Private Firms and the New Security Governance

 

                                                     

 

 

Elke Krahmann

 

Visiting Research Fellow

Center for European Studies

Harvard University

27 Kirkland Street at Cabot Way

Cambridge, MA 02138

U.S.A.

krahmann@fas.harvard.edu

 

 

                                                     

 

Paper prepared for the International Studies Association 43^st Annual Convention,

23-27 March 2002, New Orleans.

This research is supported by a grant from the German Academic Exchange Service.

 

 

 

 

 

 

ABSTRACT: The increasing role of private firms in international security has been a much noted development in recent years. In particular, the involvement of private military companies such as Executive Outcomes and Sandline International in Angola and Sierra Leone have spawned a growing literature on the “new mercenaries”. While much of the literature has generalized the negative experiences with these companies in Africa, this paper seeks to introduce a more differentiated perspective. In particular, it suggests that privatization of security in Europe and North America should be examined as a distinct phenomenon. This phenomenon can be explained by emergence of a new system of security governance in the region. At the heart of it is a shift from ‘government’ to ‘governance’ since the end of the Cold War. Using the concept of security governance as a theoretical template, this paper examines the specific development and problems associated with private security companies in the transatlantic community. Moreover, it suggests that the notion of multilevel governance can help identify possible mechanisms for the regulation and management of private security companies in Europe and North America.

 

INTRODUCTION

 

The increasing role of private firms in international security has been a much noted development in recent years. In particular, the involvement of companies such as Executive Outcomes and Sandline International in Angola and Sierra Leone have spawned a growing literature on the “new mercenaries”(Adams, 1999). The aim of many studies has so far been to provide a comprehensive analysis of the new phenomenon of contemporary private security companies. This phenomenon departs from previous mercenary activity in that it not only takes the form of individuals, but also, increasingly, of corporate entities. In particular, it subsumes two types of firms: private military companies which also engage in direct combat and private security firms which commonly provide military support, such as training, logistics and maintenance (Cleaver, 2000: 136; Lilly, 2000: 8).

         However, when offering an assessment of private security companies in the post-Cold War era, many studies have tended to focus on the controversial experiences with these firms in Africa (e.g., Nossal, 2001). As a consequence of this Third-World bias, much of the analysis has been colored by scepticism concerning a positive role for private security companies in international security and the possibility of regulating their services. Since there will always be unstable governments in the Third World which are willing to employ private security companies and offshore havens which are prepared to host these firms, it is argued, anything short of a global regime will not be sufficient to control private security companies.

         This paper presents the outline of a research project which takes a more differentiated perspective. Notably this project concentrates on the specific development, problems and options for the regulation of private security companies in Europe and North America. The narrow focus of this project seems justified by three arguments.

         First, most of the revenue of private security companies stems from services provided to governments and private actors in the region. Indeed, some authors suggest that industrialized nations will be the primary growth area for the private security industry as these firms are increasingly viewed as legitimate actors in European and North American security (Lilly, 2000: 7).

         Second, the outsourcing of security policy functions within the transatlantic community differs in many respects from the use of private security firms in the Third World. Specifically, this paper proposes that the privatization of security in Europe and North America has been part of the emergence of a new system of ‘security governance’ in the post-Cold War era. The concept of security governance suggests that the transformation of European and transatlantic security policy from its state-centered bias and bipolar superpower competition toward a complex system of functionally differentiated networks which involve public and private actors at multiple levels represents a shift from ‘government’ to ‘governance’. The security sector, thus, appears to follow a development which has been analyzed in subnational, national and European Union politics since the 1980s (Pierre 2000). Characteristic of the rise of governance has been the progressive withdrawal of many governments in Europe and North America from the direct provision of public services in favor of multilateral or public-private policy making arrangements.

         Third, the development, problems and possible regulation of these firms in Europe and North America are crucial for defining the international role of private security companies. Since most of these companies are based in the region, they are, even when contracted by Third-World actors, subject to the legal and normative restraints imposed by Western governments. Moreover, due to the large role of European and North American governments in the provision of security and development aid to Third World countries, Western governments are able to influence the decisions as to which private security companies may be used in local operations. Finally, European and North American governments determine which companies are considered for contracts in international peacekeeping missions or by international organizations in which they are members.

         In the following, this paper is structured in four parts. The first part outlines the growing involvement of private security companies in Europe and North America as part of the shift toward security governance since the end of the Cold War. The second part examines the problems associated with the outsourcing of security functions to private actors in governance arrangements and the third part explores possible solutions to these problems. The conclusion summarizes the issues raised in this paper and indicates a future research agenda.

 

THE RISE OF PRIVATE SECURITY COMPANIES

 

Before this section can turn to the possible explanations for the growing number and influence of the private security industry in the post-Cold War era, it is necessary to examine what is meant by the notion of private security companies. The literature commonly mentions three ideal-types of firms: (1) mercenary firms, (2) private military firms and (3) private security firms (Lilly, 2000: 8; Cleaver, 2000: 136). The first type refers to ‘individuals or organizations who sell their military skills outside their country’ (Adams, 1999: 2). It is the only type which engages in direct combat. In their corporate form, the most well-known examples have been Executive Outcomes, a South African firm which was disbanded in 1999 and Sandline International, which is registered in the Bahamas, but has offices in London and Washington, D.C. The second term is more narrowly used to denote private firms which offer military training, equipment and intelligence (Brooks, 2000: 129). They include companies such as Military Professional Resources Inc. (MPRI), Defense Systems Limited (DSL), Silver Shadow and Vinnell. The third set refers to companies which provide security for installations and personnel as well as logistics, technical support and transportation (Singer, 2001; Cleaver, 2000). It is by far the largest category and is represented by companies, such as Brown and Root, Pacific Architects and Engineers (PA&E) and the Ronco Consulting Corporation. Frequently, however, private security companies combine functions across these areas and the following will use the term private security companies to subsume all three.

         While mercenaries have a long history (Thompson, 1990), it is in particular the rise of private military firms and private security firms which has caused a new interest in the subject of private military forces. Three main explanatory factors have been proposed for the accelerated growth of these companies over the past two decades. The first factor appears to be increased demand generated by the outbreak of small conflicts in the Third World where fragile regimes can no longer count on the financial and military support of one of the two superpowers (Brooks, 2000: 132 ). The second factor seems to be a decreased willingness of European and North American governments to engage in international peacekeeping operations unless their immediate security interests are concerned, following the failure of missions such as in Somalia in the early 1990s (Brooks, 2000: 134; Taulbee, 2000:434f.; Cleaver, 2000: 137). The third factor concerns the reduction of defense budgets and the outsourcing of military tasks to private companies among Western industrialized nations after the end of the Cold War (Arnold, 1999: 173).

         This paper suggests that the above explanations for the growth of the private security industry subsume two analytically distinct developments. The first factor describes the lack of credible military and police forces which is often associated with the notion of failed statehood in the Third World. The latter two factors refer to the emergence of a system of security governance in Europe and North America where states continue to hold substantial military forces, but choose to subcontract parts of their national or international security functions to private companies.

         In order to understand the trend toward security governance in Europe and North America and its relationship with the growth of the private security industry, it is first necessary to specify what is meant by this concept. Both, security and governance, have experienced significant redefinitions over the past two decades. In particular, the notion of security has been broadened from the preservation of state boundaries to the protection of societies and individuals within states (Buzan et al., 1998; Haftendorn, 1991). Moreover, with the expansion of the concept of security to nonmilitary issues has come a reconsideration of the political structures through which security can be achieved. This reassessment has highlighted the inability of governments to provide security across multiple levels and dimensions by existing unilateral or multilateral institutions. Problems arising from differences in the needs and interests of states and limited resources have favored the increasing differentiation of security policy making and implementation. In addition to national governments, a variety of public and private actors taken on security functions at the local, regional and global levels, including charities, human rights organizations and private security companies (Commission on Global Governance, 1995).

         The differentiated, but overlapping, networks which structure the collaboration among these actors have increasingly been described with the concept of governance. In contrast to ‘government’ which refers to the centralization of political authority by the state, ‘governance’ denotes the fragmentation of policy making and implementation capabilities among public and private actors at the subnational, national, or international levels (Gordenker and Weiss, 1996: 17; Czempiel, 1992: 250). In detail, governance can be defined as the structures and processes which enable a set of public and private actors within a specific issue area to coordinate their interdependent needs and interests through the making and implementation of binding policy decisions in the absence of a central political authority.

         An examination of contemporary governance arrangements in various issue areas and across levels of analysis reveals that governance is commonly differentiated from government along seven dimensions: (1) geographical scope, (2) functional scope, (3) distribution of resources, (4) interests, (5) norms, (6) decision-making and (7) policy implementation (Krahmann, 2001a). Each dimension can take a variety of forms along a scale between the ideal notions of government, i.e., centralization and integration and governance, i.e., fragmentation and differentiation. However, it should be noted that not all dimensions apply to every issue area. Some governance structures might not be defined by a geographical dimension, but purely in functional terms, such as the General Agreement on Tariffs and Trade (GATT).            

 

Table 1 Dimensions of Government and Governance

	DEGREE OF FRAGMENTATION
DIMENSIONS	‘Government’ - centralised authority	‘Governance - fragmented authority
Geographical scope	states	subnational national regional global
Functional scope	several issue areas	single issue areas
Distribution of resources	centralised	dispersed
Interests	common	differentiated
Norms	sovereignty command + control redistribution	limited sovereignty self-government market
Decision-making	hierarchical consensus formal equality	horizontal negotiation inequality
Implementation	centralised authoritative coercive	fragmented self-enforced voluntary

 

Obviously, it is difficult to specify which or how many dimensions have to be fragmented for a policy making structure to qualify as ‘governance’ rather than ‘government’. Moreover, the formal and informal institutions on which these political structures are based are constantly evolving. Separate dimensions may proceed toward greater fragmentation or integration. Different dimensions might even display countervailing trends. Nevertheless, in the area of security a trend from government to governance can be noted since the end of the Cold War (Krahmann, 2001b). The growing role of private security companies in the making and implementation of security policies has been one result of the emergence of a new system of security governance in Europe and North America. To illustrate this relationship, the following sections examine each dimension in turn.

         Specifically, the increasing number of national and transnational private security companies can directly be linked to the geographical fragmentation which has characterized the shift from government to governance within the transatlantic community. In the terms of the analytical framework proposed in Table 1, this expansion suggests the progressive replacement of the nation-state as the central geographical dimension of security. In the post-Cold War era, it has been particularly evident in two developments: an ‘upward’ shift toward regional and global institutions of governance and a ‘sideways’ shift to private security actors. The upward trend has particularly been identified with the geographical expansion of NATO and the EU. In addition, there is a growing number of regional and sub-regional institutions, such as NATO’s Partnership for Peace (PfP) program, the Council of the Baltic Sea States, the Stability Pact of South-Eastern Europe, or the Visegrad Group. The ‘sideways’ trend has been embodied in the privatization of security functions which include not only private policing, but also the armaments industry and the outsourcing of security services to private security companies.

         In addition, the emergence of private security companies can be linked to the differentiation of security functions in Europe and North America. In particular, the growing recognition of non-traditional areas of security, such as human rights, aid and the environment, combined with the limited expertise and resources of governments in these areas has strengthened the role of private actors.

         The most crucial factor in contributing to the emergence of security governance and the growing role of private security companies in Europe and North America has been the increasing fragmentation of resources. In the immediate aftermath of the Cold War, this development was driven by public demands for a peace dividend (Carver, 1992: 155; Croft and Dunn, 1990). In addition, governmental resources have become more and more limited because of the rising costs of standing armies, professional training and armaments research and development (Greenwood, 1991; Smith, 1993). As European and North American governments have sought more cost-effective ways for the provision of national security, they have turned to private actors. Although it is not agreed whether or in which areas of security private actors can offer cheaper solutions than the military, many Western governments plan to expand public-private partnerships (Gates and Robbert, 1998; Pint and Hart, 2001).

 

Table 2 Trends in Security Governance

DIMENSIONS	Security Government (during the Cold War)	Shift toward Security Governance (since 1990)
Geographical scope	state regional	subnational state regional global private
Functional scope	military	military political social environmental
Distribution of resources	centralised in states and NATO/ WTO	fragmented among public and private actors at different levels: private security firms, charities, NGOs, states, UN, NATO, EU, OSCE ...
Interests	common	differentiated
Norms	sovereignty ‘one for all, all for one’ ideological priorities	limited sovereignty ‘coalitions of the willing’ cost-efficiency
Decision-making	centralised consensus formal equality	fragmented negotiation inequality
Implementation	centralised authoritative	fragmented voluntary

 

In non-traditional areas of security where the involvement of non-governmental actors has been strong, charities, environmental organizations and human rights watchdogs have become central agents in the making, implementation and monitoring of security policies. However, recent developments show that even areas which have previously been considered at the core of ‘traditional’ defense policy, such as armaments production, logistics and military training, are increasingly characterized by a fragmentation of resources. The rise of private security companies has here complemented the privatization of armaments industries in Western Europe which began in the late 1980s (Bitzinger, 1994; Guay, 1998; Skoens and Wulf, 1994; Webb 1995). Moreover, governments, international organizations and non-governmental organizations are considering it more efficient to hire private security firms for international missions rather than attempting to muster the relevant resources themselves (Adams, 1999; Spearin, 2001).

         In addition to changes in the material dimensions of government and governance, the increasing role of private security companies in the transatlantic community appears to be a result of a transformation of how interests are perceived in the post-Cold War world. Specifically, there has been a growing willingness to recognize the diverse, though not necessarily conflicting, security interests of governments in Europe and North America. Contrary to expectations of a return toward increased anarchy and old-style balancing behavior (Mearsheimer, 1990; Waltz, 1993), however, the pursuit of these interests is framed by international institutions. The Common European Security and Defense Policy (CESDP), in particular, provides a new institutional forum for European governments to implement their own, more narrow, security concerns. Even the internal structures of the CESDP acknowledge the differentiated interests of the member states. Specifically, actions under the emerging CESDP are based on varied ‘coalitions of the willing’.^[1] NATO, too, has progressed toward a similarly flexible structure with the development of the Combined Joint Task Forces (CJTF). The demand for private security companies might also be increased by this trend toward a differentiation of interests. Thus, European governments might increasingly rely on private security companies for services which have previously been supplied by the United States, such as airlifts and logistics, in order to be able to act where there is no agreement within the Atlantic Alliance.

         In addition to interests, normative changes which can be associated with the emergence of security governance, have permitted the growth of the private security industry. Specifically, where the norm of state sovereignty in security is weakened, as in subnational policing, private security companies can take on functions which were until recently regarded the monopoly of the state. A second development has been the weakening of the norm of collective responsibility. Although NATO was the only international organization whose members subscribed to this norm and continue to do so, it can be noted that the ties which bind the members of NATO are increasingly challenged by policies such as the American National Missile Defense program and the preference given to ‘coalitions of the willing’ by CJTF. While not yet showing any immediate impact, in future this shift might force alliance members to buy privately resources, for instance surveillance, which will no longer be provided by the community. Most progressed, however, has the abolition ideological principles in security policy in favor of cost-efficiency. The damaging economic burdens which contributed to the dissolution of the Soviet Union and placed significant costs on European and North American governments during the Cold War seem no longer acceptable. The outsourcing of some security functions, such as logistics and maintenance, to private companies has been a direct consequence of this change of norms (Howe, 1998a, Brooks, 2000: 131).

         Driven by these material and ideational changes has been a creeping transformation of decision-making processes in transatlantic security which gives private security companies more influence over public policies. In addition to governmental decision-making arrangements centered around governments and national parliaments, there is now a growing network of informal relations with private security companies, charities and non-governmental organizations at the national and international levels. As typical for governance arrangements, horizontal coordination and negotiation prevail in these networks (Rhodes, 1999: xxii; Eising and Kohler-Koch, 1999: 270). A tacit, but close collaboration between governments and the private security industry seems to prevail in Western industrialized countries, as in the case of the British Foreign Office’s knowledge and secret approval of Sandline International’s intervention in Sierra Leone.^[2] However, even in the United States, where private security companies have to be registered and exports have to be licensed by the State Department, informal consultation and cooperation between private security firms and officials seem widespread (Grant, 1998).

         Finally, due to the above developments, the implementation of security policies in Europe and North America is becoming more and more fragmented: geographically, functionally and in terms of the division between public and private security providers (Tuathail et al, 1998: 14; Rosenau, 2000: 172f.; Commission on Global Governance, 1995: 2f.). Some members of the European Union and NATO, for instance, envisage a distribution of labor in which the EU focuses on the implementation of security policies within the European region, while NATO serves as a global agent. Functionally, divisions have been more longstanding with specific arrangements and agencies in areas such as nuclear proliferation, environmental safety and international police cooperation. The transformation of the division of labor between public and private actors which has markedly shifted toward a greater role for private actors is, however, the greatest change. Although most security policy decisions are still taken in the final instance by national governments and international organizations, private companies not only implement these policies at the national level, but also, increasingly, abroad.

 

PROBLEMS IN THE GOVERNANCE OF PRIVATE SECURITY COMPANIES

 

A broad range of problems has been associated with the increased involvement of private security companies in the literature. Among these are challenges to sovereignty, the militarization of society, criminal activity, the exploitation of natural resources as well as problems of transparency and accountability (Taulbee, 2000: 436; Zarate, 1998: 77). However, as with the rise of private security companies, it can be argued that the problems faced by developing countries which use private security companies are distinct from those of states in Europe and North America. The main dangers for Third World countries which use private security companies - i.e. that these companies will prolong a conflict or, at best, achieve only to temporary stability, challenge the authority of the contracting government, are open to exploitative linkages with natural resource extracting companies, or encourage arms trafficking and the militarization of society - are remote in Western industrialized nations. Conversely, the key problems discussed in Europe and North America, such as the lack of transparency with regard to the corporate linkages and operation of private security firms, the lack of political control and the question of accountability (Grant, 1998; Howe, 1998; Silverstein, 1997), may perhaps be regarded as secondary in developing nations where political accountability is often not even fully ensured among public actors and achieving some basic level of security is imperative.

         Based on the preceding analysis, this section suggests that most of the problems with the rise of private security companies in Europe and North America are related to the shift from government to governance in security. Specifically, they seem to be a result of material and ideational changes which are not reflected by associated modifications of the decision-making process and vice versa. This has led to a mismatch between empirical facts, normative beliefs and security policy making processes. In particular, the following paragraphs discus six problems which seem a concern within the transatlantic community: a lack of transparency, control and accountability, an increased need for coordination, growing divergences in security policies and the uneven provision of security.

         The lack of transparency in the relations and actions of private security companies appears to be a direct consequence of the increasing fragmentation of security policy actors along the geographical, functional and resource dimensions, whereas decision-making procedures in security have widely remained unaltered in the transatlantic community. Notably, geographical fragmentation allows private security companies to operate in the service of governments, international organizations and non-governmental actors beyond the borders of the state in which they are located and thus outside the direct oversight of their government, the public or the media. Moreover, since private security companies have so far been treated like other export companies, there are few institutional or legal requirements which ensure public oversight. Even where private security companies and their exports are regulated such as in the United States, the government only notifies Congress and informs the public of exports in excess of $50 million (Grant, 1998: 6) which, if comparisons with other countries such as Sweden hold, excludes all but a very small number of export licences.

         The observation that this lack of transparency causes public concern in the area of security, but seems widely accepted in other export sectors indicates, however, that there is a more fundamental mismatch between the current role of private security companies and existing political structures. The mismatch appears to be due to a variance between the norms of the public and politicians with regard to national and international security on the one hand and the distribution of political authority on the other. Many parliamentarians and large sections of the public in Europe and North America still believe that security policy is and should remain at the core of the state and that governments are, therefore, responsible for ensuring the transparency of private military operations at home and abroad.^[3]

         A similar argument can be advanced with regard to the control and accountability of private security companies which has widely been discussed in the literature (Grant, 1998: 2; Howe, 1998a; Zarate, 1998: 146). Again there seems to be a mismatch between the shift from government to governance in one dimension, namely the decision-making process, but not in others. At the heart of this shift has been the increasing involvement of private security companies in the making of foreign and security policy through either the sub-contracting of defense functions by states in Europe and North America or the export of security services to state and non-state actors abroad. Private security companies are able to influence not only the foreign and security policies of their host countries, but also of other nations, international organizations and non-governmental actors. The accountability of national governments for security policy which has been the guiding principle during the Cold War era in Europe and North America is thus compromised. In place of governmental accountability to the general public through democratic decision-making procedures and parliamentary scrutiny steps governance with its responsibility to shareholders and customers.

         The problematic nature of this shift seems again to lie in the observation that, in security, the norms held by politicians and electorates with regard to accountability have not changed to the same degree. Security is still widely believed to be a responsibility of governments rather than private actors. However, since the growth of the private security industry has been a relatively recent development, political structures have not yet been adapted to ensuring the transparency and control of these actors through national governments. In particular, European governments have so far failed to set up regulatory regimes which could reassert state control over the actions of transnational private security companies.

         While the questions of transparency, control and accountability are frequently raised in the literature about the private security industry, the lack of coordination among the increasing number of public and private security actors, the differentiation of security policies and the uneven provision of security which have also been a result of the transformation from government to governance in Europe and North America have so far been under-examined.

         The first of these problems can directly be attributed to the growing number and diversity of security actors in terms of their geographical basis, their functional specialization and their resources as part of the development from government to governance. As has been argued above, today security actors operate within a complex network of large and small, public and private security agencies which include government agencies, international organizations and non-governmental organizations. The increased need for coordination which results from this fragmentation of security functions within the transatlantic community is well documented. In particular, the recent interventions in the former Yugoslavia and Afghanistan have illustrated the difficulties which arise from an insufficient exchange of information and lack of collaboration between the multiple actors engaged in these countries. Indicative of the problem has been the targeting and destruction of a Red Cross warehouse near Kabul by the US air force during its continuing intervention in Afghanistan.^[4]

         The second problem concerns the growing multiplicity of security policies due to the shift from government to governance. It is closely linked to the belief that the diverse interests of different public and private actors are better served by market forces than by centralized government institutions. However, the differentiated provision of security at the national and international levels also facilitates the implementation of different security interests. In national security, it has led to the cut-down of general security provision in favor of specialized services, such as the private policing of shopping malls, the privatization of prison services and the patrolling of neighborhoods. In international security, it has taken the form of private security services for non-governmental organizations and international organizations where states have been reluctant to intervene, such as in Rwanda. However, while private security companies might enhance the independence of non-governmental organizations from state security and their scope for autonomous intervention, the divergent and sometimes conflicting policy approaches adopted by public and private security actors can also lead to counterproductive results which endanger not only the helpers, but also those to whom help is provided. In the former Yugoslavia, for instance, the divergent policies of governments, international organizations and charities seriously complicated the situation. In particular, the decision to implement NATO air strikes in 1995 contributed to aid workers and peacekeepers being used as human shields to protect Serb military installations from the attacks.^[5]

         Lastly, the shift from government to governance suggests unresolved problems concerning the uneven provision of security within Europe and North America. In particular, it raises the question whether governments in the region are willing to accept the weakening of alliance structures which is likely to accompany it. With the cutbacks of direct security assistance by Western industrialized nations, international organizations, non-governmental actors and Central and East European countries increasingly rely on private security companies for armaments procurement and military training. As has been argued above, this could loosen the ties which bind the transatlantic security community and foster differences in security governance. The consequences of this trend could range from decreased interoperability between European and American militaries, the abandonment of the collective defense principle within the Alliance and growing dependence of smaller countries on funds from private or foreign sources.

         Some of these problems associated with the use of private security companies in governance have already become apparent in Croatia as well as among the new and prospective members of NATO. The training of the new Croatian army by the American private security company MRPI was, for instance, funded by a number of Muslim countries including Brunei, Kuwait, Malaysia, Saudi Arabia and the United Arab Emirates (Mandel, 2000), suggesting that through the emergence of governance, religious differences might undermine the broadening of the security community within the transatlantic region. Problems of interoperability and the integration of the Alliance military might further be suggested by the observation that a number of East European states, such as Hungary, Slovakia, the Czech Republic and Romania, have been encouraged to hire private security companies for the training of their armies due to limitations in direct military assistance by their NATO partners.^[6]

        

TOWARD THE REGULATION OF PRIVATE SECURITY COMPANIES

 

The preceding analysis appears to imply two ways of resolving the problems with the growing role of private security companies in Europe and North America: the return to governmental arrangements which concur with the normative beliefs prevalent in security or the unreserved adoption of governance principles and structures. However, already a cursory examination of the literature on governance reveals that despite the growing acceptance displayed toward the fragmentation of political authority, most countries in the transatlantic community are characterized neither by government nor governance in their ideal-type definition. Although there has been a noticeable shift toward governance, many states seek to temper market forces through regulation and management. This section examines how these two mechanisms can be applied to security and the increasing role of private security companies in the transatlantic community. In order to do so, the section first examines the current state of national and international legislation concerning mercenaries and private security companies. It then proceeds to discuss the options for regulation analyzed in the literature on private security companies. Finally, this section proposes a new regulatory framework based on the experience with governance arrangements in other issue areas.          In security, the trend toward replacing direct governmental control with indirect regulatory tools has so far most progressed with regards to the armaments industry and the export of goods with civil and military applications (dual-use). All North American and European countries have laws which stipulate the conditions for the export of dual-use goods. Furthermore, several multilateral regimes exist, such as the Wassenaar Arrangement, the Australia Group, the Missile Technology Control Regime, the Nuclear Suppliers Group and the Zangger Committee, which contribute to the regulation of arms dn dual-use exports at the international level (Lundbo, 1997; Bauer and Eavis, 1992).

         Conversely, within the transatlantic community only the United States has so far comprehensive legislation which regulates the export of military services by private security companies. One reason for this discrepancy seems to be that the shift from government to governance in the armaments and dual-use industry already proceeded in the 1980s and, hence, under the conditions of the Cold War. At the time governments were careful to ensure that military and dual-use capabilities were only exported to a limited range of allied states in order to prevent the transfer of weapons to the Soviet Union and other members of the Warsaw Treaty Organization. The accelerated growth of private security companies, on the other hand, has been a development of the post-Cold War era when there were fewer concerns that the military capabilities of private security companies would be abused by non-allied states.

         Indeed, the likelihood that a private security company will be employed to attack a country in Europe or North America seems rather remote. However, the preceding section has suggested that even though Western industrialized states are little affected by many of the direct dangers that have been linked to private security companies, they still face a number of normative, political and practical problems which have so far been unresolved. In particular, the above has highlighted the need for a regulation of the industry in order to ensure transparency, control and public accountability.

         So far the amount of regulation concerning private security companies in the transatlantic community has been limited. A number of European and North American states have legislation which prohibits or controls the recruitment of mercenaries. However, in many countries these laws are outdated, inconsistent and rarely enforced (Nossal, 2001: 465; Taulbee, 2000: 440; Zarate, 1998: 138). Furthermore, private security companies are not covered by the legislation and no European country has so far institutionalized general controls for the export of security services. At the international level, the regulation of mercenaries and private security companies is equally patchy. There have been attempts to outlaw mercenary activity, notably through the International Convention against the Recruitment, Use, Financing and Training of Mercenaries which was adopted by the UN General Assembly in 1989 and finally came into force on 20 October 2001.^[7] Yet, the convention, too, excludes the services of private security companies and no attempt has been made to create an international regime for their regulation.

         In addition, existing national and international regulations concerning mercenary companies have been found insufficient to address the problems which have been raised above. In particular the debate has focused on the problematic nature of the definitions of mercenaries and mercenary activity used within national and international legislation (Nossal, 2001: 468-472). Not only does most of the legislation not take private security actors in account, it also excludes most actors which would commonly be deemed to be mercenaries. The definition of mercenaries used by the UN International Convention is particularly controversial because it is based on the subjective motive of the individual engaging in mercenary activity, i.e., private gain and is practically impossible to enforce. It is for this reason that many European countries, such as the United Kingdom, have not endorsed the convention (FCO, 2002: 22).

         Unfortunately, the dominant focus on mercenaries and whether they can, or indeed should, be prohibited has distracted from the possibility of regulating private security companies. Moreover, it has shaped the discussion in such a way that any form of control, including regulation, is often perceived as impossible or too costly (FCO, 2002: 22; Nossal, 2001: 472; Kassebaum: 2000: 589f; Herbst, 1999: 120). Even in the United States, which stipulates controls for the transfer of private security services in its International Traffic in Arms Regulations implemented by the Department of State’s Office of Defense Trade Controls concerns have been raised about the effectivity of the law in ensuring the transparency, control and accountability of private security companies (Grant, 1998). 

         Nevertheless, a number of propositions have been made with regard to the possible regulation of private security companies (Zarate, 1998; Herbst, 1999). The latest in a series of such analyses, has been the U.K. Green Paper Private Military Companies: Options for Regulation which was published by the British Foreign Office in February 2002. As typical for such enterprises, the Green Paper lists a variety of regulatory options, its advantages and disadvantages (FCO, 2002: 22-26). Specifically, the Green Paper and other studies examine four policy options: (1) a national and international ban on mercenary activity, (2) national regulation of private security exports, (3) an international regime on private security companies and (4) the self-regulation of the industry (FCO, 2002; Nossal, 2001; Zarate, 1998; Arnold, 1999).

         The possibilities for an international ban on mercenary and private military activity is the primary mechanism for controlling private military force discussed in the literature. However, as indicated above, the status of the current international law and the problem of agreeing on a practicable definition of mercenaries appear to confirm the futility of this approach. Some authors argue that the advantages of using private security companies, such as cost-efficiency and rapid deployment, are considerable for Western industrialized nations and conclude that governments will, therefore, be unwilling to prohibit private security services (Nossal, 2001: 472). The regulation of private security companies through registration and the licensing of exports seems more likely and supportable. Yet, if restricted to national level regulation, private security companies might evade these efforts to control their activities by moving their bases offshore. Consequently, it is often concluded that an international regime for the regulation of private security firms would be the only effective solution. An international regime is also the least likely. First, it would be difficult to reach an agreement about which type of companies and services should be regulated. Second, the regulation would have to be implemented by national governments, thereby, raising questions of monitoring, national security and national sovereignty. Third, the enforcement of an international regime would incur considerable cost, in particular due to the necessary international cooperation required. A voluntary regime for the control of permissible private security activities would be the least costly for governments and would probably be supported by the industry which frequently claims high individual standards concerning human rights or the self-limitation to governmental customers. The level of control and accountability achieved by self-regulation is, on the other hand, questionable.

         A governance perspective challenges this overwhelmingly negative assessment of the prospects for a regulation of private security companies. It shows that governments in Europe and North America have developed a range of regulatory mechanisms to increase transparency, public oversight and accountability in the governance of security as well as other policy sectors. Moreover, since Western industrialized countries in most cases provide the bases and the main customers of private security companies, they are likely to have a strong impact on the international involvement of these firms beyond the region.

         Specifically, the regulation of dual-use exports in Europe and North America appears to provide a suitable model for the control of transnational private security companies. The similarities between the arguments concerning the regulation of dual-use and private security exports are considerable. Notably, the difference between armaments exports and dual-use transfers appears to mirror that between mercenaries and private security companies. Moreover, like the services of private security companies, the potential for abusing dual-use goods has only recently been recognized. Most modern national, regional and international dual-use control regimes have been the result of a number of export scandals in the early 1990s (Wulf, 1991: 83; Hantke, 1992: 257). Today, all members of the transatlantic community require government licenses for the export of certain goods or to specific countries which are considered a danger to national security. Within the European Union, efforts have been made to coordinate these regulations and to proceed toward a common European regime for dual-use controls (Bauer and Eavis, 1992; Krahmann, 2002). These measures are complemented by a range of multilateral conventions and regimes within the transatlantic community and beyond.

         As characteristic for governance, the regulation of dual-use goods is varied and includes multiple levels. At none of these levels does control approach the degree being achieved by government. Moreover, as with private security companies, differences between national export controls have raised in the early 1990s the fear of companies relocating to countries with less restrictive licensing laws. However, judging by available statistics these fears have not been met.^[8] Conversely, they appear to have provided an incentive for governments with strong controls to press for high international control standards. The current dual-use export regime works by providing several layers of controls which have tended to re-enforce each other. For instance, national and European legislation within the transatlantic community have explicitly incorporated multilateral regimes, such as the Wassenaar Arrangement, the Australia Group and the Missile Technology Control Regime (Lundbo, 1997; Bauer and Eavis, 1992). Moreover, rather than weakening the pressure for a comprehensive and more effective international regime, as seems to be suggested by the literature on private security companies, national governments and regional organizations have attempted to tighten international regulation to meet their own standards.

         A critical factor in this process has been the progressive development of common dual-use export controls within the European Union. The first step toward common European dual-use export regulations was taken in December 1994 when member states agreed on an intergovernmental basis on common lists of goods and countries which should be subject to controls for all exports outside the European Union. The aim of the regulation was to abolish controls within the EU and to harmonize the export licensing requirements among the member states. However, governments retain the ability to impose stricter international controls where regarded as necessary for national security and the regulations continue to be implemented by the national agencies in the primary exporting country. The second step was taken in September 2000 when a new regulation came into force which recognized the exclusive competence of the European Community over dual-use exports under Article 133 (ex-113) EC.^[9] Under this regulation, qualified majority voting on issues relating to dual-use transfers came into force. While the voting procedure is now broadly applied to the content of the common lists of controlled dual-use goods and countries, the Council and the Commission have committed themselves to a consensus approach where national security interests are at stake.^[10]

         In addition to enhancing the public control and accountability of the EU and national governments over dual-use exports, most European countries have sought to facilitate the transparency of their exports and licensing decisions through the publication of annual arms export reports. These reports, which increasingly include dual-use goods, are not only submitted to national parliaments, but are also available to the general public.^[11] The European Union provides further general data on the arms exports of all EU member states in annual documents since 1999.^[12] Notable is that the publication of arms and dual-use export data by the EU and some governments appears to have put pressure on other European countries to follow suit. Thus, over the past decade the EU and its members have progressively increased the amount of arms and dual-use export information open to the public.

         Taking the case of dual-use controls as an example for security governance in the transatlantic community, the mechanisms for a regulation of private security companies discussed above appear less futile. Crucially, from a governance perspective national and international regulations are not alternative solutions, but separate elements which can be combined within a comprehensive framework of multilevel governance. At the lowest level within this framework, private security companies could be encouraged to establish an international common code of conduct which will be self-enforced and might take the form of a list of ‘approved’ companies^[13] that voluntarily subscribe to its principles. The second layer of governance would be provided by national governments which would require the registration of private security companies and licence the export of certain sensitive services and to particular destinations. Since similar controls are already enforced with regard to armaments and dual-use goods, the establishment of such procedures should be relatively easy since the necessary agencies and personnel are already in place. In Europe, these national controls could then be complemented by common European regulations, again following the procedures established for dual-use goods. Within the transatlantic community, cooperation would be eased by the fact that the United States has already institutionalized export regulations for private security companies. Indeed, it would seem possible to formally link the European and American control regimes through an international convention similar to the US-EU Declaration on Responsibility in Arms Exports of December 2000.^[14]

         The financial and political cost of such a multilevel governance regime for the regulation of private security companies would be relatively low since significant parts of this arrangement are already in place or will be voluntary. Thus, it seems practically and legally possible to amend national and European dual-use legislation to include security services. Some EU member states, such as Germany and Sweden, already control the export of services if related to dual-use transfers or military training.^[15] Since the common European regime on dual-use is constantly expanding to accommodate new technologies and, most recently, to include the transfer of technical information by electronic means, the inclusion of services seems the next logical step. The European Commission could take a leading role in this development because any national regulation of transnational private security firms, as considered by the United Kingdom, would undermine the free flow of goods and services within the EU.

         The advantages of this approach would be considerable. An amendment of the existing European dual-use regulations would eliminate the need for lengthy and costly intergovernmental negotiations over the form which the regulation of private security companies should take. Moreover, the EU and its member states could utilize already existing institutional structures for the coordination and implementation of the regime. Since in most European countries a staff of between five and ten is able to deal with all annual dual-use export licensing requests, the number of additional officials required to include security services can expected to be rather low. At the same time, common European controls would maximize the geographical scope of the regulation and prevent intra-European competitive disadvantages due to divergent national legislation. Many of the EU candidates in Central and Eastern Europe have already aligned themselves with the EU Code of Conduct on Arms Exports and the prospect of accession will encourage the adoption of similar dual-use export controls. Finally, the inclusion of private security services into the European licensing framework would create global pressure for compliance among private security companies which seek to contracts from countries in Europe and North America, from non-governmental organizations hosted by these countries, or from international organizations, such as the EU, NATO and the OSCE.

         However, while such regulation would increase the transparency, control and accountability of private security companies, it would not resolve the other problems of security governance identified in the preceding section. Additional institutions would be needed to deal with the existing lack of coordination among public and private security actors and the differentiation of security interests and provision.

         In recent years, a conscious effort has been made to develop and improve the linkages between governments and international organizations and among various international bodies engaged in transatlantic security, such as the OSCE, the EU and NATO. However, private security companies have so far been integrated to an insufficient degree. Most attempts to increase cooperation between public and private security actors have focused on ad hoc exchanges between governments and non-governmental organizations during international operations, such as in Bosnia. But, although the need for coordination in the former Yugoslavia has triggered a more fundamental review of ‘civil-military cooperation’ (CIMIC) within NATO, the incorporation of private security companies into decision-making processes is not discussed (Bellamy, 2001; NATO, 2000).

         Moreover, it is questionable whether these temporary and informal linkages will be sufficient to enable coordination between an ever growing number of public and private security actors. Here, the study of governance can be employed to identify possible alternatives and their potential. One option would be the formal accrediting of private security companies and non-governmental organizations with governments and international organizations. Another could be the creation of standing consulting groups with the right to submit proposals for action and advice to the relevant foreign and security policy councils of NATO and the EU. The OSCE which decided in its Helsinki Document in 1992 and by agreement of the Permanent Council to enhance cooperation with non-governmental organizations could serve here as an example.^[16] Finally, the regulation and incorporation of private security actors into the emerging system of security governance in the transatlantic community could be combined through the creation of international associations for private security companies and non-governmental organizations. By granting these associations access to public decision-making processes, governments and international organizations could simplify the cooperation with private security actors while at the same time creating incentives for private security companies to comply with the standards and regulations to be enforced by these associations.

 

 

CONCLUSION

 

The preceding sections have sought to illustrate how the concept of security governance might be employed to understand and respond to the challenges presented by the increasing role of private security companies in Europe and North America. In doing so, this paper has attempted to demonstrate that the evolution of the private security industry within the transatlantic community is analytically distinct from the use of mercenary firms in Africa. Not only did private security firms in Europe and North America emerge in response to the specific needs of governments, international organizations and non-governmental actors in the region, they also can be controlled in different ways.

         Nevertheless, the analysis of the development and possible regulation of private security companies in Europe and North America has a broader relevance. Thus, is seems likely that a regional regulatory framework would have a direct impact on the control, accountability and transparency of private security companies in the Third World and elsewhere. Specifically, the export of private security services from Europe and North America or security services contracted by governments, non-governmental organizations and international organizations from the region would be subject to the legal, normative and practical constraints imposed in these countries.

         The concept of security governance can help in various ways to understand the problems with and the regulation of private security industry in Europe and North America. First, it puts the proliferation of private security firms in Western industrialized countries into a theoretical context. This context is very different from that of failed statehood which has contributed to the use of private military companies in Africa. In Europe and North America, the growth of the private security industry is part of a general shift from government to governance in which policy sectors that had been centralized during the past century are partly re-privatized. The new role of private security companies in the transatlantic community seems thus to a larger degree comparable with other public policy sectors, such as policing, transport and health, than with that of similar companies in developing countries.

         Second, the analysis of security governance suggests that some of the problems which have been associated with the use of private security companies by public and private actors are well-known in the study of governance at the subnational, national and EU levels. Specifically, the question of transparency, control and accountability in governance arrangements have been well researched. In addition, the proposed framework for the analysis suggests further problems which have so far been under-examined by the literature on private security companies, such as the increased need for coordination among public and private actors and the development of policy making and implementation procedures which utilize the growing expertise of private security actors.

         Finally, the concept of governance provides a more positive assessment of the possibilities for regulating private security companies within the transatlantic community. This approach moves beyond the attempts and difficulties of an international ban on mercenary activity. By inviting a comparison with other governance arrangements in Europe and North America, it suggests that the loss of governmental control which has been associated with these systems can be compensated for by multilevel governance structures. In these structures, regulations are implemented at several levels and work by complementing each other. Governance analysis illustrates that even where governmental control is challenged by a globalizing market, new forms of regulation by private, regional and global actors are developing.

         The aim of this paper has been to raise these issues and to outline some of the arguments which will be examined as part of a larger research project over the coming year. Obviously, this paper leaves many questions open. In particular, more detailed research will be required on which regulatory and management mechanisms have proved useful in governance arrangements and whether and how these might be applicable to the integration of private security companies into security governance.

 

Notes