{"id":209622,"date":"2022-04-18T12:00:53","date_gmt":"2022-04-18T11:00:53","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=209622"},"modified":"2025-01-10T15:06:46","modified_gmt":"2025-01-10T15:06:46","slug":"the-new-capitalist-gold-rush","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2022\/04\/the-new-capitalist-gold-rush\/","title":{"rendered":"The New Capitalist Gold Rush"},"content":{"rendered":"

How Pentagon Contractors Are Cashing in on the Ukraine Crisis<\/strong><\/em><\/p>\n

\"\"<\/a><\/p>\n

17 Apr 2022 – <\/em>The Russian invasion of Ukraine 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 the world, one group is already benefiting from it: U.S. arms contractors.<\/p>\n

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\u2019s investors, Raytheon Technologies CEO Greg Hayes typically bragged<\/a> that the prospect of conflict in Eastern Europe and other global hot spots would be good for business, adding that \u201cwe are seeing, I would say, opportunities for international sales\u2026 [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\u2019re going to see some benefit from it.\u201d<\/p>\n

In late March, in an interview with the Harvard Business Review<\/em> after the war in Ukraine had begun, Hayes defended<\/a> the way his company would profit from that conflict:<\/p>\n

\u201cSo 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\u2019s 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\u2019s all great news. Eventually we\u2019ll have to replenish it and we will see a benefit to the business over the next coming years.\u201d<\/p><\/blockquote>\n

Arms to Ukraine, Profits to Contractors<\/strong><\/p>\n

The war in Ukraine will indeed be a bonanza for the likes of Raytheon and Lockheed Martin. First of all, there will be the contracts to resupply weapons like Raytheon\u2019s Stinger anti-aircraft missile and the Raytheon\/Lockheed Martin-produced Javelin anti-tank missile that Washington has already provided to Ukraine by the thousands<\/a>. The bigger stream of profits, however, will come from assured post-conflict increases in national-security spending here and in Europe justified, at least in part, by the Russian invasion and the disaster that\u2019s followed.<\/p>\n

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\u2019s <\/a>Ukraine Security Assistance Initiative (USAI) and the State Department\u2019s Foreign Military Financing<\/a> (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<\/a> channels for military aid to Ukraine from the moment the Russians invaded and seized Crimea in 2014. Since then, the United States has committed<\/a> around $5 billion in security assistance to that country.<\/p>\n

According to the State Department<\/a>, the United States has provided such military aid to help Ukraine \u201cpreserve its territorial integrity, secure its borders, and improve interoperability with NATO.\u201d So, when Russian troops began to mass on the Ukrainian border last year, Washington quickly upped the ante. On March 31, 2021<\/a>, the U.S. European Command declared a \u201cpotential imminent crisis,\u201d 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<\/a> in weaponry to Ukraine, including<\/a> anti-aircraft and anti-armor equipment like the Raytheon\/Lockheed Martin Javelin anti-tank missile.<\/p>\n

Despite such elevated levels of American military assistance, Russian troops did indeed invade Ukraine in February. Since then, according to Pentagon reports, the U.S. has committed to giving approximately $2.6 billion<\/a> in military aid to that country, bringing the Biden administration total to more than $3.2 billion<\/a> and still rising.<\/p>\n

Some of this assistance was included in a March emergency-spending package for Ukraine, which required<\/a> the direct procurement of weapons from the defense industry, including<\/a> 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.<\/p>\n

On that front, in fact, military contractors have much to look forward to. More than half of the Pentagon\u2019s $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<\/a> more than the president even requested<\/a>. They also boosted funding by $150 million<\/a> for the State Department\u2019s FMF<\/a> program for Ukraine. And keep in mind that those figures don\u2019t even include emergency financing for the Pentagon\u2019s acquisition and maintenance costs, which are guaranteed to provide more revenue streams for the major weapons makers.<\/p>\n

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<\/a> made it all too clear that \u201cwe\u2019re going to give Ukraine the arms to fight and defend themselves through all the difficult days ahead.\u201d One can only assume that more commitments are on the way.<\/p>\n

Another positive side effect of the war for Lockheed, Raytheon, and other arms merchants like them is the push <\/a>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 America also needs more \u201chot production<\/a> lines\u201d for bombs, missiles, and drones. Consider that yet another benefit-in-waiting for the major weapons contractors.<\/p>\n

The Pentagon Gold Mine<\/strong><\/p>\n

For U.S. arms makers, however, the greatest benefits of the war in Ukraine won\u2019t be immediate weapons sales, large as they are, but the changing nature of the ongoing debate over Pentagon spending itself.\u00a0 Of course, the representatives of such companies were already plugging<\/a> the long-term challenge posed by China, a greatly exaggerated<\/a> 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<\/a> over the next decade, more than four times the cost of President Biden\u2019s $1.7 trillion<\/a> domestic Build Back Better plan, already stymied by members of Congress who labeled it \u201ctoo expensive\u201d by far.\u00a0 And keep in mind that, given the current surge in Pentagon spending, that $7.3 trillion could prove a minimal figure.<\/p>\n

Indeed, Pentagon officials like Deputy Secretary of Defense Kathleen Hicks promptly cited Ukraine as one of the rationales for the Biden administration\u2019s proposed record national-security budget proposal of $813 billion<\/a>, calling<\/a> Russia\u2019s invasion \u201can acute threat to the world order.\u201d In another era that budget request for Fiscal Year 2023 would have been mind-boggling, since it\u2019s higher<\/a> 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.<\/p>\n

Despite its size, however, congressional Republicans \u2014 joined by a significant number of their Democratic colleagues \u2014 are already pushing for more. Forty Republican members of the House and Senate Armed Services Committees have, in fact, signed a letter<\/a> to President Biden calling for 5% growth in military spending beyond inflation, which would potentially add up to $100 billion<\/a> to that budget request. Typically enough, Representative Elaine Luria (D-VA), who represents the area near the Huntington Ingalls company\u2019s Newport News military shipyard in Virginia, accused<\/a> the administration of \u201cgutting the Navy\u201d because it contemplates decommissioning some older ships to make way for new ones. That complaint was lodged despite that service\u2019s plan to spend a whopping $28 billion<\/a> on new ships in FY 2023.<\/p>\n

Who Benefits?<\/strong><\/p>\n

That planned increase in shipbuilding funds is part of a proposed pool of $276 billion<\/a> for weapons procurement, as well as further research and development, contained in the new budget, which is where the top five weapons-producing contractors \u2014 Lockheed Martin, Boeing, Raytheon, General Dynamics, and Northrop Grumman \u2014 make<\/a> most of their money. Those firms already split more than $150 billion<\/a> 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<\/a> in Pentagon contracts in fiscal year 2020 alone. That\u2019s considerably more<\/a> than the entire budget for the State Department, dramatic evidence of how skewed Washington\u2019s priorities are, despite the Biden administration\u2019s pledge to \u201cput diplomacy first.\u201d<\/p>\n

The Pentagon\u2019s weapons wish list <\/a>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\u2019s new intercontinental ballistic missile (ICBM), the Ground Based Strategic Deterrent, will increase by about one-third annually, to $3.6 billion.\u00a0 The category of \u201cmissile defense and defeat,\u201d a specialty of Boeing, Raytheon, and Lockheed Martin, is slated to receive more than $24 billion<\/a>.\u00a0 And space-based missile warning systems, a staple of the Trump administration-created Space Force, will jump from $2.5 billion<\/a> in FY 2022 to $4.7 billion in this year\u2019s proposed budget.<\/p>\n

Among all the increases, there was a single surprise: a proposed reduction<\/a> in purchases of the troubled Lockheed Martin F-35 combat aircraft, from 85 to 61 planes in FY 2023.\u00a0 The reason is clear enough. That plane has more than 800<\/a> identified design flaws and its production and performance problems have been little short of legendary.\u00a0 Luckily for Lockheed Martin, that drop in numbers has not been accompanied by a proportional reduction in funding.\u00a0 While newly produced planes may be reduced by one-third, the actual budget allocation for the F-35 will drop by less than 10%<\/a>, from $12 billion to $11 billion, an amount that\u2019s more than<\/a> the complete discretionary budget of the Centers for Disease Control and Prevention.<\/p>\n

Since Lockheed Martin won the F-35 contract, development costs have more than doubled<\/a>, 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\u2019t keep up with the demand for spare parts. And yet the F-35 can\u2019t 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\u2019s ever in the cards.<\/p>\n

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.\u00a0 Take the new ICBM.\u00a0 Former Secretary of Defense William Perry has called<\/a> ICBMs \u201csome of the most dangerous weapons in the world\u201d\u00a0because 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> a pop, especially since the latest version is having trouble<\/a> even launching and landing aircraft \u2014 its primary function \u2014 and is increasingly vulnerable to attack<\/a> by next-generation high-speed missiles.<\/p>\n

The few positives in the new budget like the Navy\u2019s decision to retire the unnecessary and unworkable Littoral Combat Ship<\/a> \u2014 a sort of \u201cF-35 of the sea\u201d designed for multiple tasks none of which it does well \u2014 could easily be reversed by advocates from states and districts where those systems are built and maintained.\u00a0 The House of Representatives, for instance, has a powerful Joint Strike Fighter Caucus, which, in 2021, mustered<\/a> 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<\/a>, co-chaired by representatives Joe Courtney (D-CT) and Rob Wittman (R-VA), will fight against the Navy\u2019s plan to retire old ships to buy new ones.\u00a0 (They would prefer that the Navy keep the old ones and <\/em>buy new ones with more of your tax money up for grabs.) Similarly, the \u201cICBM Coalition<\/a>,\u201d made up of senators from states with either ICBM bases or production centers, has a near perfect record of staving off<\/a> reductions in the deployment or funding of those weapons and will, in 2022, be hard at work defending its budgetary allocation.<\/p>\n

Towards a New Policy<\/strong><\/p>\n

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, given where our taxpayer dollars go, it remains all too worthwhile.\u00a0 Such a new approach should include things like reducing the numbers of the Pentagon\u2019s private contractors, hundreds of thousands<\/a> 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\u2019s estimated that cutting spending on contractors by 15% would save around $262 billion<\/a> over 10 years.<\/p>\n

The Pentagon\u2019s three-decades-long near $2 trillion<\/a> \u201cmodernization\u201d 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 \u201cdeterrence-only\u201d nuclear strategy <\/a>developed by the nuclear-policy organization Global Zero.\u00a0 And the staggering American global military footprint \u2014 an invitation to further conflict that includes more than 750 <\/a>military bases scattered on every continent except Antarctica, and counterterror operations in 85 countries<\/a> \u2014 should, at the very least, be sharply scaled back.<\/p>\n

According to the Center for International Policy\u2019s Sustainable Defense Task Force<\/a> and a study<\/a> 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.<\/p>\n

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 in Europe. No matter how hard it may be, it\u2019s a fight worth having, both for the security of the world and the future of the planet.<\/p>\n

One thing is guaranteed: a new gold rush of \u201cdefense\u201d spending is a disaster in the making for all of us not in that complex.<\/p>\n

________________________________________________<\/p>\n

J<\/em>ulia Gledhill<\/em> is an analyst at the Center for Defense Information at the Project On Government Oversight<\/a>.<\/em><\/p>\n

William D. Hartung<\/em> is a Senior Research Fellow at the Quincy Institute for Responsible Statecraft, and the author of <\/em>Prophets of War: Lockheed Martin and the Making of the Military Industrial Complex<\/a>.<\/p>\n

Go to Original – tomdispatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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