Erik Prince —ex-Navy SEAL, ex-CIA spy, ex-CEO of private-security firm Blackwater —calls himself an “accidental tourist” whose modest business boomed after 9/11, expanded into Iraq and Afghanistan, and then was “blowtorched by politics.” To critics and conspiracy theorists, he is a mercenary war-profiteer. To admirers, he’s a patriot who has repeatedly answered America’s call with bravery and creativity.
Now, sitting in a boardroom above Hong Kong’s Victoria Harbour, he explains his newest title, acquired this month: chairman of Frontier Services Group, an Africa-focused security and logistics company with intimate ties to China’s largest state-owned conglomerate, Citic Group. Beijing has titanic ambitions to tap Africa’s resources—including $1 trillion in planned spending on roads, railways and airports by 2025—and Mr. Prince wants in.
With a public listing in Hong Kong, and with Citic as its second-largest shareholder (a 15% stake) and Citic executives sitting on its board, Frontier Services Group is a long way from Blackwater’s CIA ties and $2 billion in U.S. government contracts. For that, Mr. Prince is relieved.
“I would rather deal with the vagaries of investing in Africa than in figuring out what the hell else Washington is going to do to the entrepreneur next,” says the crew-cut 44-year-old.
Having launched Blackwater in 1997 as a rural North Carolina training facility for U.S. soldiers and police, Mr. Prince says he “kept saying ‘yes’ as the demand curve called—Columbine, the USS Cole and then 9/11.” In 100,000 missions in Iraq and Afghanistan, he says, Blackwater contractors never lost a U.S. official under their protection. But the company gained a trigger-happy reputation, especially after a September 2007 shootout that left 17 civilians dead in Baghdad’s Nisour Square.
At that point, charges Mr. Prince, Blackwater was “completely thrown under the bus by a fickle customer”—the U.S. government, and especially the State Department. He says Washington opted to “churn up the entire federal bureaucracy” and sic it on Blackwater “like a bunch of rabid dogs.” According to Mr. Prince, IRS auditors told his colleagues that they had “never been under so much pressure to get someone as to get Erik Prince,” and congressional staffers promised, “We’re going to ride you till you’re out of business.”
Amid several federal prosecutions involving Blackwater employees, most of which fizzled, Mr. Prince resigned as CEO in 2009 and now feels “absolutely total regret in every way, shape and form for ever saying ‘yes’ ” to a State Department contract.
Which brings him to Hong Kong and his new firm. “This is not a patriotic endeavor of ours—we’re here to build a great business and make some money doing it,” he says. Asia, and especially China, “has the appetite to take frontier risk, that expeditionary risk of going to those less-certain, less-normal markets and figuring out how to make it happen.” Mr. Prince says “critics can throw stones all they want” but he is quick to point out that he has “a lot of experience in dealing in uncertainties in difficult places,” and says “this is a very rational decision—made, I guess, emotionless.”
Mr. Prince aims to provide “end-to-end” services to companies in the “big extractive, big infrastructure and big energy” industries. Initially focused on building a Pan-African fleet of aircraft, his firm will expand into barging, trucking and shipping, along with “remote-area construction” as needed for reliable transport. A company—Chinese, Russian, American or otherwise—may have “an extremely rich hydrocarbon or mining asset,” he explains, “but it’s worth nothing unless you can get it to where someone will pay you for it.” His investor prospectus notes that with today’s transportation infrastructure, “it costs more to ship a ton of wheat from Mombasa, Kenya to Kampala, Uganda than from Chicago to Mombasa.”
Such high costs also reflect the dangers of piracy and civil conflict, but Mr. Prince plays down his firm’s plans in the security realm. “We are not there to provide military training. We are not there to provide security per se. Most of that security”—say, if an oil pipeline or mining camp needs protection—”would be done by whatever local services are there,” including police and private firms. “We don’t envision setting up a whole bunch of local guard services around the continent.”
So the former Blackwater chief won’t employ guys with guns? Well, he says, “that would be the exception, certainly not the rule.”
He says his attention is on “expeditionary logistics” and “asset management.” If a company needs to build a dam, he muses by way of example, “how do you deliver an extremely high-dollar turbine into a very remote part of the world? . . . Do you sling it with a helicopter? There’s all sorts of interesting challenges like that that we’ll be endeavoring to face.”
Mr. Prince won’t share any revenue projections, but his prospectus notes that “China is Africa’s largest trading partner,” with annual flows of $125 billion. Most estimates put that figure closer to $200 billion, a meteoric increase from $10 billion in 2000 and $1 billion in 1980. The U.S., which was Africa’s top trade partner until 2009, registered $100 billion in annual African exchange at last count. China-Africa trade could reach $385 billion by 2015, according to Standard Chartered Bank.
“The U.S. has been fixated on terrorism the last 10 or 15 years,” says Mr. Prince, “and American companies by and large haven’t had the appetite for Africa.” In 2010 the African Development Bank found that Chinese firms signed 20 contracts in Africa for every one signed by an American firm. But does post-9/11 distraction really explain this discrepancy?
A better explanation would begin with China’s state-directed investment strategy, which funds opaque state-owned firms to operate across Africa with little regard for trifles such as financial transparency, environmental degradation or human rights. When a tyrant like Sudan’s Omar al- Bashir can’t get Western financing for a mega-dam across the Nile River, China arrives with an easy loan, some state-owned firms to build the dam and some others to claim oil or mineral concessions elsewhere in the country. Beijing’s approach has helped boost African economic growth—projected at 6% this year by the International Monetary Fund—but it has also helped entrench some of the world’s most oppressive governments.
Mr. Prince prefers to look on the bright side. “Developing good investments in Africa is by and large the best for the people of Africa that have a job, that have electricity, that might have clean water, that might have those things that we in the West take horribly for granted.”
It’s Capitalism 101, he argues. “When someone needs copper, or wood or an ag product, and they invest capital somewhere to make that happen, and people get jobs from that, and that good gets introduced to the world stage and it gets traded and moved, the whole world benefits.”
As for Chinese patronage of presidents-for-life like Sudan’s Bashir, Mr. Prince’s CEO, Gregg Smith —a former U.S. Marine and Deloitte executive—offers this observation: “There’s thousands of tribal conflicts in Africa every decade that have nothing to do with anyone from the outside. It has everything to do with tribal conflicts that have been going on for centuries, and the fact that the economies cause folks not to have jobs,” says Mr. Smith. “It’s not about who backs Omar al-Bashir.”
Nor, adds Mr. Prince, does China’s expanding commercial empire come at the expense of American interests. “The United States and China are among each other’s largest trading partners,” he notes, “and I think countries that trade goods together tend not to trade lead,” meaning to shoot at each other.
This historically questionable reassurance notwithstanding, Mr. Prince certainly isn’t complacent about America’s global standing. U.S. policy in Africa, he says, “is just nonexistent. It’s about as coherent as U.S. Middle East policy—incoherent.”
Americans, he says, “are at a competitive disadvantage because of their government. . . . It’s amazing how many countries run their embassies as commercial outposts to promote businessmen from their country. I think the U.S. has forgotten about that one.”
At this point in the interview, Mr. Prince begins speaking more sharply, even bitterly, not simply as a critic of Washington policy but as a man betrayed. Which he was, in 2009, when he was outed publicly as a CIA asset.
For years while running Blackwater, it turns out, Mr. Prince was also using his personal wealth and expertise to recruit and deploy a world-wide network of spies tracking al Qaeda operatives in “hard target” locations where even the CIA couldn’t reliably operate. This work remained secret until June 2009, when then-CIA Director Leon Panetta mentioned it in classified testimony to Congress. Within weeks, leaks hit the front pages.
“The one job I loved more than any other was ripped away from me thanks to gross acts of professional negligence at the CIA,” Mr. Prince wrote in his memoir, “Civilian Warriors,” published in November.
This background comes to mind as Mr. Prince makes the surprising claim that “there’s very little advantage to being an American citizen anymore. They tax you anywhere in the world you are, they regulate you, and they certainly don’t help you, at all.”
His advice for Washington: “Stop committing suicide.” Lawmakers should “get out of their heads this idea that they can recklessly spend money that they don’t have,” he says. “The United States government is too big in all areas. . . . It’s time to make the entire thing a lot smaller.” That would include doing everything from allowing Americans to buy incandescent light bulbs to reining in domestic surveillance by the National Security Agency.
At no point does Mr. Prince address the irony of making these arguments days after going into business with a state-owned firm founded as part of Communist China’s Ministry of State Security.
“Look,” he says, grasping to end our talk on an optimistic note, “America can pull its head out at any time. That happens at the ballot box. Ballot boxes have consequences still in America.” He continues: “But the American electorate has to actually pay attention, has to turn off the Xbox long enough to pay attention. Otherwise they’re going to continue to elect the government they deserve.”
Mr. Feith is an editorial-page writer at The Wall Street Journal Asia.