Blackwater: The Rise of the World's Most Powerful Mercenary Army

ALTHOUGH BLACKWATER’S name recognition in 2004 was almost exclusively centered on the Fallujah ambush and the company’s role in Iraq, it was not the only “war on terror” front line where the Bush Administration dispatched the company. Beginning in July 2004, Blackwater forces were contracted to work in the heart of the oil- and gas-rich Caspian Sea region, where they would quietly train a force modeled after the Navy SEALs and establish a base just north of the Iranian border as part of a major U.S. move in what veteran analysts in the region call the “Great Game.” As it won more contracts in Iraq in the aftermath of Fallujah, Blackwater simultaneously found itself helping to defend another high-stakes pet project of some of the most powerful figures in the U.S. national security establishment, including Henry Kissinger, James Baker III, and Dick Cheney.

The United States’ quest for domination of the world’s petrol reserves certainly did not begin with the 1991 Persian Gulf War or the subsequent 2003 invasion of Iraq. While Iraq and the war on terror have dominated the headlines, the U.S. government and American corporate interests have long been quietly engaged in a parallel campaign to secure another major prize, this one located on the territory of what was once the Soviet Union: the Caspian Sea, which is believed to house well over 100 billion barrels of oil.¹ After the collapse of the Soviet Union in 1991, Washington and its allies saw an opportunity to snatch one of the great deposits of valuable natural resources from Moscow’s grip. Multinational oil giants swooped in like vultures as the United States and its allies moved quickly to shore up the repressive regimes of the littoral ex-Soviet republics of the Caspian region. Unocal spent much of the 1990s trying to run a pipeline from Tajikistan through Afghanistan, a project on which Erik Prince’s friend (and Blackwater’s lobbyist) Paul Behrends had worked, but there was also great interest in the nations of Kazakhstan and Azerbaijan, as well as the strategically important Republic of Georgia. While the route from Tajikistan proved very complicated, it was by no means the only one being explored by Big Oil, the White House, and a powerful cast of political players from past U.S. administrations.

Complicating a swift U.S. domination of the landlocked resources of the Caspian was the fact that two powerful nations—Russia and Iran—also border the sea and viewed the U.S. incursion into the area as a hostile threat. By 1997, a powerful U.S. consortium was hard at work exploring multiple ways to get to the Caspian resources. “American oil companies—including Amoco, Unocal, Exxon, Pennzoil—have invested billions of dollars in Azerbaijan and plan to invest billions more. As a result, they have developed a strongly pro-Azerbaijan position,” reported New York Times correspondent Stephen Kinzer in a dispatch from Azerbaijan. “The list of private American citizens who are seeking to make money from Azerbaijani oil or to encourage investment here reads like a roster of the national security establishment. Among the most prominent names are former Secretaries of State Henry A. Kissinger and James A. Baker 3d, former Defense Secretary Dick Cheney, former Senator and Treasury Secretary Lloyd Bentsen, former White House chief of staff John H. Sununu, and two former national security advisers, Brent Scowcroft and Zbigniew Brzezinski.”²

While the Clinton administration worked feverishly to secure Caspian resources, hosting Azerbaijan’s president at the White House for a two-hour meeting in August 1997 and courting his cooperation,³ it was not until the Bush administration took power that these onetime “pipe dreams” became a reality. In May 2001, Dick Cheney’s energy task force estimated that proven oil reserves in Azerbaijan’s and Kazakhstan’s sectors of the Caspian alone equaled “about 20 billion barrels, a little more than the North Sea and slightly less than the United States.”⁴ The Cheney group estimated that if the United States could get a major pipeline flowing west from the Caspian Sea—away from Moscow’s control—daily exports from the Caspian to world markets could go as high as 2.6 million barrels per day by 2005, “as the United States works closely with private companies and countries in the region to develop commercially viable export routes.”⁵ By contrast, in 2005 Iran exported 2.6 million barrels of oil per day, Venezuela 2.2, Kuwait 2.3, Nigeria 2.3, and Iraq 1.3.⁶

Since the collapse of the Soviet Union, getting at the Caspian region’s oil had proved extremely difficult for Washington. Dating back to the Clinton administration, the United States and its allies envisioned a plan wherein Washington would essentially prop up the repressive regime in Azerbaijan and establish a state-of-the-art oil exploitation operation off the coast of the Azerbaijani capital, Baku, a peninsula that juts into the western Caspian. The oil would then flow through a massive pipeline stretching from Baku to Tbilisi, Georgia, through Turkey to the Mediterranean port city of Ceyhan. From there, the Caspian oil could be easily transported to Western markets. The project would mean an end to Moscow’s de facto monopoly on transporting Caspian oil, while at the same time providing Washington with an unparalleled opportunity to exert its influence in the ex-Soviet territories. When the project began in 1994, some analysts celebrated it as a “new Persian Gulf”; estimates projected as much as 230 billion barrels of oil in the region—eight times the proven U.S. reserves.⁷

During the latter years of Clinton’s tenure, however, the project came to be viewed as a white elephant likely to fail. The Caspian countries were governed by corrupt, unstable regimes that remained under Moscow’s sway despite their nominal independence. The pipeline would be extremely costly and vulnerable to sabotage. To top it off, early Western explorations in the Caspian turned up estimates of the sea’s potential resources far more modest than previous projections.⁸ While the United States remained committed to tapping the Caspian, the program moved forward at a slow pace. That changed when Bush took office and oil executives were welcomed into the White House like cousins at a family reunion. By September 2002, construction on the massive eleven-hundred-mile Caspian pipeline was under way. The BBC described it as a project that U.S. officials favored because it would “weaken Russia’s stranglehold on regional pipeline network and leave Iran on the sidelines.”⁹

A potential problem for the project lay in what the White House saw as the dangerous geography of the neighborhood—located not far from Chechnya and Iran. The Bush administration, therefore, made a number of moves that would result in at least one regime change in the region and the deployment of forces from Blackwater and other U.S. war-servicing firms to protect what would be one of Washington’s most ambitious power grabs on former Soviet territory.

In 2003, the Bush administration helped overthrow the government of a longtime U.S. ally, President Eduard Shevardnadze of Georgia. Once considered Washington’s closest strategic partner in the region and affectionately referred to as “Shevy-Chevy” by U.S. officials like James Baker, Shevardnadze had fallen fast out of favor with the administration of George W. Bush, as Shevardnadze began increasingly doing business with Moscow after years of U.S. patronage.¹⁰ Among his sins: granting new drilling and pipeline concessions to Russian firms and obstructing Washington’s grand Caspian pipeline plan. Soon after those transgressions, he was forced to resign in November 2003 as the so-called Rose Revolution brought to power a more staunchly pro-U.S. regime. The first telephone call the new acting president, Nino Burdzhanadze, made when she took over from Shevardnadze was to oil giant BP to “assure them the pipeline would be OK.”¹¹ Just prior to taking power in Georgia, the new U.S.-backed leader, Mikhail Saakashvili, announced, “All strategic contracts in Georgia, especially the contract for the Caspian pipeline, are a matter of survival for the Georgian state.”¹² That regime change resulted in the closure of Russian bases in Georgia and an increase in U.S. military aid to the country. In early 2004, Defense Secretary Rumsfeld deployed private military contractors from the Washington firm Cubic on a three-year $15 million contract to Georgia “to equip and advise the former Soviet republic’s crumbling military, embellishing an eastward expansion that has enraged Moscow,” reported London’s Guardian. “A Georgian security official said the Cubic team would also improve protection of the pipeline that will take Caspian oil from Baku to Turkey through Georgia. Georgia has already expressed its gratitude by agreeing to send 500 troops to Iraq.”¹³

The Bush administration knew that the controversial pipeline would need to be protected in each country it passed through. While Washington increased its military aid to Georgia, it faced a decade-long U.S. Congressional ban on military assistance to Azerbaijan, where the oil would be extracted. In 1992, Congress banned such aid because of Azerbaijan’s bloody ethnic and territorial conflict with Armenia in the Nagorno-Karabak region. But on January 25, 2002, President Bush “waived” that section of the Congressional Act, thereby allowing U.S. military aid to Azerbaijan to resume. The White House said the waiver was “necessary to support United States efforts to counter international terrorism [and] to support the operational readiness of United States Armed Forces or coalition partners to counter international terrorism”¹⁴—in other words, to protect oil interests. In the fall of 2003, the administration officially launched a project it called “Caspian Guard,” under which the United States would significantly bolster the military capabilities of Kazakhstan and Azerbaijan.¹⁵ Similar to the U.S. plan in Georgia, the $135 million program would create a network of commando and special operations forces that would protect the lucrative oil and gas exploitation being plotted out by transnational oil corporations and patrol the massive pipeline project that would allow an easy flow of the hydrocarbon resources of the Caspian to Western markets.

But oil and gas were only part of the story. While the Caspian’s resources were undoubtedly viewed by Washington as a major prize to be secured, Azerbaijan’s geographic proximity to the center of the administration’s broader attempt at conquest of the Middle East was also incredibly valuable. With open talk of the possibility of a U.S. attack on Iran and several reports detailing military planning for such operations as part of the “war on terror,” many of Tehran’s neighbors, particularly those directly on its border such as Azerbaijan, were very resistant to the overt presence of U.S. forces on their soil. Iran had made clear that it would retaliate against any state that supported the United States in an attack. As the Caspian Guard program got under way in 2004, “the Azerbaijani parliament adopted a law prohibiting the stationing of foreign troops on the country’s territory, a move widely believed to be a gesture towards Moscow and Tehran, which both oppose any strengthening of military ties between Azerbaijan and the US,” reported the EurasiaNet news service.¹⁶ But despite the overtures to Washington’s foes, the reality was that Azerbaijan was on the receiving end of a massive new pipeline of U.S. military assistance.

Enter Blackwater

In early 2004, with the United States ratcheting up its rhetoric against “axis of evil” member Iran, Blackwater USA was hired by the Pentagon under Caspian Guard to deploy in Azerbaijan, where Blackwater would be tasked with establishing and training an elite Azeri force modeled after the U.S. Navy SEALs that would ultimately protect the interests of the United States and its allies in a hostile region. The $2.5 million Army contract for a one-year project indicated that it was open for competition but that Blackwater was the only company to bid on it.¹⁷ On Pentagon documents, the nature of Blackwater’s work in Azerbaijan was kept vague—only mentioning “training aids” and “armament training devices.” Despite the secrecy, one thing was clear: Blackwater had once again found itself at the forefront of a pet Bush administration project. “We’ve been asked to help create, for lack of a more educated term, a SEAL team for Azerbaijan, both to help them with their oil interests in the Caspian but also to kind of monitor what goes on in the Caspian during the wee hours of the night,” said Blackwater’s Taylor. “These are very, very politically… sensitive issues.”¹⁸ Blackwater joined a U.S. corporate landscape in Baku that included other Bush administration-linked corporations such as Bechtel, Halliburton, Chevron-Texaco, Unocal, and ExxonMobil.

Some analysts viewed Caspian Guard and the Blackwater contract as a backdoor U.S. military deployment. “We were hired to come in and build by the U.S. government, to build a maritime special operations capability in Azerbaijan,” said Blackwater founder Erik Prince at a U.S. military conference in 2006. “We took over an old Spetsnaz (Soviet special forces) base and built about a ninety-man Azeri high-end unit.”¹⁹ Prince called Blackwater’s Azerbaijan work “a great small footprint way to do it.” Instead of sending in battalions of active U.S. military to Azerbaijan, the Pentagon deployed “civilian contractors” from Blackwater and other firms to set up an operation that would serve a dual purpose: protecting the West’s new profitable oil and gas exploitation in a region historically dominated by Russia and Iran, and possibly laying the groundwork for an important forward operating base for an attack against Iran. “Compared with the U.S. efforts to train and equip troops in neighboring Georgia, training Azerbaijan’s commandos was a relatively low-profile program,” observed Central Asia correspondent Nathan Hodge. “It’s understandable: The country is sandwiched between Russia and Iran, and sending a contingent of uniformed U.S. military trainers would be a provocative move. A private contractor helps keep things under the radar.”²⁰

One indication of the strategic importance of Azerbaijan comes from the list of names associated with the U.S. Azerbaijan Chamber of Commerce, an organization formed in 1995 to “facilitate and encourage trade and investment in Azerbaijan” and to “serve as a liaison between foreign companies and Azerbaijani businesses and officials.”²¹ Its “Council of Advisors” reads like a who’s who of the hawks of the Reagan-Bush era: James Baker III, Henry Kissinger, John Sununu, and Brent Scowcroft.²² The board of directors includes senior executives from ExxonMobil, Chevron, ConocoPhilips, and Coca-Cola, while the trustees include Azerbaijan’s dictator, Ilham Aliyev, and top neoconservative Richard Perle. Listed as “former” officials of the organization are none other than Dick Cheney and Richard Armitage.²³ “These men are the power behind the throne in Azerbaijan,” observed investigative journalist Tim Shorrock, adding that Blackwater’s deployment would be “impossible to imagine… without a nod from one of these principals.”²⁴

A March 2004 Blackwater recruitment ad sought a manager to oversee the contract “to train, equip, and permanently establish a Naval Special Operations Unit in the Azerbaijan Armed Forces.”²⁵ The announced salary was $130,000 to $150,000 annually. Blackwater referred to the project as part of a “Maritime Commando Enhancement” program. “The Caspian Sea is a region of interest for many, many reasons,” said Blackwater vice president Chris Taylor at a conference on contracting in 2005, where he held up Blackwater’s Azerbaijan work as evidence of successful U.S. government contracting to help allied governments build up their forces. “This is not a zero-sum game. We’re not trying to take as much of the pie and leave the government with nothing so we can get as much money as we possibly can. It just doesn’t work out that way. And if you want quote unquote repeat business, if you want to have a solid reputation, it’s actually affecting the strategic balance in an area for the government or assisting in doing that, then you’ve got to be part of that give and take. And we like to think that we do that on a daily basis.”²⁶

Caspian Guard appeared to be part of a strategy Defense Secretary Rumsfeld had articulated publicly in a visit to the region in early 2004. At a press conference in Uzbekistan on February 24 of that year, Rumsfeld revealed that he and other senior U.S. officials had been discussing the establishment of “operating sites” in the area, which he described as facilities “that would not be permanent as a base would be permanent but would be a place where the United States and coalition countries could periodically and intermittently have access and support…. What’s important to us is to be arranged in a way and in places that are hospitable, where we have the flexibility of using those facilities.”²⁷ In Georgia, where the Pentagon has also deployed private military contractors, a Western diplomat told the Guardian that the United States was considering “creating a ‘forward operational area’ where equipment and fuel could be stored, similar to support structures in the Gulf.”²⁸ “The two moves would combine to give Washington a ‘virtual base’—stored equipment and a loyal Georgian military—without the diplomatic inconvenience of setting up a permanent base,” according to the paper.²⁹

That appeared to be the strategy with Blackwater in Azerbaijan as well. In strategically important Baku, Blackwater renovated a Soviet-era maritime special operations training facility that Pentagon planners envisioned as a command center modeled on those used by the Department of Homeland Security.³⁰ As part of Caspian Guard, the United States also contracted defense giant and Iraq War contractor Washington Group International to construct a radar surveillance facility in Astara, just north of the Iranian border, one of two such facilities built under the program.³¹ The other was positioned atop a mountain south of Russia’s North Caucasus region, not far from Chechnya.³² Washington also renovated the nearby Nakhchewan airport to accommodate military aircraft, including from NATO.³³ In the meantime, encouraged by its cozy relationship with Washington, Azerbaijan dramatically increased its military spending by 70 percent in 2005 to $300 million.³⁴ By the end of 2006, it had reached a whopping $700 million, with the country’s president pledging it would soon grow to $1 billion annually.³⁵

In the event of a U.S. war against Iran, Azerbaijan would play a central role; to Tehran, the U.S.-orchestrated buildup along the Caspian was an ominous threat. Iran actually responded to word of Blackwater’s involvement in the region by announcing the creation of its own special naval police force that would patrol the Caspian.³⁶ As an exclamation point to Iran’s concerns, Ariel Cohen of the right-wing Heritage Foundation wrote in the Washington Times in 2005 that Caspian Guard was “significant… for any future conflict with Iran.”³⁷ As Jane’s Defence Weekly reported, the U.S. presence near the Caspian allowed Washington to “gain a foothold in a region that is rich in oil and natural gas, and which also borders Iran. ‘It’s good old US interests, it’s rather selfish,’ said US Army Colonel Mike Anderson, chief of the Europe Plans and Policies Division at US European Command (EUCOM). ‘Certainly we’ve chosen to help two littoral states, Azerbaijan and Kazakhstan, but always underlying that is our own self interest.’”³⁸

By April 2005, Rumsfeld had visited Azerbaijan, a small country of 8.5 million people, at least three times.³⁹ The visits were secretive, and U.S. and Azerbaijani officials would only speak in generalities about what exactly Rumsfeld was doing dropping into the country so often. After Rumsfeld’s third visit, the popular daily newspaper Echo ran the headline “Rumsfeld Is Interested in Oil!”⁴⁰ Indeed, the flurry of U.S.-military-related activities in Azerbaijan, including the Blackwater deployment, was timed for the launch of one of the most diplomatically controversial Western operations on former Soviet soil since the fall of the Berlin Wall: the massive eleven-hundred-mile oil pipeline that for the first time would transfer oil out of the Caspian on a route that entirely circumvented Russia and Iran—a development both Moscow and Tehran viewed as a serious U.S. incursion into their spheres. The $3.6 billion pipeline project was heavily funded by the World Bank, the U.S. Export-Import Bank, and the Overseas Private Investment Corporation, ⁴¹ and spearheaded by a consortium led by oil giant BP along with U.S. companies Unocal, ConocoPhilips, and Hess. As originally planned, the pipeline would run from Baku, Azerbaijan, through Tbilisi, Georgia, to the Turkish port of Ceyhan, where the oil would then be shipped for Western consumption.

Known by its acronym, the BTC pipeline was labeled “a new round in the Great Game” by veteran Russia analysts, who viewed it as part of a wider plan to isolate Moscow. Analyst Vladimir Radyuhin said the “pipeline is a key element in the U.S. strategy to redraw the geopolitical map of the former Soviet Union and supersede Russia as a dominant force in the former Soviet Union. The U.S. has pushed through the project over more profitable pipelines via Russia and Iran to create an alternative export route for oil produced in Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan, which have so far depended on Russian pipelines to export their oil to Europe.”⁴² Radyuhin said Washington’s Caspian Guard program “together with the U.S.-promoted GUUAM alliance of Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova, will enable Washington to exercise control over an absolute majority of post-Soviet states and create a cordon sanitaire around Russia.”⁴³ The head of the International Committee of Russia’s upper house of parliament, Mikhail Margelov, said, “Russia will always oppose the presence of any foreign military contingents within the boundaries of the [Caspian region]…. First and foremost, it is a question of [Russia’s] national security.”⁴⁴

Prior to the launch of the BTC pipeline, the United States had invested in the Russian-controlled Caspian Pipeline Consortium, a $2.6 billion project made up of a 935-mile crude oil pipeline that ran from the Tengiz oilfield in Kazakhstan to the Russian Black Sea port of Novorossiysk.⁴⁵ The White House called it “the largest single United States investment in Russia.”⁴⁶ In November 2001, when the first tanker loaded with oil from the Caspian under the project was launched, Commerce Secretary Don Evans remarked, “It tells the world that the United States, Russia, and Central Asian states are cooperating to build prosperity and stability in this part of the world.”⁴⁷ But once the new BTC pipeline became active in 2005, Bush publicly encouraged “companies producing oil [in Kazakhstan] and elsewhere in the Caspian region [to] embrace BTC as a gateway to global markets.” ⁴⁸ It seemed that was the plan from the start. Indeed, the Cheney energy task force had envisioned a scheme to allow multinational oil giants like Chevron and Exxon operating in Kazakhstan under the Russian pipeline to redirect oil through the BTC pipeline, effectively taking away from Russia’s profits. It was all laid out in May 2001 in the recommendations made by the White House National Energy Policy Development Group, headed by Cheney. The group recommended that President Bush “direct the Secretaries of Commerce, State, and Energy to continue working with relevant companies and countries to establish the commercial conditions that will allow oil companies operating in Kazakhstan the option of exporting their oil via the BTC pipeline” instead of through the Russian controlled pipeline. It called for the Administration to “deepen [its] commercial dialogue with Kazakhstan, Azerbaijan, and other Caspian states to provide a strong, transparent, and stable business climate for energy and related infrastructure projects.”⁴⁹

The BTC pipeline was inaugurated in May 2005, and President Bush dispatched his new Energy Secretary Samuel Bodman to represent him at the ceremony. “BTC opens a new era in the Caspian Basin’s development. It ensures Caspian oil will reach European and other markets in a commercially viable and environmentally sound way,” Bush said in a letter read by Bodman at the ceremony.⁵⁰ The letter was addressed to the dictator of Azerbaijan, whom Bush praised. “As Azerbaijan deepens its democratic and market economic reforms, this pipeline can help generate balanced economic growth, and provide a foundation for a prosperous and just society that advances the cause of freedom,” Bush wrote.⁵¹ But as David Sanger of the New York Times reported, a few days before Bush’s letter was read at the ceremony, “the Azerbaijani police beat pro-democracy demonstrators with truncheons when opposition parties, yelling ‘free elections,’ defied the government’s ban on protests against President Ilham Aliyev. Mr. Aliyev is one of President Bush’s allies in the war on terror, even though he won a highly suspect election to succeed his father, a former Soviet strongman.”⁵²

Azerbaijan’s human rights record is dismal. “Torture, police abuse, and excessive use of force by security forces are widespread,” according to Human Rights Watch.⁵³ The U.S. State Department, meanwhile, labeled Azerbaijan’s human rights record “poor” and said President Aliyev, the ally of Kissinger, Baker, Cheney, et al., maintained power through an election “that did not meet international standards for a democratic election due to numerous, serious irregularities.”⁵⁴ The State Department charged that in Azerbaijan there was: “restriction on the right of citizens to peacefully change their government; torture and beating of persons in custody; arbitrary arrest and detention, particularly of political opponents; harsh and life-threatening prison conditions; excessive use of force to disperse demonstrations; [and] police impunity.”⁵⁵ It also determined, “Members of the security forces committed numerous human rights abuses.”⁵⁶ Even still, the United States has spent millions of dollars to deploy Blackwater in the country with the explicit purpose of bolstering Azerbaijan’s military capabilities, including creating units modeled after the United States most elite Special Forces, the Navy SEALs. As with other convenient allies of the administration, Azerbaijan was valued for its usefulness in securing oil profits and as a potential staging site for future wars. Blackwater’s contract in the country strengthened the U.S. foothold in a region that will only grow in importance to U.S. policy, and the company has publicly advertised its work in Azerbaijan as a model in seeking more business.⁵⁷ Journalist Tim Shorrock concluded, “Blackwater’s project in Azerbaijan is clear evidence that contractors have crossed the line from pure mercenaries to strategic partners with the military-industrial complex.”⁵⁸