WORLD: Steady Growth Expected for Private Security Industry

The private sector provides the second largest contingent of armed foreigners in Iraq after the US.

There are estimated to be more than 20,000 armed expatriates working for private security companies in Iraq, more than all the non-US troops combined. This compares with 8,500 British soldiers.

And, contrary to widespread expectations, their numbers do not appear to have fallen appreciably. The Baghdad bubble, as it has been dubbed, has yet to burst.

The aftermath of the 2003 war in Iraq has accelerated a controversial trend: the takeover by private concerns of defence and security-related roles that until recently were almost exclusively carried out by governments.

Work as varied as the repair and maintenance of battlefield systems, close protection for visiting government officials, and the interrogation of prisoners is now carried out by private contractors.

The development, largely led by the US, is seen by some as undermining state sovereignty, whose essence, according to the definition first used by the sociologist Max Weber in 1918, is a monopoly on the use of legitimate physical force.

In any event, the extraordinary growth of private security companies (PSCs) in Iraq, where conventional armed forces have been at full stretch, has revealed large regulatory and legal gaps.

According to Deborah Avant of George Washington University, the author of a book on privatised security*, international law in the field of private security often relies on domestic laws which clash in some respects from country to country and leave important gaps in other areas.

This has proved a headache for the companies involved, particularly those whose personnel are armed, and most of which are desperately seeking respectability.

She says: "It's hard for companies that are looking to the future and want to be on the right side for reasons of profitability. They are not quite sure what is expected of them. Indeed, some of the laws passed by the US to regulate what is a transnational industry "may step on the toes of other countries".

An effort, she noted, is under way by the International Committee of the Red Cross, funded by the Swiss government, to develop standards and guidelines for private security companies operating in conflict zones.

It is Iraq that has given new urgency to the issue. PSCs there operate under the auspices of regulation 17, introduced by the Coalition Provisional Authority, the interim US body that ruled Iraq until June 28 2004.

Amid the country's violence and chaos, the regulations are barely enforced anyway and the issue needs attention from the Iraqi government, company executives argue.

"With a constitutionalreferendum, elections and everything else that's going on there, it's not surprising that it's way down the priority list," said Richard Fenning, chief executive officer of Control Risks of the UK, which has 300 contractors in Iraq at any one time.

Gaps in US domestic law have also been exposed. Soldiers involved in the abuse of prisoners in Abu Ghraib prison have been charged and sentenced in the US but no indictments of civilian contractors have emerged from the grand jury examining the incidents.

This appears in part because of the limited application of the Military Extraterritorial Jurisdiction Act, which was passed in 2000 precisely because Congress recognised that it was almost impossible to charge civilians under military codes for offences committed abroad.

Yet initially, the act applied only to employees of the Department of Defense - and not to those working for other US agencies, such as the Central Intelligence Agency.

This year the scope of the act has been widened to cover other federal agencies that are supporting the DoD's mission abroad. Yet even this extension would appear to exclude those contracted, for example, by a body such as Iraq's CPA.

The approach of the US is particularly important to security companies because of its importance as a buyer of their services.

In her book, Ms Avant argues: "The fact that British PSCs do not consider the British government a prime customer gives them less incentive to attend as closely to British policy as American PSCs (do to US policy)."

Nonetheless, according to Mr Fenning, regulation is sorely needed in the UK. The Private Security Industry Act, passed in 2001, aims at licensing and regulating companies operating inside the UK and does not address their activities overseas.

There is talk of reviving some of the approaches discussed in a UK green paper, issued in 2002. The paper made no recommendations, but seemed to some observers to favour a licensing regime.

The main difficulty was highlighted by the activities of a British-based company, Sandline, in Papua New Guinea and Sierra Leone, which were seen as subverting British foreign policy and evading international law.

Sandline's behaviour highlights a potential dilemma for the government, wereit to institute a licensing regime: how to avoid the perception that a UK licence to operate a PSC also signals British government approval for its activities abroad.

It has been a commonplace to suggest the boom for PSCs in Iraq will be short-lived. Actually, the Baghdad bubble has been inflated for longer than most people in the business expected. Inevitably, many of the tasks now carried out by foreigners will be taken over by Iraqis.

"There have been very special circumstances why there are so many (foreign

contractors) in Iraq. I don't subscribe to the theory that this is the start of some huge gold rush," says Mr Fenning of Control Risks.

Yet after the Baghdad bubble bursts, he and others argue that what will remain is an industry that should see steady long-term growth as more governments follow the example of the US and outsource increasing volumes of security-related work to the private sector.

*The Market for Force, The Consequences of Privatizing Security, Cambridge University Press.

• 174 War & Disaster Profiteers Campaign