Business

Ukraine and the military-industrial complex

President Biden has asked Congress for US$813 billion in military spending for fiscal year 2023. An increase of more than $30 billion over the 2022 military budget.

This increase is intended – among other things – to address “serious threats” posed by Russia in Ukraine and elsewhere. The Biden administration had already pledged more than $1 billion in military aid to Kyiv.

It is asking for an additional 300 million dollars for Ukraine and 6.2 billion to reinforce the American military presence in Europe. The European Union has announced that it will buy and deliver 450 million euros (C$623 million) in arms to Ukraine.

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Lucrative contracts in sight

Russia’s invasion of Ukraine creates a boom for arms manufacturers. It guarantees the global military-industrial complex massive profitability for years to come. Like during the Cold War decades.

The conflict has already seen an increase in military spending in many countries. Germany, a pacifist since the Second World War, has announced a major increase in its defense budget as well as an imposing rearmament programme. Other European countries are following suit. More business for the military-industrial complex.

Since Russia invaded Ukraine, the stock prices of companies like Northrop, Grumman, Raytheon and Lockheed Martin have risen dramatically.

Lockheed Martin and Raytheon, among the world’s largest arms manufacturers, had the audacity to tell their investors that the conflict in Ukraine was good for business.

The United States and NATO are sending 17,000 anti-tank weapons and 2,000 Stinger anti-aircraft missiles manufactured by Raytheon. The thousands of Javelin anti-tank missiles supplied to Ukraine were developed in partnership by Raytheon and Lockheed Martin. General Dynamics reports that Eastern European demand for its combat vehicles is “at a high level”.

When the war between Russia and Ukraine ceases, the military-industrial complex will be further advantaged. The countries involved, directly or indirectly, in the conflict will have to replenish their stock of ammunition and missiles and replace the planes, vehicles and equipment destroyed.

According to the Stockholm International Peace Research Institute (SIPRI), 10 countries monopolized in 2021 90.3% of the world arms trade.

The United States is easily the world leader, with 37% of all arms sales from 2016 to 2020. Next comes Russia with 20%, followed by France (8%), Germany (6%) and China (5%). Canada is in 17th place with a global market share of 0.5%.

Good for Russian industry too

The war in Ukraine is also advantageous for Russian arms manufacturers. US and European sanctions will make it more difficult to obtain Western electronic technologies and sell weapons systems abroad. It’s certain. But the Russian military-industrial complex will be greatly boosted by internal demand. Think of the enormous quantities of military equipment that the country has lost in Ukraine and that will have to be renewed.

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