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Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited
The return of Stahlhelm Corporations
Article Type: Editorial From: International Journal of Commerce and Management, Volume 21, Issue 3
Since the sixteenth century, corporations have played varying roles in the market and in society, and in the process they have been simultaneously loathed or appreciated by stakeholders. For over three centuries, as European countries fiercely pursued colonization projects in various continents, charter corporations were granted a monopoly over trade, in addition to the right to manage colonies, enforce order, and assume responsibilities for the security and military affairs of the colonized lands. Consequently, corporations gained unprecedented powers.
For example, one of the first charter corporations was the Dutch East India Company. By 1669, the company employed over 10,000 soldiers and had a fleet of 40 warships and 150 merchant ships. Similarly, the East India Company, established in December 1600, assumed control over vast lands abroad and became a ruling entity when the military defeated the forces of the Nawab of Bengal, Siraj-ud-daulah, at the Battle of Plassey in 1757.
By assuming military and security roles and or the administrative functions of the colonies, charter corporations gained the label, Stahlhelm or steel helmet firms. In today’s world, Stahlhelm conveys a specific message; these are corporations that, for various reasons, are given the right by a government to perform security or military functions which are normally carried out by the state. By necessity, this trend has blurred the lines between government roles and private corporations’ emerging security functions.
Charter corporations did not survive, as colonial governments preferred to directly manage their colonies and as new firms in the manufacturing, banking and extraction industries flexed their muscles in politics and markets. Though newly emerged corporations once relied on their respective governments in order to expand overseas and capture new markets, they gradually understood that there were activities other than exploitation of natural resources in developing nations that they could engage in, i.e. non-economic activities. Though these corporations had initially responded, in varying degrees, to the needs and dictates of their home governments, by the early 1960s these corporations had started to involve themselves in non-economic activities and had taken note of changing market realities. Their concerns with public image and with having friendly relationships with the elite in other countries, be they politicians, union leaders, or intellectuals, inaugurated a new era of corporate social responsibility.
This, however, has not precluded many governments from utilizing, though usually in secret, the service of corporations in performing security functions. For many years, governments have contracted or authorized private corporations to engage in militaristic and subversive activities abroad. This has enabled states to maneuver easily and to blame private entities when things do not go as planned.
Until early 2001, these activities were carried out discreetly by business corporations. The events after 9/11 brought these activities to the forefront. The invasion of Afghanistan and Iraq and secret intelligence and military operations conducted abroad have made the presence of Stahlhelm Corporations a reality in the business and political scene. Indeed, many security and military operations have been subcontracted to private corporations, be they private military contractors or security firms. These companies, while often accused by some media outlets and non-government organizations (NGOs) of being mercenaries, prefer to describe their businesses as private military or security provider contractors.
These corporations are involved in a wide range of defensive and offensive operations on the battle fields and in training military and security personnel in different countries. They provide security services for politicians and business people and engage in security screening in airports. The business of these corporations has flourished across the globe. In December 2005, the US Secretary of Defense, Rumsfeld (2005), in a speech at the Johns Hopkins School of Advanced International Studies (December 5, 2005), shed light on the rationale for using private military contractors stating:
It is clearly cost-effective to have contractors for a variety of things that military people need not do, and that, for whatever reason, other civilians, government people, cannot be deployed to do. There are a lot of contractors, a growing number, they come from our country, but they come from all countries. And indeed sometimes the contracts are from our country or another country and they employ people from totally different countries, including Iraqis and people from neighboring nations. And there are a lot of them, and it’s a growing number. […] But I personally am of the view that there are a lot of things that can be done on a short-time basis by contractors that advantage the United States and advantage other countries who also hire contractors. And that any idea that we shouldn’t have them, I think, would be unwise.
Whether we agree or not with Rumsfeld, the Stahlhelm Corporations have thrived in the last three decades. Their numbers are in the thousands if not the hundreds of thousands. In the case of US military engagements, Amnesty International (2011) has reported that in Iraq and Afghanistan, private military and security contractors have mushroomed:
As the United States engages in the “war on terror”, it is outsourcing key security and military support functions, particularly in Iraq and Afghanistan, to private companies to carry out the work. The number of contractors now exceeds the number of military personnel. The work that is contracted out to companies ranges from logistical support to security for U.S. government personnel and reconstruction projects, to training military and security personnel, to operating and maintaining weapons systems.
In fact, companies like airlines (e.g. Delta), in the USA, have been given the authority to issue a “military excuses” for passengers who are prevented by airlines employees from boarding or are escorted off the planes because of their physical appearance or their names. Other private corporations (e.g. Blackwater) have been accused of engaging in torture and human rights violations. The extent of such activities has been documented by NGOs including the Red Cross and Human Rights Watch. Writing in the International Review of the Red Cross, Cameron (2006) reported that the private military company industry is clearly multifaceted and complex, operating around the globe in many different situations. She indicated that there are a very large number of companies operating in this industry who are worth about $100 billion.
While Cameron (2006) has argued that the employees of private military companies are being referred to as “mercenaries”, she nevertheless has made it clear that not all of their activities are criminal. Nevertheless, the UN General Assembly (2003) in its Resolution (57/196) on February 25, 2003 condemned the “Use of mercenaries as a means of violating human rights and impeding the exercise of the right of peoples to self-determination”.
Many researchers, including Ottaway (2001), have argued that it is not the business of corporations to preach human rights and that asking corporations to observe human rights in their dealings with host governments represents a return to charter corporations. While she acknowledges that charter corporations once played a crucial role in the first phase of globalization by opening up the world for trade and establishing empires, she goes on to ask, “can private corporations […] play a similar role in the second phase of globalization, combining their entrepreneurial activities with the role of political and moral reformers?” Her answer is that “it is a singularly bad idea”. She provides three reasons for this: corporations, especially oil firms, are not the right organizations for furthering moral causes as their strengths lie not in devotion to democracy and human rights but in doing their primary business; the attempt to couple increased economic globalization with a further globalization of moral values assumes that all people of the world share similar “wider values of civil society” which is inaccurate; and pushing corporations to assume the role of reformers creates a process where nobody wants to take responsibility.
Furthermore, Ottaway believes that expecting corporations to promote human rights and ensure that security forces are assigned to protect their installations, therefore complying with international law, is indeed a restoration of charter companies, which she argues belong in history books not in the twenty-first century. This statement, along with the three reasons that she provides, contradicts her own historical account of charter corporations which she addressed in her article, “Reluctant missionaries”. Charter corporations abused the people of the colonized lands, engaged in torture and subjugation, and were interested not in improving the welfare of the host countries but in accumulating wealth and transporting it to their respective countries.
More importantly, a casual survey across the globe of government and business involvement indicates that it has become the norm to depend on business organizations to carry out what were once government functions. US Secretary of Defense, Donald Rumsfeld, UN agencies, and several NGOs, have proved that the existence of private military and security contractors are a part of the global market landscape. They have been in business under various forms and have thrived since the early 1990s (Cameron, 2006). These firms, along with many other corporations in various economic sectors, intentionally or unintentionally violate human rights and display a disregard for the welfare of their host countries. And much like the charter corporations of the past, they do not shy away from engaging in questionable practices.
Individuals who promote the idea that corporations must not promote human rights appear to be out of touch with reality. Many executives today, as reported by McKinsey Quarterly (2006), not only advocate socio-political issues but also include them as part of their strategic planning. Indeed, the survey found a strong global support for a wider social role for corporations. Senior business leaders from the USA, Japan, and Europe established in 1986 the Caux Round Table (1998) to promote “principled business leadership and responsible corporate practice”. One of the enacted principles states:
Corporations should lead by example through business practices that are ethical and transparent and that reflect a commitment to human dignity, political and economic freedoms, and preservation of the planet.
In recent years, hundreds of corporations have espoused the UN Global Compact (2011). Two of its ten principles that focus on human rights are:
Principle 1. Businesses should support and respect the protection of internationally proclaimed human rights.
Principle 2. Make sure that they are not complicit in human rights abuses.
These principles are clear and executives from various parts of the globe have officially adopted them. This, however, does not indicate that all corporations are observing human rights, In fact, the presence of private military and security contractors and the subcontracting of some government security functions to business organizations demonstrate that Stahlhelm Corporations are on the rise. While we are not sure about the future of these corporations, it certainly suggests that in an era of fiscal austerity, governments are subcontracting some of their activities to private businesses. The latter, driven by greed and the probability that their respective governments will provide them with immunity from prosecution, are likely to violate human rights and behave like charter or imperial corporations.
Corporations are not solely economic actors. Rather, they pursue social and political activities to facilitate their primary economic functions and enhance their economic involvement, survivability, and growth. They are endowed with resources and acquire skills and knowledge that are normally applied to fostering their contributions to markets and societies. The strengths of corporations lie in their ability to be creative and invent themselves to further their markets and societal functions. Steering their capacities and resources in the service of subversive activities is a disservice to corporations themselves and constitutes an attempt to turn history back into the darkness; it is a serious setback to the cause of humanity and civilization.
The return of Stahlhelm Corporations is a disappointing development in an era where people seek to live free of fear and abuse. Indeed, the evolving business of Stahlhelm Corporations is a threat to civility and to individual rights and liberties. A sensible action would be to compel these organizations to observe universal human rights and the principles of the Global Compact.
Abbas J. Ali
Amnesty International (2011), “The costs of outsourcing war”, available at: www.amnestyusa.org/our-work/issues/business-and-human-rights/private-military-and-security-companies (accessed June 5, 2011)
Cameron, L. (2006), “Private military companies: their status under international humanitarian law and its impact on their regulation”, International Review of the Red Cross, Vol. 88 No. 863, pp. 573–98
Caux Round Table (1998), “The critical role of the corporation in a global society”, Caux Round Table, available at: www.cauxroundtable.org/index.cfm?&menuid=49&parentid=21
McKinsey Quarterly (2006), Global Survey of Business Executives: Business and Society, available at: www.mckinseyquarterly.com/PDFDownload.aspx?ar=1741 (accessed June 6, 2011)
Ottaway, M. (2001), “Reluctant missionaries”, Foreign Policy, Vol. 125, July/August, pp. 44–54
Rumsfeld, D. (2005), “Secretary rumsfeld’s remarks to the john hopkins”, Paul H. Nitze School of Advanced International Studies Department of Defense, available at: www.defense.gov/Transcripts/Transcript.aspx?TranscriptID=1361 (accessed June 5, 2011)
UN General Assembly (2003), Resolution Adopted by the General Assembly (on the Report of the Third Committee (A/57/555)) 57/196, available at: www.undemocracy.com/A-RES-57-196.pdf (accessed June 5, 2011)
UN Global Compact (2011), “The ten principles”, UN Global Compact, available at: www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html (accessed June 5, 2011)