LONDON (Reuters) – Private security companies are expanding operations in Afghanistan as the war there heats up, but industry experts say those that made fortunes in Iraq may find business much tougher in the new market.
An Afghan man looks at a U.S. army vehicle some 50 km (31 miles) west of Kandahar October 7, 2007. REUTERS/Goran Tomasevic
As Iraq has grown more stable, Afghanistan, where the Taliban insurgency is strong, has been a natural next-step for dozens of mainly British and U.S. firms that compete for contracts to protect military bases, escort engineers and diplomats and help train local security forces.
In Iraq the market was fairly loosely regulated and there was room for niche players as well as established operators, but Afghanistan is a more mature market with tighter regulation and no over-arching source of major contracts.
And even with the new U.S. administration making Afghanistan a focus, it is far from certain the vast security and reconstruction contracts seen in Iraq will be available again.
“The security situation in Afghanistan is deteriorating rapidly and that means more people wanting to buy security,” said Andy Bearpark, head of the British Association of Private Security Companies and a former senior official with the U.S. Coalition Provisional Authority in Iraq.
“But if I were an investor, I’m still not sure I would be looking for a boom in the market,” he told Reuters, pointing out that $18.6 billion (13 billion pound) of U.S. taxpayer funds were made available for reconstruction and security in Iraq.
While there are contracts to be had in Kabul, they are less lucrative, more spread out and those offering them — including the Afghan government — are more aware of potential pit-falls than Iraq was when it dolled out contracts in 2004-05, he said.
“Some of the gold-digging that went on in Iraq can’t go on in Afghanistan,” said Bearpark, who on Thursday will address a conference in London on private-sector support for European Union and NATO operations in places such as Afghanistan.
“Afghanistan is never going to be the gold mine that the more naive (security companies) hoped. They hoped it would be another Iraq, but what they didn’t spot was that the world had moved on and was much more competent at dealing with them.
“The consumer is more intelligent now.”
The landscape for the industry — estimated to be worth $3 billion a year — shifted substantially after five employees of U.S. private security firm Blackwater were accused of killing unarmed civilians in a Baghdad shootout in 2007.
The five were charged in a U.S. court last month with 14 counts of manslaughter, 20 counts of attempt to commit manslaughter and a weapons violation. The charges put the industry on warning and led to a general tightening up.
“The government of Afghanistan has taken control of the industry very seriously, much more seriously than Iraq ever did,” said Bearpark. “The operating environment in Kabul is much more regulated than it ever was in Iraq.”
Even in terms of sheer numbers, Afghanistan is a long way behind where Iraq was at its peak. There are about 3,000 foreign security contractors in Afghanistan, whereas in Iraq there were at one point around 20,000, experts say.
Amyas Godfrey, a military specialist who has consulted for security companies, said that while large contracts were in the pipeline in Afghanistan, opportunities were harder to come by.
“There’s no single, binding force like the U.S. military as there was in Iraq,” he said. “Because it’s largely NATO in Afghanistan, everything is split up into different contracts.”
Police stations and army bases need to be built — and therefore the workers and engineers who put them together need protecting — but it’s a smaller pool of contracts and big, established companies are the best-placed to compete.
Editing by Peter Millership
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