Colombo, October 24: In the modern capitalist era, the beneficiaries of war are the arms manufacturers, defence contractors and their political patrons. While combatants and innocent civilians perish in the war zones, arms manufacturers, particularly the major corporations, large defence contractors and their political patrons mint money. Corruption and malfeasance are par for the course in these deals.
Increasingly, wars are giving bonanzas to arms manufacturers and defence contractors because of an ever-increasing expenditure on arms by major powers, chiefly the United States.
On October 20, US President Joe Biden sought US$ 105 billion for military aid to Ukraine, Israel, and for border management from Congress. These are over and above the largesse they had been getting.
New York Times reported in December 2022, that Congress was set to approve a national military budget of US$ 858 billion, US$ 45 billion above what Biden requested.
It was projected that US spending on procurement would rise sharply in 2023. This will go up further because of the war in Gaza and the Middle East. Given the threat from Russia, China, Iran and Hamas, there is a bi-partisan consensus on giving more funds to the Pentagon.
According to a 2021 paper by William D. Hartung of the Centre for International Policy, Watson Institute, Brown University, US defence spending had been going up steeply since 9/11.
Between Fiscal Year 2002 and Fiscal Year 2003 US defence spending was more than the entire military budget of any other country, including major powers like China, Russia, the United Kingdom, Germany, and France.
But the benefits of spending on the Pentagon accrue mostly to a handful of big corporations. A quarter to a third of all Pentagon contracts in recent years had gone to just five major weapons contractors, namely, Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman.
“These five companies received over US$ 286 billion in contracts in Fiscal Year 2019 and Fiscal Year 2020 alone. From FY 2001 to FY 2020 these five firms alone split over US$ 2.1 trillion in Pentagon contracts (in 2021 dollars).”
“To put these figures in perspective, the US$ 75 billion in Pentagon contracts received by Lockheed Martin in FY 2020 is well over one and one-half times the entire budget for the State Department and Agency for International Development for that year, which totalled US$ 44 billion,” Hartung points out.
Orders have been coming in from other US allies also. In September 2022, Japan announced its intention to double its spending on defence in the five years. The US had pledged US$ 18 billion to Taiwan. Switzerland and Germany have finalized orders for F-35 fighter jets, collectively worth US$ 16 billion.
Overall foreign military sales notifications to Congress till the end of 2022 totalled US$ 81 billion, New York Times reported.
Apart from arms manufacturers, logistics and reconstruction firms like Kellogg, Brown and Root (KBR) and Bechtel, and armed private security contractors like Blackwater and Dyncorp, also benefitted enormously, Hartung points out.
Since the start of the war in Afghanistan, Pentagon’s spending has totalled over US$ 14 trillion, a third to half of which went to defence contractors.
The Congressional Research Service estimated that in FY2020, spending on contractors grew to US$ 420 billion—well over half of the total Pentagon budget
The best-known reconstruction and logistics contractor in Iraq and Afghanistan was Halliburton, through its Kellogg, Brown and Root (KBR) subsidiary. By August 2008 Halliburton company had received over US$ 30 billion for work.
Numerous companies took advantage of wartime conditions to make money on the sly, investigations revealed.
Hartung says that the chaos of war, the lack of adequate government oversight, and the sheer volume of funds poured into the reconstruction effort in a short time frame all contributed to an environment that enabled massive waste, fraud and abuse in the reconstruction efforts in Iraq and Afghanistan.
The Commission on Wartime Contracting in Iraq and Afghanistan estimated that waste, fraud and abuse in the two war zones as of 2011 had totalled US$ 31 billion to US$ 60 billion.
For example, audit found that the number of meals KBR charged the government for could have been up to 36% greater than the accurate number. By February of 2004, KBR was forced to refund the US for U$ 27.4 million of “potential over-billings” at dining facilities in Iraq and Kuwait.
Rep. Henry Waxman (Democrat-California) exposed scores of examples of overcharges, shoddy construction, and outright theft by contractors engaged in the rebuilding of Iraq. But relatively few companies suffered significant financial or criminal consequences, Hartung recalls.
But no Congress member could stand in the way of these corporations. As Harry Stonecipher, then Vice President of Boeing, told The Wall Street Journal in October 2001: “The purse is now open . . . any member of Congress who doesn’t vote for the funds we need to defend this country will be looking for a new job after next November!”
Producing for Future Wars
To keep defence production on track, arms manufacturers have been asking the government to fund production in anticipation of future wars so that they get enough time to rig their facilities and also “to ensure continued returns in future years.”
That benefitted big players like Lockheed and Raytheon who could take orders for the future. And this was reflected in the stock market. According to New York Times, Lockheed and Northrop Grumman both had seen their stock prices jump more than 35% in 2022.
Given the money-spinning opportunities wars through up, arms manufacturers spend big money to swing contracts.
“Lockheed, for example, spent more than US$ 60 million of its own money in advance of getting Pentagon contract commitment to build more of its High Mobility Artillery Rocket System vehicles, or HIMARS,” New York Times said.
The arms industry has ample tools at its disposal to influence decisions over Pentagon spending.
The industry spent US$ 285 million in campaign contributions since 2001, with a special focus on presidential candidates, Congressional leadership, and members of the armed services and appropriations committees in the House and Senate, Hartung says.
Weapons makers spent US$ 2.5 billion on lobbying over the past two decades, employing, on average, over 700 lobbyists per year over the past five years, more than one for every member of Congress, he points out.
A report by the Project on Government Oversight found that there were 645 instances of the top 20 defence contractors hiring former senior government officials, military officers, Members of Congress, and senior legislative staff as lobbyists, board members, or senior executives in 2018 alone.
In addition to having the inside track on influencing decision-making on defence, government personnel give special treatment to contractors while they are still in government, in the hope of landing lucrative positions with a defence contractor upon retirement.
And arms industry personnel frequently take influential positions in government. Four of the past five US Secretaries of Defence came from one of the top five arms contractors. Former Trump administration Secretaries of Defence came from the military industries: James Mattis (board member at General Dynamics), Patrick Shanahan (executive at Boeing) and Mark Esper (head of government relations at Raytheon).
Biden administration Defence Secretary Lloyd Austin was board member of Raytheon Technologies.
Wars Generate Jobs
To fulfil orders, arms companies have stepped up manpower recruitment. Raytheon, which had 180,000 workers before 2022, hired 27,000 new employees in 2022 and needed more, New York Times said.
Wars anywhere in the world, generate employment in the US, the world’s largest arms manufacturer
Since waging wars is a source of profits, diplomacy has been reduced to being a minor player in international relations, though wars and war-mongering has not solved any problem, Hartung laments.