Pentagon contractors are turning bearish on the so-called “soft power” market for non-defense work such as nation-building and post-conflict reconstruction.
During the past several years, major defense firms have been seeking to diversify their corporate portfolios in anticipation of funding cutbacks to traditional weapons programs. One promising new source of revenue, analysts predicted, was the emerging “interagency” work from the non-defense side of the government, such as the State Department, the U.S. Agency for International Development, as well as from the military’s expanding role in post-conflict “stability” operations.
But the rising tide of pessimism about the civilian “surge” in Afghanistan is throwing those projections into question, experts said.
A glaring sign of the souring mood toward soft-power work was the recent decision by Lockheed Martin Corp. to unload a construction and engineering company that it purchased just four years ago as a means to break into that market.
In a series of speeches during the past two years, Defense Secretary Robert Gates, Secretary of State Hillary Clinton and Chairman of the Joint Chiefs of Staff Adm. Michael Mullen have called for increased use of “smart power” in U.S. foreign policy. In a nutshell: more diplomacy, nation-building, training local forces to defend themselves and less lethal force.
A similar theme runs through the Obama administration’s National Security Strategy and the 2010 Quadrennial Defense Review.
But so far the rhetoric has not been matched by resources, industry insiders lament. Companies are no longer seeing soft-power work as a growth area. Non-defense agencies have paltry budgets compared to the Pentagon, and there is no sign that the wealth will shift any time soon. Despite a close working relationship between Gates and Clinton, Defense overshadows State in terms of financial and human resources to conduct reconstruction and post-conflict stability operations.
Lockheed Martin in 2006 acquired a long-time peacekeeping and reconstruction contractor, Pacific Architects and Engineers Inc., for $700 million. PAE last month was selected as one of four awardees for the State Department’s Africa Contingency Operations Training and Assistance program, a contract potentially worth $500 million over five years. The work involves training and equipping African peacekeepers, and upgrading facilities used by these forces.
Lockheed announced last month it intends to sell the company. The move was motivated by both financial and political reasons, industry sources said. The profit margins in that sector were lower than what Lockheed had anticipated, and analysts ultimately concluded that the growth prospects were weak.
The “whole of government” strategy advocated in the National Security Strategy hasn’t materialized, industry officials said. On the political side, defense contractors have become fearful of what they see as a hostile environment for firms doing security-related work overseas. The political backlash against the expanding presence of wartime contractors has had a chilling effect on many firms, especially the top defense contractors that obsessively protect their corporate image. CEOs don’t want to risk ending up on the witness stand on Capitol Hill or being grilled in the media à la Blackwater. Even if there were profits to be made, for certain companies, the possibility of PR embarrassments may not be worth it.
The outlook for greater civilian participation in war zones so far remains grim, said Gordon Adams, professor of U.S. foreign policy at American University. Gates has supported “increased funding for the civilian institutions of statecraft,” Adams wrote. But the defense secretary also has “strongly advocated a significantly greater role for DoD in funding and providing training and equipment for foreign security forces, ranging broadly from the military, to constabulary forces, to border guards to police,” Adams said. “The weakness of our civilian institutions of statecraft [makes] the expansion of the DoD role a self-fulfilling prophecy,” said Adams.
Recent developments in Afghanistan, such as the unsuccessful Marjah operation that had sought to bring additional U.S. civilian government support to the war, have cast further doubts on the future of smart-power efforts. Obama administration officials have stated that there would be civilian representation in every military deployment across Afghanistan, but so far there are not enough qualified personnel to do that.
Nor is the money flowing toward the civilian side. Congress approved $6 billion for the State Department’s civilian surge in Afghanistan in 2010. The Pentagon will receive $65 billion just in emergency funding for Afghan war costs in 2010, which does not include the war-related expenses that already are embedded in the baseline defense budget.
“We’re not meeting this so-called civilian surge goal, and the quality of the civilians we’re providing isn’t meeting the need,” said Anthony Cordesman, a military analyst at the Center for Strategic and International Studies.
The State Department in July 2009 partnered with the Indiana National Guard to offer a one-week training for civilians who are headed to Afghanistan.
Such civilian-military alliances, alas, should have a negligible impact on the smart-power equation. More to the point, the nation’s huge and growing debt load, mounting public angst against the war and the realization that the United States has no clear-cut victory strategy suggests that the “whole of government” approach to warfare may be nothing more than a noble experiment.