US Arms Dealers profit from War in Ukraine and confrontation with China

The Russia-Ukraine confrontation has continued for more than a month and caused many casualties, while economic sanctions as western diplomatic efforts had little effect.

People always say there are no winners in war. But for the US military-industrial giants, war is a great opportunity to make huge profits and drive up their stock prices.

Some people have noted that military conflicts or geopolitical tensions have become money-printing machines for the US arms dealers.

US military-industry companies apparently have a consensus that diplomatic efforts are unprofitable, but behind this lies the opportunity to make a profit.

James Taiclet, chief executive of US military-industrial giant Lockheed Martin Corporation, said in January that the competition between major powers would lead to a strong growth in defense budgets and bring more business to the company.

Gregory Hayes, chief executive of Raytheon Technologies, told investors that tensions in Eastern Europe had shown the company new business opportunities.

Shares of major US military companies have surged significantly since the Russia-Ukraine conflict broke out. So far this year, Lockheed Martin’s shares have grown by about 25%, while Raytheon’s shares have gained 16.4% in the the same period.

Shares of the war enterprises such as Northrop Grumman and General Dynamics also jumped.

Immediately after the outbreak of the Russia-Ukraine conflict, the USA announced that it would provide military assistance totaling $350 million to Ukraine.

President Joe Biden authorized $200 million worth of additional military equipment for Ukraine on March 12 and an additional $800 million on March 16, 2022.

The new funds will come from a spending bill Biden signed into law on March 11 that includes $13.6 billion in new aid to Ukraine.

At the same time, in the face of intensifying geopolitical tensions, Germany and other European countries have adjusted their defense policies, creating new business opportunities for the US military giants.

Since the start of the war in Afghanistan in late 2001, Pentagon spending has totaled more than $14 trillion, with 30%-50% of that going to military contractors, according to a paper published by the Watson Institute for International and Public Affairs at Brown University.

US military suppliers, namely Lockheed Martin, Boeing, General Dynamics, Raytheon and Northrop Grumman, have won 33% of all Pentagon contracts in recent years. There is no doubt that arms companies are the biggest beneficiaries of rising US military expenditures in the post-9/11 era.

Apart from instigating wars and creating geopolitical tensions, creating various opposing strategic proxy forces and competitors and threat theories are important means for the Pentagon and arms dealers to increase revenue.

Because of this, China has also been portrayed as the top threat to the USA. The arms industry has ample tools at its disposal to influence decisions over Pentagon spending going forward.

In its 2022 National Defense Strategy report, the Pentagon raised concerns about China’s military power and called great-power competition the biggest threat to the United States’ security and global influence.

But threat assessments that aim to boost US military expenses are not based on existing challenges, such as global terrorism, North Korea and Iran, but rather some overstated risks.

The industry has spent $285 million in campaign contributions since 2001, with a special focus on presidential candidates, congressional leadership, and members of the armed services and appropriations committees in the House of Representatives and Senate.

US weapons manufacturers have spent $2.5 billion on lobbying over the past two decades, employing, on average, more than 700 lobbyists per year over the past five years, more than one for every member of Congress.

These kinds of interactions raise serious questions about whether special interests or the national interest have the greater sway in determining US defense policies and procurement choices.

The revolving door swings both ways. For example, four of the past five US secretaries of defense came from one of the top five arms contractors.

Arms dealers also exert great influence by funding prominent think-tanks that strongly advocate for higher Pentagon budgets but never disclose the pecuniary interests behind them.

At least $1 billion in US government and defense-contractor funding went to the top 50 think-tanks in America between 2014 and 2019, Ben Freeman said as the director of the Foreign Influence Transparency Initiative at the CIP.

The top recipients of this funding were the RAND Corporation, the Center for a New American Security and the New America Foundation.

All these are only the tip of the iceberg. Frankly, the China threat is just another excuse for the Pentagon and arms dealers to get more money, otherwise it would be difficult to justify their claims. Without a threat, who would pay the arms dealers?

Asia Times / ABC Flash Point News 2022.