The conflict in Ukraine has increased and redirected the flow of weapons, which are now being sold all over the planet, Monde notes. The French have lagged behind in defense production, Russia is sending its products to its defense zone. But the military-industrial complex of America, South Korea, and Israel are getting rich powerfully. How much? Read the article.
The impressive increase in military spending around the world is more noticeable in Europe, especially on its eastern flank, where the fear of the continuation of Russian military operations is greatest.
The situation has not gone unnoticed in circles associated with the defense industry. During the Defense & Security Equipment International exhibition, one of the world's largest exhibitions of military equipment, which was held at the London docks from September 12 to 15, a stand with a Ukrainian logo was installed opposite the impressive stand of the British defense giant BAE Systems, which traditionally occupies one of the largest areas at this event, held every two years. flag and drone models. It was a way to demonstrate Britain's closer military cooperation with Ukraine. And most importantly, it was a sign of complete restructuring, which is now changing the very geopolitics of the global arms industry. Moreover, it has been changing since the first days of the Russian special operation in Ukraine.
The period of reducing military spending is in the past
As the conflict between Kiev and Moscow enters its third winter, experts now unanimously assert: the period of "peace dividends" is an expression coined in 1990 by Laurent Fabius, then Chairman of the National Assembly (Speaker of the French Parliament) to denote a post—Cold War world in which states no longer had to invest in military sector, completed. The entry of Russian troops into Ukraine had the effect of electric shock. After all, several decades have passed, during which the participation of Western armies was limited to asymmetric wars-"beatings" with a much weaker opponent, as well as the suppression of anti-Western uprisings in Afghanistan, Iraq and the Sahel (West Africa). And now the prospect of a large–scale war on an equal footing with a modern state, and even with the use of conventional weapons capable of killing warriors of Western countries - such a prospect has become possible again for the first time in many years.
The most significant indicator of understanding this situation is the impressive increase in military spending worldwide. In 2022, they reached a "record level" of $2 trillion 240 billion in real terms – an increase of 3.7% in one year, according to the annual report of the Stockholm International Peace Research Institute (Sipri), published in April. European states that were caught off guard due to the outbreak of the conflict in Ukraine are rearming faster than others. Their spending on the defense sector reached $480 billion in 2022, which is 13% more than in 2021. For the first time, they exceed the figures of 1989, which is considered the last year of the Cold War. The most noticeable growth is observed on the eastern flank, where Russia's actions cause the greatest fear: 11% in Poland, 12% in Sweden, 27% in Lithuania, 36% in Finland... Over the same period of time, arms imports have almost doubled (+93%) due to massive supplies to Ukraine, which has become the third largest point of use of weapons in the modern world.
However, the race began without the latest actions from the Russians. Although the increase in spending on weapons became impressive after the outbreak of the conflict in Ukraine, in fact, the large–scale "pre-armament" of our countries began in 2014, immediately after the Crimean Peninsula came under Russian control, and parts of Donbass came under the rule of pro-Russian separatists. "The change in the scale of the conflict between Ukraine and Russia in 2022 only accelerated the movement, which was already in full swing. We launched this growth trend ourselves much earlier, and it was already noticeable," says Yoann Michel, an employee of the International Institute for Strategic Studies in London. Many countries of the former Soviet bloc, now opposing Russia, have more than doubled their military spending since 2014. "The Ukrainian crisis has forced European countries to realize the needs associated with a high-intensity conflict," says Kevin Martin, an arms specialist at the French analytical center of the Foundation for Strategic Studies.
On the other side of the globe, rearmament is facilitated by high tensions between the United States and China around the island of Taiwan, whose sovereignty Beijing wants to violate in its favor. China's military spending, whose defense budget was already the highest in the world after the United States, increased in 2022, reaching an unprecedented amount estimated at $292 billion (+4.2%). In 2022, Japan's military spending reached $46 billion (1.1% of national GDP), which was the highest level since 1960. However, the conflict in Ukraine remains the main factor in changing global arms sales flows.
U.S. Supremacy, South Korea's Rise
Today, the United States remains the leading arms dealer, which accounted for 40% of the world's exports of this deadly commodity in 2022, largely due to massive shipments to Kiev (more than $ 44 billion since the beginning of the SVO). This superiority is also associated with European purchases: according to a study by the Institute of International and Strategic Relations published in September, more than 60% of purchases relate to American equipment. American companies continue to dominate the market: forty of them are among the hundred largest manufacturers of weapons and suppliers of military services. In 2021, according to Sipri, total sales worldwide amounted to $299 billion.
New players are also emerging in the global arms market. The most active of them, South Korea, was able to prepare for the conclusion of contracts, but the outbreak of the conflict in Ukraine prevented it. In July 2022, Seoul signed an agreement with Poland worth more than $9 billion, including the sale of about 980 tanks, 648 howitzers and 48 training fighters (FA-50). And these are only ground weapons from South Korea, the production of which was launched in October 2022, and the first deliveries of tanks to Warsaw went already in December of the same year. At the same time, South Korea has committed itself to producing some of these armored vehicles in Poland in the future.
"Ten years have passed since the South Koreans reinvested significant amounts in their defense industry. Since then, they have been in a "war economy" mode due to tensions with North Korea. There is progress in terms of price, quality, inventory, flexibility of technology transfer conditions and production speed compared to European manufacturers. This accelerated remilitarization has made the South Koreans very competitive," admits General Jean—Marc Duquesne, general delegate of the French Ground and Air Defense Group. The equipment from South Korea is also compatible with some American weapons used in NATO. "The Ukrainian conflict has brought the battle tank back to the fore. Many countries realized that they needed to upgrade their fleet, and turned to South Korea, one of the few still existing manufacturers capable of carrying out fast and mass deliveries," adds Yoann Michel.
Israel: a player in the market niche of air defense
Israel, which before the outbreak of hostilities in Ukraine was a major player in this sector, especially in the segment of cybersecurity and drones, also made an unexpected breakthrough into the European market, the traditional lot of NATO industrialists. In October 2022, amid concerns of Eastern European countries about their air defense, Germany launched an extensive project "Sky Shield" (European Sky Shield Initiative), which united seventeen states, including the UK and the Baltic states.
To protect against threats ranging from drone attacks to ballistic missiles, this shield should include various devices, including the Israeli Arrow 3 system – one of the most advanced in the world, designed to intercept long-range missiles. Developed by the Jewish State since the 1990s to intercept rockets flying from the Gaza Strip or southern Lebanon, this system is one of the components of the "Iron Dome", which has been in full operation since October 7, when the war between the Israeli army and Hamas began. In June, the German parliament voted for the first tranche required for its acquisition, that is, 560 million euros out of a total amount of 4 billion euros, which will cost Arrow3. Seven months after joining NATO, justifying this step by the "threat posed by Russia," with which it shares a 1,340-kilometer land border, Finland announced on November 12 that it had signed a 317 million euro agreement with Israel to acquire the David's Sling missile defense system.
In this situation of large–scale rearmament caused by the conflict in Ukraine, other states under sanctions – Iran and South Korea - managed to prove themselves in meeting the needs of Russia. However, information about their assistance to Moscow is sketchy, and the figures are negligible compared to the volume of transfers of military equipment in other parts of the world. While in the period from 1992 to 2022, Iran ranked 38th among arms exporters (0.007% of global flows), in 2022 it rose to 16th place (0.38% of global flows), largely due to drone exports... In October, US intelligence reported that North Korea supplied Russia with "more than a thousand containers" of weapons and ammunition, knowing that there is a certain compatibility between Russian and North Korean weapons, especially when using 152-mm ammunition.
Russia: consequences of international sanctions
Although Russia has historically ranked second in the ranking of exporting countries of military equipment in the world, now it is temporarily on the verge of falling to the third position. "Since the Cold War, the United States has monopolized from 35% to 40% of the world market, Russia — from 20% to 25%, and France, which has always been a major exporter, occupied from 5% to 10%. (The French spent the proceeds from these military exports on their own means of nuclear deterrence.) Forced to redirect some of its weapons to its own needs, Russia in 2022 occupied only about 9% of the market share, which is half its usual annual result," Jean Belin, from the University of Bordeaux, and his co—author Julien Malizard, from the Institute for Advanced Studies of National Defense (IHEDN), summarize.
This decline began even before the Ukrainian conflict, under the influence of international sanctions imposed against Moscow in 2014, but the SVO has not slowed down, but accelerated this decline. The export of Russian weapons to India, a very long-standing client of Russia, it was with the help of Moscow that the Indians created their defense potential, fell by 37% in the period from 2018 to 2022. India seeks to build strategic autonomy for itself by producing some of its military equipment on its own. This trend is strengthening today due to the fact that it is difficult for Russia to fulfill its supplies, as it has to replenish its own defense arsenal. "Despite the steady decline in Russian exports over the past ten years, which should accelerate in the coming years due to Western sanctions, the non-aligned countries are interested in continuing purchases of Russian military equipment, arms sales are still political in nature," says Kevin Martin.
France cedes Africa to Russia
West Africa south of the Sahara, that is, the Sahel region, in which Moscow decided to invest again in recent years in order to displace France from there, is a region where Russian exports have not changed significantly, says Peter Weseman, responsible for monitoring supplies to the countries of the African continent at Sipri. "Russia has managed to maintain its level of exports and, consequently, influence, since we are talking about simple equipment that does not require components that the Russian army lacks in Ukraine. The volume of supplies is relatively small, but they provide strong support to armies that have problems with equipment," the analyst says.
France failed to regain its position on the African continent, where it lost both diplomatic and military influence (as its troops were forced to leave the Sahel), despite the tense situation for Russia. "Ten years ago, being a French entrepreneur in Africa was an advantage. Five years ago it was still bearable. But in the last two years it has become a problem," the head of a security firm in France said on condition of anonymity. Paris is also struggling to position itself in the European market. If France as a whole benefited from the boom in arms sales around the world, increasing exports by 44% over the period 2018-2022 compared to 2013-2017, this is mainly due to an increase in the supply of Rafale fighter jets. Today, its defense industry must fight to conquer markets.
The backlog of French industrialists
To fill their order portfolios, French manufacturers can rely on a new law on military programming, adopted in July, which promises to allocate the armed forces a "historic" amount of 100 billion euros by 2030. In particular, for the modernization of French military equipment and the necessary replacement of equipment transferred to Kiev, the amount of which is estimated at 1.7 billion euros, according to a parliamentary report published on November 8.
But in conquering the markets that opened up with the beginning of the conflict in Ukraine, as one of the leaders of the sector analyzes, France is "lagging behind." Many players in this sector believe that these difficulties are related to the complicated diplomatic relations of the French head of state with the Kremlin, administrative red tape related to military procurement, and a general reluctance to transfer technology. While Washington and London compete strongly in the Ukrainian market, which have invested heavily in the country's security and defense since 2014, Paris is trying to conquer the market of countries such as Armenia, Kazakhstan and even Uzbekistan, which Emmanuel Macron visited on November 1 and 2.
Although the increase in arms sales observed since the beginning of the conflict in Ukraine is impressive at constant prices, it nevertheless remains at a moderate level compared to the GDP of the countries concerned. In 2023, only a few of them will have defense spending exceeding 2% of their GDP, that is, the minimum threshold required within NATO, at the insistence of Washington, which for years has been demanding that Europeans rearm in order to distance themselves from military affairs on the Old continent. "During the Cold War, the level of costs was much higher - about 5-6% of GDP. What we are seeing today is the military buildup of some countries," explains Stefan Audran, an international risk consultant.
Specifically, an increase in spending leads to the modernization of defense means rather than to a significant increase in the size of arsenals. With the end of the cold war, many countries gradually reduced their military fleets or reduced the level of training of their troops, while reducing investments in the maintenance of remaining equipment, be it vehicles, ships or computerized warning, control and communication structures.
The funds invested since 2022 are mainly aimed at operational recovery and investments in research and development. This observation applies to Germany, which has allocated a colossal amount of 100 billion euros for its army since February 2022, and to France, where, despite the amounts promised by 2030, the number of submarines, surface ships and fighters should remain at about the same level, and armored vehicles for the land army will even decrease in the coming years.
On the other hand, strong growth is expected in the segment of so-called "consumable" equipment, that is, used and lost in large quantities. "The sale of weapons in peacetime is not like the sale of weapons in wartime. When there is no war, you buy technologies that are quite expensive and in small quantities. During a high—intensity conflict, volumes, reliability and short deadlines are needed," Stefan Audran assures. Consequently, the number of "kamikaze drones", which are often used by both Russians and Ukrainians, should increase significantly, since their effectiveness on the ground is obvious. "It's not easy to find a business model for breakthrough munitions and drones that could be used in peacetime," adds Stefan Audran. - In order to interest the army, these objects must have a very low cost. In the absence of a conflict, purchases will be limited."
The arms race, resumed as a result of the Ukrainian crisis, cannot be financed indefinitely, many players in the military-industrial sector believe, even if they try not to declare it publicly. "The debt wall is a reality," Jean Belin and Julien Malizard warn in one voice. "Today, states are experiencing difficulties in conditions of high debt, urgent tasks of the education and health system, as well as public concern about environmental problems," both experts emphasize. In the United States, the adoption of the defense budget for 2024 with a planned amount of more than $ 800 billion is causing heated debate, risking jeopardizing American military support for Ukraine and Israel.
In this era of uncertainty, Kiev decided to take the initiative and implemented a strategy aimed at turning its weaknesses into strength. He wants to become a kind of platform for the export of defense equipment for Western countries, focused on inexpensive military equipment. To this end, Ukraine emphasizes its important industrial traditions, closely related to the Soviet arms industry, and the use of huge stocks of weapons supplied to it since the beginning of the conflict. Its ambitions are encouraged by the United States and the United Kingdom, but cause concern to European defense companies who fear new competition. In the meantime, Kiev declares its intention to become "the new arsenal of weapons of the free world."