The Privatisation of Intelligence Services and Military Activities

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CIA headquarters in the United States

On April 30, 2019, Reuters revealed that Blackwater’s founder Erik Prince has been preparing since several months a possible intervention of 5,000 mercenaries to support opposition leader Juan Guaido in the Venezuelan crisis.

Founded in 1997, and officially renamed Academi in 2011, Blackwater is a private military and intelligence company, that has worked especially during the war in Iraq and the conflict in Afghanistan. The company in particular symbolizes the privatisation of military activities in the United States that began in the late 1990s under the leadership of the Defence Secretary Dick Cheney. The rumours about the hypothetical intervention of Blackwater in Venezuela make us question the realities of intelligence and military activities externalisation today.

Privatisation refers to the outsourcing, by a sovereign State, of intelligence and military activities for the benefit of the private sector. This is done mainly in the form of public contracts with private military companies (PMCs) and regulated private security companies, as it is the case with Blackwater which is a contractor of the United States Government.

On the other hand, it also involves the production of intelligence by private actors on behalf of corporations, especially multinational ones. It includes also site safety, and protection of important personalities even if intelligence constitues the main activity of private agencies. In 2006 for instance Greenpeace was attacked by private agencies on behalf of EDF group in France, allowing the most important French electricity supplier to retrieve nearly 1,400 confidential documents via hacking, as it was revealed by newspaper Slate.

Since the end of the Cold War there has been a sharp rise in privatisation of intelligence activities, with the State reorienting its activities. In the United States Presidents Clinton and Bush have followed this logic and therefore helped private companies’ strengthening. Thus in 2007, $47 billion were spent by U.S. intelligence agencies for private contracts, including information technology provision, and operations in Afghanistan. This is in that respect that the CIA used Blackwater to hunt Al Qaida terrorists, as the New York Times revealed in 2009.

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Blackwater corporate mercenaries during a military intervention

The American experience is the most relevant one. Indeed in the United States the intelligence services community has been characterized by a massive recourse to outsourcing following the post 9/11 anti-terrorist policies. In 2010, for instance, 1,931 private companies worked for the American intelligence community. In Europe the approach is quite different. In France for example there is still a continuous resistance, some will say a “Jacobin” attitude, towards private intelligence. Thus, the 2015 Intelligence Law recalled that intelligence falls within the “exclusive jurisdiction of the French State”.  In the same vein, in Italy the private intelligence sector is barely developed with a few medium-sized players and a lack of “intelligence culture” and legal framework (see also Aleph Italian article “Contractor: professionisti o mercenari? La situazione italiana” by D. Spinelli for a zoom on the Italian situation). On the other hand the United Kingdom knows a real “boom” in private intelligence activities, as it is evidenced by the installation of many agencies in the district of Mayfair, like Arcanum Global Intelligence, involved in the struggle between a Kazakh oligarch and President Nazarbayev.

Privatisation of intelligence also refers to the development of competitive intelligence. Indeed, holding strategic information is a key success factor in a globalised economy. In the era of multinational corporations, competitive intelligence has defensive and offensive aspects. It is used mainly for the protection of industrial, scientific and technological heritage, but also the conquest of new markets and the anticipation of changes in a context of increasing economic predation. Private players in this sector help companies but also States to get accurate knowledge of markets and to conduct due diligence processes for their targets.

European countries clearly lag behind on this field, compared to the Anglo-Saxon economies. There may be concerns about the consequences for European companies competitiveness, and there is a question mark to know if Europe can address this gap. This should push States to encourage a reorganisation of the profession, and to promote it in particular with education. The recent creation of a degree in competitive intelligence at the University of Corsica, a rural region of France, seems to be a positive sign in this “centralized” country.

Finally, one may wonder what is the rationale behind States delegation of intelligence activities to the private sector. Obviously privatisation is linked to cost optimization in a context of budget restriction. It is sufficient to look at the recent report of the French Cour des comptes (Court of Accounts) released in March 2019, pointing out the spending constraints as a source of defense and intelligence activities externalisation. Another fundamental reason is the need for Governments to benefit from specific skills and private actors technological advantage. Again France constitutes a good example. Indeed the French national security and counterintelligence services, the DGSI, has used since 2016 intelligence softwares of the American unicorn company Palantir, founded by the libertarian Peter Thiel, also shareholder of Facebook. American private companies, in particular tech giants like Facebook or Google, actually understood the potential of the Internet as a primary source for intelligence, with new important tools such as big data, cyber defense, e-reputation, and hacking for information purpose. In consequence, companies but also institutions are in a sense forced to follow the American dynamics.

All the issues highlighted obviously raise fundamental questions, particularly concerning sovereignty. The risks associated with intelligence privatisation are considerable for sovereign States: irreversibility in the outsourcing process, collusion between public and private interests, but also divergence between Administrations and technology providers, and finally exposure of the State to objectionable behaviour. Private agencies have indeed been used for illegal purposes in several cases, and Blackwater for instance was accused of having made illegal weapons exports.   On the one hand, Governments should try to maintain key competences in State agencies and perform control of private players. Yet, one could ask why the private sector would be less legitimate than States in spying. Didn’t Montesquieu say “spying would be tolerable if it could be exercised by honest people”…

(PLM)

(1)  BLACK Will, « The Privatisation of Intelligence Services and the Erosion of Security », in The Huffington Post, September 2013

(2)  BURGIS Tom, « Spies, lies and the oligarch: inside London’s booming secret industry », in Financial Times, September 2017

(3)  ROSTON Aram, « Blackwater founder’s latest sales pitch: mercenaries for Venezuela », in Reuters, April 2019

(4)  VAN PUYVELDE Damien, « Quelles leçons tirer de la privatisation du renseignement aux Etats-Unis? », in Revue internationale et stratégique, N°87, 2012

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