War Profiteering

Part of Bird’s Eye View

What is it?

War profiteers are people, corporations, or any actors that profit from war. The concept is complicated because of the nature of the wars being fought today. Governments can outsource war to private military organizations and contractors, and because these are companies, they work and survive through profit.

Entities profit from war through defense contracts with governments, legal weapons deals/contracts, illegal arms deals, black marketeering during times of war, and even private military contracts.

Since there are many paths to profit from war, the act is not illegal in the eyes of the law unless companies purposely try to profit more than the agreed contractual amounts, or if they profit illegally.

War profiteering does, however, have a largely negative connotation due to long-standing associations with the term. It has direct implications on life and death, destruction and chaos, and their continuance over extended periods of time because potentially profiting from war is an incentive to perpetuate it.

Where it Comes from?

Profiteering is a complicated consequence born out of the nature of modern–day warfare. War itself produces events that are far more morally inexplicable than just profiteering.

War in the modern era encompasses conflicts in which children die by the hundreds of thousands, humanitarian efforts become targets, and sexual abuse becomes a policy of war for dehumanization. Its horrors extend past non-warring entities and friendlies on the ground, scarring even the soldiers who risk their lives for their nations.

What Caused it?

In the modern era, three factors played into the start of private military firms (entities of war profiteering):

[i] End of Cold War

[ii] Change in the nature of warfare, which “blurred the lines between soldiers and civilians”

[iii] Trend toward outsourcing government tasks

Policies to Prevent War Profiteering:

The War Profiteering Prevention Act of 2007 was created to illegalize exploitation and profiting from war. It was supposed to be, according to the Senate Committee, “ a bill to prohibit profiteering and fraud relating to military action, relief, and reconstruction efforts, and for other purposes.” While it passed the House floor, the bill died in the Senate, never being enacted.

There has yet to be a bill or act formally enacted to prevent such actions. Though unofficially, there have always been attempts to stop it. Companies and individuals are brought to justice in their exploitative acts, under other laws, like the False Claims Act.

Example of War Profiteering:

The United States Department of Justice tried a case under the False Claims Act against a defense contracting company that actively defrauded U.S. supply provision to soldiers fighting overseas. According to the DOJ,

Between July 2005 and April 2009, Supreme Foodservice AG, together with Supreme Foodservice KG, now called Supreme Foodservice FZE, devised and implemented a scheme to overcharge the United States in order to make profits over and above those provided in the $8.8 billion subsistence prime vendor (SPV) contract.  The companies fraudulently inflated the price charged for local market ready goods (LMR) and bottled water sold to the United States under the SPV contract.

The government lost $48 million as a result.

The DOJ could legally only prosecute this case under the False Claims Act because the act of war profiteering itself is not illegal, rather the means of it is. Had these companies not actively defrauded the U.S. and swindled money from the Fed, this case would never have come to light.

Implications:

Due to the construction of the modern form of combat, war has become a business in and of itself. With high demands, defense contracting companies and private military firms fight to win jobs. The potential profit creates an incentive for such companies to continuously defraud nations. They also provide incentives for more, unending wars, like the current war on terror.

The “Military Industrial Complex”

The other, more scary implication, is corporate influence on politicians, driving them into actually start wars!

In January 1961, US President Dwight D. Eisenhower warned the nation of what he viewed as one of its greatest threats: the military-industrial complex composed of military contractors and lobbyists starting and continuing wars.

Eisenhower warned that “an immense military establishment and a large arms industry” had emerged as a hidden force in US politics, economics and even spiritually, and that citizens “must not fail to comprehend its grave implications”.


There are documented instances of this happening very recently:

US Senator Dianne Feinstein, who voted in favor of the Iraq Resolution, and her husband, Richard Blum, are making millions of dollars from Iraq and Afghanistan contracts through his company, Tutor Perini Corporation.

The U.S. war in Iraq [and Afghanistan] has cost $1.7 trillion with an additional $490 billion in benefits owed to war veterans, expenses that could grow to more than $6 trillion over the next four decades counting interest – Reuters – Time

As a result, we seem to be experiencing perpetual wars and there is no reason to believe that this is still not happening today. Some of the recent discussions happening in the media today seem to be leading us to even newer wars. In particular, the talk about Russia with regards to the Ukraine and its supposed (though, still not proven) hacking into the Democratic National Committee’s emails and the New York Times.

Profit-based warfare perpetuates not only war itself, but all the consequences that are characteristic of war as well. This is because profiteering, itself originally an unfortunate outcome of war, has embraced the role of perpetrator in modern times, and its escalating control over the decision making process is not going to stop.

As long as war produces a valued outcome for profiting entities, there is no perceived incentive to stop, and as a result, every other factor that would be considered during the decision-making process, including the potential of high casualty rates, has little to no significant value. The result is a structurally- flawed system dictated by flawed individuals who do not consider, much less understand, the cycle they are perpetuating.

Politicians start wars, soldiers die in them, and ordinary people are left to bear the weight of the violence their representatives have unleashed; all because profiteers have found a “pro-capitalistic” loophole that allows them to profit more.

Without a fundamental change in the laws governing war profiteering, private companies will continue to take advantage of the government and overstep their boundaries as private firms at the expense of the lives of innocent people, foreign and American.

Oversight and regulation can keep that to a minimum, limiting the larger threat that comes from profiteering—its ability to create new wars.

What the Media Gets Wrong:

The media has a tendency of reporting widely regarded, and mostly expected acts of profiteering. Entities like large corporations and past administrations are targets, but where it fails is reporting on the more likely current politicians. People criticized KBR, a subsidiary of Halliburton, whereas it is a rarity that any well-known news source has reported that current California Senator Dianne Feinstein’s husband, Richard Blum, was found to have profited millions from the war in Iraq and Afghanistan.

The media fails to report on issues that would have direct or indirect implications on people’s lives. While it is important to identify abuses in Iraq by private companies, it is also important to recognize the faults of those who represent the people.

The media acts as a source for the public to keep politicians accountable and actively working to ameliorate the consequences that come of war. Without its information, accountability ceases and allows for politicians and the like to profit perpetuate the very wars that create suffering.

The External Problem the Media’s Mistake Creates:

This raises another problem. Aside from the political catastrophe such a realization would have for a senator and the impending distrust that builds from knowing public representatives are profiting on the backs of dying soldiers and civilians, an issue also stems from compromising the integrity of the media.

The media questions the purpose for war only after it is enacted, rather than proactively questioning the incentives of those who push for it before. Instead of doing its job accurately, it becomes an instrument of control and distrust. Without questioning the reason behind war profiteering and other consequences, it inadvertently becomes an instrument of propagation. At that point the media must also be held accountable because it is now another rung on the ladder that leads to war.