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Mainstream, VOL LII, No 42, October 11, 2014

Corporatising War and Conflict: The Military-Industrial Complex in USA and India

Saturday 11 October 2014

by Emma-Jayne Orser-Kooistra

One facet of democracy is the power of citizens to control what a state can and cannot do, both domestically and abroad. The corporatisation of war and conflict severely undermines democracy and state sovereignty and puts power in the hands of multinational corporations (MNCs) that have little accounta-bility for their actions. MNCs that work within the private security sector are known as Private Military and Security Companies (PMSCs). For the purpose of this article, a PMSC is defined as “any firm or individual that provides international services traditionally provided by national militaries.” [Ref. 1]

PMSCs have significant power and influence at the highest levels of governments, which results in multi-million dollar contracts paid for from a country’s military budget. The corporatisation of war and conflict is a result of the military-industrial complex (MIC) that exists in all countries. However, the present focus is on the MICs in the USA and India.

Private Military and Security Companies

The nature of PMSCs allows them to escape the typical rules and constraints of military engagement. They are bound to their private contracts and not to the state. They are driven by money, not duty. The United Nations defines a mercenary as a person under “pay-for-performance contracts for military services between individuals and state governments” [Ref. 2], and PMSCs may be considered as modern-day mercenaries.

PMSCs are corporate entities or persons in law, essentially unaccountable and intrans-parent to the public or the government, and exempt from international conventions regar-ding mercenaries and mercenary activity. Bound to their contracts, not to the state, PMSCs easily circumvent accepted rules of military engagement. Also, since individuals working in PMSCs do not work for the state, errant full-time employees or persons employed on contract in PMSCs are not liable to administrative or disciplinary action to which errant soldiers in national militaries are liable.

The PMSCs’ legitimacy depends on their public image, and so they avoid situations that might tarnish their corporate reputation and image. In fact, the majority of PMSC activity is the provision of logistical support to the US military, and coordination of reconstruction efforts. However, when PMSCs enter combat and use lethal force, they become mercenaries. [Ref. 2] Academi, formerly known as Blackwater, faced scrutiny in 2007 when its private contractors killed 17 and wounded 20 unarmed Iraqi citizens in Nisour Square. [Ref. 2]

Some PMSCs are careful about choosing their clients, so as to avoid situations where armed combat and lethal force may be used. [Ref. 2] This is why they tend to only take contracts with governments or recognise non-govern-mental organisations. [Ref. 2] According to Brooks, “companies fear retribution by their home governments for illegal or unethical operations, and recognise that a bad corporate reputation could result in the loss of future contracts to their competitors.” [Ref. 1] The legitimacy of the PMSCs depends on the image they project and the clients they take on.

The rapid growth of PMSCs is a result of the MIC, which consists of the nexus between elected officials, the military, and the PMSCs. [Ref. 3] Following the deployment of embedded journalists in military attack formations by USA in Iraq, sections of the media have joined the MIC. US President Eisenhower warned of the potential effects of the MIC in his farewell speech in 1961 [Ref. 4], yet his warning was not heeded.

Corporate Ventures

The private security sector is one of the fastest growing sectors in the US economy with an expected growth rate of 12 per cent in 2013. [Ref. 5] The USA’s MIC grew significantly in the post-Cold War period. [Ref. 2] American troops were withdrawn from their posts in Europe, Africa, and the Middle East due to budget cuts, and the liberalisation and privatisation economic policies of the Reagan era led to an increase in security contracts with PMSCs. [Ref. 2] It was estimated that contracting military and security services would be cheaper than paying the salaries and pensions of the regular military, and would also relieve the US Administration of the negative political fall-out of injured and dead US soldiers coming home.

The MIC grew to a new level in the post-September 11 world, and Turley notes: “the new military-industrial complex is fuelled by a conveniently ambiguous and unseen enemy: the terrorist.” [Ref. 5] President George W. Bush launched his infamous “Global War on Terror” (GWOT) shortly after the events of September 11 to combat this new unseen enemy. The number of private contracts grew exponentially as the Administration became increasingly dependent on PMSCs rather than the US military, to carry out war-time services and operations in Iraq. It is estimated that by 2007, 70 per cent of the USA’s intelligence budget was spent on contracts with PMSCs. [Ref. 2] In total, trillions of dollars have been spent on the war in Iraq [Ref. 6], and a large proportion of that went to PMSCs.

The amount of money being pumped into the MIC can be attributed to the links between them and the US Government officials. The most famous and frequently cited example of this is former US Vice-President Dick Cheney and his ties to Halliburton, a publicly listed MNC with substantial links to the energy and construction sectors. Cheney was the CEO of Halliburton before becoming the Vice-President in the G.W. Bush Administration. According to the World Policy Institute, Halliburton’s con-tracts in Iraq multiplied nine-fold between 2001 and 2003, from $ 400 million to $ 3.9 billion. In 2004, 80 per cent of their election contributions went to the Republican Party to which Bush and Cheney belonged. [Ref. 7]

Halliburton is only one of many PMSCs that have benefited from the Iraq war and the GWOT. Contracts to the top ten PMSCs nearly doubled from $ 46 billion to $ 80 billion between 2001 and 2003. [Ref. 7] Furthermore, according to the World Policy Institute, “When the Bush Administration first took office, it appointed 32 executives, paid consultants, or major shareholders of weapons contractors to top policymaking positions in the Pentagon, the National Security Council, the Department of Energy, and the State Department.” [Ref. 7] It is a vicious cycle; the PMSCs contribute money to election campaigns in order to influence who will be appointed to important government positions, and thereby exert leverage in decision-making, to ensure more lucrative contracts in return. This completely undermines democracy.

As seen above, the private military, security, and weapons industries grew remarkably under the Bush Administration and caused a burst of economic growth. However, with the end of the Iraq war, and the lack of wars in general, economic growth in the US has slowed. According to Cowen, “the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely”. [Ref. 8]

The so-called “greater peacefulness” means that there is a lower demand for the services provided by the security sector, and there is no urgency to develop weapons and technology for the war effort. Keynesian economics argues that war increases government spending and creates jobs. [Ref. 8] This was seen in the mid-20th century when World War II brought the USA out of the Great Depression and created jobs for countless people. While the Iraq war certainly increased government spending, it was only the security sector that saw tremendous growth, and it was the PMSCs themselves which reaped the benefits, not the general public. PMSCs benefit those with the political, legal, and monetary power to access their services. [Ref. 9]

Military-Industrial Complexes

Economic growth due to armed conflict does not equally benefit everyone. Relying upon armed conflict to boost economic growth is ethically questionable. The way of war has changed since World War II. Weapons today are more destructive and the cost of war is higher. [Ref. 8] The MIC keeps the US in this perpetual war-time mentality [Ref. 6], and as long as war continues to benefit the PMSCs and their political counterparts, this is unlikely to change. As Petras notes, “no peaceful economic activity can match the immense profits enjoyed by the military-industrial complex in war.” [Ref. 6]

The USA is not the only country with a MIC. Almost every country has a MIC, even though most research has been conducted on the USA’s MIC. The existence of a MIC in India has led the USA to seek strategic ties with India after September 11. US President G.W. Bush met with Indian Prime Minister Manmohan Singh at a summit in 2005. [Ref. 10] The purpose of the summit was to assert their “common values and interests”, and the “US-India Global Democracy Initiative” was announced. [Ref. 10] One of the key pillars of the Bush doctrine was democratisation, and having an ally in South Asia was a strategic move because India borders China, which is a perceived threat to the USA both militarily and economically. Indeed, Bush confirmed at the summit that “common security objectives would make India a diplomatic and strategic partner”. [Ref. 10]

Thus the USA and India not only became strategic partners, but partners in the arms trade as well. Unlike in USA, defence production in India is done by government companies partly due to the small number of private companies with the required skill and expertise required for the industry, and partly because of policy, which is now changing. [Ref. 11]

According to Donnelly and Wisner, India was interested in forming military contacts with the US, specifically for “access to US technology and markets so as to prepare its military in the face of shifting threats and challenges”. [Ref. 10] India has now become the world’s largest arms importer, with defence imports totalling $ 15 billion per year and expected growth to $ 50 billion by 2015. [Ref. 11]

Seven per cent of India’s imports come from the USA. [Ref. 12] Lockheed-Martin and Boeing were the first US MNCs to be granted permission by the US Administration to sell to India. [Ref. 10] However, with India’s increasing defence budget, domestic private sector companies have expressed interest in entering the defence industry. [Ref. 11] $ 15 billion is being annually spent on defence in India while most of its 1.3 billion population lives on less than $ 1 per day. Yet the Indian Government, influenced by the MIC, makes national security the priority rather than human security for its citizens.

India-USA Strategic Ties

The military relationship between India and the USA goes even deeper. India was also a source of mercenaries for the US Army during the Iraq war. Srivastava wrote in a 2004 article that “in a very discreet operation, US and British security sub-contractors are seeking out Indian ex-servicemen known for their professionalism and discipline, for deployment in Iraq”. [Ref. 13] PMSCs are exempt from international conventions regarding mercenaries due to their status as corporate entities. Therefore, individuals contracted for work by PMSCs work for the corporation and not for a State and, by precise definition, the Indian ex-servicemen who were working for PMSCs were not mercenaries.

The PMSCs, which hired Indian ex-servicemen, were contracted by the US and British govern-ments, and therefore the Indian ex-servicemen who were working for these countries legally avoided mercenary status. However, truth is that the Indian ex-servicemen working in Iraq were effectively working for the US and British governments [Ref. 13] possibly putting them-selves in violation of international conventions. The recruitment of these ex-servicemen was, according to Srivastava, “done without the knowledge of the central government in Delhi, or bodies responsible for the welfare of ex-servicemen”. [Ref. 13] Thus, by secretly recruiting ex-servicemen in India, the USA violated India’s sovereignty.

The corporatisation of war and conflict undermines democracy and state sovereignty, and puts power in the hands of PMSCs. The MIC has led to the surge of PMSCs in the economy, particularly in the USA. The post-Cold War economic policies of the Reagan Administration led to the downsizing of the military and privatization of military and security services, but the USA’s MIC entered a new era post-September 11 under the G.W. Bush Adminis-tration. The GWOT was launched and contracts with PMSCs increased dramatically. Additionally, Bush appointed numerous PMSC executives to top positions within the government. The presence of former PMSC executives in policy-making positions undermines democracy, by further empowering and reinforcing the intimate connection between elected officials, the military, and PMSCs.

The MIC, the Economy and Democracy

The MIC also has an effect on the overall economy. The increase in private contracts led to a boom in the security sector of the USA’s economy, but economic growth due to armed conflict only benefits entities within the security sector, and not the general public. As in all countries, economic growth is not equally enjoyed by all sections of society. This is also clearly seen in India’s MIC. India, however, lacks PMSCs, although some business-industrial corporations have expressed interest in entering the defence sector.

The corporatisation of war and conflict puts economic and political power into the hands of MNCs that have little or no accountability for their policies and actions. The result is that citizens, as in India and the USA, are losing their power to control what their governments do both domestically and abroad. The power and influence of the MIC grows at irreparable cost to democracy.


1. Brooks, Doug, “Messiahs or mercenaries? The future of international private military services”, International Peacekeeping, 7, no. 4 (2000): 129-144.

2. Baum, Joel A.C., and Anita M. McGahan, “The reorganisation of legitimate violence: the contested terrain of the private military and security industry during the post-cold war era”, Research in Organisational Behaviour, 33 (2013): 3-37.

3. Vombatkere, S.G., “The military-industrial complex—corporatising conflict”, Lecture at the Vivekananda Institute of Indian Studies, Mysore, June 2014.

4. Fallows, James, “The military-industrial complex”, Foreign Policy, 133 (2002): 46-48.

5. Turley, Jonathan, “Big money behind the war: the military-industrial complex”, Aljazeera, January 11, 2014, http://www.aljazeera.com/indepth/opinion/2014/01/big-money-behind-war-military-industrial-complex-20141473026736533.html

6. Petras, James, “The soaring profits of the military-industrial complex and the soaring costs of military casualties”, Global Research. June 24, 2014, http://www.globalresearch.ca/the-soaring-profits-of-the-military-industrial-complex-the-soaring-costs-of-military-casualties/5388393

7. Hartung, William D., and Michelle Ciarrocca, “Report: ties that bind: arms industry influence in the Bush administration and beyond”, World Policy Institute (October 2004), http://www.worldpolicy.org/projects/arms/reports/TiesThatBind.html

8. Cowen, Tyler, “The lack of major wars may be hurting economic growth”, The New York Times. June 13, 2014, http://www.nytimes.com/2014/06/14/upshot/the-lack-of-major-wars-may-be-hurting-economic-growth.html

9. Cockayne, James, “The global reorganisation of legitimate violence: military entrepreneurs and the private face of international and humanitarian law”, International Review of the Red Cross, 88, no. 863 (2006): 459-490.

10. Donnelly, Thomas, and Melissa Wisner, “Towards a global partnership between the US and India”, Military Technology, 30, no. 2 (2006): 16-21.

11. Ahmedullah, Mohammed, “India’s new defence procurement procedures and offsets policy”, Military Technology, 30, no. 2 (2006): 22-27.

12. Wezeman, Siemon T., and Pieter D. Wezeman, “Trends in international arms transfers, 2013”, SIPRI (March 2014):1-8. http://books.sipri.org/files/FS/SIPRIFS1403.pdf

13. Srivastava, Siddharth, “Indian soldiers lured by dollars”, Asia Times Online, April 30, 2004, http://www.atimes.com/atimes/South_Asia/FD30Df05.html

Emma-Jayne Orser-Kooistra is currently completing her Bachelor of Arts with a major in International Relations and a minor in German, at Mount Allison University in Sackville, New Brunswick, Canada. She recently attended the Mount Allison University’s Summer Studies in India programme at the Vivekananda Institute of Indian Studies, Mysore. Her research interests include defence policy, international security, and political conflict. She can be contacted at eorserkooistra@mta.ca.

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