Symposium on PMSCs: From Power to Peril – Risk Transfer by Private Military Security Companies and the Global South’s Burden

[Madhumita Jayashankar is a final-year B.A. LL.B. (Hons.) student at Rajiv Gandhi National University of Law, Punjab, specialising in international law with a major in political science]

In recent decades, the landscape of global security has undergone a quiet but profound transformation. The privatization of military and security functions and services has surged since the end of the Cold War, fundamentally reshaping how states manage risk and project power. Today, Private Military and Security Companies (PMSCs) are no longer marginal actors but central in operating in armed conflict environments or high risk areas. Their global workforce, drawn heavily from economically vulnerable regions in the Global South, highlights a stark and troubling reality: risk is systematically transferred from powerful states to those least able to bear it. This post contends that PMSCs, particularly those linked to Western states, function within a triple-layer risk transfer system, where regulatory gaps and inter-state competition enable powerful nations to offload military, political, and economic burdens. While acknowledging the broader global PMSC market that includes local companies in various countries, the post focuses on the international dimension of risk transfer between Global North and Global South actors. Far from a simple technical shift, this system perpetuates exploitative labour practices and undermines accountability, with consequences that reverberate across borders and generations.

Theoretical Foundations: Risk Transfer and Strategic Competition

Contemporary western warfare is marked by a calculated and methodical redistribution of risk from Western military personnel to enemy combatants and civilian populations. The risk-transfer war theory provides a vital framework to understand the above. It argues that Western countries aim to legitimise warfare by minimizing Western casualties while achieving military objectives. By extending this theory, we can analyse how PMSCs function as intermediaries in a more complex risk transfer system. In this extended model, Western states transfer risk not only to enemy combatants but also to private contractors, who further transfer these risks by recruiting personnel from economically vulnerable regions in the Global South. This creates a triple-layer risk transfer which is strategically beneficial as it allows governments to maintain operational capacity by reducing official troop counts and at the same time it provides minimal public scrutiny of military deployment. Additionally, PMSCs find it lucrative to recruit from the Global South as these regions are characterised by a high rate of unemployment, limited economic opportunities, and weak labour protections, thereby creating a ready supply of willing workers who have few alternatives to dangerous, low-paid employment. Fijian workers hired by PMSCs in Iraq reported salaries as low as $1,500 per month, while their American counterparts received $10,000-15,000 for the same work. This salary disparity cannot be rationalised by variations in training, experience, or performance; instead, it signifies the systematic exploitation of economic vulnerability and diminished bargaining power among recruits from the Global South. The transnational nature of PMSC operations combined with absence of a regulatory mechanism and jurisdiction complexities, have created a system where the recruits have limited recourse when their rights are violated. 

Regulatory Competition Dynamics

The regulatory competition between states regarding PMSCs oversight can be formally modelled as a prisoner’s dilemma that reveals why rational state behaviour leads to collectively harmful outcomes. Consider the following scenario. Two Global North states, A and B, are both home to major PMSCs. Each state can choose to enforce strict human rights regulations (cooperate) or maintain lax oversight to attract business (defect). If both cooperate, global standards rise and abuses fall, but each fears losing business to the other if it defects. The dominant strategy is to defect, leading to a “race to the bottom” where both maintain weak regulations, maximizing PMSC profits but perpetuating abuses, especially against Global South recruits who lack bargaining power and legal protection.

The payoff structure of this regulatory competition creates a Nash equilibrium where defection becomes the dominant strategy for each state, regardless of what other states choose to do. This leads to a suboptimal collective outcome where all states maintain inadequate regulations, resulting in insufficient protections for PMSC personnel, particularly those recruited from the Global South. The resulting regulatory environment prioritizes PMSC profitability over personnel protection, creating systemic conditions for exploitation and abuse. By modelling incentives and payoffs, policymakers can design interventions that realign interests and promote compliance.

The recruitment process often targets unemployed men and ex-military personnel who lack comprehensive information about the risks they would face or the legal protections available to them. The 2007 Nisour Square incident, in which Blackwater contractors allegedly killed seventeen Iraqi civilians, illustrates the accountability disparities that characterize PMSCs operations and their differential impact on various stakeholders. The legal immunity initially enjoyed by Blackwater contractors from Iraqi law through Order 17 of the Coalition Provisional Authority, demonstrated how regulatory gaps enable PMSCs to avoid accountability for their actions, and eventual prosecution only took place after sustained public outrage and diplomatic pressure. Furthermore, contractors from L-3 Services and CACI International, Inc. implicated in Abu Ghraib were never charged and were shielded by US jurisdiction. In contrast, Global South citizens or expatriates, such as South African mercenaries in Cote d’Ivoire and Equatorial Guinea, or Norwegian operatives in Congo, have faced real prosecutions, fines, or prison sentences for lesser grave crimes. This indicates that accountability mechanisms, when they exist, tend to focus on the most visible violations rather than the systematic patterns of exploitation that characterize industry practices. The differential treatment of American contractors versus Global South recruits in accountability processes reveals the hierarchical nature of risk distribution within PMSC operations. While high-profile incidents involving Western contractors may eventually result in legal consequences, the routine exploitation of Global South recruits rarely receives similar attention or generates comparable accountability measures.

Current Regulatory Frameworks and their Limitations

The Montreux Document represents the first major international effort to clarify state obligations regarding PMSCs operating in conflict environments. The document reaffirms existing obligations of states under international humanitarian law and human rights law relating to PMSC activities. Despite its comprehensive scope, the document’s non-binding nature means that states can choose whether and how to implement its recommendations, creating opportunities for regulatory arbitrage and selective compliance. The document’s focus on state obligations rather than corporate responsibilities also limits its ability to address the systematic exploitation practiced by PMSCs. 

Building on the foundations of the Montreux Document, the International Code of Conduct for Private Security Service Providers (ICoCA) represents a multi-stakeholder initiative involving governments, PMSCs, and civil society organizations. The ICoCA certification system has shown some success in improving industry practices, with companies achieving accreditation through rigorous adherence to human rights and humanitarian law standards. This market-based approach demonstrates how voluntary standards can drive improvements in corporate behaviour when properly structured and implemented. However, the voluntary nature of ICoCA participation limits its effectiveness, resulting in a two-tier industry where certified companies may maintain higher standards while non-certified companies continue to engage in harmful practices without facing meaningful consequences.

Against this backdrop of mixed success among existing initiatives, The Open-ended Intergovernmental Working Group (OEIGWG) is developing a draft instrument that could significantly improve PMSC accountability, including the creation of a UN database of approved PMSCs that abide by international law. The effectiveness of the OEIGWG draft instrument will depend on its final form and the extent to which it incorporates binding enforcement mechanisms.  

In light of these regulatory gaps, it becomes pertinent to examine national approaches that have sought to address the challenges posed by PMSCs. South Africa has developed one of the most comprehensive national regulatory frameworks for PMSCs, implementing separate but coordinated systems for companies operating domestically versus those operating abroad. The Private Security Industry Regulation Act of 2001 governs domestic security companies and The Regulation of Foreign Military Assistance Act of 1998 governs PMSCs operating abroad. This dual regulatory approach addresses the different challenges posed by domestic security services versus international military operations. The system recognizes that PMSCs operating in conflict zones face different risks and raise different regulatory concerns than those providing domestic security services, enabling more targeted and effective oversight.

Policy Recommendations for Enhanced Accountability

To address the persistent exploitation of Global South recruits and the broader regulatory challenges facing PMSCs, a comprehensive governance model must strategically deploy both positive and negative incentives to promote compliance with human rights and humanitarian law. Firstly, governments, international organizations, and industry stakeholders should establish a robust international accreditation regime, building on existing initiatives like the ICoCA. The regime would require all PMSCs to undergo regular audits and certification would only be provided after an evaluation based on strict human rights standards. Subsequently, eligibility for contracts can be linked with mandatory certification which could then serve as the basis for creating preferential procurement policies. This would result in leveraging market forces by incentivising companies to adhere to higher standards and exclude non-compliant companies. Insurance requirements should also be imposed, obliging PMSCs to maintain comprehensive coverage that compensates victims of misconduct and adjusts premiums according to risk, ensuring companies internalize the costs of unsafe practices.

Secondly, legal frameworks must be harmonized across jurisdictions to prevent regulatory arbitrage and close the gaps that currently allow PMSCs to exploit regulatory competition. The objective for the OEIGWG while drafting a legally binding instrument on PMSCs, should be to set out clear obligations for both states and corporations, establish minimum standards for licensing and oversight, and require mechanisms for victim compensation and access to justice. Any regulation should specifically address the triple-layer risk transfer system by providing protections for Global South recruits and establishing clear accountability mechanisms. National governments should develop legislations, inspired by examples such as South Africa’s dual regulatory approach for domestic and international PMSC operations, and implement mandatory human rights due diligence for all PMSCs under their jurisdiction. Enforcement mechanisms can include financial penalties and license revocation for non-compliance.

Thirdly, effective governance must also be rooted in multi-stakeholder collaboration, with regulatory bodies including balanced representation from states, industry, civil society, and critically affected Global South communities, to ensure that standards and oversight reflect the needs and realities of those most impacted by PMSC activities. Shared monitoring and review panels, involving both public and private actors, should be established to evaluate PMSC performance and publish findings, fostering transparency and accountability. 

Lastly, to address redressal gaps and empower vulnerable recruits, accessible grievance mechanisms should be established at multiple levels, ranging from company-specific processes to national and international complaint procedures and legal avenues for reparations. These should be designed to overcome linguistic, cultural, and economic barriers. Compensation funds, financed by industry contributions, government funding, or international mechanisms, should be created to provide victims with timely relief and support community recovery, even when direct legal action is not feasible.

Conclusion: The Way Forward

The persistent exploitation of Global South recruits within the private military and security industry calls for decisive transformation in how PMSCs are regulated and held accountable. The incentive structures must be reshaped to include within its ambit standardised legal frameworks, multi-stakeholder oversight and coordination as well as accessible grievance redressal mechanisms. Only by adopting an approach grounded in human rights and humanitarian law, one that is both economically rational and legally unavoidable, can the international community break the cycle of regulatory competition and risk transfer. Such a shift is not merely a technical challenge; it is a moral imperative to ensure that PMSC operations uphold the dignity and rights of all, especially those most vulnerable to abuse.