Gen. David Petraeus’ Ph.D. is in international relations, not economics, but he clearly understands the microeconomic phenomenon known as the “principal-agent problem.” Overcoming it is the key challenge in successful counterinsurgency warfare.
It is clear from “Field Manual 3-24 – Counterinsurgency,” the Army and Marine doctrinal manual Petraeus recently co-authored, that he understands this. It is not clear, however, that all of his subordinates share his insight.
Two recent news items illustrate this. One is the ongoing prosecution of the Marines accused of killing 24 civilians in Haditha, Iraq, in 2005. Another describes the casual shooting of civilians by employees of Triple Canopy, a U.S. private security contractor. Both incidents involve the “principal-agent problem.”
Generically, this refers to situations where incentives are structured so that they motivate employees – “agents” in legal terms – to do things in their own interest that harm their employers or “principals.”
Recent business examples abound. An employee of the Geek Squad allegedly placed a cell-phone camera in a bathroom of a house where he had been called to fix a computer. He is accused of trying to get nude photographs of a client’s daughter as she showered. This may have provided some perverted satisfaction to him, but it exposed the Geek Squad to significant legal liability and harm to their business reputation.
Former Qwest CEO Joseph Nacchio, currently on trial for insider trading, is only one of many CEO-agents who allegedly feathered their own financial nests at the expense of their stockholder-principals.
In business situations, principal-agent problems cause wasted resources, lost profits or legal liability. In counterinsurgency operations like Iraq or Afghanistan, principal-agent problems can waste lives and lose a war.
Every counterinsurgency analyst from Lawrence of Arabia to Mao Zedong, David Galula, John Nagl, Thomas Hammes or David Petraeus emphasizes how critical it is for counterinsurgent forces to gain the trust and support of the population. The phrase “winning hearts and minds” acquired a bitter irony during Vietnam but it remains the only way to win wars like those in Iraq or Afghanistan.
Every time a civilian driver is shot by a security contractor or driven off the road by a speeding convoy, every time a man is humiliated in front of his wife, children and neighbors during a search, every time civilians are killed by enraged troops, the chances of eventual success become even slimmer. That is the harm to one principal in this war – the American people.
But the incentives faced by U.S. troops and contractors, the “agents,” in Iraq are daunting. No one who has never been shot at should be quick to condemn those who daily risk their lives. When passing vehicles could blow up and kill you and your comrades, the incentive to fire into any remotely suspicious car is enormous. When you see, feel and smell comrades’ bodies mangled by an IED and you know that nearby civilians must have witnessed its emplacement, rage can be overwhelming.
It was no accident that the My Lai massacre was carried out by a U.S. battalion that had endured weeks of losses to mines and IEDs. Bernard Fall captured similar agonized frustration in “The Street Without Joy,” his 1961 classic account of French operations in Vietnam. Fall himself was killed by an IED while accompanying U.S. Marines in the same area in 1967.
But the fact that an “agent” faces overwhelming and understandable motivations does not reduce the harm that his resulting actions can do to the “principal.” In a classic “fallacy of composition” quandary, self-preserving actions on the part of individuals can lead to failure of the group as a whole. The discipline and leadership needed to overcome the problem are critical.
Gen. Petraeus knows this well. That is why Chapter 7, “Leadership and Ethics” is such an important part of Field Manual 3-24. The Army probably has no better leader for this task right now. But it also is clear that some of his subordinates remain clueless. A Central Command spokesman queried about contractors killing civilians dismissed it as an administrative detail: “This is not a Centcom issue. It’s whoever was running that contract. We’re fighting a war here.” That attitude makes the odds of winning that war even more unlikely.
History shows that regardless of the skill with which implemented, successes in counterinsurgency wars carried out by a foreign powers are exceedingly rare. The British experience in Malaya from 1948-1957 is one example, but it is hard to find another.
American voters and citizens also face moral choices even if we experience no personal danger or hardship.
The Army and Marine Field Manual 3-24 on counterinsurgency is available at http://usacac.leavenworth.army.mil/cac2/Repository/Materials/COIN-FM3-24.pdf.
© 2007 Edward Lotterman
Chanarambie Consulting, Inc.