What is the function/purpose of intelligence agencies?

… By virtue of their control over secret information, intelligence agencies are ideally suited to provide comprehensive strategic analyses for policymakers. “The intelligence community,” writes Richard Betts, “is the logical set of institutions to provide what one may call the library function for national security: it keeps track of all sources, secret or not, and mobilizes them in coherent form whenever nonexpert policymakers call for them.” (Rovner, 2011, p. 4)

… How should we measure progress in the war on terrorism? How do we know if we are winning or losing? How do we wage counterinsurgency campaigns against elusive and amorphous enemies? How do we understand the increasingly complex relationships between nation-states, armed groups, and transnational actors? What are the long-term goals of resurgent great powers like Russia and China? How close are states like Iran to acquiring nuclear weapons? What do they intend to do with them? (Rovner, 2011, p. vii)

                Intelligence agencies exist to grapple with questions like these. They collect a staggering amount of information, synthesize reports from secret and open sources, and try to distill it into digestible analytical products for policymakers, diplomats, and military officers. When all goes well, intelligence estimates play an important role in strategic judgement, adding unique kinds of information and insight to help leaders cope with the inherent uncertainty and complexity of international politics. (Rovner, 2011, p. vii)

References

Rovner, J. (2011). Fixing the Facts: National Security and the Politics of Intelligence. Ithaca: Cornell University Press.

Why does demand for intelligence exist?

In the ideal, intelligence contributes to rational state action by providing unique kinds of information to policy makers and by helping organize an enormous amount of data from secret and open sources. … Policymakers need intelligence to provide information, mitigate ambiguity, and reduce the amount of uncertainty in the decision making process. Wartime leaders have a special interest in knowing the disposition of enemy forces, but peacetime statesmen also benefit from intelligence when it identifies looming dangers as well as opportunities for diplomacy. (Rovner, 2011, p. 4)

References

Rovner, J. (2011). Fixing the Facts: National Security and the Politics of Intelligence. Ithaca: Cornell University Press.

What factors led to Canada’s continued involvement in the US-led military operations in Afghanistan?

“Canada had a real and vital interest in destroying the haven and base that Afghanistan had become from which international terrorists could continue to attack the West, including Canada itself” (Jockel & Sokolsky, 2008). However, Canada continued its military commitment in Afghanistan after the Taliban were removed from power, and various transnational terrorist groups lost their Afghan training camps. This happened in part because the Canadian government was eager to please Americans by demonstrating that Canada is still a good military ally, despite its refusal to participate in US led invasion of Iraq (Jockel & Sokolsky, 2008). CF’s continued action in Afghanistan also took place for other important reasons.

Recent Canadian governments and many Canadians have continued to see terrorism that arises from radical Islam as a threat to Canada and believe that Canada has a significant national interest in stopping it from retaking Afghanistan. ... ‘An increasingly interdependent world has tightened the links between international and domestic security and developments abroad can affect the safety of Canadians in unprecedented ways. Today’s front lines stretch from the streets of Kabul to the rail lines of Madrid to our own Canadian cities.’ (Jockel & Sokolsky, 2008)

Canada’s war in Afghanistan is also closely linked to what is being called the ‘transformation’ of the Canadian military, the personally initiated project of the energetic Chief of the Defence Staff, General Rick Hillier … He has had unprecedented leeway and influence as chief and indeed has seized the moment by using the war in Afghanistan and the government’s commitment there as the occasion to press for major changes and acquisitions which in normal circumstances would have been both delayed and/or scaled back by the political leadership. Hillier’s ‘transformation agenda’ for the Canadian armed forces has included more personnel and equipment, improved infrastructure and changes to training and the command structure. (Jockel & Sokolsky, 2008)

Thus, CF’s continued involvement in Afghanistan can, in part, be blamed on Hillier, who easily succumbed to the typical trappings of a high ranking bureaucratic position, and successfully managed to increase the size of his bureau, its budget, and all the benefits that come with it.

References

Jockel, J. and Sokolsky, J. (2008). Canada and the War in Afghanistan: NATO’s Odd Man Out Steps Forward. Journal of Transatlantic Studies, 6(1):100-115.

Can insurance prove to be a deterrent against terrorism?

Overall, insurance makes terrorist attacks less damaging because if all the property and lives lost from an attack are insured, the victims will suffer no overall economic losses. Also, insurance frequently results in higher investment in security, thus hardening terrorist targets. This phenomenon is apparently widespread as it has been observed in many industries “Like in fire prevention, aviation, boiler and elevator safety where insurance generated safety improvements” (Kesan et al, 2004). Cyberinsurance is an example which is clearly illustrative of this effect of insurance on many other industries.

New insurance products may make the Internet a safer business environment because cyberinsurers can require businesses to undertake loss self-protection activities, as well as tying premiums to claims histories. … cyberinsurers can proactively tie premiums to the insured firm’s investment in security processes and create market-based incentives for e-business to increase their level of IT safety. (Kesan et al, 2004)

“In addition, the insurance companies have an incentive to monitor hackers in order to minimize the amount of damage they would have to pay out to its insured firms” (Kesan et al, 2004). Thus, insurance companies that sell insurance against terrorism, can be expected to engage in the gathering of counterterrorist intelligence; greatly aiding the state security apparatus.

References

Kesan, J.P. et al. [2004], “The economic case for cyber-insurance”, University of Illinois College of Law, Law and Economics Working Papers, Paper 2, http://law.bepress.com/uiuclwps/papers/art2

What is the best way to approach interagency coordination, when the goal is to counter national security threats?

Effective response to national security threats calls for interagency coordination of all relevant security agencies. In particular “in the context of the military and the national security community, interagency coordination can be seen as the interaction and organizational synthesis that occur between elements of DND, other government departments and agencies, and regional and international organizations to achieve a common national security objective” (Lannan, 2004). Moreover, “To be of real benefit, the interagency coordination process must be formalized down to the operational level, and must be practiced in peacetime as well as throughout all phases of conflict” (Lannan, 2004).

In Canada, in order to facilitate interagency coordination between various security agencies, a national response center, called Government Operations Centre (GOC), has been established and granted directive powers over all relevant national security agencies. “The Government Operations Centre is designed to be the central node for communications and support so as to provide a multi-faceted source of intelligence and knowledge transfer” (Lannan, 2004). It is important to note, however, that the agencies coordinated by GOC will vary depending on their relevance to a particular incident or threat, so as to satisfy the particular operational requirements. Thus, “it is only the process of coordination that needs to be institutionalized. The asymmetrical threat that confronts us is simply too unpredictable to establish a fixed structural organization” (Lannan, 2004).

According to David Tucker (as quoted in Lannan (2004)), an effective interagency coordination process involves three elements: “It is a network disguised as a hierarchy; it incorporates different decision modes and speeds; and it has horizontal and vertical dimensions.”

Within a hierarchy, decisions can be made rapidly because of its centralized authority, whereas in a network the decision-making model can be complex and slow. The interagency coordination network is adaptable, and its flexible form makes it resilient in the asymmetric threat environment, whereas a hierarchy may be less accommodating and susceptible to partisanship. (Lannan, 2004)

References

Lannan, T. [2004], “Interagency coordination within the national security community: Improving the response to terrorism”, Canadian Military Journal Autumn, 49-56.

What are the pros and cons of information-sharing, within and between intelligence agencies?

 Information sharing threatens operational security and slows down decision making. The sharing of information regarding a planned operation, can lead to it getting into the wrong hands, and undermining the whole operation. Moreover, when different participants in the operation are informed of the whole operational plan, rather than only their particular portion of the overall plan, indecisiveness, due to unnecessary reflection on the overall structure of the operation by each participant, may result (Lannan, 2004). On the other hand, failure to share information about the overall operational plan, between all participants in the operation, may lead to an inability by all participants to coordinate their actions and successfully execute the operation. This is especially likely to happen if the circumstances under which the operation is to be executed turn out to be different from those expected (Lannan, 2004). Also, if “some security environment agencies are unsure of their counterparts’ roles, responsibilities and capabilities … [an] unnecessary duplication of effort” may result (Lannan, 2004).

References

Lannan, T. [2004], “Interagency coordination within the national security community: Improving the response to terrorism”, Canadian Military Journal Autumn, 49-56.

What security measures are required to counter the potential availability of weapons of mass destruction to transnational terrorists?

Effective security measures aimed at preventing the acquisition, manufacturing or usage of the weapons of mass destruction (WMDs) by terrorist groups, should include the protection of key materials, required to fabricate a WMD, from being acquired by terrorists (particularly important, in this respect, is the prevention of nuclear smuggling); increasing cooperation between regional and national police forces and intelligence agencies; and improving the effectiveness of the counterterrorism intelligence agencies by eliminating rivalries between them (especially between those within the same country) while mandating them to share information and cooperate with each other (Barnaby, 2004). 

References

Barnaby, F. (2004). How to build a nuclear bomb: and other weapons of mass destruction. New York: Nation Books.

What is the recent evolution (in terms of network connections) of British organized crime?

In the past, a British organized crime boss was the center of local operations; which meant that he was at the top of a hierarchy of local criminals through which he dominated the area (The Economist, 2004). Nowadays, Britain’s top organized criminals are masters of underground networking. Their wealth and power comes from being able to connect “illicit operators (“suppliers and clients, who may be spread over several countries”) with one another or with “overground” businesses where money can be laundered” (The Economist, 2004). 

References

The Economist (2004), “Organized crime: From godfathers to networkers”, April 1.

What is cyberterrorism?

Cyberterrorism is the convergence of cyberspace and terrorist activity; for example, politically motivated hacking operations intended to cause grave harm such as loss of life or severe economic damage. Concerns that terrorist groups or individuals may penetrate a nation’s electronic energy, transportation, financial or security grid or system and cause catastrophic damage (nuclear reactor or dam failure, multiple mid-air collisions or downed airliners, disrupting national economies through stock market interference, etc.) are all related to the phenomenon known as cyberterrorism (Nordeste & Carment, 2006).

References

Nordeste, B. & D. Carment (2006), “A framework for understanding terrorist use of the internet”, Canadian Centre for Intelligence and Security Studies 2006-2, The Norman Paterson School of International Affairs, Carleton Univ., http://www4.carleton.ca/cifp/app/serve.php/1121.pdf.

Why are protection and enforcement integral parts of organized crime?

“Along the supply chain [of any illegal good] from primary producer to final consumer, however, there are a host of contractual enforcement and financing problems that have to be solved without recourse to the police, the legal system, or to mainstream financial institutions.” Hence, this need for protection and enforcement for the orderly and efficient conduct of business is filled by the organized crime groups themselves (Skaperdas, 2001). Moreover, the ability of organized crime groups “to enforce their rule within a specific geographic or economic area requires that they have the means to use force and therefore providing protection is an element common to all mafias and gangs irrespective of their other economic activities” (Skaperdas, 2001). 

References

Skaperdas, S. (2001). The political economy of organized crime: providing protection when the state does not. Economics of Governance 2, 173-202. Available at http://www.socsci.uci.edu/~sskaperd/SkaperdasEoG01.pdf.

What are the effects of globalized communication, migration and trade on security demand?

In some respects, the needs of international security and global trade are clearly in tension. Modern shipping containers, while being highly efficient and indispensible to modern world commerce, can be used to smuggle drugs, contraband, illegal immigrants, nuclear bomb components, and well equipped terrorists, efficiently and securely (The Economist, 2002). At the moment only 2% of shipping containers get screened; in large part because screening all containers, with presently employed methods, would take a heavy toll on the supply chains of most industries, which require rapid and continuous flow of goods (The Economist, 2002).

On the other hand, when it comes to individual nations posing a threat to international security, global trade may have the exact opposite effect:

A nation’s security increases (decreases) as its interdependence with the rest of the world increases (decreases). Proponents of this view hypothesize that with greater interdependence, the opportunity costs (to all concerned nations) of a disruption in trade are greater. Higher opportunity costs in turn make it less likely that any single nation will undertake action – be it economic, diplomatic, or military – that disrupts trade and threatens the minimally acceptable level of economic welfare (Herander, 1993)

The Internet is one of the hallmarks of new means of global communication. And while having many positive effects on commerce, politics, education, and a host of other areas of human endeavour, it also has some negative effects on security, from the individual to the global level. “The presence of subversive groups and organizations on the internet has grown, and continues to grow at an alarming pace.” Such groups use the internet to plan and coordinate violent attacks in the real world, and/or engage in cyber attacks on targeted websites, computers, or electronic command systems (Nordeste & Carment, 2006). Profit-seeking criminals are also turning to the internet and other means of global communication, more and more.

Fraudsters can conduct schemes remotely using telemarketing techniques and Internet promotions in conjunction with virtual marketplaces, electronic trading systems and wire remittances. Technology enables perpetrators to undertake criminal activities anonymously, transfer funds quickly, and target victims over a broad geographic area. Many securities fraud schemes are national or transnational in scope, potentially targeting thousands of investors from multiple countries (CISC, 2010).

Increases in global migration have, not surprisingly, led to increases in many security threats. Aside from fueling such prominent illegal activities as terrorism and organized crime, increased global migration also led to increases in global health threats. Aside from contributing to the spread of local epidemics across the world, it also led to the emergence of new ones as “Travelers to and from previously isolated regions may distribute previously contained microorganisms into the global population, many of whom will be immunologically naïve to the emerging infectious agent” (Price-Smith, 2002, p. 41).

References

CISC (2010), “2010 Report on Organized Crime” http://publications.gc.ca/collections/collection_2010/grc-rcmp/PS61-1-2010-eng.pdf

Herander, M. (1993), “International trade relations, trade policy, and national security: The role of economic analysis”, in Leitzel (1993), Economics and National Security.

Nordeste, B. & D. Carment (2006), “A framework for understanding terrorist use of the internet”, Canadian Centre for Intelligence and Security Studies 2006-2, The Norman Paterson School of International Affairs, Carleton Univ., http://www4.carleton.ca/cifp/app/serve.php/1121.pdf.

Price-Smith, A. T. (2002). The Health of Nations. Cambridge: The MIT Press.

The Economist (2002), “When trade and security clash”, April 6.

What are the channels of policy intervention for the prevention of terrorism by groups such as Hamas, Hezbollah and the Taliban?

• Factors that raise the probability of apprehension of an attacker, “such as topography, strong government, and easily-profiled rebels, limit the targets that an insurgency can aspire to attack without operatives defecting. Conventional insurgency is then limited to low damage activities” (Berman & Laitin, 2008).
• Increasing economic opportunities in the area where insurgents operate will increase the chances of insurgents defecting, especially from suicide missions, because insurgents with strong outside options are far more likely to defect (Berman & Laitin, 2008).
• Since subsidies to terrorist organizations are known to increase the frequency of terrorist acts by such organizations, blocking the transfer of funds to such organizations will reduce their terrorist activities (Berman & Laitin, 2008).
• Since terrorist organizations attract new members and maintain the loyalty of old ones through provision of essential public services to them in areas where the government does not; improving the local provision of identical government or NGO provided public services (so as to create direct competition), to both members and non-members of terrorist organizations, will undermine the support base of terrorist organizations which recruit members from the same territory (Berman & Laitin, 2008). This will of course likely lead to attacks by those terrorist organizations on the government agencies and NGOs that are providing identical public services. So both should be actively protected. A more radical policy along the same lines, with an even greater anti-terrorist effect, would consist of making it illegal for any local ‘clubs’ to provide public goods (Berman & Laitin, 2008).

References

Berman, E. & D.D. Laitin (2008), “Religion, Terrorism and Public Goods: Testing the Club Model”, J. Public Economics 92, 1942-1967 http://research.create.usc.edu/cgi/viewcontent.cgi?article=1012&context=nonpublished_reports.

Did Securing an Open Society present adequate responses to existing and emerging threats before and after its publication (i.e. does it still remain a valid framework)?

Securing an Open Society was nothing more than an attempt to outline a National Security Strategy (NSS). And its publication must have been a difficult government decision because articulating an NSS “can be interpreted [by the public] as excessive defence spending at the expense of more popular domestic programs” (Devlin, 2005). However, the benefits of a formal NSS likely outweigh its disadvantages, especially those perceived by the Canadian public. A formal NSS is important for minimizing existing and emerging security threats, as well as giving further credence to Canada’s claim of being a middle power. It “promotes understanding and unity of effort throughout government departments, with a clear articulation of both the direction that the nation is moving, and how the nation intends to move there” (Devlin, 2005).   

Despite doing a good “job of providing the necessary background to underpin a NSS,” Securing an Open Society does a fairly poor job of completing a strategic assessment, and instead presents various unevenly detailed and mostly vague proposals (Devlin, 2005). 

References

Devlin, P. J. (2005). Securing an Open Society - Required and Valid? Strategy Research Project. Available at: http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA434647&Location=U2&doc=GetTRDoc.pdf. 

Which current threats to Canada's national security have been inherited from the Cold War era?

Street security:

                Street security threats most likely refer to the various crimes that take place on the streets (e.g. threats, assaults, mugging, car theft, etc.), as well as various other street dangers such as traffic accidents, accidents stemming from poor street maintenance (e.g. icy roads), and so on. Such security threats have always existed, changing little in their nature, over time.

Food and health security:

Many infectious diseases have existed for millennia and caused countless deaths and suffering to citizens of innumerable societies. In the 20th century, however, the prevalence of many such diseases has been greatly reduced, with a few being completely eradicated in the developed world (Price-Smith, 2002). However, in the mid 1970s dozens of new pathogens began to emerge, rapidly spreading all over the world in the following decades. Adding to the threat was (and continues to be) the development of drug resistance in the long existing pathogens that have formerly been successfully kept at bay through the use of drugs (Price-Smith, 2002).

Canadian Government endorses the definition of food security which emphasizes three dimensions: access, availability, and utilization (Power, 2008). The access dimension refers to “the economic ability of individuals and households to purchase food in the market (or retail) food system.” The availability dimension is restricted to the supply and production of food. While utilization “is concerned with Canadians’ ability to make healthy food selections in their local environments, such as schools and workplaces” (Power, 2008). And according to McIntyre (2003), though food insecurity in Canada has a long history, it officially was ‘discovered’ and became a subject of study in the 1980s, “when food banks began to emerge and children’s feeding programs in schools became more common.” The problem remains unsolved to this day, despite various efforts to do so. For example, “a total of 1,800 new food banks opened between 1997 and 2002.” However, these and similar initiatives “have failed to eliminate or even significantly reduce hunger and food insecurity” (McIntyre, 2003).

Organized crime:

                Organized crime refers to the activities of a group of people, which was formed primarily in order to commit criminal offences that tend to bring material benefits to the members of this group. In present-day Canada, organized crime groups range from highly sophisticated groups involved in securities frauds to street gangs involved in illegal drug trafficking (CISC, 2010).

                A large variety of criminal organizations started to grow and spread in Canada starting in the 1970s, gathering speed in the 1980s and 1990s (Schneider, 2009, p. 343). Starting in the 1980s Canadian organized crime groups became transnational for the first time. Feeding these developments was the fact that Canada has long established itself as a prime center for the production, distribution or sale of illegal and contraband goods, a practice which, not surprisingly, only grew, developed and diversified from the 1970s onwards (Schneider, 2009, p. 344).

Border security:

While there appears to be no consensus on what border security actually is (McCombs, 2011); a simple definition may be something like the following. A border is 100% secure when no ‘unwanted’ people, machines (e.g. aircraft), or goods, as specified by the state, manage to cross it. Since someone or something always manages to cross any border, border security has always been an issue; especially for Canada, with its vast borders and comparatively small national security agencies.

Infrastructure security:

“Infrastructure security is the security provided to protect infrastructure, especially critical infrastructure, such as airports, highways, rail transport, hospitals, bridges, transport hubs, network communications, media, the electricity grid, dams, power plants, seaports, oil refineries, and water systems. Infrastructure security seeks to limit vulnerability of these structures and systems to sabotage, terrorism, and contamination.”[1] Canadian infrastructure has always been in need of protection, whether from perceived attacks by Soviet sympathizers or direct attacks by the Soviet Union during the Cold War, or from international terrorists, more recently.

Terrorism:

The type of terrorism that currently presents a threat to Canadian security is the post-9/11 type, which is different and has no roots in the terrorism that plagued Canada in earlier decades and started to break down in the 1980s (Leman-Langlois & Brodeur, 2005). Hence, the terrorism that presents a current threat to Canada was not inherited from the Cold War era.

References

CISC. (2010). 2010 Report on Organized Crime. Retrieved from http://publications.gc.ca/collections/collection_2010/grc-rcmp/PS61-1-2010-eng.pdf.

Leman-Langlois, S. and Brodeur, J. (2005). Terrorism Old and New: Counterterrorism in Canada. Police Practice and Research, 6 (2), 121–140. Retrieved from http://www.crime-reg.com/textes/terrorismoldandnew.pdf.

McCombs, B. (2011). Border is a clear line; 'control' is a gray area. Arizona Daily Star. Retrieved from http://azstarnet.com/news/local/border/article_bfe40b78-ef21-538c-93a3-9017c4163dab.html?mode=story.

McIntyre, L. (2003). Food security: More than a determinant of health. Policy Options. Retrieved from http://www.chumirethicsfoundation.ca/files/pdf/FoodSecurity-MorethanDeterminantofHealth.pdf.  

Power, E. M. (2008). Commentary: Conceptualizing Food Security for Aboriginal People in Canada. Canadian Journal of Public Health, 99(2), 95-97. Retrieved from http://qspace.library.queensu.ca/jspui/bitstream/1974/1224/1/CJPH%20Aboriginal%20food%20security.pdf.

Price-Smith, A. T. (2002). The Health of Nations. Cambridge: The MIT Press.

Schneider, S. (2009). Iced: The Story of Organized Crime in Canada. Mississauga: John Wiley & Sons Canada, Ltd.

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[1] http://en.wikipedia.org/wiki/Infrastructure_security

Can anything, other than the reserves, provide the military with surge-ability?

A simple, better alternative to reserves, whether when it comes to surge-ability or otherwise, is battlefield contractors. Though no democratic state has yet allowed defense contractors to take on all functions of reserves, the potential is clearly there. Contractors for the US military, for example, are already active on the battlefields in Afghanistan and Iraq, where they perform a number of essential military functions. The services they provide include reconstruction, logistics and base support, interpreting, advising, and facilities and personal security (Cancian, 2008).

“Contractors provide a number of advantages over military personnel or civil servants—speed of deployment, continuity, reduction of troop requirements, reduction of military casualties, economic inputs to local economies, and, in some cases, executing tasks the military and civilian workforce simply cannot” (Hammes, 2011).

When it comes to achieving cost-effectiveness and surge-ability with battlefield contractors, the way the US government employs them, proves to be highly instructive. The defense contractor, who has been hired for a certain number of years, keeps a list of qualified personnel, willing to be deployed on short notice (Cancian, 2008). Unlike the training and personnel costs associated with reserve units, the services of the contractor, during peacetime, effectively cost nothing to the government. But when the conflict occurs and the military needs quick support, the contractor delivers the required personnel to the required location (Cancian, 2008).

Unlike the military, which often has the policy of rotating its personnel every 6 to 12 months, contractors are often willing to stay in the same battlefield for much longer periods (Hammes, 2011). Defence contracting companies are willing to offer increased pay to those who will stay longer, and many contractors are willing to take that opportunity. Prolonged stay often leads to a better understanding of the situation and better decision making capability (Hammes, 2011).

Defense contractors are also more efficient than the military, since they maintain a much lower support-to-operator ratio; in effect, replacing a certain number of troops with a smaller number of employees (Hammes, 2011). Also, when it comes to battlefield contractor deployment and casualties, there is no real impact on the political aspects of the war. While the reported death toll of the military personnel frequently reduces public support for the war, contractor casualties are not counted in the official death tolls. In present-day democracies “the decision to hire contractors can be taken out of view of the public while decisions to increase troop strength are usually subject to intense debate” (Hammes, 2011).

Defense contracting provides economic inputs into local economies by creating jobs and hiring locals to fill them. And this happens to be an effective method for population-centric counter-insurgency. Moreover, local power structures can be co-opted into supporting the new government through carefully targeted contracts (Hammes, 2011). And finally, locally hired contractors can execute tasks that neither the military nor the civilian workforce can. For example, supply lines to the occupying forces frequently run through highly volatile, highly contested, uncontrolled areas. Consequently, even stationing one’s military to protect them would not be very effective as they would be subjected to constant assaults from all sides. On the other hand, locally hired contractors have shown their ability to maintain such supply lines without any problems, through their combination of force, personal connections, and negotiation skills (Hammes, 2011).

Battlefield contractors, however, do pose some problems which the regular military does not. Quality control is a major issue. While unarmed contractors, employed by the US government to help with the rebuilding of Iraq and Afghanistan, have often been found guilty of substandard construction, fraud, and theft; armed contractors have been known to be under-equipped and untrained (Hammes, 2011). However, it seems that these problems are temporary. Defence contracting companies that don’t deliver the products and services of the desired quality, will not see their contracts renewed and will soon be out of business; while the government will start hiring only those contractors with a proven record of high quality performance. Moreover, such problems may also be solved, in the short-term, through the drafting of more stringent contracts and/or an enactment of more stringent procurement laws, such that the profits of contracting companies will take a strong hit should they fail to deliver the goods and services at the expected level of quality.

Also there is some risk that armed defense contractors will terrorize and kill civilians of the occupied country, especially if that makes accomplishing their missions easier, and thus cause many political problems to the country that employs them. A few such isolated cases, involving personal security contractors for the US State Department, have occurred (Cancian, 2008). This was however largely due to the fact that they were allowed to operate independently, instead of being under the control of the local US military; as well as because they were neither monitored nor given instructions of what they can and cannot do during their missions, regardless of their objectives or problems they may encounter (Cancian, 2008). Consequently, US government has demonstrated that it is possible to avoid these problems by putting battlefield contractors under the control of the military, having government security officials accompany every convoy, installing video cameras in the vehicles of battlefield contractors, and issuing strict guidelines to contractors regarding what, for the purposes of their job, will constitute allowable and unallowable use of force (Cancian, 2008).

References

Cancian, M. (2008). Contractors: The new element of military force structure. Parameters 38, 61-77. Retrieved from http://www.carlisle.army.mil/uSaWc/Parameters/Articles/08autumn/cancian.pdf.

Hammes, T. X. (2011). Private Contractors in Conflict Zones: The Good, the Bad, and the Strategic Impact. Joint Force Quarterly, 60(1), 26-37. Retrieved from http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA536906.

How can military service retention policies internalize the informational asymmetry over individuals’ preferences over pay and non-pay remuneration?

For an all volunteer force, one of the key determinants of retention is military pay. Military pay is determined by a number of factors, including various market forces, relative scarcities of required personnel, earnings in similar civilian occupations, and special features of the military job. The military salary frequently consists of pay, allowances, and benefits-in-kind (Sandler & Hartley, 1995). The last one frequently includes housing, medical support, training, recreational activities, etc. Thus, the military employer should strive to make the net market value of military benefits equal to the net benefits of a similar civilian job (Sandler & Hartley, 1995). Since different recruits to the military will prefer different wages-benefits combinations, the military employer should attempt to select the cheapest compensation package satisfactory to each individual recruit. This may be very difficult, however, whenever it is costly or impossible to discriminate between individual preferences (Sandler & Hartley, 1995).

One economic model of military compensation suggests several complementary approaches for mitigating such difficulties. One, is to separate military occupations that have close civilian equivalents from those that don’t (Sandler & Hartley, 1995). Another, is to convert nonmonetary military compensation into monetary form, to make the comparisons easier. And the final approach, is to make sure that the military employees are paid according to their contribution, at levels comparable to their civilian counterparts (Sandler & Hartley, 1995).

References

Sandler, T., & Hartley, K. (1995). The Economics of Defense. Cambridge: Cambridge University Press.

Can a recession negatively affect military recruitment?

A major economic recession in the early 1970s, which was caused by the first oil crisis, resulted in mass unemployment among young people. While this was the case, the armed forces found it relatively easy to meet their recruiting goals. Not surprisingly, during that time, the idea of a lifetime military career was seen as being very attractive (Lescreve, 2000). On the other hand, the end of the 1990s saw a rapid growth in the economies of most Western countries. At the same time the armed forces of those countries were experiencing increasing difficulties in recruiting required numbers for their ranks (Lescreve, 2000). Hence, in most cases, a recession doesn’t seem to be able to have a negative effect on military recruitment.

References

Lescreve, F. (2000). Recruiting for the military when the economy is booming. In: Changing Mission for the 21^st century. 36th International Applied Military Psychology Symposium. Croatia, Split. Retrieved from http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA412525#page=146.

What is the best way for sharing the economic burdens of a military alliance?

According to Pincus (1965, p. 58), there is no consensus or mechanism for reaching it, on such issues as measuring different countries’ capacities for efficient production of military equipment, for meeting a share of the total costs of a military alliance; estimating the benefits of a military alliance to any particular country; and consequently coming up with a system that would equitably reflect those benefits.

One common normative approach to all types of burden sharing is the ability-to-pay principle. According to this assumption, defence contributions should be progressive, very much like a domestic income tax. Such an approach would involve measuring each country’s income in terms of such measures as GNP, and them asking the countries with higher incomes to pay progressively larger shares of the common defense expenditures of the alliance (Pincus, 1965, p. 59).

Carrying this scheme out has proved to be impossible, however, in part because economic analysis has never been able to give a good answer to the question of what degree of progressiveness would be most equitable (Pincus, 1965, p. 59, 60).

Whatever may be the best way for sharing the economic burdens of a military alliance, empirical evidence from 1960 shows that the United States has contributed to combined NATO defense expenditures, during that year, considerably more than can be expected from using all but the most progressive exchange-rate and real-income formulas (Pincus, 1965, p. 76).

References

Pincus, J. (1965). Economic Aid and International Cost Sharing. Baltimore: The Johns Hopkins Press.

What intra-alliance problems and procurement issues are generated by the need to meet the strategic airlift needs of the NATO Response Force?

To achieve its airlift goals, NATO has come up with three solutions. The simplest and the oldest solution involves using the national airlift capabilities of member countries to transport the NATO Response Force. Owing to the great differences in airlifting capabilities of different countries, it is not surprising that following this approach has resulted in the burden of providing strategic airlift capacity for NATO being unequally shared among the members of the alliance. In fact, the US has largely shouldered this burden since the creation of the alliance. More recently, Canada and the UK joined US in helping to transport the troops of the alliance around the world (Hood, 2009). However, NATO will have trouble airlifting its NATO Response Force across the world if it continues to rely solely on current or future national capabilities of these countries. This is because US, Canadian, and British airlift capabilities are constantly burdened by the respective national commitments of these countries, leaving little room for catering to the needs of the alliance (Hood, 2009). Moreover, the existing strategic airlift fleets of the three countries will sooner or later reach the end of their lifespan; which will happen sooner rather than later if they continue to be used for the purposes of the alliance, on top of national interests. Also, the aircraft may simply be unavailable in times of need due to being on maintenance or being used for national commitments. So borrowing it to serve the needs of the alliance may often be simply impossible (Hood, 2009).

Thus, the mainland European nations face special difficulties when it comes to strategic airlifting. To overcome this problem NATO made a special agreement, called the Prague Capabilities Commitment, aimed at developing an airlift capability for Europe, specifically (Hood, 2009). To achieve this goal NATO signed contracts for developing and producing Airbus A400M aircraft for the European members of the alliance. But the procurement of A400M had its problems. Delays in production stalled its release until 2013. Moreover, A400M cannot transport tanks or heavy artillery that the alliance’s strategic airlift is expected to do (Hood, 2009).

Hence, a second solution for solving NATO’s strategic airlift problem was developed. It involves having its members form a commercial partnership and then using this partnership to purchase the required transport aircraft for the alliance (Hood, 2009). The rationale behind such a partnership is that sharing a few airplanes is more cost-effective than having each of the needy alliance members buy its own transport aircraft. The partnership that ten NATO members and two non-NATO countries formed for this purpose is called Strategic Airlift Consortium (SAC). And soon after its creation, SAC obtained three C-17 airplanes; two were purchased and one was donated by the United States (Hood, 2009).

The third solution, for meeting the strategic airlift needs of the NATO Response Force, consists of alliance members forming a commercial partnership and then utilizing this partnership to lease aircraft from the private sector. To this end, 15 NATO nations and one NATO partner nation formed such a partnership. It is called the Strategic Airlift Interim Solution (SALIS). Soon after its inception, SALIS started renting flight hours on Russian and Ukrainian An-124-100 aircraft (Hood, 2009).

However, using An-124 is not without its problems. For example, not long ago a contract dispute regarding the usage of one An-124 was sorted out in court for more than a year, during which, not surprisingly, the airplane could not be used because it was under “ramp arrest.” The influence of foreign governments may also affect the availability of such aircraft (Hood, 2009). For example, while a Russian aircraft charter company may not want to break contracts with SALIS, a conflict between the interests of the Russian government and NATO, may cause the Russian government to exert undue influence on the Russian charter company to make the required aircraft unavailable to NATO. Moreover, this may take place, whether by design or by accident, during a critical mission, where failure is not an option (Hood, 2009).

References

Hood, J. D. (2009). NATO Strategic Airlift: Capability or Continued US Reliance? Retrieved from http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA539589.

Are relative completeness of contracts and of contract governance arrangements necessary conditions for successful procurement?

Contracts can be, and are often deliberately designed to be incomplete. This is because there is a trade-off between the present costs of drafting a more complete agreement and the later inefficiencies stemming from the absence of exhaustive arrangements. Hence, environmental complexities that increase the costs of contract drafting can be expected to lead to lower completeness of the most efficient contracts, while more exhaustive contracts can be expected to be drafted only under conditions of increased potential for later inefficiencies. Consequently, the degree of contractual completeness is a product of an attempt by the parties involved to minimize the net economic costs of contractual exchange (Crocker & Reynolds, 1993).

Defense procurement normally involves high, reoccurring investments into relationship-specific assets provided by a relatively small group of highly specialized contractors. Moreover, due to extensive lead times and costs of development and production of major weapons systems, the government ends up being tied to particular contractors once the contract is signed and the work begins (Crocker & Reynolds, 1993). Consequently, there is a high administrative burden on the government, which involves the selection, governance and compensation of multiple private contractors. As a result, detailed procurement regulations have been developed to substantially reduce this burden. These regulations list the duties of the contracting parties, as well as the methods of conflict resolution between them; and provide the structure for the design of permissible contractual agreements (Crocker & Reynolds, 1993). Consequently, the governmental contractual officers are expected to take environmental factors into account and following the relevant regulations select the most appropriate contract from among the alternative forms open to them, subject to more senior approval. In spite of this considerable amount of regulations, the various forms of contract which can be chosen by the contractual officers from among the alternatives, allow them to choose contracts with various levels of completeness (Crocker & Reynolds, 1993).

Contractual compensation is particularly sensitive to the degree of completeness inherent in the contract which outlines it. The most restrictive and complete contract in this respect, is the “firm-price” contract, which sets a fixed price and declares that this fixed price will remain unchanged irrespective of future events (Crocker & Reynolds, 1993). Other types of contracts allow the price to fluctuate to various degrees due to possible future events, and thus carry various degrees of risk of future difficulties, if the future event does not fall neatly into any of the categories outlined in the contract. The most flexible and the least complete contract of this type is the one which allows for the periodic negotiation of nonbinding target prices (Crocker & Reynolds, 1993).

References

Crocker, K. J. and Reynolds, K. J. (1993). The efficiency of incomplete contracts: An empirical analysis of air force engine procurement. The RAND Journal of Economics, 24(1), 126-146.