Western arms firms enjoying huge profits from Ukraine crisis 

June 11, 2022 - 18:57

According to the United Nations, around 14 million people have fled their homes in Ukraine. Nearly seven million have left for neighboring countries, including Russia, with another eight million who are considered internally displaced people. 

As Ukrainian civilians suffer, Western arms companies and U.S. weapons manufacturers in particular are expected to be the biggest beneficiaries of the fighting. 

The crisis in Ukraine has seen Western governments send the country different types of military equipment worth billions of dollars.

The fear is that in most cases, the taxpayer will have to pay for these weapons and effectively for a conflict that they did not even support. 

Many analysts have blamed Washington for failing to respond to security guarantees that Moscow had sent months before the conflict even started: the key element that triggered the fighting and unfolding crisis in Ukraine. 

Experts say the United States’ reluctance to end the conflict has led to a large amount of profit for its arms manufacturers. 

Since the fighting started, NATO countries have pledged more than $8 billion in military equipment for Ukraine, with $4.6 billion coming from the U.S. alone. The United Kingdom has allocated at least £750 million in weapons, while the European Union has agreed to send €2 billion.

As Washington and some of it’s Western allies seek to prolong the conflict, that figure is expected to rise. With almost every passing week or so; the U.S. and the UK in particular have been announcing more weapons for Ukraine instead of seeking or pushing for a peaceful solution to the conflict. 

New reports have been emerging about the huge profits being made by Western arms manufacturers.

Senior arms transfer researcher at the Stockholm International Peace Research Institute (SIPRI) Siemon Wezeman, says not all the weapons being sent to Ukraine are from existing military supplies.

While some countries have been sending older equipment that was about to expire, many on the other hand, like the United States and the United Kingdom, have been sending newer weapons which they have already started the process of replacing.

The U.S. has already approved nine billion dollars to spend on military equipment so that the weapons being sent to Ukraine can be replaced. 

Washington is sending 6,500 Javelin anti-tank missile systems, which are made by two of the largest American arms manufacturers, Raytheon and Lockheed Martin. The cost of each of these missiles is about $78,000 and the launcher for these missiles (which is reusable) costs $100,000 each. 

Another bonus for Raytheon will come from the U.S. decision to send 1,400 Stinger anti-aircraft missile launchers. 
The company has already been awarded a $625m contracts to replenish the stocks.

Meanwhile, Lockheed Martin has been receiving even better news after Washington announced plans to provide Ukraine with four High Mobility Artillery Rocket Systems, which are relatively expensive.  Lockheed Martin also produces the launchers for long-range rockets that are being sent by the UK.

The U.S. is sending counter-artillery radar systems made by the same companies, along with American military arms giant Northrop Grumman.

The Pentagon is also sending 50 billion rounds of ammunition, which is likely to benefit Olin, the U.S. militarily’s largest small-arms ammunition supplier.

Another key item is the AeroVironment Switchblade drones, made by the American company AeroVironment. The U.S. is set to deliver 700 of these drones. 

Meanwhile, In Europe, the big winners are expected to include BAE Systems (a British company) and Thales (a French company).

The British company BAE Systems manufactures almost all of the UK's small-arms ammunition and is about to replace the 400,000 rounds sent to Ukraine.

BAE Systems also manufacturers long-range artillery cannons being sent by the U.S., as well as anti-tank guided missiles being sent by France and Italy. They are being produced in a joint venture with Airbus and Leonardo.

Another key piece of equipment manufactured by BAE Systems, which has factories across the UK, is the Stormer armoured vehicle. The UK is providing Ukraine with these as well.

The vehicles include anti-aircraft missiles, which are made in Britain by Thales.

Thales is also the manufacturer of the Next Generation Light Anti-Tank Weapon (NLAW), a shoulder-launched missile system that can target Russian tanks. The UK is providing Ukraine more than 5,000 of them. They are reported to cost £30,000 each. 

Germany's Dynamit Nobel arms manufacturer has sent the 3,000 anti-tank weapons Berlin is providing Kyiv, along with 5,100 MATADOR anti-tank weapons. 

Large arms manufacturing companies are already seeing their share prices go up as investors anticipate the impact of the war on profits. 

Thales shares have risen by 35 percent since the conflict started, while BAE Systems shares are up 32 percent. Lockheed Martin has seen an increase of 14 percent and AeroVironment 63 percent. 

The Campaign Against the Arms Trade, says the provision of weapons to Ukraine is "not problem-free"

"You might think you're handing over weapons to people you know and like, but then they get sold on to people you absolutely don't,” the anti-war group said. 

Wezeman says weapons supplied to Ukraine "may end up disappearing into the black market" - an increased risk given that the country "isn't in full control of its territory".

He says it is difficult to keep track of weapons when they have to be supplied at such speed and there is a risk of them getting "lost or disappearing in the chaos".

That doesn’t appear to be a matter of concern for Washington and its allies. 

U.S. defense secretary, Lloyd Austin, has previously admitted that some weapons given to Ukraine have been captured by the Russian military.

Replenishing the stocks being sent to Ukraine is not the only new business opportunity for Western arms manufacturers.

Analysts say the international community is facing increased pressure and threats of sanctions from the West which is calling on them to stop purchasing Russian arms.

Experts say there is even more money to be made as states respond to the fighting in Ukraine by increasing their military spending, a lot of which will be used for new equipment.

According to the International Institute for Strategic Studies, since the conflict started, at least 15 European countries have announced plans to increase their defense spending. According to the EU, the additional commitments are worth at least €200 billion. 

Germany’s pledge to spend an extra €100 billion euros in the coming years has made the most headlines. It’s good news for Rheinmetall, a German arms manufacturer, which is expecting its sales to grow by up to 25 percent by next year. 

Germany has also announced it will buy 35 F-35 fighter jets from the U.S., which are made by Lockheed Martin and have an estimated lifetime cost of $1.6 trillion.

France has pledged to expand its military budget. The UK government had already planned increases and is facing calls from the main Labour opposition party to spend even more.

After a NATO summit in March, the military alliance said its members "have decided to accelerate our efforts to fulfill our commitment to the [so-called] Defense Investment Pledge in its entirety.”

This calls on all members to meet NATO guidelines of spending at least two percent of GDP on the military alliance within a decade. Some NATO members had resisted the shift in policy, an issue that previously irked the former U.S. President Donald Trump.

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