December 22, 2005

US lawsuit could dent global war-contractor boom

By Bernd Debusmann

WASHINGTON (Reuters) - An unprecedented lawsuit stemming
from the gruesome killing of four American civilians in Iraq is
slowly making its way through the U.S. legal system, closely
watched by companies estimated to field up to 100,000
contractors alongside the U.S. military.

Lawyers and military experts say the case highlights legal
gray zones, a lack of regulation and little oversight of a
booming global industry believed to bring in more than $150
billion annually. Civilian military contractors now perform
scores of functions once restricted to regular troops, and a
trend toward "privatizing war" has been accelerating steadily.

The suit was brought by the families of four civilian
contractors shot last year by Iraqi insurgents, who burned
their bodies and hung the charred remains from a bridge across
the Euphrates river in the city of Falluja.

The four -- Stephen Helveston, Mike Teague, Jerko Zovko and
Wesley Batalona -- worked for Blackwater Security Consulting
LLC, one of the companies fielding armed civilians in Iraq
under contract with the Pentagon. All four had military
experience and signed contracts assuming all risks and waiving
their right to sue.

The suit against Blackwater says the company broke explicit
terms of its contract with the men by sending them to escort a
food convoy in unarmored cars, without heavy machine guns,
proper briefings, advance notice or pre-mission reconnaissance,
in teams that were understaffed and lacked even a map.

"Sending four men out on the security mission instead of
the required six essentially took away the team's ability to
defend itself," the suit says. "Not having one driver, one
navigator and a rear-gunner with a 180 degree field of fire,
the team never had a chance...the insurgents were literally
able to walk up behind the vehicles and open fire upon them at
close range."

Alleging wrongful death and fraud, the suit is the first of
its kind in the U.S. The way it is resolved, experts say, could
have major implications for the future of military contracting
and result in more rules and regulations.

Blackwater, which declines comment on the suit, filed
motions this week to have the case moved to a federal court
from a state court in North Carolina where it originated in
January. Blackwater's headquarters are in Moycock, North

Marc Miles, an attorney for the families, said he expected
the suit to come to trial next year.


"This is an important case," said Jeffrey Addicott,
director of the Center for Terrorism Law at St. Mary's
University in San Antonio. "While the volume of contractors
pouring into Iraq has been enormous, there has been very little
effort at regulation or standardizing training. It's the Wild
West out there."

Addicott, a retired Special Forces officer, estimates that
the number of civilian contractors in Iraq surpassed 100,000
this year. "That takes into account not only people
specifically hired to provide armed security, but also those in
transportation, construction, food services, housing, laundry
etc. Americans and non-Americans."

Other experts agree with that estimate.

Despite the large sums of money and large numbers of
civilians paid by the Department of Defense, the Pentagon does
not have a precise tally of either. The estimate of contractors
it gives - around 20,000 - dates back to a remark by Defense
Secretary Donald Rumsfeld almost two years ago.

Such estimates cover what is known as "arms-bearing
contractors" who work for firms including Blackwater, Triple
Canopy, Aegis Defense Services and Military Professional
Resources Incorporated (MPRI) - all run by retired military

There are about 173,000 U.S. and allied troops now in Iraq,
led by the United States with 155,000.


U.S. armed forces can no longer function without civilian
contractors, neither in combat nor in the post-combat stability
and reconstruction operations that the Pentagon last month
declared a "core mission," experts say.

According to Peter Singer of Washington's Brookings
Institution, private companies that sell warfare-linked
services to governments represent "the corporate evolution of
the age-old profession of mercenaries."

The firms involved bristle at the term "mercenary," which
evokes images of white guns-for-hire working for African
dictators and staging coups and countercoups on behalf of the
highest bidder.

Civilian contractors say they provide protection and
support personnel rather than war fighters, but the line is
often thin. Some of the most advanced weapons systems used in
combat in Afghanistan and Iraq were manned by civilians.

But while "mercenary" has been replaced by "private
military firms" or "private military companies" - PMFs or PMCs
-- there is no doubt that the driving force is money.

PMFs have operated in more than 100 countries. In 1990,
revenues from their activities were estimated at around $55
billion, a sum thought to have tripled by this year.


The government's rationale for outsourcing military
services is that it saves cost and increases flexibility -
similar to corporations which cut their work forces then
outsource functions to contractors working without health or
pension benefits.

There are no recent studies, however, on the long-term cost
benefit of replacing regular troops with contractors.

The downsizing of the U.S. armed forces has been
substantial and relentless - from 2.1 million when the Berlin
Wall came down in 1989 and the Cold War ended to 1.4 million
today. More cuts are under consideration.

One tricky consequence is the free-market competition
between the military and the private sector for people who have
been trained - often at considerable cost - by the military.
PMFs pay up to 10 times more than the military for very similar

Special Forces expertise is in particular demand, and
operators can make more than $200,000 a year, a good part of it
not subject to U.S. income taxes.

To counter the lure of private contractors, the army has
begun to offer re-enlistment bonuses of $150,000 for special
forces soldiers who agree to stay on an additional six years.

(IRAQ-USA-CONTRACTORS, editing by Randall Mikkelsen,
e-mail:[email protected])