When will we finally end the party of the arms companies?
by David Goeßmann
[This article posted on 4/18/2024 is translated from the German on the Internet,
https://www.telepolis.de/features/Wann-beenden-wir-endlich-die-Party-der-Ruestungskonzerne-9688657.html?seite=all.]
Drone view over buildings in northern Gaza being bombed by the Israeli military, March 20, 2024
The share prices of weapons manufacturers are exploding. The arms industry drives the armaments wheel. about the fatal, tax-funded windfall – and cowardice. in order.
Our surveys show us that many people in Europe and America are increasingly concerned about wars and military escalation. According to a survey in the USA, for example, 84 percent of respondents are afraid that their own country could be drawn into the Middle East conflict.
And this study was published in November last year, i.e. before the latest escalation in the wake of military strikes by Israel and Iran.
Lockheed-Martin shares are up!
After 300 missiles and drones were launched from Iran towards Israel at the weekend in retaliation for the Israeli attack on the Iranian consulate in Syria (almost all of which were intercepted and caused little damage), alarm bells rang throughout Western countries.
Not everyone is afraid, worried and wants restraint when it comes to war.
On Monday morning, according to Nick Gleveland-Stout on Responsible Statecraft, JP Morgan analyst Seth Seifman upgraded the US bank’s rating on Lockheed Martin, the manufacturer of Israel’s F-35 fighter jets, from “hold” to “buy” and set a higher price target for the stock. He said the development is good for the business:
“What we can say is that the world is dangerous, and while that is not a sufficient condition for defense stocks to ‘outperform,’ it is a potential source of upside, especially if the stocks are undervalued.”
Where there is war, there is money to be made”
The British investment bank Liberum Capital believes that a limited military strike by Israel would “correct” the stock market by five to ten percent, while strengthening the dollar. The short-term winners would be oil and gas stocks and those of defense companies.
The financial journalist Jacob Wolisnky sums up the situation in an article on defense stocks: “Where there is war, there is money to be made”.
The rising geopolitical tensions in the Middle East and two years of war in Ukraine are prompting investors to shield their portfolios with defense stocks, while governments shore up their defense budgets with plans to boost military stockpiles and modernize long-range vehicle and aircraft fleets. There is perhaps no better time than now to be in the defense business.
This also applies to Germany – the second largest arms exporter to Israel and Ukraine behind the US – where government spending on the military has increased significantly.
German military budget: increase of 90 percent
The German defense budget has increased the most in recent years compared to the budgets of other ministries, from 38.5 to now 51.95 billion euros. 20 billion from the special fund for the Bundeswehr for 2024, so a total of 72 billion is being spent on defense.
This is an increase of almost 90 percent in just five years.
In the USA, the Pentagon and security budget has long been in the stratosphere, which knows no measure, no limits. ,4 trillion dollars of taxpayers’ money, and rising, is allocated to military and security spending each year (including 900 billion for the Department of Defense). 2 cents of every paid tax dollar spent discretionary by the US Congress ends up with armed forces, military bases, weapons manufacturers and security companies.
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The recipients of the windfall are, in particular, the manufacturers of weapons and ammunition (in the USA, half of it goes directly to them). In Germany, this is primarily the country’s largest arms manufacturer, Rheinmetall, based in Düsseldorf. It provides the whole range: tanks, artillery and large-caliber ammunition.
The golden tenfold increase thanks to wars
Before the war in Ukraine, the company sold around 70,000 shells per year. Today, according to the company, it sells around 700,000 – a tenfold increase in artillery ammunition production in two years.
The share price went through the roof in the wake of the wars and the subsequent rearmament and militarization. or February 24, 2022, when Russia invaded Ukraine, its value was below 100 euros. It then rose to around 250 euros by the summer of 2023.
With the Hamas attack on Israel on October 7, 2023 and the Gaza war that has been raging since then, the share price literally went into overdrive. The share recently reached new highs of around 570 euros.
Anyone who invested 100,000 euros in Rheinmetall shares ten years ago has increased his wealth tenfold today. Those who have enough “gambling money” to speculate on the stock market can therefore make enormous profits from the arms business, while ordinary citizens use their taxes to turn the armaments wheel, which the large shareholders and corporate leaders skim off privately.
The arms industry as a powerful state in its own right
And this wheel is getting bigger and bigger, both nationally and globally, thanks to the conflicts, military conflicts and wars that are being fomented.
It is not only Germany (see the 100 billion euro special fund) and the USA that have increased defense spending significantly. In 2022, global military spending rose to a record 2.24 trillion dollars, according to the peace research institute Sipri.
This is a sum that is on course to almost equal the gross domestic product of France. The military and war industry has long since mutated into a powerful state in its own right on this planet.
Europe was the global leader with an increase of 13 percent. The EU member states alone spent 270 billion euros, more than at any time since the end of the Cold War, while the EU provided many billions in military aid to Ukraine.
The military-industrial complex is proliferating
Russia increased its military spending by around nine percent to 86.7 billion dollars. China increased its budget by a good four percent to 292 billion dollars, a third of what the USA spends.
But not only wars are good for business. Military and security companies also earn money from militarized border protection, while it is their weapons and ammunition that create the refugee and migration crises that rich countries then protect themselves against with the help of the same companies, all at the expense of taxpayers.
It is to be feared that the power of the so-called “military-industrial complex” will not weaken in the coming years unless political countermeasures are taken. At the moment, the proponents of war dominate politics, the media and the public agenda in many countries.
And then there is the arms lobby, which not only has a firm grip on politicians in the USA. Its influence is clearly felt in Europe and Germany.
The hour of the arms lobbyists
German arms companies are represented by large lobby offices in Berlin and maintain close, long-standing relationships with ministerial officials and members of parliament, as the lobby register shows. There is also the so-called “revolving door effect”, whereby representatives of arms manufacturers move into politics and vice versa.
The sector is also highly “prone to corruption”, as Transparency International states. nyone accuses Marie-Agnes Strack-Zimmermann (FDP), Chair of the Defense Committee, of enriching herself. But she is connected to the arms lobby.
Anyone who thinks anything bad about Strack-Zimmermann is a scoundrel.
Olive green instead of social green
The EU is also focusing on political militarization. hile the arms industry is booming, with the trend towards a war economy, EU foreign affairs chief Josep Borrell quotes the Latin saying “Si vis pacem, para bellum”, “If you want peace, you have to prepare for war”, while the EU Commission has presented a “Defense Industrial Strategy” for the first time.
The focus is being shifted from climate-related to defense-related projects, the Green Deal is being downgraded and the European Sovereignty Fund – a response to the Biden administration’s IRA stimulus program in the USA – is being cut from ten to 1.5 billion euros.
Today, the military comes first, savings are being made on social issues, jobs and the energy transition. eld that is used for tanks and fighter jets, ammunition and missiles can no longer be spent on healthcare, schools, the promotion of wind and solar power or protection against poverty. Even if our future depends on it.
Governments and parliaments should stop this dangerous process of militarization, put a stop to it and at the same time focus on the concerns of citizens – so as not to breed even more right-wing developments in Europe and the USA.
Who wants to be a party crasher
The wars in Ukraine and Gaza, the escalations with Iran and China, must therefore be stopped as quickly as possible. They are the main drivers in the major military powers, which are increasingly relying on weapons, tanks and fighter jets.
This is the only way to pull the plug on the arms companies’ party. ven if they don’t say it openly, they love war and conflict because it makes their business flourish.
The people, however, want the opposite. They are afraid of war. They want peace and civil conflict resolution. They want social welfare and a decent standard of living.
That is what politics should focus on. Unfortunately, in the current hysterical mood, there are only a few who have the courage to be pilloried as “party crashers”, pro-Putin, pro-Hamas, pro-Mullah and other autocrats when in doubt.
Herd behavior does not only exist on stock exchanges, where weapons are doing very well at the moment.