The second decade of the 21st century is signified by the conflicts that are occurring throughout the world. Rising tensions, volatile relations and supply chain collapse hamper the countries that are not even in the conflict. However, certain countries are actively fuelling the conflicts for their direct and indirect financial gains which is called ‘War Profiteering’. War profiteering is defined as the phenomenon in which a certain individual, corporation or government gains inordinate profit from selling goods, especially weapons and ammunition to the parties at war.
Throughout history humankind fought many wars with each other and in many instances, there were occurrences of war profiteering, which was limited to individual level and at a very small scale. However, in modern times this occurs on a large scale through the military-industrial complex and the worst of it is that these groups are actively promoting war for their continuation of profit. During World War II, industries were incentivised and converted into wartime manufactures to fulfil the needs of war on both sides. Companies like Ford Moto Cop (automobile manufacturer), Alcoa (Aluminium manufacturer) and Lionel Toy Train Company started manufacturing war trucks, tanks, machine guns, rifles and bullets. Similarly, German companies like Volkswagen, Mercedes and BMW also produced tanks and shells for the Nazi Army. These government-incentivised programmes laid the groundwork for the establishment of an industry that continued to exist even after WW-II and runs on the need for arms and weapons which is ultimately war. Throughout the years they have penetrated the states and administrations using lobbying and questionable funding and dictated the war policies.
To understand the working mechanism of these military-industrial complexes let’s take a glance at the strongest and largest of its kind, the American military-industry complex.
USA – The merchant of war
During World War II the defence military industry was kickstarted under the then-President Franklin Roosevelt. In later years the Cold War further pushed the industry into an upward growth trajectory. However, after the fall of the Soviet Union, a decade of relative peace fell upon the world and there they understood that peace is the biggest calamity in this line of business. In the 80s under government supervision and expense, the defence companies restructured and merged to create monopolies, despite the US having strict monopoly laws and a record of intervening in the creation of potential monopolies. Lockheed merged with Martin Marietta to form Lockheed Martin and Northrop merged with Grumman to form Northrop Grumman; a total of 51 companies merged to become 5 monopolies that operate in most of today’s wars. This all happened due to the lobbying and funding of government officials in the Defence organisation and the politicians in Washington DC, which is famously known as the ‘revolving door’ in US politics. It means when a certain individual from a defence organisation be it the Military or Pentagon goes to politics and then after goes to serve a weapon manufacturer, clearly and openly birthing conflict of interest. Favouritism in contract distribution, law and policy bending for certain parties and sheltering corruption are done due to these influences.
As a result, we got the biggest merchant of war in recorded history, the US military-industrial complex. Since 2001, the USA has exported a total of $738.1 Billion worth of weapons to other countries, which was exponential when compared to the years before. Since 9/11, the US fought wars in Afghanistan and Iraq against Islamic terrorism and US weapons exports skyrocketed in the Middle East. ISIS, Taliban and Al-Qaeda were using US weapons to fight against the US Army. In Afghanistan, the US spent $8 trillion and almost $2 trillion of it went to 5 major military industries- Lockheed Martin, Boeing, Northrop Grumman, Raytheon Technologies and General Dynamics. $10,000 invested in US defence stocks in September of 2001, yielded almost $100,000 in 2021 when the US withdrew its troops from Kabul, which is 58% more than the US stock market’s overall performance in that period. Apart from these the then-Afghan Army spending contracts were also given to US companies, varying from spending on weapons, ammunition, vests, ration and infra projects.
Almost 80% of all US defence spending is outsourced to private contractors sometimes including troops. America as of now exports 39% of the world’s all defence exports and Saudi Arabia, Israel, Australia and South Korea are its largest recipients. In 2023 alone the US exported $80.9B worth of arms, which is the highest ever as the Russia-Ukraine and Israel-Palestine conflict is continuing.
Revival of the European defence industry
According to the International Institute of Strategic Studies, global defence spending hit a record high in 2023, i.e. $2.23 Trillion. European countries in total have spent $228B to boost their defence industry which is the highest since the Cold War and they are eyeing to recover it all in multi-fold. Orders from the Middle East and Ukraine are at an all-time high and the profits are starting to reflect in the stock prices.
Since the Russia-Ukraine war, the stock prices of top arms manufacturers have increased by several hundred percent; Rheinmetall (German)- 367%, Saab(Swedish)- 244%, Leonardo(Italian)- 198%, Rolls-Royce(British)- 190%, Kongsberg Gruppen(Norwegian)- 130%, BAE Systems(British)- 126%.
The total defence exports of European countries are not publicly available due to certain European Union Laws, however, looking at the order backlog of last year one can gauge the scale of their earnings. In 2023, the 15 largest defence manufacturers had approximately $306.5 Billion worth of orders to be fulfilled and for 2022 the amount was $251.6 Billion.
France in 2023 stands as the second largest defence exporter in the world and the largest in Europe. Its exports increased 41% from 2019 to 2023 and hold 11% of total global defence exports. Germany stands as the 5th largest exporter of arms and other military equipment.
Russian and Chinese defence industry
Russia after France is the third largest exporter of arms in the world. Over the decade 2011–20 Russia was the largest exporter of major arms to both Armenia and Azerbaijan. It supplied nearly all of Armenia’s major arms during the period and almost two-thirds of Azerbaijan’s. Between 2020 to 2023 its arms export declined due to its war with Ukraine. However, it has profited from another avenue in this conflict, which is Russian oil and gas. After economic sanctions European imports of Russian oil were depleted and it found other states to sell its oil. However, upon deep analysis, it can be found that most Russian oil revenue comes directly or indirectly from Europe. Between February 24, 2022 and February 14, 2023 Russia earned almost 197 billion euros from oil exports, including crude oil and refined products. Over the same period, EU countries paid around 83.3 billion euros for Russian oil, which was more than the amount spent on fossil gas and coal combined. Apart from this most of the oil purchased by India is later refined and bought by European entities. The majority of Russia’s crude oil and condensate exports went to OECD Europe, which received almost half of Russia’s total exports.
In the case of China, Chinese weapon manufacturing and exports are done under direct supervision of the CCP government. China accounted for 5.8 per cent of total global arms exports in 2019–23. The bulk of Chinese arms exports (85 per cent) went to states in Asia and Oceania, followed by states in Africa (9.9 per cent). China delivered major arms to 40 states in 2019–23, but well over half of its arms exports (61 per cent) went to just one state—Pakistan. Pakistan’s paranoia with India gives China a perfect candidate for its defence exports.
Apart from these major countries, smaller countries like Israel, Turkey, Italy, Belarus also sold weapons to major conflicts between Armenia-Azerbaijan, Arab Spring, Russia-Ukraine.
War Profiteering – Moral Dilemma
War profiteering, a morally contentious practice, epitomizes the darkest aspects of human nature. As conflicts ravage regions, profiteers exploit chaos for personal gain, perpetuating suffering for financial benefit. Such actions undermine efforts for peace and reconciliation, prolonging the agony of those caught in the crossfire. To combat this scourge, stringent regulations, international cooperation and public awareness campaigns are imperative. Additionally, fostering a culture that prioritizes ethical conduct over profit margins is essential. Only through collective action and unwavering ethical commitment can societies hope to mitigate the devastating consequences of war profiteering and pave the way for a more just and peaceful world. Realistically the border conflicts are the kind of problems that are not going away in the near future. However, there must be a collective effort to curb the fuelling of the conflicts for monetary gain. Otherwise, there will come a time when there will be enough guns but not enough hands.