The Russian-Ukrainian conflict is beneficial to the enterprises of the US military-industrial complex, which are expected to profit from an increase in the military budgets of Western countries aimed at strengthening Kiev's forces and adapting to instability in the region. They write about it Karl Evers-HillstromandEllen Mitchell in the material for the American edition "The Hill".
(c) Jim Lo Scalzo / EPA
Within weeks of the start of the Russian special military operation in Ukraine, the US Congress approved the largest defense spending bill in the country's history, and US allies in Europe pledged to dramatically increase their military budgets to counter the Russian threat. These measures will bring new profitable contracts to the defense industry.
"Contractors have many opportunities and ways to benefit, and in the short term we can talk about tens of billions of dollars, which is quite a lot even for large companies," said William Hartung, senior researcher at the Quincy Institute for Responsible Statecraft.
On March 15, 2022, US President Joseph Biden signed a $1.5 trillion government funding bill, according to which $ 782 billion is allocated for US defense, which is about $ 30 billion more than the initial draft and almost 6% more than last year. The bill also provides for military support to Eastern European countries in the amount of $6.5 billion, including $3.5 billion. in the form of additional weapons for Ukraine.
Last year, the United States has already spent more than $ 1 billion to equip Ukrainian soldiers with modern weapons, including Javelin anti-tank missile systems manufactured by American corporations Lockheed Martin and Raytheon Technologies, as well as Stinger anti-aircraft missile systems manufactured by Raytheon.
"There is an old saying: "A high tide lifts all ships." I think that when such money starts to be invested, we certainly want our companies to compete for them," said Arnold Punaro, a retired three-star general and former member of the US Senate Armed Services Committee, who now works as a consultant in the defense industry. industry.
One of the lobbyists in the military-industrial complex told The Hill that the short-term consequences of quickly sending more defense systems and equipment to Ukrainians mean that "we [the US - bmpd] will have to replenish some of them ourselves, which will force the Pentagon to buy more from some of the defense enterprises." And in the long term, according to the lobbyist, Democrats and Republicans also expect an increase in the defense budget next year. "This will allow more money to be spent on procurement, as well as research and development work," he added.
Defense contractors are also considering additional sales in Europe, where several countries, including Germany, Poland, Sweden and Italy, have announced increases in their defense budgets.
Referring to Russian aggression, Germany announced on March 14 that it would purchase up to 35 American Lockheed Martin F-35A fighters, which is a serious deviation from its previous plan to upgrade its aging aviation fleet through a combination of older and less expensive American and European-made aircraft.
This happened after German Chancellor Olaf Scholz announced late last month that the country would invest $111 billion in a new military investment fund and increase defense spending to more than 2% of GDP.
"We are proud of the trust that the Ministry of Defense and representatives of the German Air Force have shown in choosing the F-35," Lockheed Martin Corporation said in a statement.
Since the beginning of the year, Lockheed Martin shares have risen by almost 25%, while shares of Raytheon, General Dynamics and Northrop Grumman have risen by about 12%.
In a January earnings report, Lockheed Martin CEO James Taiclet said that "renewed competition between the great powers" would lead to inflated defense budgets and additional sales. On the same day, Raytheon Technologies CEO Greg Hayes told investors that the company expects to see "opportunities for international sales" amid the Russian threat.
"Tensions in Eastern Europe, tensions in the South China Sea - all this puts pressure on the defense spending of some countries in these regions," Hayes said, "So I have no doubt that we will see some benefit from this."
The defense lobbyist also predicted a significant profit for the enterprises of the American military-industrial complex from an increase in defense spending in Europe. "Despite the fact that many countries have their own military-industrial base, they do not produce everything they need on their own. So in many cases they will rely on us [US - bmpd] in terms of missiles, aircraft, ground equipment," he said.
Defense industry associations also note the growing tension, as they pushed US lawmakers to adopt a spending bill, rather than another resolution to continue financing current expenditures, which involves much smaller revenues to the defense budget.
The National Defense Industrial Association (NDIA) warned lawmakers in January that the failure to pass the spending bill "risks indicating a lack of seriousness and competence to counter Russian aggression in Ukraine and China's actions in East Asia and the South China Sea."
The lawmakers said that the war and humanitarian crisis in Ukraine, initiated by Russian President Vladimir Putin, pushed them to come together and adopt a comprehensive law after months of stalled negotiations. In the end, the US Congress provided Ukraine with much more assistance than Biden asked for.
"From a legislative point of view, our team is focused on increasing the budget in excess of the requested amount to support Ukraine, and it seems that this has helped the public understanding of defense priorities in the field of disarmament," Kea Matory, a representative of the NDIA, replied in her letter.
Lawmakers pointed out that the increase in spending is not temporary. The chairman of the US House of Representatives Committee on Armed Forces Adam Smith (Democrat from Washington State) said earlier this month that the budget for 2023 will be even bigger because "the Kremlin's invasion has fundamentally changed what our position should be in the field of national security and defense."
The government spending bill for 2022, which passed both chambers last week with overwhelming bipartisan support, included billions of dollars for ships and planes that the Pentagon did not ask for, which is a common occurrence for the US Congress.
Congress allocated $27 billion for warships, including $4 billion for several ships that the U.S. Navy did not request, and $900 billion for additional Boeing F/A-18 Super Hornet fighters that the Navy hoped to abandon. The bill also provides billions of dollars for the purchase of Lockheed Martin C-130J military transport aircraft - 20 units more than the Pentagon requested.
Legislators representing regions with a significant number of jobs in the defense industry, often receiving political donations from defense companies, usually insist on these acquisitions. Senator Roy Blunt (Republican from Missouri) and member of the House of Representatives Vicky Hartzler (Republican from Missouri), a senior member of the US House of Representatives Committee on Tactical Aviation and Ground Forces, fought for the inclusion in this list of F/A-18 fighter jets and others produced in St. Louis cars.
"We are talking about the economy and domestic politics," Hartung said.
