The Russian invasion of Ukraine has been widely condemned for its unjustified aggression. Less discussed is the almost half trillion-dollar (£381 billion) defence industry supplying the weapons to both sides, and the substantial profits it makes as a result.
The EU announced it would buy and deliver €450 million (£375 million) of arms to the Ukraine. The US has pledged US$350 million in military aid in addition to the over 90 tons of military supplies and US$650 million in 2021.
The US and Nato sent 17,000 anti-tank weapons and 2,000 Stinger anti-aircraft missiles. An international coalition of nations is also willingly arming the Ukrainian resistance, including the UK, Australia, Turkey and Canada.
This is a major boost for the world’s largest defence contractors. Raytheon makes the Stinger missiles, and jointly with Lockheed Martin makes the Javelin anti-tank missiles. Both US groups, Lockheed and Raytheon shares were up by around 16% and 3% respectively since the invasion.
BAE Systems, the largest player in the UK and Europe, is up 26%. Of the world’s top five contractors by revenue, only Boeing has dropped, due to its exposure to airlines among other reasons.
The overall industry is global in scope. The US is easily the world leader, with 37% of all arms sales from 2016-20. Next comes Russia with 20%, followed by France (8%), Germany (6%) and China (5%).
Beyond the top five exporters are also many other potential beneficiaries in this war. Turkey defied Russian warnings and insisted on supplying Ukraine with weapons including hi-tech drones. Israel enjoys around 3% of global sales.
As for Russia, it has been building up its own industry as a response to western sanctions. The government instituted a massive import substitution programme to reduce its reliance on foreign weaponry and expertise, as well as to increase foreign sales.
As the second biggest arms exporter, Russia has targeted a range of international clients. Its arms exports did fall 22% between 2016-2020, but this was mainly due to a 53% reduction in sales to India. At the same time, it dramatically enhanced its sales to countries such as China, Algeria and Egypt.
The largest Russian defence firms are the missile manufacturer Almaz-Antey (sales volume US$6.6 billion), United Aircraft Corp (US$4.6 billion) and United Shipbuilding Corp (US$4.5 billion).
What the west and Russia share is a profound military industrial complex. They both rely on, enable and are influenced by their massive weapons industries. This has been reinforced by newer hi-tech offensive capabilities from drones to sophisticated AI-guided autonomous weapons systems.
Wars can be avoided. Most wars are about dominance. A human trait that can be “controlled”. No dictator or murderer will live forever. What’s it all about? Ego, greed and/or covetousness. We need more “peace studies” than war and defence colleges. As a human civilisation we seem not to have progressed from Genghis Khan or Alexander the Great. We have the United Nations because of WW2. But it has remained a eunuch in most situations. Unless we have peace, a nation will ruin its coffers and face an end to its dominance. Ask the Romans, the Brits, the French, Dutch or Portuguese. Now the U.S. is repeating that cycle. The only people who will benefit are the arms suppliers and dealers. Is that the human goal? To self-destruct for the benefit of Lockheed Martin, Boeing, Northrop, BAE Systems etc?
Reference:
Ukraine: the world’s defence giants are quietly making billions form the war, The Conversation, 9 March 2022
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