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Military Privatization

Jefferson ChaseApril 4, 2008

This year, the German army kickstarts Project Hercules, a billion-euro initiative transferring non-military computer services to a public-private partnership. The move has stirred deep unease in some quarters.

Bundeswehr soldier
The project is supposed to free soldiers for their core tasksImage: picture-alliance/ dpa

Under the 10-year, 7.1 billion euro ($10.6 billion) project, a consortium between the Bundeswehr and private firms like Siemens and IBM is upgrading non-military IT and communications infrastructure. The project involves some 140,000 PCs, 7,000 servers and 300,000 telephones.

The Bundeswehr has used the private sector to a limited extent before -- chiefly for clothing, catering and vehicle-maintenance services. Project Hercules, currently the largest initiative of its kind in Europe, represents a giant leap in scale.

Is Germany going down the problematic path taken by the US of outsourcing massive sectors of the military to profit-conscious private enterprise? The consortium -- called BWI Information Technologies -- says no.

"Using the private sector has advantages," BWI Chief Executive Officer Peter Blaschke said. "The Bundeswehr is dependent on annual parliamentary budgets and can only engage in short-term planning. With Project Hercules, we can -- for the first time -- have a 10-year plan and be flexible with investments. For example, we've invested ahead in the first year to get the project off to a fast start. In addition, we're securing the know-how of experts over a number of years."

But some German politicians are monitoring the initiative with an extremely critical eye.

"The privatization of Bundeswehr tasks is the wrong way to go," said Paul Schaefer, the defense spokesman for the opposition Left Party's parliamentary group.

"The private sector can play a role, but the question is who is ultimately responsible for the decision-making," Schaefer added. "IBM and Siemens will want to recoup their money, and there no telling right now whether the project will actually yield savings. The total price has already gone up from 6.6 to over 7 billion euros, and the whole thing was preceded by five years of costly negotiations."

Lessons from the US

Peter Blaschke
BWI's Peter Blaschke says Project Hercules has built-in safeguardsImage: BWI Informationstechnik GmbH

Project Hercules distinguished between "green" (military) and "white" (non-military) information technology, with BWI only responsible for the latter. The Bundeswehr itself is represented on the board of directors, and the consortium is open to audit by the military, the German Defense Ministry and the General Accountants Office.

That's part of an attempt to avoid repeating mistakes made by the United States. Private military contractors employed by the Pentagon have been accused in extreme cases -- such as the 2004 torture scandal at the Abu Ghraib prison in Iraq -- being involved in human rights abuses.

There have also been allegations of companies over-charging, doing poor work and usurping whole military sectors.

"The Bundeswehr has chosen a clever path," Blaschke said. "This is not a normal business contract, but a mandate for the military to build up its own IT company. The main computer center will not end up at IBM, and the Bundeswehr will not fall into the trap of not having the know-how to run its own equipment. After 10 years, BWI will revert to 100 percent Bundeswehr control -- that's specified by the contract."

But contracts, some fear, can be broken.

"There's definitely more supervisory administration in Germany than in the US," Schaefer said. "But the question of brain-drain remains. Will the know-how really return to or remain with the Bundeswehr once the contract expires?"

The challenge for the Bundeswehr is how to utilize the flexibility and expertise of the private sector without making itself as dependent as the US Army, which is sometimes unable to operate and maintain privately designed systems.

The line between green and white

Blackwater mercenaries
Blackwater employees have been active in combat in IraqImage: AP

The US military is thoroughly entwined with military service providers, which include not just Blackwater and Halliburton but lesser-known companies like CACI or DynCorp. The industry is highly secretive, but some estimates put the number of private employees in Iraq above that of all non-US foreign troops combined -- essentially making business the second-largest force in that war-torn country.

Especially in the fog of war, it can be difficult to distinguish clearly between military and non-military activities when it comes to private companies.

"In Germany, we're roughly where the US was in the late 1980s and early 1990s in that only civilian, non-military tasks are supposed to be outsourced," Schaefer said. "But the vehicle maintenance company has already been in Bosnia. And it may probably be just a matter of time until logistics specialists become active in Afghanistan as well."

BWI acknowledges the difficulties of drawing absolute lines between civilian, domestic tasks and foreign, military ones. But it says there are safeguards.

"BWI will not be active abroad with the Bundeswehr, and we're not involved in things like weapons-guidance systems or IT for military command centers," Blaschke said. "And in a crisis situation, where the lines get blurred, the Bundeswehr can assume total responsibility for all areas. That's part of the agreement."

BWI said Project Hercules has gotten off to an optimal start. But it will be years down the road before its efficiency can be determined -- and the question answered as to whether the Bundeswehr has succeeded in maintaining the crucial distinction between civilian and military tasks.