LEASHING THE DOGS OF WAR: EFFECTIVE REGULATION OF PRIVATE MILITARY CONTRACTORS

Abstract

This qualitative thesis examines proposed methods of regulation for private military contractors (PMCs,) evaluating them on both effectiveness and feasibility of implementation. As the US is the world’s largest host and employer of PMCs, special attention is given to the use of PMCs in the 2003 invasion of Iraq and the existing US regulatory system. Special attention is also given to the unique nature and corporate structure of PMCs and their finances, which influences the regulatory process. Research is primarily theoretical, collecting incidents of both desired and undesired PMC behavior, and determining if they can be induced or prevented, respectively, through various legal solutions proposed by experts in the field. Verified news articles and reports are frequently utilized as evidence, as statements from the industry are generally evasive, misleading, or otherwise of little help. After defining the nature and function of PMCs, the thesis identifies the three causes of their unprecedented growth: demilitarization after the Cold War, the democratization of violence, and the prevalence of the military-industrial complex. This serves to confirm the prevalence and durability of the PMC phenomenon and demonstrates why abolitionism is not an option. The financial performance, typology, current market shares and future growth opportunities of PMCs are discussed in order to fulfill the requirements for Princeton’s Finance Certificate program, and the policy issues and moral hazards inherent to PMCs are identified as the reasons for regulation. The necessary foundation having been laid, regulatory solutions are evaluated on three different levels: international, national, and business level. Existing international regulation on PMCs is mostly non-applicable, and even were it to be modified, the inherent weakness of international institutions prevents enforcement. National licensing regimes, particularly the US system, are effective but undermined by lack of government enforcement and oversight. Reform via corporate law is nearly impossible given the unique legal rights of a corporation, but reform of the contract awards and approval processes will give government enforcement capacity and transparency to ensure enforcement of contract terms. Thus, a modified national-level licensing system patterned after the US model, in conjunction with reform of the contract awards and approval processes employed by the US, offers the best solution for effective regulation.