Who’s Going to Get Rich Fighting the Islamic State?
Obama's small war means big profits -- and little oversight -- for defense contractors and hired guns.
Erik Prince has an idea. The founder of Blackwater thinks the Obama administration can beat the Islamic State (IS) using private contractors as its boots on the ground. "If the old Blackwater team were still together, I have high confidence that a multi-brigade-size unit of veteran American contractors or a multi-national force could be rapidly assembled and deployed to be that necessary ground combat team" to beat IS, Prince wrote recently on the website of his new company.
Blackwater is now called Academi and has no ties to Erik Prince. But the company is back in the news: The trial of four Blackwater mercenaries charged with killing 14 Iraqi civilians at Baghdad’s Nisour Square in 2007 has finally come to an end after a seven-year legal battle.* One man was charged with murder, three others with manslaughter. The massacre helped convince Americans — and the world — that the private contractors on which the United States military depended for so much during the Iraq occupation were, in fact, reckless and unaccountable.
Still, despite the reminder of America’s ill-fated use of private contractors in the Middle East, these elements will likely play a critical role in the Obama administration’s unfolding war in Iraq and Syria, now known as Operation Inherent Resolve. President Barack Obama’s aversion to using ground troops — or to seeing U.S. soldiers killed or wounded — makes using private contractors a politically attractive option. And contractor personnel have a comparative advantage in carrying out certain key functions, like teaching Iraqi forces to use and maintain U.S.-supplied weaponry. With these contracts will come more corruption and waste, unless the American people and the government remain vigilant.
Within four years of the start of the United States’ wars in Iraq and Afghanistan, private contractors outnumbered troops in the field. In addition to Blackwater, contractors from companies like DynCorp, Triple Canopy, and their cohorts became integral to the conflicts in a wide range of capacities. Thousands of their employees carried guns and guarded U.S. facilities, trained Iraqi police and security forces, and occasionally even engaged in direct combat. But most of the contract employees were doing more mundane tasks like serving meals, building military facilities, or digging latrines. As David Isenberg writes in Shadow Force: Private Military Contractors in Iraq, private contractors are the "American Express card of the American military. The military doesn’t leave home without them, because it can’t."
For now, Obama’s small war is unlikely to provide the kind of bonanza for contractors that the much larger conflicts in Iraq and Afghanistan did. In those wars, private contractors had responsibilities like reconstruction and large-scale logistics that the current conflict doesn’t require. Still, there is money to be made, both directly and indirectly, from Operation Inherent Resolve. Triple Canopy recently received a no-bid contract to beef up its forces protecting the U.S. Consulate in Erbil when it appeared that IS forces might overrun the city over the summer. In August, Kenneth Asbury, the president and chief executive officer of the military and intelligence contractor CACI, told a group of investors that they have begun to see increases in some of their contracts due to turmoil in the Middle East.
The fight against IS could also lead to a rise in logistics contracts as contractors are hired to support U.S. forces at places like al-Udeid air base in Qatar, which has served as one of the launching points for the ongoing bombing raids. Contractors will also be deployed to train Baghdad’s army on how to maintain and use the new stream of U.S.-supplied weaponry flowing into the country. This is routine practice: A "helicopter sustainment" deal passed by Congress in July will dispatch 25 contractors to live in Iraq for five years. Similarly, as U.S. arms sales to the Gulf states and other allies increase, so will the number of contractors, who will conduct weapons systems training. Another round of contracts may come once the Pentagon decides how it is going to carry out its training of Iraqi and Syrian moderate rebel forces. At the moment, discussions have focused on U.S. special forces carrying out the training, but in the past this has often morphed into an involvement for private contractors. Training contracts have been a steady source of revenue for companies like DynCorp over the past decade.
All of these opportunities will grow if the war in Iraq and Syria continues to escalate. Todd Harrison of the Center for Strategic and Budgetary Assessments has estimated that the war could cost between $2.4 and $22 billion next year, depending on how many more troops are involved. Former Clinton administration budget official and Foreign Policy contributor Gordon Adams has said that the price of the air war alone could hit up to $20 billion — once all associated costs, including that of bolstering allies, are taken into account. That’s far less than the $175 billion per year spent at the height of the wars in Iraq and Afghanistan, but it’s not chump change.
The Commission on Wartime Contracting (CWC) estimated that private contractors have received nearly $200 billion for work done in support of the wars in Iraq and Afghanistan. That doesn’t even include the tens of billions of additional dollars used to procure weapons. Meanwhile, overall Pentagon contracts — justified in part by the argument that the United States needed to build up its military across the board as part of the Global War on Terrorism — more than doubled, to more than $400 billion per year in the first decade of the 2000s.
In Afghanistan and the George W. Bush-era Iraq war, these contractors were often untrustworthy partners. As oversight bodies like the Special Inspector General for Iraq Reconstruction (SIGIR) and the congressionally mandated CWC have revealed, one common thread uniting the privatized elements of the Iraq and Afghan wars was the prevalence of waste, fraud, and abuse. The contracting commission estimates that the value of fraud and waste in Iraq and Afghanistan ranged from $31 billion to $60 billion. There are scores of examples, including a subcontractor on a military construction project in Afghanistan who simply walked off with $2 million in U.S. funds; faulty electrical repairs in Iraq that resulted in the electrocution of a soldier while he was taking a shower; the provision of nearly $300 million in faulty 1960s-era Chinese ammunition procured from the Albanian government to supply U.S. forces in Afghanistan; and the expenditure of over $3 billion in reconstruction funding in Iraq for work that may never have been performed.**
Corruption is likely to be a problem in any new round of contracting in Iraq as well. As reported in mid-September by Jim McElhatton in the Washington Times, the State Department last year dropped an investigation into kickbacks by a subcontractor to DynCorp on a project in Iraq that involved providing linguists for the Iraqi police academy. A State Department memo related to the case indicated that it was dropped because it was deemed to be too difficult to get needed cooperation from the Iraqi government. This is the kind of shady dealing that Americans have to look forward to as more of their tax dollars are handed over to private defense companies.
But the biggest prize for contractors from Operation Inherent Resolve may be indirect. The campaign in Syria and Iraq means that the Pentagon can make the case to extend its separate war budget, known in Washington-speak as the Overseas Contingency Operations (OCO) account, for who-knows-how-long into the future. The OCO concept was established in the late 1990s at the time of the U.S. interventions in the Balkans, but its use and abuse as a handy slush fund for the Pentagon didn’t begin in earnest until the Iraq and Afghanistan wars of the 2000s. The Defense Department has used it to finance tens of billions of dollars of equipment and activities that had nothing to do with Iraq or Afghanistan. The Pentagon will no doubt continue this practice when it requests additional OCO funding next year, justified primarily by the argument that more funding is needed for the war against IS. During the Iraq and Afghan wars, roughly one out of every four OCO dollars went to private contractors.
Finally, there will be the battle over the Pentagon’s base budget. It has been constrained due to the Budget Control Act of 2011, and everyone from President Barack Obama to Joint Chiefs of Staff Chairman Gen. Martin Dempsey to House Armed Services Committee chair Howard P. "Buck" McKeon have called for the current caps on Pentagon spending to be lifted due to increasing demands on U.S. forces in Iraq and Syria, as well as to deal with the Ebola crisis in Africa.
If the caps are removed it could mean hundreds of billions of dollars in additional Pentagon spending over the next decade. Barring a massive shift in how the Defense Department operates, a substantial portion of that new spending will go toward contracts for weapons, training, and other defense services. In reality, the Pentagon has more than enough funding in a half-trillion-dollar base budget and a war budget worth tens of billions of dollars more to cover any action now being contemplated by the Pentagon. But that won’t stop advocates of higher Pentagon spending from trying to exploit the war to press for even more funding.
The last Iraq war was marked by corruption, criminality, and profiteering by private contractors. This time around, Congress, the public, and the press need to scrutinize every dollar that the Pentagon requests to prevent a repeat. This may call for the creation of new, independent investigative bodies akin to the Special Inspector General on Iraq Reconstruction or the Commission on Wartime Contracting. It definitely demands that the Obama administration be transparent about who it is asking to wage war in Americans’ names.
*Correction, Nov. 4, 2014: Blackwater guards killed 14 Iraqi civilians at Baghdad’s Nisour Square in 2007. An earlier version of this article put the number at 17. (Return to reading.)
**Correction, Nov. 4, 2014: Contractors provided nearly $300 million in faulty ammunition to U.S. forces in Afghanistan. An earlier version of this article put the number at $300 billion.(Return to reading.)