Zaynab Quadri, Yale University
Introduction: Private Military Contracting and the War on Gaza
That the business of war is costly for civilians, but profitable for weapons manufacturers, is an uncomfortable yet undeniable truism. As CNN Business bloodlessly reported barely two weeks into Israel’s ongoing military campaign against Hamas: “When war breaks out, defense companies tend to make money. That means aerospace and defense stocks tend to rise during geopolitical unrest. In the immediate aftermath of the Israel-Hamas War, shares of military contractors spiked” by about seven percent “as both institutional and retail investors bought in.”[1] Since October 2023, various mainstream news outlets, U.S. military and foreign affairs publications, research, and non-governmental organizations have drawn public attention— by multiple means to multiple ends— to the boom, so to speak, in financing the production of missiles, bombs, and other military equipment for Israel. Student protestors, antiwar and anti-occupation activists, and certain journalists have especially worked to identify defense contractors as key players and beneficiaries in the violence. As Spencer Ackerman pointedly put it in July 2024, “Just because a war cannot be won does not mean that it lacks for winners… Those winners are in the boardrooms of [defense] companies.”[2]
While neither quite new nor fully mainstream in political or academic discussions on Israel/Palestine or U.S. foreign policy, the critical discourse recently generated by organizers, researchers, and public-facing writers has brought an analytically and intellectually vital spotlight to the political economy of war.[3] This essay seeks to build upon this emergent body of knowledge by taking a long historical view of how corporate power— specifically, private military contractors (PMCs)— became indispensable to sustaining U.S. state, military, and global power after World War II, but especially in the wake of September 11th. Rather than focusing on armed private security contractors or weapons manufacturers, I define PMCs as any for-profit entity that relies in full or significant part on public funding in order to supplement U.S. military efforts. This allows for a broader, institutional-level view of how PMCs operate not only within a global market for security, but also as state actors in their own right— situated at the hinges of the political and economic, public and private, domestic and transnational spheres.
Though this story takes a temporally and geographically circuitous route out of current events in Gaza, the broader historical processes by which PMCs have established themselves as lynchpins within the U.S. national security apparatus provide deep systemic and substantive context as to why and how “forever wars”— American as well as Israeli— remain so powerfully profitable despite their profound public unpopularity.
One critical factor that my analysis will foreground is that of rapidly evolving military technology. As tools of war have grown more sophisticated since the Second World War, the U.S. government has subsequently grown more dependent on its relationship with what used to be called “industry,” in order to maintain American military edge. Overlapping with that domestic transformation in military-industrial relations was the heightened regional urgency and centrality of the Middle East for global U.S. foreign policy since the 1970s. As the United States strengthened its material security ties to Israel, and accordingly renewed its material security partnerships with other Middle Eastern powerbrokers, the resulting demand for hardware, software, and consulting expertise made the corporate producers of these new tools of war key diplomatic facilitators. They sustained government alliances, end-ran chronic labor shortages, and built up U.S. capacity for what amounted to indirect state governance across the Middle East, but in Israel/Palestine in particular.
Yet, while myriad American and Israeli actors have richly profited from these arrangements, I argue that the very profitability that lubricates the entire global economy of militarism originates, ultimately, in U.S. public tax dollars. Tracing the history of private military contracting in the twentieth and twenty-first centuries reveals the irreducibly co-constitutive nature of corporate and governmental power: corporate power is backstopped by U.S. public dollars, U.S. state power is underwritten by corporate power, and their mutual material benefit invests the U.S. and its allies, quite literally, in “forever war” as a way of life. The end-result of this commodification of security, and the securitization of everyday life, is in fact the horror still unfolding now in Gaza. By doing the work of state actors using state funds but generating only private profit, skirting civil-institutional scrutiny in the form of regulation and thus avoiding any meaningful responsibility for their outcomes of their policies, PMCs transform state power in the United States, Israel, and Palestine to structurally incentivize impunity.
Historicizing Private Military Contracting in the United States
Private military contracting, in its current scale and form as a massive war-funding mechanism, was neither a historical novelty nor inevitable. The U.S. mobilization for World War II involved mobilizing businessmen as well as scientists, industrial labor, and the traditional military corps; but the defense industry began to take on higher-profile political and economic importance after the hot war, in the late 1940s and early 1950s.[4]
With the introduction of a new generation of weapons technology during World War II— from guided missiles and radar all the way up to the nuclear bomb— U.S. military and government officials broadly believed that conventional weapons in conventional quantities were no longer enough to assure victory. The wars of the future would require increasingly sophisticated arsenals in order to better leverage technology against real or perceived capability gaps between the United States and its enemies. By definition, then, the successful exercise of state power would require interdependent relationships with the non-state entities capable of executing its political ambitions.
Indeed, already by the late 1960s, the Vietnam War exhibited a more expansive transnational U.S. political economy of militarism that dovetailed with more expansive U.S. foreign policy goals. In order to wage war on communist ideology, rather than traditional state-military targets, the U.S. military conducted a counterinsurgency campaign for “hearts and minds” in Vietnam— a project that required the wholesale creation of civilian infrastructure, in addition to surveillance, policing, and jungle warfare.[5] Not only did established U.S. defense corporations develop upgraded chemical and biological weapons to use against civilians, including napalm and anti-personnel bombs; American state-building programs in South Vietnam required a diversified further set of contractors that offered more than hardware. For example, Kellogg, Brown & Root (KBR)— which would later gain notoriety during the Iraq and Afghanistan Wars— helped to construct ports, bases, roads, and airfields.[6] The labor force that assisted American contractors was itself diverse and transnational, imbricated in an evolving militarized regional economy in Southeast Asia.[7]
Then as now, anti-war activists in the United States noted these developments in real time: the rhetorical language of “war profiteers” and civilian publics as “laboratories” echoes across decades and continents, from Vietnam in the 1970s to Palestine in the 2010s and 2020s.[8] As one example, the National Action/Research on the Military-Industrial Complex (NARMIC), an offshoot of the Quaker organization the American Friends Service Committee (AFSC), published a widely-circulated activist handbook in January 1970 called “Weapons for Counterinsurgency,” in which they employed “the art of publishing truth as a mode of action” to “assist and encourage local action/research groups to resist the power of militarism and defense industries over their social, economic and cultural development.”[9] Providing an illustrated survey of U.S. weapons and tactics in Vietnam, as well as a bibliography for further research, “Weapons for Counterinsurgency” specifically underlined the role of PMCs in enabling violence against racialized civilians for financial benefit. “In addition to being a laboratory,” NARMIC wrote, “Vietnam has become the dumping ground for new weapons… Southeast Asia provided the arms manufacturers— the war profiteers— with a ready and expanding market.”[10]
The literature on PMCs largely historicizes privatization through the “neoliberal turn” of the 1970s and 1980s. Yet, as historian Mark R. Wilson argues, the “oft-discussed rise of deregulation and privatization… was preceded, and then accompanied, by an equally significant shift in the military-industrial field” from the 1940s through the 1960s.[11] As corporations in aerospace engineering, weapons development, construction, and transportation logistics together produced a diversifying market of products and expertise, so too did a heterogenous “Cold War coalition” across the political spectrum rise to secure their own personal and professional gain, including greater access to the halls of power.[12]Federal defense spending via military contracts across economic sectors undergirded the growth of the entire national U.S. economy throughout the Cold War.[13]
I narrate these broad domestic U.S. economic shifts because they intersected and indeed converged with global macroeconomic crises of energy and capital to tremendous consequence in the early 1970s— crises for which the Middle East functioned as a seismic epicenter. No shortage of studies exists to explicate the profusion of political-economic causes and implications; but the perspective of Israeli political scientists Jonathan Nitzan and Shimshon Bichler is especially illuminating. “Middle East conflicts and energy crises aggravated the processes of stagflation and monetary instability around the world [and] intensified the global arms race,” they write. “Yet not everyone took a hit.” What Nitzan and Bichler term the “Weapondollar-Petrodollar Coalition”— multinational oil companies, defense contractors, infrastructure companies, and financial institutions including banks— experienced, not devastation, but “a massive differential accumulation bonanza,” in which “the very distinction between ‘state’ and ‘capital,’ ‘government policy’ and ‘private action,’ ‘international relations’ and ‘global business,’ is difficult and often impossible to pin down.”[14]
On the one hand, the arms trade— largely used as a foreign policy instrument by national governments— became privatized, turning into a “counter-cyclical, life-support mechanism for the leading arms contractors.” Meanwhile, the oil industry— largely a haven for private commercial interests— became “subject to increasing political control,” as oil-producing countries nationalized oil reserves and industrialized countries “moved to regulate the distribution, taxation and price of petroleum products.” These tandem, line-blurring processes allowed the Organization of Petroleum Exporting Counties (OPEC) to politicize their oil in order to pay for new weapons, further raising oil prices and their own revenues in turn; while the United States in particular was able to leverage intensified regional conflict to boost arms exports and their attendant profits.[15]
Given the tide-turning U.S. involvement during the 1973 War, Israel occupied a central position at the heart of these regional cross-currents— in a physical and political-economic sense, with its 1967 capture of the West Bank, Gaza, Golan Heights, and Sinai. By 1980, when the American and Israeli governments officially signed a Memorandum of Understanding cementing their mutually lucrative security partnership, the enormous guaranteed influx of U.S. defense dollars would permanently alter the political economy of Israel— specifically the course of its occupation of Palestine.
Corporate State-Building in Israel
Though ostensibly a state-to-state relationship involving a complex array of institutional actors that include local police forces, universities, and non-governmental organization, the logistics of the U.S.-Israel relationship are uniquely contingent upon corporate PMCs to facilitate and execute. “Aid” as a political and conceptual designation fails to adequately capture the financial and practical extent of PMCs’ involvement in the Israeli economy in general, and the occupation of Palestine in particular. “State-building,” I posit, is a more appropriate framework by which to articulate the outcome of U.S. corporate-military involvement in Israel over five decades.
The ubiquitous presence of PMCs in this space is neither a nefarious conspiracy nor an incidental sideshow. Though not often stated as such, defense contractors and contracting have been implicitly baked into the logic of American policy in the Middle East since the 1973 War. U.S. military aid to Israel has been designed to maintain Israel’s “qualitative military edge” (QME) over other regional militaries. As the Congressional Research Service puts it, “The rationale for QME is that Israel must rely on better equipment and training to compensate for being much smaller in land area and population than most of its potential adversaries.”[16] But this foundational underlying principle by definition requires that Israel requires access to American PMCs. Congress disburses earmarked public U.S. funds through the relevant financial mechanisms, which include grants, vouchers, and facilitated purchasing and financing; yet, it is the companies themselves who ultimately deliver the primary basis of U.S. military aid. And it is therefore the companies who are able to metabolize billions of public dollars into undisclosed private profit.
As Nitzan and Bichler point out: “Unlike economic assistance, military aid couldn’t be pocketed by domestic groups, at least not directly… [The money] was transferred straight from the bank account of the U.S. government to the bank accounts of U.S. military contractors, who then shipped their hardware to Israel.” Yet, this arrangement “did not leave the Israeli groups empty-handed.” The Israeli army “retained the right to pick and choose its American weapons,” so “each U.S. supplier had to hire its own local retainers to plead its case and hopefully share the spoils. Over the years, many of Israel’s retired IDF generals and chiefs-of-staff, big businessmen and leading politicians… have been integrated as middlemen into this mechanism… While on the surface the inflow of capital looked largely a matter of philanthropy, humanitarian aid or foreign policy, under the surface it helped create and sustain a complicated international infrastructure of private accumulation.”[17]
The corporate nature of U.S. military investment in Israel sets the conditions for the broader Israeli economy. As Shir Hever explains, Israel began to develop its own “military-industrial complex” after 1967, with the military industry growing 143% by 1972 alone. “More importantly,” Hever elaborates, “[Israel’s defense economy] grew beyond its role as a government-protected and regulated industry designed mainly to outfit the Israeli military, and became an economic sector in which private investors could invest.” Within Israel, the industry still tends to be dominated by government-owned companies, but Hever points to the Oslo period as one in which the changing costs of occupation, combined with institutional pressure on Israeli economic institutions to imitate U.S. policies, galvanized the privatization of Israeli security.[18] Given that the primary objective of Israeli security policy since 1967 has been to maintain control of the West Bank and Gaza, PMCs in both the U.S. and Israel have an active stake in Israel’s untenable status quo.
The Commodification of Security
Privatization— the process by which roles of governance traditionally held by civil institutions are transferred to entities that operate for profit— lays bare the “non-homogenous interests of various elements within the state and of various private agents.”[19] Most strikingly in the case of PMCs in the United States and Israel/Palestine, commodification makes corporate and state power simultaneously co-constitutive and mutually self-destructive.
Israel exemplifies the dialectical ambivalence of “domestic” and “transnational” capital flows: as a settler state sustained through the twentieth century by large investments from donors and foreign governments, it absorbed the external capital into a synthesized national economy, only for this domestic capital to transcend the state in the 1970s and 1980s, re-integrating it into the global economy in new form.[20] By the 1990s, corporate interaction with the transnational market for security no longer required as much state mediation through intergovernmental aid or loans; rather, private capital could flow directly between Israeli security companies and other security companies as well as foreign governments.[21] But Palestine— as defined both through the state intended to encompass the West Bank and Gaza, and through the Palestinian nation living in diaspora across Israel/Palestine— exemplifies the devastating human repercussions of corporatized state power.
As Hever schematizes it: “Although at no point did the Israeli government officially withdraw from its obligation to protect the public, it allowed security to become commodified, a service which can be bought and therefore which is not available to everyone in the same quantities [emphasis mine].”[22] Commodifying all aspects of social and political life through the lens of security— as opposed to funding a national military defense against a credible, immediate military threat— undermines and unmakes the civil-democratic nature of governing institutions by allowing both governments and militaries to abdicate responsibility, either for their policies or the publics that are vulnerable to them. The proprietary nature of PMCs, when intersected with the top-secret national-defense prerogatives, discourage informational transparency: accurate figures on U.S. and Israeli defense sales, particularly in the cybersecurity market, are impossible to pinpoint.[23]Such cloaks of secrecy only make it easier to conduct raids, displacements, and extralegal violence against Palestinian civilians without scrutiny— during wartime and beyond.
As early as 1987, scholars like Sara Roy warned that Israel’s political-economic stranglehold on Gaza “[exceeded] traditional parameters of dependency” and economic exploitation. Roy proposed a framework of “de-development,” a process which “weakens the ability of an economy to grow and expand by preventing it from accessing and utilizing critical inputs needed to promote internal growth beyond a specific structural level.”[24] By the time of this writing in October 2024, a year into Israel’s assaults on Gaza, the United Nations has found “reasonable grounds” to term the war a genocide— yet supplemental U.S. military funding to Israel already exceeds $6.5 billion, with no signs of abatement despite consistent worldwide protests.[25] This level of material support, I argue, functionally makes the U.S. a co-equal partner with correspondingly co-equal responsibility for Gaza’s fate. And with unchecked famine and disease ravaging a captive population largely comprised of children, whatever is left of Gaza when the bombs finally quiet will more closely resemble Giorgio Agamben’s theorization of bare life. This is the human endgame resulting from two major industrialized economies investing, quite literally, in the business of security— in states of “forever war.”
Scholar Eyal Weizman has observed that “Israeli militarism has always sought military solutions to political problems.”[26] However, as Sara Roy wrote in December 2023, Israel has now “created a humanitarian problem to manage a political problem… [transforming] ordinary life into war by other means, using the threat of catastrophe as a form of governance and suffering as an instrument of control.”[27] With Gaza’s profoundly bleak present and future prospects, it is essential to parse the distinct role of corporate actors in making so extreme a military campaign logistically, if not morally, possible.
References
[1] Nicole Goodkind, “What the Israel-Hamas War Means for Defense Stocks,” CNN Business, October 18, 2023, https://www.cnn.com/2023/10/18/investing/premarket-stocks-trading/index.html.
[2] Spencer Ackerman, “These Corporations Are the True ‘Winners’ of the War on Gaza,” The Nation, July 9, 2024, https://www.thenation.com/article/economy/gaza-war-profiteers-corporations/.
[3] See, for example: American Friends Service Committee, “Companies Profiting from the Gaza Genocide,” May 28, 2024, https://afsc.org/gaza-genocide-companies.
[4] For one contemporary historicization of this phenomenon, see: Fred J. Cook, “Juggernaut: The Warfare State,” The Nation, October 28, 1961, 277-337.
[5] For more on counterinsurgency and its blurred civil-military scope, see: Hannah Gurman, Hearts and Minds: A People’s History of Counterinsurgency (New York: New Press, 2013); David Fitzgerald, Learning to Forget: US Army Counterinsurgency Doctrine and Practice from Vietnam to Iraq (Stanford: Stanford University Press, 2013).
[6] James Carter, Inventing Vietnam: The United States and State Building, 1954-1968 (Cambridge: Cambridge University Press, 2008).
[7] Patrick Chung “From Korea to Vietnam: Local Labor, Multinational Capital, and the Evolution of US Military Logistics, 1950-97,” Radical History Review 133 (2019): 31-55.
[8] Re: Palestine as laboratory, see: Antony Loewenstein, The Palestine Laboratory: How Israel Exports the Technology of Occupation Around the World (London: Verso, 2023).
[9] National Action/Research on the Military-Industrial Complex, “Weapons for Counterinsurgency,” January 15, 1970, https://afsc.org/sites/default/files/documents/1970_Weapons%20for%20Counterinsurgency%20-%20NARMIC.pdf.
[10] ibid., 15.
[11] Mark R. Wilson, Destructive Creation: American Business and the Winning of World War II (Philadelphia: University of Pennsylvania Press, 2016), 6. See also: Deborah Cowen, The Deadly Life of Logistics: Mapping Violence in Global Trade (Minneapolis: University of Minnesota Press, 2014).
[12] Michael Brenes, For Might and Right: Cold War Defense Spending and the Remaking of American Democracy (Amherst: University of Massachusetts Press, 2020).
[13] Scott Campbell, Peter Gavin Hall, Sabrina Deitrick, and Ann R. Markusen, The Rise of the Gunbelt: The Military Remapping of Industrial America (New York: Oxford University Press, 1991).
[14] Jonathan Nitzan and Shimshon Bichler, The Global Political Economy of Israel (London: Pluto Press, 2002), 25-26.
[15] ibid., 26.
[16] U.S. Library of Congress, Congressional Research Service, U.S. Foreign Aid to Israel, by Jeremy M. Sharp, RL33222 (2023), 5.
[17] Jonathan Nitzan and Shimshon Bichler, The Global Political Economy of Israel, 28.
[18] Shir Hever, The Privatization of Israeli Security (London: Pluto Press, 2018), 3, 33, 171.
[19] ibid., 5.
[20] Jonathan Nitzan and Shimshon Bichler, The Global Political Economy of Israel, 14.
[21] ibid., 29.
[22] Shir Hever, The Privatization of Israeli Security, 118.
[23] Antony Loewenstein, The Palestine Laboratory, 36.
[24] Sara Roy, “The Gaza Strip: A Case of Economic De-Development,” Journal of Palestine Studies 17, no. 1 (Autumn 1987), 56.
[25] “Rights Expert Finds ‘Reasonable Grounds’ Genocide Is Being Committed in Gaza,” United Nations News, March 26, 2024, https://news.un.org/en/story/2024/03/1147976; Sharon Zhang, “Report: US Has Sent Israel $6.5 Billion in Military Assistance Since October,” TruthOut, June 27, 2024, https://truthout.org/articles/report-us-has-sent-israel-6-5-billion-in-military-assistance-since-october/.
[26] Eyal Weizman, Hollow Land: Israel’s Architecture of Occupation (London: Verso, 2007), 253.
[27] Sara Roy, “The Long War on Gaza,” The New York Review, December 19, 2023.