High Energy Prices and Private Security

Dinner table conversation about rising energy prices and the arguably higher costs incurred by energy corporations on private security. Upstream and downstream, private security is intertwined with the exploration, production and transport of hydrocarbons, and your energy bills.

This is an annual ritual. Every year, as the winter approaches in the northern hemisphere, energy prices go up. Be that gas or electricity and whichever is your energy company, the timing of the announcement always ads insult to injury. Indeed, as soon as the first chilly spell is in the horizon, the announcement that prices are going up by X percentage soon follows. The catalog of justifications for higher prices includes many reasons, with an old favorite being that wholesale prices over the last few months have gone up been somehow higher than expected. Well, that is sometimes hard to comprehend given that energy companies often hedge purchases to protect themselves from market volatility. Current favorites include anything related to greening technologies and environmental protection. One wishes that was true. Nevertheless, even if technological upgrade is mandatory, why consumers and not shareholders need to bear the lion's share of the costs, as it should be the case? Hence, shareholders' record profits will continue breaking records, so too your energy bills. This is a recipe for future economic and social disaster.

Yes, around the dinner table all these issues were discussed, but then someone asked what about the alleged higher prices of private security. And so, the discussion shifted to some other matters little discussed by the mainstream media and ordinary people:

• Exploration and production in dangerous places. As hydrocarbon demand increases, energy companies are forced to source supplies from ever more dangerous places. This is both true and a myth. Oil and gas exploration do takes place in ever more remote spots. However, downstream, this has always being the case. It is just a matter of finding the next promising oil field and comparatively speaking, at the beginning of the production cycle, the location is likely to be remote and perhaps dangerous spot.

• More private security is needed because production takes place in hot-spots. Private security wages have gone down over the last decade and increasingly local workers -at local prices- comprise the bulk of the security forces protecting operations, however imperfect these forces might be. The 1990s image of a bunch of very expensive ‘mercenaries' being hired to secure operations is long gone. You would be surprised to hear how many highly-skilled security contractors are actually struggling to find a half-decent job.

• The growing problem  maritime piracy poses is making the transport of hydrocarbons hugely expensive. The problem has generated the need to hire maritime security experts,  but never on the scale entertained by many. This is particularly the case when the issue is blown out of proportion and offered as a justification for higher extraction and production prices. In addition, governments are now deeply involved in maritime security operations off Somalia 's coast and other affected regions. Governments do not bill energy corporations for the enhanced security of international waters! Are we indirectly paying for the enhanced maritime security provided by state navies via our energy bills? 

We also discussed the myths of green technologies being deployed to remote spots by energy giants to protect the local habitat. The security contractors protecting operations in remote spots can provide first-hand accounts on the issue. But that belongs to a future post.

India Mars mission vs UK aircraft carriers

21st century contrasts on an otherwise ordinary November 5, 2013

At the Satish Dhawan Space Center on India's southeastern coast, India’s first mission to Mars successfully launched. A rocket lofted a satellite into Earth orbit on the first stage of a voyage that, if everything goes according to plan, will reach Mars orbit in 2014. Cheers erupted against the background of India moving up the technological and power ladder. Even if something goes wrong over the voyage’s next 300 days or so, India has achieved a milestone.

In the UK, there are reasons to celebrate too. Firework displays are to be watched everywhere, as November 5 marks the annual Guy Fawkes bonfire night. After the fireworks extinguish, however, it will be difficult to ignore the drama that building two new aircraft carriers has become. About six years ago, when the contract with the Aircraft Carrier Alliance was eventually approved, the costs of building them were estimated at about £3.65 billion. Leaving aside design failures and delays, the usual post-tender drama associated with any infrastructure project in the UK, the costs are now estimated at about £6.2 billion. Off course a multi-million enquiry on the issue will follow and its conclusions will be, “lessons have been learnt.” Please expect further delays and the totals costs for the two carriers, the HMS Queen Elizabeth and the HMS Prince of Wales, to be even higher, and a few more lessons to be learnt as a consequence. Add to the music other cheerful news announced this same day. For example, BAE Systems is likely to cut hundreds of jobs, around 1,000 mentioned, at its UK shipyards in Glasgow and Portsmouth. Indeed, economic stagnation has a heavy price attached.

Riches and poverty, technological might versus technological aspiration, vociferous rhetoric versus unassuming pragmatism, success and failure; these are some of the qualities setting the two stories apart. Yet, on this otherwise ordinary November 5, these qualities are no longer easy to associate in the manner accustomed over the previous century. Good luck to India, as a successful mission to Mars is something that all nations, emerging and declining, should cherish.

Private Military Dogs

The British media reported this week some interesting statistics about military serving dogs and incidentally touched a little researched subject: private military dogs. The UK Ministry of Defence (MOD) disclosed that about 11,000 dogs work across all sectors of the armed forces. Since 2009, about 350-370 of them have been put down. Back in 2012, the media reported a figure of over 800 military dogs put down over the previous decade. Some reasons given by MOD for putting down dogs are dangerous temperament, cancer-related problems, and injuries. Truth is, exact statistics about dog deaths are not likely to be kept, as the life and death of a military service dog is possibly not a top priority for MOD and something we have not been paying attention to. Nevertheless, it seems relevant to remember that dogs in (public and private) military service have saved countless of lives and undertake that would be lethal for humans –though their handlers are evidently exposed to constant risks. Notably, these services include the detection of improvised explosive devices (IED) and mines in Afghanistan, Iraq, the wider Middle East and many other locations worldwide, including the UK. Our K9 serving  friends play a remarkable role that should not be underestimated.

Now, have in mind the figure of 11,000 public service dogs just in the UK and try to extrapolate that figure to the private sector, globally! Just between the leading suppliers of private military and security personnel (the U.S., the UK, South Africa, and Israel) there must be at least 20,000 private military serving dogs. Here, please remember that private mine clearance and IED detection are two areas that took off during the first Gulf War and have exploded over the last decade. How many private military service dogs are currently on service? What is the life expectancy of a deployed dog? How many dogs die in service and how many are put down? Are dogs put down sometimes due to economic reasons? What are the minimum welfare standards for both public and private military serving dogs? Quite simply we do not have answers for questions like these, but it is perhaps time we start researching and debating the topic systematically.

Rebellion in Mali, al-Shabaad resurgent, fundamentalism spreading in north and central Africa, etc

Yes, economically speaking Africa is progressing. Yet, in parallel, many corners of Africa appear to be descending into chaos. We have mentioned already in some social networks that extremism is on the rise in a manner never seen before in Africa. Rebellion in many parts of the continent has been a constant, but never so intrinsically linked to terrorist and criminal networks. Please, go and grab a map of Africa or open one in your browser. The Arab Spring countries in the north have so many unresolved political problems that are spreading to adjacent regions and entering Europe via growing refugee communities poorly integrated into mainstream society by the respective host countries. In the East of Africa, we find a resurgent al-Shabaab and other groups inspired by al-Qaeda ideology spreading their influence to the south and the east. Criminal activity, notably piracy and the kidnapping industry, overlaps terrorism and fundamentalism both east and west. Nigeria is fast becoming a country were this lethal mix is becoming commonplace. Maritime piracy is fast growing in the west coast of Africa too. Drug trafficking organizations have also found that the area appears to be a good transit hub for traffic between South America and Europe. Add also all the many rebellions in countries like the Congo and the Central African Republic and criminal violence in South Africa, Zimbabwe, etc. We have identified at least twenty concerning trends of criminal and terrorist activity in the continent that remain unchecked as they rarely make the headlines. A grand strategy is needed here before violence in Africa reaches a point of no return. When that happens, peacekeepers and/or Private Military Companies will be unable to contain the escalating mayhem.

AAA British Private Security

On February 22, 2013, the United Kingdom lost the coveted AAA credit rating, a privilege belonging to the best performing and promising economies. Moody, the credit rating agency, downgraded the UK rating to Aa1. This was the first occasion this happens since 1978. The argument for the downgrade was that “the continuing weakness in the UK's medium-term growth outlook, with a period of sluggish growth which Moody's now expects will extend into the second half of the decade.” The woes of the UK economy (and the Eurozone at large) are becoming a never-ending story of ‘things will get better but somehow seem to get worse.’ A consequence of the adverse economic outlook was outlined in our previous post, The British Ceremonial Army.

To recap, we revised the plans of the UK government for the further downsizing of the armed forces over a horizon roughly overlapping Moody’s forecast period of continuous sluggish growth. The planned reduction is from about 102,000 regular troops to 82,000 by 2020. What are the implications of this reduction for the future of the UK private military industry?

At the outset, we should remember that there is a well-established private military tradition in the UK. This tradition goes back centuries. Its first golden period was during the seventeenth and eighteenth centuries, when the overseas trading companies flourished and helped consolidate the UK as the largest empire of modern times. The key private military protagonist of the period was the English East India Company.

After the end of the Cold War, the British armed forces went through a period of downsizing and reorganization. The downsizing in the 1990s was perhaps as dramatic as the planned 21st century downsizing. Continuing the well-established private military tradition, the British private military industry integrated the released soldiery into the sector. Thus, in the 1990s the UK cemented its position as the world’s leading supplier of Private Military Companies together with the United States.

There are currently about 200 corporate identities in the UK employing former service members and in virtual possession of private military capabilities. Many of these companies deliver private military, security, or intelligence services worldwide. Like in decades past, like in the 1990s, the released soldiery will boost and enhance the private military sector over the next decade. Moreover, as many of the released soldiers, in addition to those retiring early because of low morale, are senior and experience personnel, they are likely to lead the creation of new corporate identities. A 20% expansion of the private military sector and 100 new corporate identities in possession of private military capabilities seems to be a moderate estimate of how much the UK private military sector is likely to grow by the end of the decade.

The UK economy is at a standstill and the AAA credit rating of the country is for the time being history. However, an unseen benefit of the downturn is that the British private military sector is thriving and its AAA status will be maintained for yet another century.

The British Ceremonial Army

As a direct consequence of the global financial downturn and its impact on British public finances, the UK Ministry of Defence (MOD) was forced to reinvent itself. Please interpret “reinvention” largely as “downsizing.” It was inevitable. However, the gap between the political rhetoric underpinning the foundations of the new force and the actual shape this force is taking keeps widening.

The 2010 Strategic Defence and Security Review (SDSR) outlined the beginnings of the planned reinvention:

• Royal Navy – reduction of about 5,000 personnel to about 30,000 by 2015.
• Royal Air Force – reduction of about 5,000 personnel to about 33,000 by 2015.
• British Army – reduction of about 7,000 personnel to about 95,000 by 2015.

By July 2012, the reinvention of the British Army has evolved into plans for a further reduction of regular troops from about 102,000 people to roughly 82,000 by 2020. Any of the top-ten American football stadiums can comfortably seat the British Army; that is its actual size. Please do not be surprised if in the next rounds of reinvention, the leaner and smarter force shrinks even further. Periodic announcements by MOD seem to be already adding substance to the claim: the reinvented British Army will be by 2020 a compact force indeed.

Along this downsizing path, we find the MOD headings outlining what the reinvented British Army is expected to achieve: “To succeed in Afghanistan,” “To continue to fulfill our standing commitments,” “To succeed in other operations we are required to undertake at home and overseas.” The maths simply do not add up. When jihadists keep finding new world corners where to set home and thrive, the Arab Spring is fast turning into a long and chilly Winter, China and Russia are fast strengthening their military muscles, the situation in Syria is deteriorating by the hour, nuclear Iran, etc.,  it is hard to imagine that the shrinking British Army can ‘succeed in any other operations they are required to undertake.’

Let’s not forget. To fill the gap, the British government is planning to double the size of the reserve force from about 15,000 to 30.000 people and to start using them in front-line duties along with Territorial Army personnel. The plan calls for a partnership with industry, so that reservists can stay away from their jobs with some ease while on deployment. Down this path, the meaning of being a reservist (called for duty only during times of crisis) and the meaning of being a member of the “territorial” forces goes out of the window. What is the meaning of maintaining a professional and dedicated military class then?

Add all these points up, the shrinking numbers, the diluted meanings, the unimpressive pay soldiers take home, and we finish with a formula not for a smarter force, but for a ceremonial army.

Official documents will not document a component of British state defense and security likely to play a greater role by 2020. This “private” component calls for a greater use of Private Military Companies (or Private Security Companies if you prefer the milder term) by the British enlarged and thriving private security and private military sectors. Which will be at the forefront of British defense and security by 2020, the ceremonial army or properly staffed PMCs and PSCs?

Made in China: a perilous cycle

This is a perplexing story and hardly a fairy tale.

Once upon a time, we avoided things made in China. It might have been the fact that those things were made by people living in a Communist state or that they were poorly made and ultimately disposable. Then two trends converged and, eventually, gave rise to a perilous cycle.

Firstly, mighty corporations decided to shift production to a place where labor was beyond cheap; never mind that the chosen place was located at the other end of the planet and the questionable status of that country’s political leadership. The whole issue was to generate more profits. Initially, the goal was to generate more profits for the benefit of shareholders. Thereafter, the profits were needed not just for shareholders, but also to pay the higher and higher wages of a handful of executives at the top of the corporate ladder. Now, with a dwindling consumer base in the West, profitability is also linked to the penetration of the Chinese market –global brands, but the products are largely manufactured in China.

Secondly, everyone wanted to have more for less. Why to buy one top quality item when we can buy ten made in China for peanuts on every shopping trip? We forgot why we used not to buy made in China and became accustomed to the new rule: nearly everything is made in China, so why bother checking labels to see where the products we buy are made.

The story starts to sound familiar. This is partly the reason why we finished living in the financial mess that the second decade of the 21st century has become.

It is perplexing, but while importantly contributing to make modern China, the West has also become increasingly dependent on the heath of the Chinese economy --and western corporations dependent on the outlined perilous cycle. We support free trade and capitalism, but we cannot see much of a levelled field and fair game here.

Please stop reading for a few seconds and see the connection between the two outlined trends! Please also keep them in mind while you read the rest of the post.

Among the consequences of this perilous cycle, we can identify the massive transfer of technological know-how to China, which through natural assimilation or industrial espionage has contributed to China consolidating a solid technological lead –the process will not be reversed. While the U.S. and its allies engaged in costly military incursions in Afghanistan and Iraq, China quietly consolidated its resurgent technological base and started to exercise greater control over the supply of natural resources. They went shopping in Africa and elsewhere and since the recession, the shopping trips have also included prime real state in the West along with important industrial assets.

You might ask yourself what all of these has to do with security?

• China will increasingly own (or continue to copy) strategic technologies. Please bear in mind that unlike the West and emerging democracies, China bypasses international law whenever they consider it necessary. Yet, they are starting to call the tunes and the U.S. and Europe look increasingly impotent whenever they infringe copyrights, patents or the like.

• What about state-sponsored technological espionage? What about the growing number of incidents involving the (state-sponsored?) hacking of the servers of top online providers and even the websites of state agencies? Do you sense the impotence of the U.S. and Europe when it comes to dealing with these concerning and escalating cyber attacks?

• While the U.S. and its allies continue to haemorrhage money in Afghanistan, China has the surplus resources required to build an enormous and sophisticated defense apparatus. Probably in the second decade of the 21st century, China might invade Taiwan. Perhaps sooner that that, China might engage in trial naval skirmishes with Japan. What the U.S. and Europe can do about it with their more than exhausted budgets, their faltering economic growth, and their growing dependence on the health of the Chinese economy

• On top of the amorphous security component the Chinese deploy overseas to protect their interests, which has included the use of convicts in Africa and quasi-mafias, they already have an answer to Private Military Companies in the form of state-sponsored security companies. These Chinese forces are hardly part of development strategies or attempt to promote values oppressed people aspire to such as democracy and justice. What are we doing about it?

The list of security concerns that the perilous made in China cycle has engendered is long indeed. The point here has been simply to highlight a problem we all created and for which so far there is no escape. Any idea how we can break free from this cycle?

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*** Post reprinted in May 2021 via MilitaryEcology.com due to, finally, this issue gaining track and being discussed everywhere; i.e. nearly a decade later when little can be done to rectify China's peculiar development path. ***

Adverse Forces vs Private Military-Security Companies

The motivation to expand PrivateMilitary.org to incorporate a segment focusing on Adverse Private Forces (APFs) originates in a key argument put forward in Dr. C Ortiz’s book Private Armed Forces and Global Security. The author, a well-known commentator on the Private Military/Security Companies (PMCs/PSCs) subject, argues that a dichotomy in the private realm has emerged and implies that PMCs/PSCs now legitimately and formally collaborate with state and multilateral forces. In particular, these “security partnerships” are established with the aim of deterring or counteracting the predatory advances of APFs. As in the cited book, the types of APFs covered by this new segment of PrivateMilitary.org are terrorist organizations, rebels and insurgents, mafias, drug trafficking organizations, and maritime pirates. In addition to terrorism, insurgency and rebellion, organized crime, drug trafficking, and maritime piracy, our new APFs segment also covers emergent security issues such as the emerging South China Sea conflict, exploration and exploitation of the Arctic region, insurgency in particular regions, food security, cyber crime and cyber warfare. As it is our tradition, this segment will remain a free resource, growing organically and based on your feedback.

 The first stage of this large project has been completed: upgrading the templates and creating the master directories. Guided by the many unfolding events in which APFs and security partnerships are becoming the key conflict players, for example the hostage crisis in Algeria and the descent of Mali into chaos, we are currently populating all the sections.

Unlike other online resources overloaded with pop up ads and jargon, we are pleased to offer you a straight-forward search logic (by region or the name of the particular APF covered). Be your project a college paper, professional research, or simply fostering your knowledge on critical global security issues, we hope you will find this new segment useful and informative.

 We have many other plans for the APFs segment. We are thinking that perhaps it might be useful to list PMCs and PSCs offering particular services alongside particular types or APFs or security issues. However, this next step will be based on your feedback. So please be patience while we complete the work throughout 2013, but do please visit the new sections and give us your opinion.