Story by Prabhash K Dutta •
After Hamas leader Ismail Haniyeh's assassination, threat of revenge from Hezbollah and Iran has pushed the US to bolster its defenses in the Middle East. Reuters© Copyright (C) https://firstpost.com. All Rights Reserved.
The conflicts in Ukraine and West Asia have not only reshaped geopolitical landscapes but have also underscored the role of arms manufacturing and supply in modern warfare. There are intricate connections between these wars and the global arms industry, showing how arms manufacturers and suppliers influence the dynamics of conflict.
The two ongoing wars
Ukraine: The ongoing conflict in Ukraine actually began in 2014 with Russia annexing Crimea — condemned but without serious cost on Vladimir Putin’s regime in Kremlin. He followed it up by arming rebels in the Donbas region of Ukraine — drawing international attention. The 2022 Russian invasion of Ukraine escalated the situation, leading to widespread devastation and a significant military standoff.
West Asia: Israel and counter-Israel forces, and al-Qaeda/Islamic State-inspired groups have kept the West Asian pot of armed conflicts boiling for years. The region remains a hotspot for conflict, with Syria, Yemen, and Iraq being the other fronts. The Syrian Civil War, which began in 2011, has seen multifaceted international involvement, including proxy wars and direct military intervention. Yemen's civil war, exacerbated by a humanitarian crisis, involves regional powers like Saudi Arabia and Iran. Iraq, despite the defeat of the Islamic State, continues to grapple with insurgency and instability. The Israel-Hamas war after the October 7 attack that killed about 1,200 Israelis has claimed close to 40,000 lives in Gaza. With recent killings of a Hezbollah commander in Lebanon and top leaders of Hamas in Iran and Gaza has increased the risk of a wider West Asian war.
Both Ukraine and West Asia hold immense geopolitical importance. Ukraine's location makes it a crucial buffer between Russia and Western Europe, while West Asia's vast energy resources and strategic position connect it to global economic and security interests.
Against this background is simmering another geostrategic location — the South China Sea, which China has increasingly been claiming almost in entirety, setting up a more direct conflict with global military powers such as the US and Japan.
Who isn’t complaining?
The arms trade is a lucrative business and weapon manufacturers reap substantial profits from these conflicts. In 2022, global military expenditure reached $2.1 trillion, with significant portions attributed to arms sales. The United States, Russia, and China are the leading exporters, with Europe and other regions also contributing.
The global arms industry is dominated by a few major players, including Lockheed Martin, BAE Systems, Raytheon Technologies, Northrop Grumman, and General Dynamics. These companies manufacture a wide range of military equipment, from aircraft and tanks to missiles and electronic warfare systems.
A complete estimate of commercial dividends that these companies have reaped from the Ukraine and Israel-Hamas wars is yet to be ascertained but several arms manufacturers have recently said that they are not able to meet global demands for weapons. Some of them have even complained about the shortage of materials like gun-powder. What is undeniable is that a war is good business for them.
For instance, Lockheed Martin reported revenues of $67 billion in 2022, with a significant portion attributed to international arms sales. Raytheon's revenues exceeded $64 billion, driven by increased demand for advanced missile systems and defence electronics. Earlier this year, BAE Systems, a major player in the European arms market, reported revenues of over £20 billion, bolstered by contracts in both Ukraine and West Asia.
The continuation of these conflicts is likely to further boost the revenues of these companies. For example, the US has provided $55.3 billion in military assistance to Ukraine since Russia launched its invasion in February 2022, and approximately $58.1 billion in military assistance since Russia's initial invasion of Ukraine in 2014. Much of this assistance translates directly into sales for defence contractors.
Similarly, ongoing arms sales to Saudi Arabia, the UAE, and other Gulf states involved in Yemen’s civil war have ensured a steady stream of revenue for Western arms manufacturers.
The war business in numbers
The 32 Nato members collectively spent $1.3 trillion in 2023 on defence, marking a record high in inflation-adjusted terms since the fall of the Soviet Union. The United States, the largest spender, has allocated $842 billion for defence this year.
Historically more pacifist European nations now under Russian aggression calculate that their underinvestment in defence amounts to $600 billion. They are looking to right their wrongful neglect over rapidly changing military concerns in Europe and over the upcoming US presidential election. This year, Nato anticipates that 18 European members will meet the target of dedicating 2% of their GDP to defence, a significant increase from only three members in 2014.
The result has been a fast cash flow to defence giants such as Lockheed Martin, RTX, and Northrop Grumman. As the Pentagon plans to spend $315 billion this year on procurement and research and development (R&D), the bulk of this amount is flowing to these American companies. Lockheed Martin alone generated $68 billion in sales in 2023.
The ripple effect is being seen across the Atlantic as the ongoing conflict in Ukraine has seemingly invigorated European defence firms. While the market values of Lockheed Martin, RTX, and Northrop Grumman have remained relatively stable, European defence stocks have surged dramatically. Thales of France has seen its share price increase by 82 per cent this year, BAE Systems' shares have doubled, and Rheinmetall, a German company, has experienced a more than five-fold rise in its share price. Only last month, Rheinmetall secured a munitions contract of $9.2 billion from the German government.
Arms supply in Ukraine
Key suppliers: The United States and European countries have been the primary suppliers of military aid. Companies like Lockheed Martin and Raytheon have provided advanced weapons systems, including Javelin anti-tank missiles and HIMARS rocket systems.
Weapons supplied: F16 fighter jets are one of the most advanced military attack aircraft that the US has supplied to Ukraine. Javelin missiles, highly effective against tanks, have been instrumental for Ukrainian forces in countering Russian armoured units. HIMARS systems (High Mobility Artillery Rocket Systems) have enhanced Ukraine's long-range strike capabilities. Drones or unmanned aerial vehicles (UAVs) from various manufacturers have played a critical role in reconnaissance and targeted strikes.
The influx of advanced weaponry has bolstered Ukraine's defensive and offensive operations, leading to strategic gains and prolonged resistance against Russian advances. However, it has also escalated the conflict, resulting in higher casualties and destruction.
Also, Russia’s own defence production has gone up. China is said to have supplied weapons and ammunition to Russia since it launched the invasion of Ukraine.
Arms supply in West Asia
Active suppliers: West Asia's conflicts have attracted a diverse array of arms suppliers. The United States, Russia, France, and the United Kingdom are prominent exporters to the region. Companies like BAE Systems and Raytheon have sold significant quantities of military hardware to countries involved in the conflicts.
Weapons and equipment: American-made F-15s and F-16s, along with Russian Su-30s and MiG-29s, dominate the skies over West Asia. Armoured vehicles such as tanks and personnel carriers from various manufacturers are extensively used. Precision-guided munitions have been crucial in airstrikes, particularly in Gaza, the Golan Heights, and the Syrian and Yemeni theatres.
The supply of sophisticated arms has intensified the conflicts, enabling prolonged and more destructive engagements. In Syria, external military support has sustained both government and rebel forces, leading to a prolonged civil war. In Yemen, the Saudi-led coalition's use of advanced weaponry has exacerbated the humanitarian crisis.
What now?
The connection between arms manufacturing and the conflicts in Ukraine and West Asia is profound. The supply of advanced weaponry has reshaped battlefields, influenced political alliances, and driven economic profits.
Amid a growing profit for arm-makers, there is a growing awareness of the humanitarian impact of these weapons, leading calls for greater transparency and accountability in arms sales. Advocacy groups and international organisations urge stricter controls to prevent exacerbating conflicts.
However, with no sign of a truce in the Ukraine war, and an increasing risk of a wider conflict in West Asia, clouds of an armed tussle are gathering fast over the South China Sea. A flurry of defence pacts involving countries alarmed by China’s unilateral territorial claims on land and water beyond its legitimate boundaries is posing a threat to human safety but ensures a time of greater profits to manufacturers of arms and war systems.
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