Sunday, June 27, 2010

Blackwater? Again? Really?

Blackwater (or Xe, as it is currently called - they changed their name to try and avoid attention after all the negative press they got from Jeremy Scahill's outstanding work on them, amongst others) recently recieved a $100 million contract for work in Afghanistan. CIA Director Panetta took to the airwaves on Sunday to defend the contract. Part of the reason why Blackwater got the contract is they presented a bid that was $26 million less than the nearest competitor. The contract is for a year, and could run up to 18 months. So...America's professional mercenary army, viewed very negatively in many parts of the world (Iraq is obviously the key sore spot, as they were banned from the country as a result of numerous incidents where they killed unarmed civilians), now gets a nice contract in Afghanistan. Raise your hand if you think this will go well? Anybody? Anybody?

So, how the hell did Blackwater even get this contract? Shouldn't they be such a toxic company that should be avoided at all costs? Well...maybe. Part of the issue is this issue of massive military overstretch. The U.S. has, as Chalmers Johnson calls it, an empire of military bases around the globe...over 700 on record. We're currently engaged in two major theaters of conflict, Iraq and Afghanistan, neither of which really have the troop level needed to win - that isn't just a military strategy problem, though, as part of the reason is the populace's resistance to the not-quite-benign American presence in their land.

Fact is, if we want to keep up this level of committment, we need a lot more troops. A private firm, with lots of connections to government officials (this was definitely true during the Bush administration, when Blackwater really got established), and tons of potential foot soldiers, out of the reach of military rules of law, worked out well. We got the troops we wanted, those soldier deaths weren't treated the same (the number of deaths in Iraq is definitely lower because contractors killed don't get counted in the troop number, making the costs of the war seem not quite as bad), everybody is happy.

Well, maybe not U.S. taxpayers, who help fund this mercenary group that has committed multiple acts of murder in our name, Iraqis who have been subject to Blackwater's wrath, U.S. troops who see Blackwater "contractors" operate beyond their rules of law (not to mention that they get much better pay and much better equipment, while the U.S. troops got to deal with Iraqi anger at Blackwater, directed at them [its not all that easy to differentiate between American troops and Blackwater mercenaries for an Iraqi]).

So, there's a "need" for Blackwater because of our level of military overstretch. Now, Blackwater has made a killing (irony noted) over the years with contracts. They are the private contractor of choice of the U.S. State Department. They get 90% of their money from government contract, two-thirds of which are no-bid contracts. It was the 12th largest contractor in Iraq, pulling in almost $500 million between 2004 and 2006. They have what you might call a comparative advantage over their adversaries. Given the advantage that they enjoy, they probably have the luxury of bidding less than others - they want the contract, and enjoy economies of scale in a sense...the big dog in the neighborhood can afford to eat a smaller bone every now and then, whereas the smaller ones can't.

As a result, Blackwater gets this contract. Despite its horrific track record in Iraq. Despite the fact that it is openly run by religious fundamentalists. Despite the whole potential fraud issue - former employees accused the company of defrauding the federal government through phony billing, using this to pay for prostitutes, alcohol-filled parties, and spa trips. Despite the murder allegations against Erik Prince, the founder of the organization. Blackwater got another contract. It seems kind of preposterous, but it is a consequence of a problematic level of military overstretch and an economic advantage the company holds, a result of getting so many no-bid contracts over the years. And it probably won't end well...yet I somehow suspect they'll get more work.

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