Global Policy Forum

By Brian Brady

Ministers are negotiating multi-million-pound contracts with private security firms to cover some of the gaps created by British troop withdrawals. Days after Tony Blair revealed that he wanted to withdraw 1,600 soldiers from war-torn Basra within months, it has emerged that civil servants hope "mercenaries" can help fill the gap left behind. Officials from the Foreign Office and Ministry of Defence will meet representatives from the private security industry within the next month to discuss "options" for increasing their business in Iraq in the coming years.

The UK government has already paid out almost £160m to private security companies (PSCs) since the invasion of Iraq, for a range of services, including the protection of British officials on duty and in transit in some of the most dangerous parts of the world. But, despite expectations that the booming market for private security would go into decline following the bursting of the "Iraq bubble", firms have now been told to expect even more lucrative work during the "post-occupation phase".

A senior official from one of the biggest PSCs already operating in Iraq last night claimed firms had been told to expect increased business opportunities in areas such as personnel protection, highway security and the training of Iraqi police and soldiers. "It is not entirely surprising that they recognise PSCs still have a value in Iraq," the source said. "But them wanting to meet us demonstrates that they have accepted just how valuable the industry can be. "No one is saying PSCs can take over all the jobs of regular military, but the British forces have not been doing regular military work recently. If there is a need to protect people and supply routes and areas, there are a lot of specialised private-sector companies that can do that perfectly well."

The MoD has consistently maintained that it has not paid a PSC to carry out any security duties in Iraq in almost four years since British forces arrived. But officials from the department are planning to join colleagues from the Foreign Office at a "summit" with members of the British Association of Private Security Companies (BAPSC) next month. The development will reawaken complaints that the government is "privatising" the occupation of Iraq.

Pressure groups have consistently warned that private security contractors have been given too much freedom to operate in Iraq, and one warned that the country was being flooded with PSCs as part of the British "exit strategy".

The size of the private-security companies market is difficult to determine, but an estimated 10,000 to 30,000 private security contractors are thought to be working in Iraq. At a conference of British private-security companies last month, delegates said that the industry had increased about tenfold over the past decade and was worth the equivalent of about $4bn (£2.04bn) a year.

Almost 40 international PSCs are licensed to operate in Iraq, and the Foreign Office has paid out tens of millions of pounds to a handful of the largest British firms over the past four years. The department's bill for bodyguard protection alone rose from £19m in 2003-04 to £48m the following year. Most of the firms employ veterans from the forces, including former members of the SAS and SBS, who can command wages of up to £600 a day. One company has taken £112m in just three years. Another has been paid £42m for work in Afghanistan and Iraq.

Ministers have failed to bring in legislation to control the activities of the industry, despite promising action four years ago. The Tory homeland security spokesman, ex-Army colonel Patrick Mercer, said "it makes no sense" to make huge payments to private firms while the regular forces were undergoing cuts. But the charity War on Want claims the government has consciously expanded the role of PSCs in Iraq - through a series of multi-million-pound contracts - in order to pave the way for a military exit.

Both the Foreign Office and the MoD are believed to have supported an expanded role since early in the Iraq operation and Downing Street is now rumoured to favour the move as part of the accelerated withdrawal announced by Blair last week. "There are genuine worries that the government is trying to privatise the Iraq conflict," said War on Want's campaigns director, John Hilary. "The occupation of Iraq has allowed British mercenaries to reap huge profits. How can Tony Blair hope to restore peace and security in Iraq while allowing mercenary armies to operate completely outside the law?"

Hidden casualties of 'outsourced' hostilities

The dangers faced by contractors working in Iraq were laid bare last night by new figures showing hundreds of civilians employed by the Pentagon alone have been killed in the country since 2003. In a graphic exposé of a hitherto invisible cost of the war in Iraq, it emerged nearly 800 civilians working under contract to US defence chiefs have been killed and more than 3,300 hurt doing jobs normally handled by the military.

The casualty figures, gathered by the Associated Press, make it clear the US Defence Department's count of more than 3,100 military dead does not tell the whole story. "It's another unseen expense of the war," said Thomas Houle, a retired Air Force reservist whose brother-in-law died while driving a truck in Iraq. "It's almost disrespectful it doesn't get the kind of publicity that a soldier would."

Employees of defence contractors such as Halliburton and Blackwater cook meals, do laundry, repair infrastructure, translate documents, analyse intelligence, guard prisoners, protect military convoys, deliver water in the heavily fortified Green Zone and stand sentry at buildings - often highly dangerous duties almost identical to those performed by many US troops. The US has outsourced so many war and reconstruction duties that there are almost as many contractors (120,000) as US troops (135,000) in the war zone. But insurgents in Iraq make little, if any, distinction between the contractors and US troops.

By the end of 2006, the Labour Department had quietly recorded 769 deaths and 3,367 injuries serious enough to require four or more days off the job. The contractors are paid handsomely for the risks they take, with some making £50,000 per year, mostly tax-free - at least six times more than a new Army private. Houle's brother-in-law, Hector Patino, was driving a truck for a Halliburton subsidiary in the Green Zone when he was killed by friendly fire at an Australian checkpoint. Patino, who served two tours in Vietnam, thought he was safe, said his mother, 82-year-old Flora Patino. "I said: 'Hector, you're playing with fire'," she recalled.