The Men Who Own the War Now Run It

by Thomas S. Karat | Jul 9, 2026 | 

There was a time when the arms dealer waited in the corridor. He financed the campaign, endowed the think tank, took the general to dinner, and hoped the man inside the office would remember him when the contract came up. The wall between the money and the decision was thin, often corrupt, but it was there. Someone held the public trust, and someone else tried to buy it, and you could at least tell the two apart.

That wall is gone. The financier no longer waits in the corridor. He holds the office. He signs the checks. He is the buyer and the seller, the regulator and the regulated, the public interest and the private portfolio, fused into a single man in a single suit, and the arrangement is entirely legal, which is the whole problem.

One of these men may already be familiar from a previous article. His name is Friedrich Merz.

The chancellor was the warm-up act

From 2016 to 2020, Merz chaired the supervisory board of BlackRock’s German arm, the local office of the largest pool of private capital on earth – a fact confirmed, without embarrassment, by his own party’s foundation. Then he climbed back into politics, and in March 2025, as chancellor-in-waiting, he drove through the outgoing Bundestag — deliberatelybefore the newly elected parliament could convene – the constitutional amendment that exempted defense spending from Germany’s debt brake. The borrowing limit Germans had treated as sacred since 2009 was gone. German military spending rose 24 percent in a single year to $114 billion, the largest in NATO Europe, and BlackRock held stakes in the very contractors – Rheinmetall, Hensoldt – that the money would flow toward.

He broke no law. He simply spent four years learning, from the inside, how the machinery paid out, and then went and pulled the lever. The arrangement was a particular kind that no scandal quite captures, because nothing in it is hidden. It sits in plain view, in regulatory filings and procurement requests, and it works precisely because everyone involved can say, truthfully, that they broke no rule.

It reads as a German problem only until you cross the Atlantic. There the same face turns up in an American suit, several of them, installed not adjacent to the war machine but at its controls.

The banker who became the Navy

Consider John Phelan, who until March 2025 had no connection to the military beyond a seat on a charity board. His career was money: he co-founded MSD Capital, the private investment firm that managed the personal fortune of Michael Dell, and later founded his own firm, Rugger Management. He gave Trump’s joint fundraising committee $834,600 in April 2024. Months later he was nominated to run the United States Navy, and in March he was confirmed, handed a $263.5 billion budget and command of nearly a million sailors and Marines.

Before his confirmation, Senator Elizabeth Warren wrote to him about the obvious. He had recently earned over $5 million in capital gains from Palantir, a defense-software contractor that took in $541 million from the Pentagon in fiscal 2024 alone, and whose relationships Phelan’s own acquisition vehicle had once advertised. She asked him to divest his defense holdings and to recuse himself, for four years, from matters touching his former clients and employers, noting that a dozen Biden appointees had voluntarily gone beyond what the ethics laws required. Phelan declined to make the stronger commitment. He was confirmed anyway, 62 to 30, with eleven Democrats joining every Republican in the room.

The man overseeing the Navy’s shipbuilding budget was, weeks earlier, a private investor with money in the companies the Navy buys from. Nobody hid it. It was printed in his disclosures and read aloud at his hearing, and it changed nothing.

The private-equity takeover of the Pentagon

Phelan is the modest case. The full expression of the thing sits one floor up, in the office of the deputy secretary of defense, where Stephen Feinberg runs the day-to-day of the entire department.

Feinberg co-founded Cerberus Capital Management and led it for thirty-three years; in his own sworn testimony to the Senate he put the firm’s portfolio at over $65 billion. He was a major Trump donor, and by the time he was confirmed in March 2025 he was, at a listed minimum net worth of $2 billion, the wealthiest official in the administration. What he has built since is not influence over the Pentagon. It is ownership of its investment arm.

Feinberg has surrounded himself with a circle of advisers drawn from his old firm. The group includes former Cerberus managing director John Gallagher and a deal team led by Cerberus alumnus George Kollitides – who was, until 2015, chairman and chief executive of Remington, the gunmaker Cerberus owned. Industry executives nicknamed the squad “Deal Team Six,” a joke on the SEAL unit that killed bin Laden, and Kollitides told a Milken Institute audience he found the name both fun and fitting while explaining that economic warfare has been a part of all successful nations for thousands of years. A Stanford professor watching this described it plainly: private equity has just acquired its largest organization.

The organization it acquired writes checks the size of nations. Under Feinberg, the Pentagon stopped merely buying weapons and began buying companies. It took a $400 million preferred-equity stake in the rare-earth miner MP Materials, enough to make the United States government the firm’s largest single shareholder at roughly 15 percent – ahead, as it happens, of BlackRock. It put $1 billion into an L3Harris rocket-motor unit slated to go public in 2026. Stakes in Trilogy Metals, Vulcan Elements, and ReElement Technologies followed, a portfolio that a group of House members warned was locking federal policy to the fortunes of individual firms – picking winners, and by definition creating losers.

Whose companies get the contracts

Here is where the fusion stops being abstract:

Feinberg signed an ethics agreement before confirmation. He would divest from Cerberus and recuse himself from matters involving the firm. But the fine print left the door open: he could transfer his Cerberus holdings into trusts benefiting his adult children, a maneuver legal under conflict-of-interest law but one ethics experts say hollows out its purpose, and he could keep contracting with Cerberus for administrative services. That contract was meant to end in April 2026. In January, he reversed course and extended it with no end date. The financial relationship between the deputy secretary of defense and the private equity firm he used to run now continues indefinitely.

Meanwhile the department began handing out contracts for Golden Dome, Trump’s missile-defense shield, a program that has already ballooned to an estimated $185 billion. The Pentagon at first refused to name the companies winning the work. When it finally released a list, at least four of the winners turned out to be owned or partly owned by Cerberus: North Wind, Stratolaunch, Red River Technology, and NetCentrics. The department still will not disclose what those contracts are worth, and by law is required to announce only those above $9 million.

Does Feinberg personally pick the contractors? The department says he has no direct responsibility for Golden Dome acquisitions. But the general who runs the program, Michael Guetlein, described his own chain of command without ambiguity: I report to the deputy secretary and only to the deputy secretary, he said. He is the only official who can tell me no. The man who can say no to the entire missile-defense program is the man whose old firm owns the companies being paid to build it, and whose family may still profit from that firm’s returns. No single email needs to be produced. The architecture does the work.

The recruiting pitch says it out loud

For anyone wondering how normal this has become, the sales brochure settles it. To staff its new investment operation – an “Economic Defense Unit” meant to deploy up to $200 billion over three years – the Pentagon hired the headhunting firm Heidrick & Struggles, whose recruiting deck went hunting for bankers at Goldman Sachs, Morgan Stanley, JPMorgan, and Bank of America.

The pitch promised recruits unmatched access to top-level government officials and privileged information flow — whatever you need, you can get. It offered salaries reaching $600,000 through a government-aligned nonprofit, against a federal average near $100,000. And it described the job not as public service but as a two-year secondment leading to exceptional exit opportunities, including the chance to launch a new fund with members of the team. Come into the government, use the access, leave richer, on the strength of relationships built on the public payroll. This is not a leak of something embarrassing. It is a document written to attract people, on the assumption that the merger of private profit and public office is the perk.

A former assistant director on the White House technology-security staff, reading the same deck, warned that an effort this size has the potential to distort national-security-critical industries in ways he did not think anyone had seriously contemplated. There is, he added, obvious potential for truly egregious corruption. But corruption is almost the smaller point. Corruption implies a rule being broken. What is happening here is a rule being dissolved.

The same men, both shores

Line them up. Merz chaired an asset manager and then commanded the German rearmament that manager profits from. Phelan ran a billionaire’s money and then took command of the Navy that buys from the companies he held. Feinberg ran a private equity empire and then took the Pentagon’s second chair and filled the building with his former partners. Different countries, different uniforms, one profession and one move: from owning the assets of war to commanding the state that pays for them.

The line worth repeating from Merz’s own story turns out not to have been about Germany at all. The buildup manufactures the danger it claims to answer. Every European budget hardens Moscow’s conviction that it is being encircled, which justifies the next budget, around and around, while the men who profit count their dividends and call it security. That was true of one chancellor. It is true of an entire class of men who have stopped seeing daylight between the public interest and their own book, because across their whole careers there never was any.

The old fear, the one Eisenhower named in 1961, was that the military-industrial complex would acquire unwarranted influence over the government. That fear is quaint now. Influence is what you need when you are standing in the corridor. These men are not in the corridor. They are behind the desk, and the desk has a checkbook with no ceiling, and the recruiting brochure is on the table telling the next banker that whatever he needs, he can get.

Thomas Karat writes investigative work published at karat.substack.com and the Libertarian Institute, drawing on a corporate career and academic training as a behavior analyst to examine how institutions manufacture consent and influence.