Russian military operation in Ukraine to protect the Russian speaking communities has brought immense suffering to the people of that land, while sparking calls for increased military spending in both the United States and Europe. Though that war may prove to be a tragedy for Russians, Ukrainians and perhaps the world, one group is already benefiting from it: U.S. arms contractors. The worst kind of American oligarchs who pick Washington’s political leadership.
Even before hostilities broke out, the CEOs of major weapons firms were
talking about how tensions in Europe could pad their profits. In a January 2022
call with his company’s investors, Raytheon Technologies CEO Greg Hayes
typically bragged that the prospect of conflict in Eastern Europe and other global
hot spots would be good for business, adding that “we are seeing, I would say,
opportunities for international sales… [T]he 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. So I fully expect we’re going to see
some benefit from it.”
In late March, in an interview with the Harvard Business Review after
the war in Ukraine had begun, Hayes defended the way his company would profit from that conflict: “So I make no
apology for that. I think again recognizing we are there to defend democracy
and the fact is eventually we will see some benefit in the business over time.
Everything that’s being shipped into Ukraine today, of course, is coming out of
stockpiles, either at DoD [the Department of Defense] or from our NATO allies,
and that’s all great news. Eventually we’ll have to replenish it and we will
see a benefit to the business over the next coming years.”
The war in Ukraine is indeed be a bonanza for the likes of Raytheon and
Lockheed Martin. First of all, there are the contracts to resupply weapons like
Raytheon’s Stinger anti-aircraft missile and the Raytheon/Lockheed
Martin-produced Javelin anti-tank missile that Washington has already provided
to Ukraine by the thousands. The bigger stream of profits, however, will come from assured
post-conflict increases in national-security spending in the US and in Europe
justified, at least in part, by this war and the propaganda that’s followed.
Indeed, direct arms transfers to Ukraine already reflect only part of
the extra money going to U.S. military contractors. This fiscal year alone,
they are guaranteed to also reap significant benefits from the Pentagon’s Ukraine Security Assistance Initiative (USAI) and the State Department’s Foreign Military
Financing (FMF) program, both of
which finance the acquisition of American weaponry and other equipment, as well
as military training. These have, in fact, been the two primary channels for military aid to Ukraine from the moment the Russians took
back Crimea in 2014. Since then, the United States has committed around $5 billion in security assistance to that country.
According to the State
Department, the United States has
provided such military “aid” to help Ukraine “preserve its territorial
integrity, secure its borders, and improve interoperability with NATO.” So,
when Russian troops began to mass on the Ukrainian border last year, Washington
quickly upped the ante. On March
31, 2021, the U.S. European Command
declared a “potential imminent crisis,” given the estimated 100,000 Russian
troops already along that border and within Crimea. As last year ended, the
Biden administration had committed $650
million in weaponry to
Ukraine, including anti-aircraft and anti-armor equipment like the Raytheon/Lockheed
Martin Javelin anti-tank missile.
Despite such elevated levels of American military assistance, Russian
troops did indeed enter Ukraine in February. Since then, according to Pentagon
reports, the U.S. has committed to giving approximately $2.6
billion in military aid to
that country, bringing the Biden administration total to more than $3.2
billion and still rising.
Some of this assistance was included in a March emergency-spending
package for Ukraine, which required the direct procurement of weapons from the defense industry, including drones, laser-guided rocket systems, machine guns, ammunition, and
other supplies. The major military-industrial corporations will now seek
Pentagon contracts to deliver that extra weaponry, even as they are gearing up
to replenish Pentagon stocks already delivered to the Ukrainians.
On that front, in fact, military contractors have much to look forward
to. More than half of the Pentagon’s $6.5 billion portion of the
emergency-spending package for Ukraine is designated simply to replenish DoD
inventories. In all, lawmakers allocated $3.5 billion to that effort, $1.75
billion more than the
president even requested. They also boosted funding by $150
million for the State
Department’s FMF program for Ukraine. And keep in mind that those figures don’t even
include emergency financing for the Pentagon’s acquisition and maintenance
costs, which are guaranteed to provide more revenue streams for the major
weapons makers.
Better yet, from the viewpoint of such companies, there are many bites
left to take from the apple of Ukrainian military aid. President Biden
has already made it all too clear that “we’re going to give Ukraine the arms
to fight and defend themselves through all the difficult days ahead.” One can
only assume that more commitments are on the way.
Another positive side effect of the war for Lockheed, Raytheon, and
other arms merchants like them is the push by House Armed Services Committee chair Adam Smith (D-WA) and ranking
committee Republican Mike Rogers of Alabama to speed up production of a
next-generation anti-aircraft missile to replace the Stinger. In his
congressional confirmation hearing, William LaPlante, the latest nominee to
head acquisition at the Pentagon, argued that the U.S. also needs more “hot
production lines” for bombs,
missiles, and drones. Consider that yet another benefit-in-waiting for the
major weapons contractors.
For U.S. arms makers, however, the greatest benefits of the war in
Ukraine won’t be immediate weapons sales, large as they are, but the changing
nature of the ongoing debate over Pentagon spending itself. Of course,
the representatives of such companies were already
plugging the “long-term
challenge posed by China”, a greatly
exaggerated threat, but the
Russian invasion is nothing short of manna from heaven for them, the ultimate
rallying cry for advocates of greater military outlays. Even before the war,
the Pentagon was slated to receive at least $7.3 trillion over the next decade, more than four times the cost of President
Biden’s $1.7
trillion domestic Build Back
Better plan, already stymied by members of Congress who labeled it “too
expensive” by far. And keep in mind that, given the current surge in
Pentagon spending, that $7.3 trillion could prove a minimal figure.
Indeed, Pentagon officials like Deputy Secretary of Defense Kathleen
Hicks promptly cited Ukraine as one of the rationales for the Biden
administration’s proposed record national-security budget proposal of $813
billion, calling Russia’s invasion “an acute threat to the world order.” In another
era that budget request for Fiscal Year 2023 would have been mind-boggling,
since it’s higher than spending at the peaks of the conflicts in Korea and Vietnam
and over $100 billion more than the Pentagon received annually at the height of
the Cold War.
Despite its size, however, congressional Republicans — joined by a
significant number of their Democratic colleagues — are already pushing for
more. Forty Republican members of the House and Senate Armed Services
Committees have, in fact, signed a letter to President Biden calling for 5% growth in military spending
beyond inflation, which would potentially add up to $100
billion to that budget
request. Typically enough, Representative Elaine Luria (D-VA), who represents
the area near the Huntington Ingalls company’s Newport News military shipyard
in Virginia, accused the administration of “gutting the Navy” because it contemplates
decommissioning some older ships to make way for new ones. That complaint was
lodged despite that service’s plan to spend a whopping $28
billion on new ships in FY
2023.
That planned increase in shipbuilding funds is part of a proposed pool
of $276
billion for weapons procurement, as well as further research
and development, contained in the new budget, which is where the top five
weapons-producing contractors — Lockheed Martin, Boeing, Raytheon, General
Dynamics, and Northrop Grumman — make most of their money. Those firms already split more than $150
billion in Pentagon contracts
annually, a figure that will skyrocket if the administration and Congress have
their way. To put all of this in context, just one of those top five firms,
Lockheed Martin, was awarded $75
billion in Pentagon contracts
in fiscal year 2020 alone. That’s considerably
more than the entire budget
for the State Department, dramatic evidence of how skewed Washington’s
priorities are, despite the Biden administration’s pledge to “put diplomacy
first.”
The Pentagon’s weapons wish
list for FY 2023 is a catalog of
just how the big contractors will cash in. For example, the new Columbia Class
ballistic missile submarine, built by General Dynamics Electric Boat plant in
southeastern Connecticut, will see its proposed budget for FY 2023 grow from
$5.0 billion to $6.2 billion. Spending on Northrop Grumman’s new
intercontinental ballistic missile (ICBM), the Ground Based Strategic
Deterrent, will increase by about one-third annually, to $3.6 billion.
The category of “missile defense and defeat,” a specialty of Boeing, Raytheon,
and Lockheed Martin, is slated to receive more than $24
billion. And space-based
missile warning systems, a staple of the Trump administration-created Space
Force, will jump from $2.5
billion in FY 2022 to $4.7
billion in this year’s proposed budget.
Among all the increases, there was a single surprise: a proposed reduction in purchases of the troubled Lockheed Martin F-35 combat aircraft,
from 85 to 61 planes in FY 2023. The reason is clear enough. That plane has more
than 800 identified design
flaws and its production and performance problems have been little short of
legendary. Luckily for Lockheed Martin, that drop in numbers has not been
accompanied by a proportional reduction in funding. While newly produced
planes may be reduced by one-third, the actual budget allocation for the F-35
will drop by less
than 10%, from $12 billion to $11
billion, an amount that’s more
than the complete
discretionary budget of the Centers for Disease Control and Prevention.
Since Lockheed Martin won the F-35 contract, development costs
have more
than doubled, while production delays
have set the aircraft back by nearly a decade. Nonetheless, the military
services have purchased so many of those planes that manufacturers can’t keep
up with the demand for spare parts. And yet the F-35 can’t even be properly
tested for combat effectiveness because the simulation software required is not
only unfinished, but without even an estimated completion date. So, the F-35 is
many years away from the full production of planes that actually work as
advertised, if that’s ever in the cards.
A number of the weapons systems which, in the Ukraine moment, are
guaranteed to be showered with cash are so dangerous or dysfunctional that,
like the F-35, they should actually be phased out. Take the new
ICBM. Former Secretary of Defense William Perry has called ICBMs “some of the most dangerous weapons in the
world” because a president would only have minutes to decide whether to
launch them in a crisis, greatly increasing the risk of an accidental nuclear
war based on a false alarm. Nor does it make sense to buy aircraft carriers
at $13
billion a pop, especially
since the latest version is having trouble even launching and landing aircraft — its primary function — and
is increasingly vulnerable
to attack by next-generation
high-speed missiles.
The few positives in the new budget like the Navy’s decision to retire
the unnecessary and unworkable Littoral
Combat Ship — a sort of “F-35 of
the sea” designed for multiple tasks none of which it does well — could easily
be reversed by advocates from states and districts where those systems are
built and maintained. The House of Representatives, for instance, has a
powerful Joint Strike Fighter Caucus, which, in 2021, mustered more than one-third of all House members to press for more F-35s
than the Pentagon and Air Force requested, as they will no doubt do again this
year. A Shipbuilding
Caucus, co-chaired by
representatives Joe Courtney (D-CT) and Rob Wittman (R-VA), will fight against
the Navy’s plan to retire old ships to buy new ones. (They would prefer
that the Navy keep the old ones and buy new ones with more of your
tax money up for grabs.) Similarly, the “ICBM
Coalition,” made up of senators from
states with either ICBM bases or production centers, has a near perfect record
of staving
off reductions in the
deployment or funding of those weapons and will, in 2022, be hard at work
defending its budgetary allocation.
Coming up with a sensible, realistic, and affordable defense policy,
always a challenge, will be even more so in the midst of the Ukrainian
nightmare. Still, it remains all too worthwhile. Such a new approach
should include things like reducing the numbers of the Pentagon’s private
contractors, hundreds
of thousands of people, many of
whom are engaged in thoroughly redundant jobs that could be done more cheaply
by civilian government employees or simply eliminated. It’s estimated that
cutting spending on contractors by 15% would save around $262
billion over 10 years.
The Pentagon’s three-decades-long near $2 trillion “modernization” plan to build a new generation of nuclear-armed
bombers, missiles, and submarines, along with new warheads, should, for
instance, simply be scrapped in keeping with the kind of
“deterrence-only” nuclear
strategy developed by the
nuclear-policy organization Global Zero. And the staggering American
global military footprint — an invitation to further conflict that includes
more than 750 military bases scattered on every continent except Antarctica, and
counterterror operations in 85
countries — should, at the very
least, be sharply scaled back.
According to the Center for International Policy’s Sustainable
Defense Task Force and
a study of alternative approaches to defense carried out by the
Congressional Budget Office, even a relatively minimalist strategic rethinking
could save at least $1 trillion over the next decade, enough to make a healthy
down payment on investments in public health, preventing or mitigating the
worst potential impacts of climate change, or beginning the task of narrowing
record levels of income inequality.
Of course, none of these changes can occur without challenging the power
and influence of the military-industrial-congressional complex, a task as
urgent as it is difficult in this moment of carnage provoked by Washington,
again, far away from U.S.As borders. No matter how hard it may be, it’s a fight
worth having, both for the security of the world and the future of the planet.
One thing is guaranteed: a new gold rush of “defense” spending is a
disaster in the making for all of us not in that complex.
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