The best source for just about everything to do with Blackwater is journalist Jeremy Scahill, a writer for The Nation and author of Blackwater: The Rise of the World’s Most Powerful Mercenary Army. Scahill has been tracking Blackwater for several years, his book is an excellent profile of what the company does and how it became successful, and he describes it’s spread around the globe as mercenaries in the hire of the United States Government.
Blackwater was founded the day after Christmas in 1996 by Erik Prince. Prince is not a typical ex-Navy Seal, as his father was a billionaire auto parts mogul and major funder to a wide array of religious right organizations that have gone on to exert major influence over the Republican party, and thus over all of us. Through his family’s political connections, Prince has long known such big players in the religious right as Gary Bauer and Chuck Colson. His older sister Betsy married Dick DeVos, heir to the Amway fortune, thus joining the families of two of the biggest funders of Republicans and the religious right not just in Michigan, but in the entire country.
Blackwater is based in rural North Carolina, not far from Norfolk VA. Prince now claims that the idea to create a company that would provide better training and facilities for military and law enforcement came to him while serving in the Navy, but the more convincing story is that his original partner, an older ex-SEAL named Al Clark, had been talking about the concept for years before he met Prince. The billionaire had the capital, but the idea appears to have originally been Clark’s. [Clark eventually left Blackwater to start his own firm, and now says little about his time at the company.]
In the early days, Blackwater mostly trained small military units and law enforcement agents. It wasn’t until after 9-11 that the company took off. Unlike many other "security" firms, Blackwater has never focused much on the private sector. For all his pronouncements about loving the free market, the company created by Prince is almost wholly a product of government payouts. Roughly 90% of Blackwater’s revenue comes from government contracts (many of them no-bid contracts). Blackwater has already received over $800 million for work in Iraq, and that’s just what we know about. Most intelligence appropriations are kept secret, so the total revenue Blackwater receives from the US Government is likely much more.
Blackwater’s industry is almost entirely unregulated. Before he left Iraq, Viceroy Paul Bremer—whom Blackwater was hired to protect—extended legal immunity to mercenary forces in Iraq [pdf]. As we’ve recently learned, Blackwater has been so reckless and unaccountable that the Iraqi government has stood up to the United States and is demanding Blackwater be expelled from Iraq. There’s little oversight exercised over Blackwater or any other contractors in Iraq. And instead of respond to calls to get tough with the mercenaries and other contractors, the Pentagon’s Inspector General, Joseph Schmitz, instead left the Pentagon and soon ended up serving as vice president and chief legal counsel at Blackwater. As Blackwater has grown, they have added major figures from the Bush administration and the military, including former head of counter-terrorism for the National Security Advisor, Cofer Black.
What works brilliantly for Blackwater is that they owe obligations to almost no one. Take their mercenaries. Unlike most corporations, Blackwater doesn’t send out recruiters finding top applicants and then spending massive amounts of money to train them and ready them for service in their corporation. No, they demand that potential employees pass their training. And Blackwater doesn’t pay to train or screen these applicants. In fact, the applicants pay $20,000 out of their own pockets to go through the Blackwater training. Many take out promissory notes to cover the cost, so if they pass and are offered a contract, much of their initial job simply pays the cost of their training.
Once someone goes to work for Blackwater, the company really doesn’t assume many more obligations. Blackwater pays mercenaries not as actual employees, but as individual private contractors. Thus, no 1040 tax form, just an 1099. The contractor is responsible for paying his or her own taxes, and Blackwater doesn’t have to pay any payroll taxes. If the contractor wants to quit while in Iraq or Bosnia or Azerbijan, fine, but they have to find their own way back home. I’m trying to find out other details, but I would be shocked if Blackwater contractors get medical insurance or other benefits when they are not working on a specific contract.
Blackwater has some capital-intensive materials, such as its weaponry, its fleet of planes and choppers, and its training facility. But it has almost completely avoided most personnel costs. It has no legacy costs like health care or pensions, because it has few employees. In fact, Blackwater is essentially a huge employment agency that is allowed by the federal government to bypass federal hiring rules or the code of military conduct. The government takes public money and gives it to for-profit entities, immunizes them against any litigation, but the private corporation provides none of the accountability we have over federal employees or the military. And not only does Blackwater owe almost no obligations to the general public, it owes almost no obligations to the people it hires and sends in to dangerous places to do dangerous work.
How did this happen? How did such an irresponsible approach to delivering public services become so lucrative and valued so highly by so many major officials in the US government and throughout the Republican elite? The first, major component was the radical privatization at the heart of Bush authoritarianism. But Blackwater specifically benefited from Erik Prince and his connections at the heart of the religious right and the other authoritarian networks intertwined with the Bush administration. Next week I’ll start to lay out those connections and how the ideology of radical privatization didn’t start with the military, but with such rightwing fetishes as "tort reform" and school vouchers.
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