Dr. Peter Lock
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Dr. Peter Lock
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Exploring the changing role of the military in the economy
Given the scale of the pervasive involvement of the armed forces around the world, particularly of their higher ranks, in economic activities outside what one would consider to be their ideal-type mandate, it is astounding how little systematically collected information is available. It almost seems that social science has been avoiding the subject, in spite of the fact that rich anecdotal material is not difficult to identify. One of the reasons for this lacuna may be the fact that in many cases of an expansion of the military into economic roles not mandated, they also are in a position to sanction social scientists and spoil their careers if they deem research on their role as counterproductive for the pursuit of their interests. Chile might be a case in point. To my knowledge the last comprehensive study of the Chilean military is Alain Joxe's book which predates the Allende government. The fact that no broad comparative studies seem to be available may be explained by the impressive diversity of roles in the economies of various countries the military have been taking up. But the most important reason is likely to be the fact that very often the activities are part of the shadow economy or take the form of institutionalised corruption as is regularly the case with procurement.
It is almost a regular feature when weapon systems are being imported that the military and the political bureaucracy involved in decision making ask for hefty bribes. This is the case in resource rich countries as well as in poor countries. The absence of a transparent market facilitates this unashamed appropriation of tax payers' money. Among the many cases in point Pakistan's institutionalised corrupt procurement procedure has recently been documented in illustrative detail, including the names of those officers who have taken permanent residence abroad as a result. If the figures reported are representative then 15% percent of the import contracts selectively subsidise the salaries of the officer corps, a rough estimate of this booty accruing to groups belonging to the military sector amounts to one billion dollars per year, part of which certainly serves as a launching pad for entrepreneurial roles in the shadow economy or even in the criminal spheres of the economy.
In fragile states with weak political institutions the military are often in the convenient position to be an indispensable partner of any oligarchic group trying to stay in control and consolidate its power. Rewards for the services rendered become a pattern. They often take the form of institutional entitlements as well as appointments in state-controlled sectors of the economy amenable to corruption.
From my perspective a comprehensive compilation of observations of direct and indirect role expansions in an as large as possible number of countries would be a first necessary step, in order to develop adequate categories to fruitfully study the issue. While country studies often contain valuable information, they also have a tendency to subvert comparative studies, because they tend to emphasise the unique circumstances of their case. But the purpose of comparative studies is precisely to recognise the wider context and the underlying structural pattern. As the impact of the globalisation process does not spare a single economy, there is ever more reason to search for common features wherever non-mandated activities of the military can be identified. At the same time it is important to understand that the period in which the role expansion of the military started determines the present configuration.
In a way it is an attractive research subject, because there does not yet exist a solid body of research. It is therefore necessary to create the analytical tools from the scratch. I would locate the space of the subject in the triangle between economic, sociological and institutional analysis. The difficulty in the process stems from the uneven quality of information available on the often "stealth" roles the military in the legal and extra-legal spheres of the economy. Their aggregate roles resemble an iceberg, only a small part is visible.
I will start with drawing attention to the evolution of ideologies attributing a role above the constitution to the military. They are to a large extent a legacy of the German military tradition in the first half of the century. I will then highlight the roles attributed to the military within the context of the Cold War and of modernisation and development strategies pursued after WW II. The accepted role of the armed forces was not any longer tenable in the context of weak and failing states resulting from the pervasive economic crisis in most parts of the Third World. I describe the logical process of "autonomisation" of the military institution in this economic environment. For the second half of the 20th century I try to identify three distinct motivational modes which lead to military involvement in economic affairs. I conclude with hypothesising that this involvement unleashes centrifugal forces and eventually dissolves the cohesiveness of the military institution.
The German roots of non-democratic relations between armed forces, state and citizen
The conceived paradigm of armed forces is linked to the nation-state as it emerged in the absolutist period in Europe. The armed forces became the embodiment of statehood. The oath of allegiance to the respective nation-state constituted the absolute frame of reference for building a corporate identity within the armed forces. In the late 19th century obligatory military service was identified with nation-building, particularly in the case of latecomer nations. The internal military order proved relatively immune to the social changes, including technological innovations, brought about by the industrial age. Therefore democratic decision making also remained alien to the military organisation. As of today only through the supreme command in the hands of a civilian minister the civil society controls the strictly hierarchical and often authoritarian internal order of the military, somewhat mitigated by heavy handed bureaucratic procedures.
Two developments in Germany dating back to WW I and its aftermath are important landmarks on the road of the apparently increasing entanglement of the military in economic affairs. They should be taken into account when analysing the present typology of the military's role in economic affairs which displays quite distinct degrees of legitimacy, though it often has ideological roots in the influential concept of total war introduced by Ludendorff in 1922.
The first event dates back to WW I when the German military towards the end began to blame the weakening economic support for the war effort to hamper the success on the battlefield. The nationalistic and often chauvinist officer corps began pushing to take over the command over entire economy. The civilian society in their view had failed to fulfil their national duties, therefore the society were best to be put under marshal law according to this view shared among the military elite. Eventually their political pressure lead indeed to a directed economic order (Kriegswirtschaft) exclusively geared toward war supplies. However, the state condoning to the military imposition to put military production first did not interfere with property rights. Actively controlled preferential pricing was the exclusive means used to achieve the desired ends of focusing the entire economy towards military ends. Eventually the war was lost, but influential groups within the officer corps did not accept the result, because in their view the war was not lost in the trenches of the battlefield, but on the so-called home front. Politically the so-called "Dolchstoßlegende" (stab in the back <of the military>) was created.
At the ideological level Ludendorff who had been a key player behind the implementation of the >Kriegswirtschaft<, laid out the revisionist agenda in an influential pamphlet (1922), in which he developed the concept of >total war<. According to this reasoning the armed forces are not only entitled, but obliged to pre-emptively take the helm, should the civil society ever put the existence of the nation-state, or rather the specific social order the military elite takes for granted, into danger. Particularly in times of war the military are entitled to command the totality of national resources to make sure that the nation prevails over its enemies. Resources were seen as an integral part of military power. Reflecting the aristocratically dominated officer class' contempt of "politicians" Ludendorff portrayed the military as an ultimate arbitrator above the constitution and eventual saviour of the nation-state.
The very logic of Ludendorff's argument is to be found much later in the justification of military dictatorships, in Latin America in particular. There is ample evidence that the influence of German generals serving in the General Staff Colleges of Latin American armies was instrumental in bringing the armed forces into the political and economic arenas. But equally important was the way in which leading democratic states readily sanctioned military regimes as inevitable to avoid the presumably greater evil of leftist regimes. The extraordinary emphasis of the principle of non-intervention in internal affairs throughout the Cold War prepared the ground for condoning the undemocratic and arbitrary expansion of the military sphere, often culminating in ruthless military dictatorships.
Secondly, after WW I the German officer class felt betrayed by the civilian society back home for lack of support and was thus extremely uneasy with the civilian control of the armed forces instituted under the constitution of the Weimar Republic. They considered the strict limitations of the military sector imposed by the Versailles Treaty to be illegal. As a corporate group, comprising the small number of officers in active service with the Reichswehr and large numbers of retired officers, they actively conspired against what they considered to be an illegal treatment of Germany which was to be reversed. For a long period after the end of the war and the initial period of the Weimar Republic quasi-privately organised military formations carried out missions they had appointed themselves to. Their resources varied from looting (in the Baltic states), private contributions to "blackmailed" support from the state. As a social class the officer corps suffered a severe descent with only a small number of active duty positions available. Hence their disposition to actively conspire against the democratic order ( Rosa Luxemburg's'murder falls into this category) and to seek employment in clandestine activities to prepare for an eventual rearmament. I dedicate some space to these details because they put present post-conflict scenarios somewhat into perspective and highlight the fact that the massive military involvement in economic affairs is not a phenomenon restricted to the so-called Third World.
Already in the mid-twenties the revisionist plan for the very army Hitler had in place at the beginning of WW II was secretly drafted by the general staff. But more importantly a secret foreign military diplomacy was carried out, aiming at fostering Germany's military capabilities by circumventing the restrictions of the Versailles treaty. The range of activities included secret military training and research in collusion with other nations (i.e. Soviet Union), transfer of engineering teams to other countries and the creation of foreign industrial subsidiaries to carry out activities not allowed under the Versailles Treaty (Sweden, Netherlands, Japan in the case of <military> aircraft production), emigration of officers as private citizens to serve as military instructors at national staff colleges with the intention to serve as liaison officers for the German arms industry and prepare for strategic partnerships at later stages (Latin America), military advisory activities in on-going wars in the form of private enterprises, conspicuously similar to the present companies in this field like Executive Outcome. It is noteworthy that after WW I a corporate identity of the upper military ranks was operational which comprised active and retired officers forming a conspiratorial network within the state not unlike the informal military networks operational in countries as diverse as Thailand, Indonesia, Chile, Ecuador to name but a few.
The most comprehensive case of private activities in this field were the mercenary services of a large group of retired officers rendered in the Chinese civil war on behalf of Tschiang Kai-schek. This case is noteworthy for several reasons. First of all, it was a classical case of high ranking officers, displaced in the aftermath of a war, in a mercenary role. Secondly, this group systematically ventured into arms brokering. Thirdly, the participating officers, jointly with colluding industrialists and some bureaucrats in the foreign ministry saw themselves as spearheading what in their view were legitimate strategic interests of the "subjugated" German Reich. It is for this reason that all parties involved sought and eventually won von Seeckt as head of the entire operation. At the time he had just retired as the prominent Chief of Staff who had masterminded the reconstruction of the Reichswehr after WW I. The whole Chinese operation lasted into the Nazi-period, it was highly profitable for the participants and above all secured arms contracts and cheap supplies of rare strategic metals on the basis of barter contracts for the German industry. This was a particularly important asset during the world-wide economic crisis after 1929. This operation contributed to the resurgence of the German military sector, once Hitler was in command, by securing the survival of the German arms industry through export orders during the meagre years of the Weimar Republic and by securing raw materials for strategic industries.
There is some evidence that the early role of the military (Uriburu) in industrial policies in Argentina from around 1940 onwards is conceptually linked to the influence of German military instructors and their geopolitical thinking. At the time in addition to the German instructors in Argentina many Argentine officers were attending various German military colleges. More importantly the idea of a national security doctrine requiring the creation of domestic military production and aiming at self-sufficiency with respect to the primary sector gained importance and eventually determined Argentina's policy of import substitution and the development of strategic sectors including military production under Peron, an idea derived the attempted sea blockade against Germany in WW I.
Apart from the economic motives of German officers in times of crisis they were guided by an ideology by which they felt entitled to a 'legitimate' conspiracy to resurrect the deprecated nation-state and bring it back to the deserved position at the top. The nation-state was considered to be in a state of emergency which obligated them to conspire and act extra lege. This form of "corporate" disdain of the democratic state and its laws was a precursor to the evolution of the civil-military relationship characterising various periods after WW II.
Anti-communism and modernisation strategies
At different periods both parties of the Cold Wars recognised the military (in the Third World) as the best guarantors of modernisation and progress. This meant that they regularly condoned and sometimes actively supported dictatorial regimes controlled by the military.
In the logic of the Cold War every citizen, and consequently the entire civil society, could be a potential enemy of the contrived order of the nation-state, the military felt appointed to defend. The direction of perceived inimical actors was top-down, the incumbent oligarchy often attempted to corner rival groups by spreading rumours of subversion. The theory of the fifth column erased the separation between external defence and internal security and served as an entitlement to interfere in the civil society, take over industrial policy and often eliminate so-called enemies without due process of the law. The aftermath of the Cuban revolution and the emergence of the Vietnam war turned into the heyday of the ideology of "national security" in their actively practised Latin American versions of "segurança nacional" or "seguridad nacional". It meant that the military actively claimed an arbitrarily appropriated prerogative to declare a state of emergency and take over all powers.
It was in this ideological climate that large numbers of colonies, mainly in Africa, were converted into suddenly independent nation-states. It is important to note that the corporate body forming the armed forces in the newly independent states predated these nation-states. With a few exceptions like Algeria the armed forces and the police alike were the symbol and executive forces of the colonial system, before seeking the new role as the "embodiment" of the (new) nation-state. Thus, the armed forces started as an alienated element in what were expected to become democratic states. Their professional and ideological formation continued to be closely associated to the centre on either side of the Cold War divide, which included an indoctrination emphasising a presumed praetorian role of the military on behalf of the respective ideological camp. There were no limits as to the means the military were encouraged to employ when fulfilling their praetorian role. The School of the Americas was probably the most notorious institution involved in this indoctrination of the military elite of the Third World, but similar elite training facilities were operating in the Soviet Union in addition to the famous Patrice-Lumumba university in Moscow. This encouragement to expand the ideal-type constitutional role of the military and conspiratorially break laws in the name of a superior entitlement together with the bureaucratic secrecy of the military organisation prepared the ground for all kind of military role expansion, including economic activities.
Theories of modernisation developed in the 1960 timely attributed a prominent role to the military institution in the promotion of modernisation of "traditonal" societies. Presumably the Military were the only institution throughout the Third World fulfilling Max Weber's dictum of "zweckrational" which was considered to be a necessary momentum for taking the lead in the development process struggling to overcome so-called traditional attitudes. Not surprisingly the role of Atatürk in modernising and westernising Turkey was highlighted in the literature of the time (Pye, McClelland, .Parsons, Almond and Coleman and others). I mention this period because it imbued the corporate military identity with an explicit mission extending far beyond the ideal-type role of the armed forces to militarily defend the country. I hypothesise that this entitlement prepared the ground for the creeping process of the formal and informal, legal and illegal cases of the role expansion which presently characterises civil-military relations in many countries. Indonesia might form a good case to follow this evolution which started precisely in this period with the coup in 1966. But there are also cases where this creeping amalgamation between traditional military roles and attempted economic leadership largely aborted. Brazil may be a case where during the military dictatorship the ESG (Escola Superior da Guerra) carried out high level courses jointly for business and military elites with the apparent intention to consolidate the military role in the economy, but nothing lasting came of it.
Of course many countries follow different patterns (cf. India). But this should be considered to be an advantage for the process of comparative research as it warns against easy generalisations and facilitates testing of hypotheses.
The military in weak and failed states
Beginning in Africa and Central America, but slowly extending to other regions of the Third World, many states have been losing their capacity to maintain more than a minimum of functions and services. As a result a combination of controlled privatisation and outsourcing (i.e. customs) and unregulated, sometimes criminal private substitution of state functions, including security, provides for a fuzzy institutional environment in a large number of countries (Montclos 1997; Reno 1998; Trotha 1995; Lock 1998; Lock 1999). The failure to generate the necessary resources to maintain an orderly governance eventually also affects the armed forces which have no longer the wherewithal to pay their personnel and have fewer resources at their disposal to procure new or replace old equipment. This deterioration was accelerated because it coincided with the end of proxy supplies and other military support from the respective ideological shepherd throughout the Cold War. Additionally the military in many countries did not have a clear perception that their level of armament was never accumulated on the basis of national resources, though they tended to take their level of equipment for granted after the Cold War supplies were drying out.
This institutional decline was often embedded in general political and economic crises in which oligarchic groups regularly attempted to pull the armed forces to their side of the social struggle. In these situations the army gained some leverage to appropriate additional resources, at the same time such visible one-sided allegiance further reduced the low prestige and legitimacy of the armed forces. In this situation the corporate reaction of the military to their deteriorating economic environment and acceptance by the society at large was to intensify their efforts to achieve some degree of economic autonomy. Well ahead of the relatively recent funding crisis the military have intensively laboured among others to reserve particularly safe taxes for themselves, to supplement the promise of pension payment with the transfer of unalienable resources like land titles or investment in pension funds instead of the insecure perspective of pension payments depending on future tax revenues. In some countries the economic claims of the military were substantial and began to dominate the promotional competition within the military hierarchies.
The pension fund of the Turkish officer corps is an early example of this implicitly expanding involvement of the military in running the economy. The military can be expected to back economic strategies favouring their pension fund investment. Not surprisingly high profile foreign investors were keen to take the military pension fund on board as a >political collateral< of their investment. Other developments as well make Turkey an interesting case. The present military spending spree is linked to the late-comer expansion of a military-industrial sector. It continues in spite of the fact that the Turkish economy is not likely to successfully sustain the reckless accumulation of military mortgages. I hypothesise that the support for this policy comes from national capital which perceives military production as the last segment of investment which is protected from global competition and financial supervision by the IMF. It is likely to end in a cul-de-sac and cause an economic and political crisis as was the case in Argentina two decades earlier. A similar argument can be made for Brazil in the late seventies and the eighties when the military began to endorse a liberalisation of the economy, but at the same time they formed a close alliance with some national industrialists and subsidised an emerging national military-industrial sector, because generally the military sector is rarely subject to pressures for opening the economy. When the only significant export market vanished with the end of the first Gulf war, the sector contracted enormously and the military-industrial alliance rapidly evaporated.
However, if the state loses control of the economy and fails to collect taxes the members of the armed forces tend to receive minimal or no wages and resources for operational purposes. Because in such circumstances alternative jobs are rare, few people leave the army, but the uniform and the military infrastructure turn to the market and try to sell their services in addition to moonlighting. In the circumstances the economy is usually disintegrated and functions in three different spheres: the regular economy, the informal sectors and the criminal sphere. The "self-reliant" reproduction of the armed forces is likely to link up with all sectors, but the dynamics of the linkage with the criminal sphere regularly prevails. In these circumstances the armed forces become the protectors of international criminal networks of all kind. But it is within the logic of any criminal appropriation to wash the proceeds and use them for an existence in the regular economy. Therefore social scientists trying to shed light on these processes are confronted with a fuzzy puzzle to solve.
Four basic patterns of involvement and reduced space of expansion
The pressures to get involved in the economy mount when the state does not generate enough taxes to support its security forces. But the military may also simply perceive certain developments which are likely to put the procurement perceived as indispensable as well as their proper payment in danger, as an argument to move into the economic sphere. It is for example conceivable that the military elite anticipates a profound crisis of the state and seeks its own productive resources aiming at autonomy and institutional stability in the midst of the turmoil shattering the civil society. The adoption of such a strategy presupposes an elitist self-image of the military. The military must identify with the role of vanguard, guardian or absolute arbitrator on behalf of an ideologically projected social model. Without such an ideological anchor the institution loses the cohesiveness which is required to survive as an institution. At the same time the military do not want under the circumstances to risk taking over the entire economy, in order to secure the resources they deem necessary to fulfil their role. This pattern results in an alliance with a strong internal (social class) or transnational (primary sector) partner.
Until the neo-liberal paradigm prevailed almost everywhere the military could also portray their involvement as a doctrine of comprehensive national (independent) development. More recently, however, only their direct command over strategic military-industrial activities can be sold under this cover (cf. Pakistan). Though in countries with plentiful resources the military are often able to secure a hefty extra-budgetary slice of the export revenue. In these cases there does not exist an agreed perception among the political elite of how much military investment is enough, the lavish endowment of resources move converts the military into an firm protector of the respective revenue producing sector. But it also introduces corruption related to procurement as an destabilising factor. In other words military involvement in the economy is not sufficiently explained as a reaction to declining revenues and military budgets. More factors come into play. Some factors like ideologies of national economic development are linked to a paradigm in a specific historical context. As their role in the economy is not a fast >in< and >out< process, empirical analysis is faced with different layers of involvement manifesting themselves in the present situation often in a single country.
As a starting point one might broadly identify four ideological models which lead eventually to a self-entitlement of the military to expand into the economic sphere.
In all cases a certain diffusion of the military either as a corporate entity or as delegated or self-appointed individuals into entrepreneurial and civilian governmental positions takes place. The boundaries of the military identity rapidly become fuzzy as active and retired officers labour for the collective well-being in official positions as well as in undeclared roles from which a diversion into private coffers is likely to start its cancerous expansion. The economic activities can either be corporate or individual or a combination of the two. Corporate and individual involvement may depart from a legal assignment, but it is likely to enter murky waters both for contextual reasons in a corrupt business environment and for lack of proficiency in non-military roles. Generally only the officer corps is involved and, as it may be the case, reaps personal profits from non-military roles. However under the Leninist paradigm the ordinary soldiers are converted into industrial or agricultural slave labour. Similarly under the anarchic paradigm wearing an uniform and carrying a weapon turns into a license to extort and steal for the ordinary soldier while the centralised military order is no longer operational. Expansion into economic role in the context of institutional survival may start as simple self-help activities as is presently the case in certain region of Russia, but it may also enter into productive activities to generate cash income. The dilemma is that these activities tend to develop dynamics of its own without any controls of costs because the input does not have a price tag and is provided by the authoritarian command structure which characterises the military organisation.
Distinct cultures: markets and the military
The organisational principles of the armed forces are not compatible with the management skills required in business roles. Therefore when the military enter the world of business they are drawn into dynamics of its own alien to the military order. In the course delegated actors gain an unforeseen autonomy unrelated to their military rank. The logic of business requires permanent expansion of the spheres of involvement implying an irresistible loss of hierarchical control over the military delegated to operate in the economic sphere. In most countries this process regularly comprises legal and illegal, corrupt and criminal activities. As already mentioned it becomes increasingly difficult to delineate the territory of military involvement from privately appropriated economic activities involving (ex-) military men. This makes for an inherent tendency of the military engagements to drift away from the core institution. If, as they often do, corruption and greed prevail, it continuously facilitates the spin-off of particularly profitable activities from the original military sphere into independent ventures or competing oligarchic alliances. It depends very much on the relative strength of the military in the political context whether at least informal protection is sought by the business spin-offs (cf. Ecuador) or whether the military affiliation serves only as launching pad to enter the business sector with a positive handicap (cf. Yugoslavia). The weaker the regulatory capacity of a government, the more likely privatised security formations emerge on the market where the military begin losing their clout as an ultimate protector.
No matter which paradigm guides the military involvement in economic affairs, the institution will be faced with centrifugal forces as a result. The age of import substitution is definitely over, today the business peripheries of the military are regularly linked with the global economy, the PR of China being possibly a conspicuous exception. The military must play the prevailing rules, be it in the regular or in the shady and criminal sectors of the global economy (cf. Angola). A return to the ideal-type role inscribed in liberal constitutions appears unlikely, not least because few military formations around the world have the capacity and command the logistics necessary to fight classical international wars. Presently and most likely in the future the military are engaged in civil wars and in subduing other forms of armed violence. But it is in these fields that the military are increasingly losing their prerogative as private business enters this market.
It must be emphasised that the profound changes of the international economic environment have changed the parameters of potential military roles in the economy. The possible return of any type of protectionist economic policy has rapidly diminished throughout the last twenty years. This trend significantly reduces the chances of the military to appropriate economic activities through arbitrary imposition in the regular economy. The present entry options are monopolistic partnerships with global corporations (the big oil companies, like Shell, Standard Oil etc., Reynolds , DeBeers, Unilever etc.) in the primary sector. Though private security companies have become powerful rivals in this market. Alternatively only an association with and/or the protection of shady deals, mostly export or import offers gainful perspectives . Presently a wide variety of military involvement in and close to the regular economy can be identified, but this impression is misleading, because in many cases the military today would not stand a chance to get involved. Only in relatively closed economies the military can still enter regular businesses (cf. bowling centres in Vietnam) while in more open economies the choices are very limited. Ordering the observed cases of economic roles along a time scale according to the time of entry, the dominant trend of military involvement in illegal economic activities should become evident. While it is ever more difficult to set up or enter any competitive business in the regular economy, the military showed an inclination to get heavily involved in illegal activities as their only viable option to earn "big" and "small" money. If this observation on the basis of extensive anecdotal evidence holds, the time of entry becomes an important factor to explain the present configuration of military involvement in the economy in any country.
Lock, Peter, Privatisierung der Sicherheit oder private Militarisierung? Aktuelle Entwicklungen in Afrika, in: Afrika-Jahrbuch 1997, München pp.71-82.
Lock, Peter, Privatisierung von Sicherheit im Zeitalter der Globalisierung Das Beispiel Lateinamerika, in: Lateinamerika, Hamburg 15 (1998),pp.13-28.
Ludendorff, Erich, Kriegsführung und Politik, Berlin 1922 and, Der totale Krieg, Berlin 1935.
Trotha, Trutz von, Ordnungsformen der Gewalt oder Aussichten auf das Ende des staatlichen Gewaltmonopols, in: Brigitta Nedelmann (Hg.), Politische Institutionen im Wandel, in: Kölner Zeitschrift für Soziologie und Sozialpsychlogie, Sonderheft 35, Opladen 1995, pp..129-166.