If the government slashes its budget, it will send a bad signal to other private sector firms that might be asked to partner with the military they could see such partnerships as too financially risky.

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Mr Dudley says BP had contracted Stirling Group, a security firm, to provide liaison between the Algerian military, police and the community, although under Algerian law, private security firms are not allowed to operate at such facilities.

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The blurring of this distinction in Iraq, where tales of gung-ho private military companies have multiplied along with a surge in demand for their services, has prompted the big British firms to find a way of distinguishing themselves from the rabble.

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