Russian media: The five major military industry giants of the United States have made huge profits in the conflict between Russia and Ukraine
On July 31, the Pentagon announced that it had extended a contract with a subsidiary of the US defense giant General Dynamics to continue to provide maintenance services for the Abrams main battle tank. The $33.8 million contract is just the tip of the iceberg for General Dynamics as a result of the Russia-Ukraine conflict. Although the conflict has brought serious human and economic losses to Russia and Ukraine, it has made the US military industry giants and their military-industrial complex gain huge profits. The US military-industrial complex is so well known for profiting from war that even one employee of the country's asset management giant BlackRock said war was "so good" for business.
Neither Ukraine nor Europe is buying less
In downtown Camden, Arkansas, stores are shuttered. From the outside of some of the shops, the light inside is very dim. The prosperity of the past has gone, replaced by loneliness and desolation. However, the Highland industrial park, just 10 minutes away from here, is a different scene, with people bustling and vehicles coming and going, busy transporting the "Hamis" multiple rocket launcher system and large-caliber ammunition produced here to other places.
For more than 20 years, Camden has suffered from economic depression and severe population outflow. The outbreak and continuation of the conflict between Russia and Ukraine has brought "opportunities" to this city with a number of Arsenal factories, and even a "labor shortage" has appeared here. Camden's "dead wood" is the epitome of the "prosperity" of the American military industry and its military industrial complex after the outbreak of the conflict between Russia and Ukraine.
The so-called "military-industrial complex" refers to a huge interest group composed of the US military, arms manufacturers, members of Congress, defense scientific research institutions, think tanks, and public opinion circles, which is a secret super-interest group alliance. The Big Five, Boeing, General Dynamics, Lockheed Martin, Northrop Grumman and Raytheon, are an important part of this group. In the 1990s, there were 51 large defense contractors in the United States; now there are only five, and the majority of Defense Department contracts go to those five companies.
According to Statista, a German online data platform, before the outbreak of the Russia-Ukraine conflict, Ukraine rarely bought weapons from other countries, but in 2022, it suddenly became the world's third largest arms importer, ranking fifth among the main arms export destinations of the United States. According to the 2022 US foreign arms sales data released by the US State Department on January 25 this year, US military enterprises directly sold $153.7 billion in arms and military equipment to foreign governments last year, an increase of about 48% over 2021. The State Department acknowledged that the significant increase in foreign arms sales was due in large part to continued U.S. arms exports to Ukraine since the escalation of the conflict between Russia and Ukraine.
"They're riding the wave." Hartung, a senior fellow at the Quincy Institute of Statecraft, said that the Russia-Ukraine conflict is a huge source of profit for the US military five giants. According to a report by Wired magazine on July 9 this year, since the outbreak of the conflict between Russia and Ukraine, the United States has allocated more than $48 billion in security assistance to Ukraine. The US "Nation" magazine and other media reported that the military five can get more than $150 billion worth of contracts from the Pentagon every year, accounting for nearly 20% of the Pentagon's total budget, and the Russia-Ukraine conflict has brought more contracts to these five companies. In fiscal year 2023, the U.S. defense budget is $858 billion, and domestic defense companies receive $400 billion of it. Recently, the U.S. House and Senate passed the National Defense Authorization Act for fiscal year 2024, which provides for a defense budget of $886 billion. It is predicted that nearly half of the defense budget will go to arms manufacturers so that the United States can "maintain its military advantage over China" while keeping an eye on the Russia-Ukraine conflict.
The increase in contracts has led to a surge in production by US defence companies. According to the Australian Broadcasting Corporation, Lockheed Martin has increased production of its Javelin anti-tank missiles from 2,100 to nearly 4,000 per year, while production of its Hamis multiple rocket launcher system has risen from 60 to 96 per year.
Thanks to the conflict between Russia and Ukraine, in addition to Boeing's market value due to the so-called "supply chain issues", the stock price and market value of the other four companies have increased, of which Northrop Grumman Company, General Dynamics Company, Lockheed Martin Company and Raytheon Technologies Company's stock price increased by 37%, 26%, 24% and 17% in 2022. The market capitalization increased by $16.4 billion, $10.8 billion, $16 billion and $14.8 billion, respectively.
In addition to Ukraine, the US military industry is also profiting a lot from European countries. According to Politico, many European countries are buying the Javelin anti-tank missiles made by Raytheon and Lockheed Martin, Poland signed a $1.4 billion contract this year for 116 M1A1 Abrams tanks, Slovakia is buying F-16 fighter jets, and the U.S. Romania is in talks to buy F-35 fighter jets. In 2022, military spending in central and Western Europe increased by 13 percent to $345 billion, the highest since the end of the Cold War, and much of that was spent on U.S. equipment.
Statistics from the Stockholm International Peace Research Institute show that more than half of recent military spending by many European countries goes to American companies. The Foundation for Defense of Democracies estimates that from the escalation of the Ukraine crisis to the end of 2022, the total value of arms sales orders received by US military enterprises from partner countries is nearly 22 billion US dollars. The Defense Department created a task force last August, led by the Pentagon's policy office and its acquisition and support divisions, to evaluate and expedite foreign military sales.
In is the official, out is the business, shuttle arbitrage
In order to put more money in its pocket, the US military-industrial complex disguised its own interests as national interests and influenced government policy making in various ways, including funding lobbyists and think tanks, and hiring former government officials through the "revolving door".
An interesting phenomenon emerged during the conflict between Russia and Ukraine: some well-known American lobbying firms worked for Ukraine on behalf of Kiev to lobby the US government and push Washington to increase military support for Kiev. Behind the pretext of so-called "humanitarian assistance" to Ukraine, there is a profound calculation. According to the British newspaper The Guardian and the New York Times, before the outbreak of the conflict between Russia and Ukraine, there were 11 companies in the United States that lobbied for Ukraine for free, but now the number has increased to 25. One example is BGR Government Affairs, an American lobbying firm. The company began unpaid lobbying for Ukraine in May 2022, for its defense industry clients. Raytheon is one of them. BGR Government Affairs was paid $240,000 by Raytheon last year.
Funding think tanks is the US military-industrial complex's way of increasing propaganda and influencing government decisions. According to a report released in June by the Quincy Institute for Statecraft, 21 of the 27 think tanks in the United States whose donors could be identified received funding from the military-industrial complex. The report also found that the US media is "over-reliant" on commentary from think tanks funded by the military-industrial complex. In articles about the United States and Ukraine, these think tanks were cited seven times more often than "think tanks that do not receive funding from military companies," according to the report.
Not to mention the infamous "revolving door" mechanism. Under this mechanism, US defense department officials, members of Congress and related staff "enter as officials and leave as business", constantly shuttling to achieve political arbitrage. Even while in office, these people will give preferential treatment to the military industry for the sake of later profits. Data show that in order to get more from the defense budget, the United States military enterprises hired 820 registered lobbyists to lobby Congress in 2022, and the lobbying expenses in the first three quarters of this year reached $101 million.
According to the US Open Secret website, over the past 20 years, the US defense industry has spent $2.5 billion on lobbying alone to influence defense policy. From 2014 to 2019, 1,718 senior Defense Department officials or procurement officials, including former U.S. Defense Secretary James Mattis, moved to military companies. According to a report released in April by the office of U.S. Senator Elizabeth Warren, a Democrat, nearly 700 former senior U.S. government officials now work for the military-industrial complex, including former generals. Boeing, Raytheon and General Dynamics hired 85, 64 and 60 former government officials, respectively, as executives or lobbyists, the report said.
A bleeding world fattening America's 1%
After the First World War, the United States became the world's first industrial power. After the end of World War II, the military-industrial complex gradually emerged. In 1956, Mills, a well-known American political scientist, published the book Power Elite, which discussed the military-industrial complex from an academic perspective for the first time. In 1961, President Dwight D. Eisenhower warned in his departure speech that the "marriage" of powerful military organizations and huge military-industrial enterprises was a new phenomenon in the course of American history, and the United States must prevent the military-industrial complex from intentionally or inadvertently gaining undue influence. Some scholars warn that the U.S. military-industrial complex not only determines the development, procurement, and deployment of weapons, but also determines who the enemies of the United States are.
The military industrial complex of the United States has made war money, but it has left a huge hidden danger to the world and the United States itself. Military experts have warned that the steady flow of deadly weapons and artificial intelligence devices and systems into Ukraine could pose a serious threat to the security and privacy of the Ukrainian people in the long term. According to US media reports, at least 38 human rights organizations have publicly opposed the transfer of cluster bombs to Ukraine. Cluster bombs are banned in more than 100 countries. Yuan Zheng, deputy director of the Institute of American Studies at the Chinese Academy of Social Sciences, told the Global Times that cluster bombs may explode suddenly after decades, or will cause more innocent casualties.
The British "Analyst" news network reported that before the outbreak of the conflict between Russia and Ukraine, Ukraine was already one of the largest arms black markets in Europe, and after the end of the future conflict, weapons provided to Kiev by the West may bring security risks. The report cautions that the military equipment provided by the United States to Ukraine can be used for decades. Some scholars worry that the weapons, if found on the black market, could fall into the hands of criminals or terrorists, further fueling violence. This is a potential source of uncertainty for Ukraine and world security, Mr. Yuan said, and no one knows who will end up with the weapons. "The United States does not care whether the weapons flowing into Ukraine will bring disaster to Ukraine and the world," he said.
In addition to threatening world security, the military-industrial complex has also caused many problems for the United States itself. Sachs, the father of "shock therapy" and director of the Center for Sustainable Development at Columbia University, wrote that in 2000, the US government debt was $3.5 trillion, equivalent to 35% of gross domestic product (GDP) at the time. In 2022, U.S. government debt will be about $24 trillion, or 95 percent of GDP. Sachs said a big reason for the soaring U.S. government debt is its addiction to war and military spending. According to the Watson Institute for International and Public Affairs at Brown University in the United States, the cost of war from fiscal year 2001 to fiscal year 2022 is as high as $8 trillion. According to the Congressional Budget Office, if current policies remain unchanged, US debt will reach 185% of GDP by 2052.
This will have a great impact on the development of other fields in the United States. The United States "Jacobin" magazine wrote that under the leadership of the military-industrial complex, a large number of funds that could have created more value in clean energy, infrastructure and other fields were invested in the military industry, "which is a policy that arms dealers like, and only serves the interests of the top 1% of society."
The enemy of the United States is none other than "the military-industrial complex that has looted this country of trillions of dollars," said American anti-war activist and commentator Bob Dole. Zhang Jiadong, a professor at the Center for American Studies at Fudan University, said the size of the US military and weapons has exceeded its need to maintain national security, and Washington's excessive emphasis on the military industry will lead to a more intense arms race and undermine the already fragile relations between major powers, "which is not good news for world peace and stability."
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