Ukrainian soldiers use a launcher with US-made Javelin missiles during military exercises in the Donetsk region, Ukraine, on December 23, 2021. Photo: Ukrainian Defense Ministry Press Service
Written by Peter Bloom. Originally published on Global Research
The Russian invasion of Ukraine has been widely condemned for its unjustified aggression. There are legitimate fears of a revived Russian empire and even a new world war. Less discussed is the almost half-trillion dollar defense industry supplying the weapons to both sides, and the substantial profits it will make as a result.
The conflict has already seen massive growth in defense spending. The EU announced it would buy and deliver 450 million euros of arms to Ukraine, while the US has pledged US$350 million in military aid in addition to the over 90 tons of military supplies and $650 million in the past year alone.
Put together, this has seen the US and NATO sending 17,000 anti-tank weapons and 2,000 Stinger anti-aircraft missiles, for instance. An international coalition of nations is also willingly arming the Ukrainian resistance, including the UK, Australia, Turkey and Canada.
This is a major boon for the world’s largest defence contractors. To give just a couple of examples, Raytheon makes the Stinger missiles, and jointly with Lockheed Martin makes the Javelin anti-tank missiles being supplied by the likes of the US and Estonia.
Both US groups, Lockheed and Raytheon shares are up by around 16% and 3% respectively since the invasion, against a 1% drop in the S&P 500, as you can see in the chart below.
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.
Defence company share prices vs S&P 500
Orange = Lockheed Martin; cyan = Boeing; yellow = Raytheon; indigo = BAe Systems; purple = Northrop Grumman; blue = S&P 500. Trading View
Opportunity knocks
Ahead of the conflict, top western arms companies were briefing investors about a likely boost to their profits. Gregory J Hayes, the chief executive of US defense giant Raytheon, stated on a January 25 earnings call:
We just have to look to last week where we saw the drone attack in the UAE … And of course, the tensions in eastern Europe, the tensions in the South China Sea, all of those things are putting pressure on some of the defence spending over there. So I fully expect we’re going to see some benefit from it.
Even at that time, the global defense industry had been forecast to rise 7% in 2022. The biggest risk to investors, as explained by Richard Aboulafia, managing director of US defense consultancy AeroDynamic Advisory, is that “the whole thing is revealed to be a Russian house of cards and the threat dissipates.”
With no signs of that happening, defense companies are benefiting in several ways. As well as directly selling arms to the warring sides and supplying other countries that are donating arms to Ukraine, they are going to see extra demand from nations such as Germany and Denmark who have said they will raise their defense spending.
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 – a major boon to its own defence industry, which supplies nearly 1% of the world market.
And with Israel enjoying around 3% of global sales, one of its newspapers recently ranan article that proclaimed: “An Early Winner of Russia’s Invasion: Israel’s Defense Industry.”
As for Russia, it has been building up its own industry as a response to Western sanctions dating back to 2014. The government instituted a massive import substitution programme to reduce its reliance on foreign weaponry and expertise, as well as to increase foreign sales. There have been some instances of continued licensing of arms, such as from the UK to Russia worth an estimated £3.7 million, but this ended in 2021.
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.
According to a US congressional budget report: “Russian weaponry may be less expensive and easier to operate and maintain relative to western systems.” The largestRussian defence firms are the missile manufacturer Almaz-Antey (sales volume $6.6 billion), United Aircraft Corp (US$4.6 billion) and United Shipbuilding Corp ($4.5 billion).
In the face of Putin’s imperialism, there are limits to what can be achieved. There appears little credible possibility for Ukraine to demilitarize in the face of Russia’s continued threat.
There have nevertheless been some efforts to de-escalate the situation, with NATO, for example, very publicly rejecting the request of Ukrainian president Volodymyr Zelensky to establish a no-fly zone. But these efforts are undermined by the huge financial incentives on both sides for increasing the level of weaponry.
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.
If the ultimate goal is de-escalation and sustainable peace, there is a need for a serious process of attacking the economic root causes of this military aggression. President Joe Biden has said that the US will directly sanction the Russian defense industry, making it harder for them to obtain raw materials and sell their wares internationally to reinvest in more military equipment.
Having said that, this may create a commercial opportunity for Western contractors. It could leave a temporary vacuum for US and European companies to gain a further competitive advantage, resulting in an expansion of the global arms race and creating an even greater business incentive for new conflicts.
In the aftermath of this war, we should explore ways of limiting the power and influence of this industry. This could include international agreements to limit the sale of specific weapons, multilateral support for countries that commit to reducing their defense industry, and sanctioning arms companies that appear to be lobbying for increased military spending.
More fundamentally, it would involve supporting movements that challenge the further development of military capabilities.
Clearly, there is no easy answer and it will not happen overnight, but it is imperative for us to recognize as an international community that long-lasting peace is impossible without eliminating as much as possible the making and selling of weapons as a lucrative economic industry.
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Peter Bloom is Professor of Management, University of Essex.
Complaining about Ukraine being supported against an invasion? Who would have thought! 🤷🤭
Ukrainian here. Today my entire brigade surrendered because we ran out of food and water. Morale is at all alltime low. Even the troops are beginning to understand that all propaganda that comes out of Kiev gets debunked in under 24h.
Interesting, all your comments were pro Russian so far. 🤷😂🤭
Problem was the Russians we wanted to surrender too, wanted to surrender to us, and as they were conscripts with dead officers they couldn’t figure out how to accept our surrender. So we drank their vodka, sang some songs and walked Them back to Kyve. Apparently life as a POW is more pleasant then life back in mother Russia!
Did the Russians capture any dildos from the Uki Nazis dressed as ugly women?
Worst of all worlds: The half-hearted sanctions against Russia have failed and Russia will not be deterred. Russia has switched to Ruble economy with Chinese help and Europe will suffer gas and oil shortages.
It is now dawning on the most braindead and brainwashed western police state sheeple that the Bilderberg Jew and WASP warmongering in Ukraine is all about money and the destruction of Russia and control over its rich resources. The next target is China if they succeed in Balkanizing Russia without being nuked. That is why 95% of the world supports Russia. The dumb Ukrainian Nazis being propped by by NATO eunuchs are just sacrificial pawns for Jew parasites, like Arabs have been. China and rest of the free world must unite against the Euro trash and Zionists.
UKRAINE HAS MANY BIOWEPAONS LABS pentagon financed? Russia doe s not have.They should have froced to adhere to the MINSK AGREEMENT OF 2015
That’s very interesting. So many people making billions of dollars thanks to Putin’s ineptitude.
Well, Vlad surely didn’t do Russia a favor with this misjudged invasion.
He is raising the very forces he is scared of himself.
He probably doesent know that yet, is intelligence sources don’t seem to be that reliable.
Vladimir Putin isn’t incompetent…he’s under the control of the judeo-christian NWO, same as all Western leaders are. So, his actions only appear to be “less than optimal” because he’s not calling the shots.
We are on the way to encircle.over 8000 rusian soldiers. The Russian army is retreating on 2 fronts from Kiev we killed 16600 solider and over 20000 are wonded. Rusian with out nuclear weapons is way down on mater or rank in military power. Actually Ukraine now is more powerful than Russian millitary even Ukraine with little equipment is able to absolutely obliterate to pieces the entire Russian army. Now Ukraine president is the most powerful person in the world and Putin is next to Hitler his best friend. Putin destroyed everything in his country Millitary Economically and Politicaly. Oligarchs yesterday they had a meeting in Russia and they are planning to asassinate Putin and his security circle and Lavorov. This is the fate of all Russian leaders. Now Putin has successfully succeeded to make the world hate his entire country exactly similar to what Hitler did . Quite impressive you have to have special skills to do that.
I’m currently watching the situation, if that turns out to be true, then Russia’s invasion might even completely collapse in the north around Kiev.
But not let’s carried away, we will see how it develops sooner or later anyway.
Current estimations with all soldiers unable to fight is a staggering 30-40,000 soldiers. Quite a development. It even includes soldiers with frostbite. And that estimation is already on the conservative side.
Anyway, we will see how it goes.
So you like to repeat the FAGGOT JEW MASS MEDIA? LMAO! Keep taking it up the ass my dear little cunt.
ukropnazzistan—former ukraine defeated demoralized but less pathetic than stupified nebraska hillbilly dead lgbt anlgle scum
Is that you Steiner?
Here people is how hitler was in his delusions of the last days of may 1945.
Hey dipshit, you have no navy no airforce, no air defence, no mobility and no supplies.
This war is fought on the ground not on twitter. I havent seen 1 ukraine counter attack not one.
They have gained ZERO ground and lost a third of their country.
Stew in your juices and cook filthy azov nazi.
If you are the angel of death, we are the angels of light. We have no fear of death!
Your “counter-attack” has already failed. And you have got the numbers backward, as you Ukrops have lost 14,000 killed and 36,000 wounded to the Russian, DNR, and LNR side losing 3,500 killed and 8,500 wounded.
Like I said before, it is the banksters who create these wars – all wars – for the purposes of making themselves richer and even more powerful.
“If my sons did not want wars, there would be none.” Gutle Schnaper Rothschild
Yup,its funny this war started the same week as all covid restrictions were lifted here.
They were lifted on march 7, did you notice what was planned by the orcs on march 8.
Exactly. The entire thing was choreographed, right from the git-go, as all world events are now.
Smedley Butler rolls in his grave.
Never heard the low IQ dumbass Smedley Butler ever talk about the satanic Jew that controlled his idiot mind….
Which satanic jew would that be?
Is it telling when the propaganda mouth piece of Putin (Southfront) is talking peace? The Russian army must really be taking a lot of casualties and losing a lot of hardware.
My heart goes out to the Mothers of Russian soldiers.😢
This article comes from Global Research, which opposes the Russian operation. You dumb jizz-rag.
Albright is dead. Let’s party all night long 🥂🥳🥳🥂🥂🥳🥳😎
The sad part is that she can only die once.
ukrps defeated—amerikants impotent feminized automatons popcorn tastes better when I observe the desperate nazi comments at SF
Putin. You now have the opportunity to liberate Europe from US-NATO
Most people in UK have no idea that this is why their country is directly involved in so many conflicts and is currently encouraging Ukraine to keep fighting Russia with no realistic hope of success. The younger generation especially have very little idea of politcs and especially geopolitics and the realities of war. They do seem to care about the environment though, which is good.
Why dont Ukrainians and Russians do an about face and kill the Jew Oligarchs that control both corrupt nations? Slavs are sickening.
Who makes these claims about “Russian Empire” nonsense? More ike NATO EMPIRE in reality. it WAS nato’s expansion and Ukraine’s hate which caused this JUSTIFIED INTERVENTION.
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