The client’s struggle to control private military companies effectively

Abstract

ABSTRACT Private military companies (PMC) offer combat and training services and can have considerable advantages for the client on the one hand, but on the other hand it is hard for the client to exercise effective external governance. Using tools of New Institutional Economics, we analyse the relationship between the PMC and the client and show that effects like adverse selection, moral hazard and supply induced demand are detrimental to the client. We derive approaches from the theory to solve the identified problems. With the help of a comparative case study (Wagner Group in Syria and Gurkha Security Guards in Sierra Leone), the insights gained are tested and put into perspective. It turns out that there must be an effective military or economic threat potential in particular in order to achieve good behaviour on the part of the PMC. In this way, we expand the insights of successful monitoring private providers of military force from the client's point of view.