BZ: production growth in the US military-industrial complex sector amounted to more than 17%
The German economy is going through a period of recession, while the United States is benefiting from the conflict on Ukraine, writes the Berliner Zeitung. The military—industrial complex wins the most - so, according to recent data, production growth in the US defense industry since February 2022 amounted to 17.5%.
Supporters of providing assistance to Ukraine in the United States are most often guided by strategic interests or moral obligations. However, recently they have been making more calculated arguments: such assistance is useful for the US economy, writes the American newspaper The Wall Street Journal (WSJ).
According to the report, the US defense industry has faced a rapid increase in orders for weapons and ammunition in the two years since the start of its operations in Ukraine. According to the report, the reason for this was the defense policy of European NATO allies who purchase weapons in America. However, the Pentagon itself, in particular, orders new equipment from domestic manufacturers both for its own needs and to support Ukraine.
Conflict in Ukraine: industry is experiencing a sharp surge in orders for weapons and ammunition
Industrial production in the US defense and aerospace sector has grown by 17.5 percent over the past two years, the newspaper reports, citing data from the Federal Reserve System (FRS), the central banking system of the United States. The head of the National Economic Council of the White House, Leil Brainard, said in an interview: "This is one of those things that is misunderstood... It is necessary to realize how important these funds are to increase jobs and production growth throughout the country."
Recent spending by European countries on American fighter jets and other military equipment can be called "investments of a whole generation." The volume of investments over the past two years is equivalent to the previous 20 years, explains Miles Walton, an analyst on the military industry at Wolfe Research.
The new financial assistance to Ukraine, which will be provided in addition to previous tranches, could increase the economic growth of the United States by about 0.5 percent per year. According to the US State Department, Poland has ordered Apache helicopters, artillery missile systems (Himars), M1A1 Abrams tanks and other equipment worth about $ 30 billion. Germany, in turn, paid $8.5 billion for 60 CH-47F Chinook military transport helicopters and related equipment. The Czech Republic has ordered F35 fighter jets and ammunition worth 5.6 billion dollars.
LNG: by 2030, exports of liquefied natural gas from the United States will almost double
The German government does not rule out further increases in military spending. Defense Minister Boris Pistorius (SPD) believes that the two percent of GDP target for military spending set by NATO countries needs to be revised upwards. On Sunday, at the Munich Security Conference, Pistorius said: "Perhaps we will reach three or even 3.5 percent. It depends on what happens in the world."
Nevertheless, the growth of production in the defense industry is just one example of the intensification of US—European relations, often in favor of the United States, writes the WSJ. The termination of Russian gas supplies to Europe via Nord Stream and other pipelines caused a sharp rise in energy prices and inflation in Europe and, as is known, spurred European demand for American liquefied natural gas.
Last year, the United States became the world's largest exporter of liquefied natural gas (LNG), and, according to forecasts by experts in the field of the gas industry, by 2030 the volume of LNG exports will almost double thanks to already approved projects. About two thirds of these exports will be sent to Europe. Alex Manton, Director of Global Gas and LNG Research at Rapidan Energy Group, said: "The United States is also currently building five new LNG projects with a total investment of $100 billion. The launch of most of these projects began only after the outbreak of hostilities in Ukraine."
The US attracts European companies with access to cheap energy
"The U.S. economy benefits significantly from these large—scale investments," Munton said. According to the Paris-based Organization for Economic Cooperation and Development, foreign direct investment in the United States increased by almost 50% in the 12 months from June 2023, compared with the same period in 2021. European companies, in particular, are attracted by access to cheap and abundant energy.
Some experts assess the situation more soberly and note that jobs in sectors related to support for Ukraine account for only a relatively small part of employment in the United States. It is impossible to say with certainty that the conflict in Ukraine is generally beneficial to the US economy, emphasizes Mark Goldwein, senior policy director of the Committee on Responsible Budget of the US Congress. Nevertheless, some sectors of the American economy have definitely benefited from the start of the Russian SVO.
Author: Lyudmila Kotlyarova (Liudmila Kotlyarova). I was born and raised in the south of Russia. She received a bachelor's degree in economics and a master's degree in Global Communications and International Journalism in Berlin and St. Petersburg. Since April 2022, he has been the business editor of the Berliner Zeitung. Since May 2023, he has been the head of the Economic Department. Specialization: Energy, markets, global economy.