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At that time instability around the world started to increase, it was the end of an era, and at the same time, the two largest militaries were downsizing. This created a great demand for troops to participate in conflicts and to guard assets in conflict zones around the world along with fulfilling the training and logistics needs of new democracies...
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Basically, it was simple economics, there was a demand, so companies were eager to do the supplying. In many cases, it is just far simpler for a country to pay a company for military work, rather than calling up more troops and dealing with all the other stuff that goes along with that. But lets not fool ourselves into thinking they're new inventions, they've been around for ages known as mercenaries, or dogs of war, just soldiers who would fight in any conflict providing the pay was right...
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