Arms industry thrives despite pandemic

December 7, 2021 - 21:25

TEHRAN - Despite the global economy contracting as a result of the Pandemic which was and still is in full swing, a new report shows that one sector has remained immune to the virus. The arms exports industry. The world’s top 100 arms manufacturers have continued to increase revenue, racking up their business profits to the tune of $531 billion in 2020. To put that in to perspective it’s more than the whole economic output of Belgium.

The Stockholm International Peace Research Institute (SIPRI) has expressed surprise by the data from 2020, the first year of the pandemic saying that “even though the IMF put the global economic contraction at 3.1%, we saw that the arms sales of these top 100 companies increased nonetheless, we saw an overall increase of 1.3%.”

According to new data released by the prominent think tank and as with all previous data releases and reports it has published, the United States is at the top of the arms exports list. Some 54% of the $531 billion was accounted for by the 41 U.S. companies on SIPRI’s top 100. The main companies in the industry are based in America, Lockheed Martin alone, for example, sold more than $58 billion worth of military equipment last year, a sum that is bigger than the GDP of Lithuania. Experts say companies that sell big also wield strong political lobbying power.

Markus Bayer, a political scientist at the Bonn International Centre for Conflict Studies (BICC), says arms companies are deliberately exerting influence in politics. He cites a report by the U.S. NGO Open Secret which notes “defense companies spend millions every year lobbying politicians and donating to their campaigns. In the past two decades, their extensive network of lobbyists and donors have directed $285 million in campaign contributions and $2.5 billion in lobbying spending to influence America’s military policy.”

And for the arms manufacturing giants, the spending appears to have paid off. SIPRI researcher Alexandra Marksteiner points out that the U.S. Department of Defense provided “targeted support” for the arms industry during the pandemic. “For example, they made sure that employees of defense companies were largely exempted from stay-at-home orders. On the other hand, there were some orders that were set up so that funds could be transferred to the companies a bit earlier, ahead of schedule, so that they would have a bit of a buffer.”

U.S. Department of Defense provided “targeted support” for the arms industry during the pandemic.She has also highlighted that “information technology can no longer be separated from weapons technology.” In its new report, SIPRI specifically looked at the growing role technology companies play in the arms business. Some experts say that, if you want a clear picture of the arms industry, “you can’t just talk about traditional players like Lockheed Martin.” SIPRI says that, in recent years, some Silicon Valley giants like Google, Microsoft, and Oracle have sought to deepen their involvement in the arms, business and in return have been rewarded with lucrative contracts.

SIPRI has provided the example of a deal between Microsoft and the U.S. Department of Defense worth $22 billion. The company has been contracted to supply the U.S. Army with a certain type of super-glasses, called the Integrated Visual Augmentation System, which will reportedly provide American soldiers with real-time strategic information about the battlefield. The U.S. military’s interest in Silicon Valley is quite easy to explain.

SIPRI researcher Marksteiner says “[the U.S. military-industrial complex] realizes that, in these new enabling technologies, be it artificial intelligence or machine learning or cloud computing, these Silicon Valley companies’ expertise is far beyond what you would see from traditional arms industry players.”  She adds that “there is a chance that some of these companies will actually end up entering the [SIPRI] top 100.”

The European arms industry also has a combined 21% of the top 100’s sales on its books. In 2020, the 26 European companies listed sold $109 billion worth of weapons. The four wholly German arms companies accounted for just under $9 billion of this total. There are also trans-European companies like Airbus, which handled arms deals worth almost €12 billion, five percent more than in 2019. Europe is increasingly relying on joint ventures like these.

BICC’s Markus Bayer explains: “Europe is now trying, by political means, to expedite such cooperative ventures for the development of a ‘Next Generation Weapon System,’ the ‘Future Combat Air System,’ or the ‘Main Ground Combat System,’ so it can bear the high development costs for new systems like these.”

These joint productions certainly make sense from a cost point of view. But as far as arms export control is concerned, experts believe they can often be problematic. Referring to the Eurofighter Typhoon, a fighter jet developed by Germany, Britain, Italy, and Spain, SIPRI analysts say that “it is also specifically supplied to problematic third countries, such as Saudi Arabia, which is still waging war in Yemen.” National export regulations are often not applied to joint productions and it seems that Europe is still a long way from implementing effective joint controls on arms exports.

As Western powers sell more weapons to certain regions, thereby destabilizing them further, Russia laid back last year. according to SIPRI, the biggest drop in arms sales was recorded by Moscow. The nine Russian companies on the list sold 6.5% fewer weapons last year than in 2019. BICC believes this drop, to just 5% of the top 100’s total sales, is directly related to India and China having developed arms factories of their own. Both countries were previously big buyers of Russian armaments. Experts cite the example of aircraft carriers. The first Chinese carrier was based on a Soviet-built ship purchased by Beijing in 1998.

But that argument can be debunked as India just purchased the Russian S-400 missile defense system at the anger of the United States. The Pentagon is strongly trying to undermine the deal which was inked during Russian President, Vladimir Putin’s trip to New Delhi on Turkey has also purchased the S-400 despite Washington warnings. In essence, Russia has been selling defensive and not offensive weapons.

There are 26 European weapons firms in the Top 100 which jointly account for 21% of total arms sales, and that equates to $109 billion. There are seven British companies that, combined, registered arms sales of $37.5 billion in 2020, up by 6.2% compared with 2019. Arms sales by BAE Systems, the only European firm in the top 10, increased by 6.6% to $24 billion. According to Dr Lucie Beraud-Sudreau, SIPRI’s military expenditure and arms production program director “aggregated arms sales by the six French companies in the Top 100 fell by 7.7%. This drop was largely due to a sharp year-on-year decline in deliveries of Rafale combat aircraft by Dassault. Safran’s arms sales grew driven by increased sales of sighting and navigation systems.” 

Meanwhile, arms sales by the four German firms in the Top 100 reached $8.9 billion in 2020. That is an increase of 1.3% compared with 2019. Together, these firms accounted for 1.7% of the Top 100’s total arms sales. Rheinmetall, which is the largest German arms manufacturer

SIPRI concludes that despite a shrinking global economy and supply chain bottlenecks, the industry giants are "largely protected by continued government demand for military goods and services. Some governments have even increased their payments to the defense industry to mitigate the impact of the Covid 19 crisis."

Catholic charity Misereor criticized the arms deals. The report shows "once again" that "the states of this world set the wrong priorities in times of crisis," its chief executive, Pirmin Spiegel, told a national newspaper. For many people, the Corona pandemic means the loss of their livelihoods. "At the same time, the arms industry is booming, and German manufacturers are also doing good business at the expense of people in conflict regions and at the expense of numerous victims of violence." The new German government must now "get serious about its announcements on export control and disarmament," he said.

He summed up the sales of arms during a pandemic not just on behalf of Germany but critics would say it applies to all. For many people, the Corona pandemic means the loss of their livelihoods. "At the same time, the arms industry is booming, and [arms] manufacturers are also doing good business at the expense of people in conflict regions and at the expense of numerous victims of violence."

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