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The Baghdad boom
Mar 25th 2004 | BAGHDAD
From The Economist print edition


British companies have been grousing about losing out to the Americans in Iraq. But in one area, British companies excel: security

THE sight of a mob of Iraqi stone-throwers attacking the gates to the Basra palace where the coalition has its southern headquarters is no surprise. What's odd is the identity of the uniformed men holding them off. The single Briton prodding his six Fijians to stand their ground are not British army soldiers but employees of Global Risk Strategies, a London-based security company.

Private military companies (PMCs)—mercenaries, in oldspeak—manning the occupation administration's front lines are now the third-largest contributor to the war effort after the United States and Britain. British ones are popular, largely because of the reputation of the Special Air Service (SAS) regiment whose ex-employees run and man many of the companies. They maintain they have twice as many men on the ground as their American counterparts. According to David Claridge, managing director of Janusian, a London-based security firm, Iraq has boosted British military companies' revenues from 200m ($320m) before the war to over 1 billion, making security by far Britain's most lucrative post-war export to Iraq.

From The Economist
Mercenaries in Africa
Mar 18th 2004
Feb 14th 2002

Country Briefing
Britain, Iraq

More articles about...
War in Iraq

The Foreign and Commonwealth Office has information on Britain’s role in Iraq. See also the Coalition Provisional Authority.


It's a lucrative business. A four-man ex-SAS team in Baghdad can cost $5,000 a day. Buoyed by their earnings, the comrades-in-arms live in the plushest villas in the plushest quarters of Baghdad. Their crew-cut occupants compare personal automatics, restock the bars and refill the floodlit pools of the former Baathist chiefs.

Established companies have expanded; new ones have sprung up. Control Risks, a consultancy, now provides armed escorts. It has 500 men guarding British civil servants. Global Risk Strategies was a two-man team until the invasion of Afghanistan. Now it has over 1,000 guards in Iraq—more than many of the countries taking part in the occupation—manning the barricades of the Coalition Provisional Authority (CPA). Last year it also won a $27m contract to distribute Iraq's new dinar. Erinys, another British firm, was founded by Alastair Morrisson, an ex-SAS officer who emerged from semi-retirement to win a contract with Jordanian and Iraqi partners to protect Iraq's oil installations. CPA officials say the contract is worth over $100m. Erinys now commands a 14,000-strong armed force in Iraq.

In industry jargon, these companies' manpower is split into Iraqis, “third-country nationals” (Gurkhas and Fijians) and “internationals” (usually white first-worlders). Iraqis get $150 a month, “third-country nationals” 10-20 times as much, and “internationals” 100 times as much. Control Risks still relies on westerners, but ArmorGroup, a British rival, employs 700 Gurkhas to shepherd America's primary contractors in Iraq, Bechtel and KBR. Erinys's corps of pipeline protectors is overwhelmingly Iraqi. The cheapness of the other ranks, compared with western soldiers, is one reason why PMCs are flourishing. “Why pay for a British platoon to guard a base, when you can hire Gurkhas at a fraction of the cost?” asks one.

Nobody knows how long government contracts will last after the CPA dissolves on June 30th. But multi-billion World Bank and UN reconstruction funds should provide rich pickings. Amid rising violence, the Program Management Office, which handles America's $18.6 billion aid budget for Iraq, has raised its estimates of security costs from an initial 7% of contracts to 10%. Blackwater, the American firm protecting Iraq's American proconsul, Paul Bremer, says in many cases costs run to over 25%. That's bad news for Iraqis hoping for reconstruction, but great news for PMCs.

The boom has led to two worries. The first is lack of regulation. Stressed and sometimes ill-trained mercenaries operate in Iraq's mayhem with apparent impunity, erecting checkpoints without authorisation, and claiming powers to detain and confiscate identity cards. A South African company guarding a Baghdad hotel put guns to the heads of this correspondent's guests. According to the CPA, non-Iraqi private-security personnel contracted to the coalition or its partners are not subject to Iraqi law. Even the industry is concerned. Regulation is vital, says ArmorGroup's Christopher Beese, if Iraq is not to descend into the law of the jungle.

Second, the boom may be eroding Britain's defences. Just when the war on terror is stretching the SAS to the limit, the rising profitability of private sector work is tempting unprecedented numbers of its men to leave. An SAS veteran estimates that some 40 of its 300 corps requested early release from their contracts last year. Another guesses that there are more ex-SAS people in Iraq than there are currently serving in the regiment. Head-hunters poaching military talent, say critics, risk turning the army's elite corps into little more than a training school for PMCs.



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