War in Ukraine a Windfall for Weapons Industry

Russia's deadly assault on Ukraine is a bonanza for arms manufacturers, which are lined up to profit as the United States and its allies increase military spending in an effort to bolster Kyiv's forces.

"The spiraling conflict over Ukraine dramatizes the power of militarism and the influence of defense contractors."

William Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft, toldThe Hill on Tuesday that "there's a lot of possibilities for ways that the contractors will benefit, and in the short term we could be talking about tens of billions of dollars, which is no small thing, even for these big companies."

In the weeks since Russian President Vladimir Putin ordered his troops to invade, lawmakers in the U.S. Congress approved a record-setting Pentagon budget, and their counterparts in several European countries also vowed to significantly boost military spending to counteract Moscow.

The $1.5 trillion government funding bill that U.S. President Joe Biden signed Friday greenlights an astronomical $782 billion in military spending--an increase of 6% over last year and nearly $30 billion above the White House's initial request. The package also provides $6.5 billion in military aid to Eastern European nations, including $3.5 billion worth of additional weapons for Ukraine.

As The Hill reported, the extra support for Ukraine "comes on top of more than $1 billion the U.S. has already spent in the past year to arm Ukrainian soldiers with modern weapons, including Javelin anti-tank missiles, manufactured by Lockheed Martin and Raytheon Technologies, and Raytheon's anti-aircraft Stinger missiles."

One arms industry lobbyist told the news outlet that an immediate effect of the U.S. ramping up weapons shipments to Ukraine is that "we're going to have to backfill some of that ourselves, so that will force the Pentagon to buy more from some of the defense companies."

As for longer-term implications, the lobbyist said that Democratic and Republican lawmakers alike expect to pass an even larger military budget next year, which "will pump more money into procurement and into [research and development]."

The U.S. is not the only country where military contractors are anticipating a bump in sales. Over the past few weeks, European countries including Germany, Italy, Poland, and Sweden have announced that they will boost military spending.

According to The Hill:

Citing Russian aggression, Germany said Monday that it would purchase up to 35 American Lockheed Martin F-35 fighter jets, a major reversal from its previous plan to revamp its aging fleet with a combination of older, less expensive American- and European-made jets.

That comes after German Chancellor Olaf Scholz announced late last month that the nation would invest $111 billion in a new military investment fund and increase defense spending above 2% of its gross domestic product.

"We are proud of the confidence the German Federal Ministry of Defense and Luftwaffe officials have shown in choosing the F-35," Lockheed Martin said in a statement.

Less than three full months into 2022, Lockheed Martin's stock has surged by more than 25%, while the share prices of Raytheon, General Dynamics, and Northrop Grumman have also risen by roughly 12%, 14%, and 16%, respectively.

Even before the Kremlin attacked Ukraine last month, arms manufacturers could hardly contain their excitement over the prospect of war, which they explained would be good for their bottom lines.

AsThe Hill reported:

In a January earnings call, Lockheed Martin CEO James Taiclet said that the "renewed great power competition" would lead to inflated defense budgets and additional sales. On the same day, Raytheon Technologies CEO Greg Hayes told investors that the company expected to see "opportunities for international sales" amid the Russian threat.

"The tensions in Eastern Europe, the tensions in the South China Sea, all of those things are putting pressure on some of the defense spending over there," Hayes said. "So I fully expect we're going to see some benefit from it."

The weapons industry lobbyist told the news outlet that higher military spending in Europe would be a boon for U.S.-based military contractors: Even though "many countries have their own defense industrial base, they don't make everything they need themselves. So they are going to rely on us in many cases for missiles, for aircraft, for ground vehicles."

U.S. Rep. Adam Smith (D-Wash.), chair of the House Armed Services Committee, said earlier this month that Russia's war on Ukraine "fundamentally altered what our national security posture, what our defense posture needs to be." Next year's Pentagon budget is "going to have to be bigger than we thought," he added--suggesting that far from being temporary, the recent spike in military spending may be a harbinger of what's to come in the years ahead.

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This is precisely the opposite of what peace advocates have argued should happen. One day after Putin launched his full-scale invasion of Ukraine, the Quincy Institute's Hartung warned against letting corporations and their allies in government use the war in Ukraine as a pretext for showering the military-industrial complex with even more money.

A week later, he argued that such a move would be "counterproductive" and potentially detrimental to U.S. security, echoing calls from anti-war groups that have long pushed for reallocating a portion of the Pentagon's bloated budget to meet pressing human needs.

In a Truthout essay published earlier this month, historian Jonathan Ng, a postdoctoral fellow at the University of Tulsa, explained how "the spiraling conflict over Ukraine dramatizes the power of militarism and the influence of defense contractors."

"A ruthless drive for markets--intertwined with imperialism--has propelled NATO expansion, while inflaming wars from Eastern Europe to Yemen," wrote Ng.

On Saturday, as Common Dreams reported, Russia's deputy foreign minister said that Moscow has warned the U.S. that "the orchestrated pumping of weapons from a number of countries is not just a dangerous move, it is a move that turns these convoys into legitimate targets."

The Russian diplomat's comments came after NATO Secretary-General Jens Stoltenberg warned that a Russian attack on supply lines of countries providing weapons to Ukraine--which is not a NATO member--would constitute a dangerous escalation that observers fear could spiral into a direct confrontation between nuclear-armed powers.

The Intercept's Jeremy Scahill argued last week that the rapid acceleration of arms shipments into Ukraine represents "a significant escalation of Western involvement" in the deadly conflict.

"It is understandable and reasonable that people across the U.S. and Europe are demanding their governments send more weapons to support Ukraine in resisting the Russian invasion," Scahill wrote. "Without the Western-supplied weapons Ukraine already possessed, it is very likely Russia would be in control of much larger swaths of the country."

"It is also vital," Scahill added, "that people advocating such a policy consider whether a sizable increase in U.S. and NATO weapons transfers will prolong the conflict and result in even more civilian death and destruction."

Last year, researchers at Brown University's Costs of War project estimated that as much as half of the $14 trillion spent by the Pentagon alone since its 2001 invasion of Afghanistan has gone to private military contractors.

Lindsay Koshgarian and her colleagues at the Institute for Policy Studies' National Priorities Project and Stephen Semler of the Security Policy Reform Institute, meanwhile, have estimated that corporations gobbled up more than half.