The deal is distinct from the common practice of oil majors and other corporations outsourcing security in hot spots in the Middle East and elsewhere. Under the contract, the wells are not just to be guarded, but to be captured first, the article said.

“The arrangement returns to the times of Francis Drake and Cecil Rhodes,” it noted, referring to two figures from British history whose careers mixed warfare and private profit.-NYT

A couple years back, I came up with a concept that more accurately described the type of contracts PMSC’s were conducting in the war. Current contracts are more or less classified as ‘Defense Industry’, where companies profit from the defense of a client and their property. This kind of contract is more favorable because it is not geared towards destroying the enemy. You actually want the enemy to stick around so you don’t work yourself out of a job. lol

The second type of scheme is ‘Offense Industry’. Basically we are talking about contracts where a company profits from the destruction of a client’s enemy and their property. If XYZ company destroys ISIS, then they are payed 50 billion dollars for example. In my post about it, I brought up past examples of offense industry–like privateering.

Fast forward to today’s news coming out of Syria. According to the news site Fontanka, there is an offense industry contract that has been arranged between Syria and several Russian PMSC’s. Here is the quote from the NYT’s article on it:

So far, two Russian companies are known to have received contracts under the new policy, according to the reports: Evro Polis, which is set to receive profits from oil and gas wells it seizes from the Islamic State using contract soldiers, and Stroytransgaz, which signed a phosphate-mining deal for a site that was under militant control at the time.
The agreements, made with the Syrian government, are seen as incentives for companies affiliated with Russian security contractors, who reportedly employ about 2,500 soldiers in the country, to push the Islamic State, also known as ISIS or ISIL, out of territory near Palmyra, in central Syria.
Most Middle Eastern wars are suspected of having some variant of this deal, but it is seldom made as explicit as in the Russian contracts.
“It’s all very simple,” Ivan P. Konovalov, director of the Center for Strategic Trends Studies, said by telephone of the deals, struck in December but just recently reported. “If a company provides security, then the country getting that service should pay. It doesn’t matter how the payment is made.”
In the petroleum deal, Evro Polis, a corporation formed last summer, will receive a 25 percent share of oil and natural gas produced on territory it captures from the Islamic State, the news site Fontanka.ru reported.

This contract is not just about defending a client’s asset. This first requires these companies to conduct offensive operations and seize this territory, and then defend it! That is a big difference and greatly adds to the risk of these types of contracts. But there is a big reward if they can take it.

It is that reward mechanism that creates an incentive for an investor to put so much into something like this. It is why investors put so much money into privateering vessels during the Revolutionary War and War of 1812 in the US–they were ‘incentivized’. But they also had a legal contract with the backing of the US Constitution and congress in the form of a Letter of Marque. I have not seen such legal protections talked about in this article by the NYT or Fontanka. Although I have to imagine the backroom dealings on this would be pretty comprehensive.

A final thought on this is that I held back on putting this story up at first. I do not have the resources to go to Syria and confirm all of this. So these forces might be legitimate Russian PMSC’s, or they might be just Russian special operations dressed up to be PMSC’s (little green men anyone?). I have written about PMC Wagner in the past, as well as the Slovanic Corps and the story always seems to be a little different that what was reported. There are a lot of groups out there pushing agendas and trying to trade up the chain as they say. So are we seeing the beginnings of new offense industry in Syria? We will see where this goes…. –Matt

 

Russian EOD personnel in Palmyra, Syria. -NBC

Russia Deploys a Potent Weapon in Syria: The Profit Motive
By ANDREW E. KRAMER
JULY 5, 2017
The Kremlin is bringing a new weapon to the fight against the Islamic State militant group in Syria, using market-based incentives tied to oil and mining rights to reward private security contractors who secure territory from the extremists, Russian news outlets have reported.
So far, two Russian companies are known to have received contracts under the new policy, according to the reports: Evro Polis, which is set to receive profits from oil and gas wells it seizes from the Islamic State using contract soldiers, and Stroytransgaz, which signed a phosphate-mining deal for a site that was under militant control at the time.
The agreements, made with the Syrian government, are seen as incentives for companies affiliated with Russian security contractors, who reportedly employ about 2,500 soldiers in the country, to push the Islamic State, also known as ISIS or ISIL, out of territory near Palmyra, in central Syria.
Most Middle Eastern wars are suspected of having some variant of this deal, but it is seldom made as explicit as in the Russian contracts.
“It’s all very simple,” Ivan P. Konovalov, director of the Center for Strategic Trends Studies, said by telephone of the deals, struck in December but just recently reported. “If a company provides security, then the country getting that service should pay. It doesn’t matter how the payment is made.”
In the petroleum deal, Evro Polis, a corporation formed last summer, will receive a 25 percent share of oil and natural gas produced on territory it captures from the Islamic State, the news site Fontanka.ru reported.
The website has a record of accurately reporting about private security companies in Russia, and just last month Washington appeared to corroborate one of its earlier reports by imposing sanctions on a Russian whose activities first came to light in the publication.
Fontanka’s latest article on the topic, published last week, detailed how Evro Polis was cooperating with a shadowy Russian private security group called Wagner, which American sanctions suggest has also provided contract soldiers to the war in Ukraine.
The deal is distinct from the common practice of oil majors and other corporations outsourcing security in hot spots in the Middle East and elsewhere. Under the contract, the wells are not just to be guarded, but to be captured first, the article said.

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