As the war in Ukraine drags on, America’s arms industry reaps the profits 

Weapons manufacturers rake in a fortune as arms flood into Ukraine from the U.S. and Europe. Experts warn sending more will only fuel continued global violence.
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As the war continues, U.S. aid to Ukraine now stands at a staggering $37.6 billion, by far the largest amount of military aid given to Ukraine by any country.

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Billions of dollars worth of military equipment has poured into Ukraine since Russia launched dozens of missile strikes into Ukraine late last year, marking the start of its full-scale military invasion into the country.

From state-of-the-art tanks and missile systems to helicopters, helmets and ammunition, rounds and rounds of military hardware continue to fly in. The vast majority, experts say, is coming from the United States.

“It’s certainly more than we’ve given any country before, even at the height of the Afghanistan war,” says Hanna Homestead, a policy analyst at the Center for International Policy who focuses on the impact of the U.S. arms trade around the world. “The aid that we’ve sent to Ukraine for their military is more than our NASA budget for space.” 

By the end of last year, Washington had spent almost $20 billion on arming Ukraine — nearly double the amount the United States gave in 2021 to 12 other countries combined, including Afghanistan ($4.1 billion), Israel ($3.3 billion) and Egypt ($1.3 billion). 

Ukraine is going through extremely high rates of artillery, Homestead says. Some of the weapons being provided are so sophisticated that Ukraine’s military is untrained in how to utilize them; the New York Times reports that some soldiers are using Google Translate to understand English-language manuals for instructions.

As the conflict drags on with little hope for a resolution soon, it’s the U.S. military-industrial complex that enjoys the spoils of war.

“When you have a military that’s not as professionalized, you have a lot more inaccuracies. You have a lot more artillery used than you necessarily should, especially [when] it’s being given for free,” Homestead explains. “The Ukrainians are really burning through a lot of that artillery much faster than they should be.”

As the war continues, U.S. military aid to Ukraine now stands at a staggering $37.6 billion, by far the largest amount of military aid given to Ukraine by any country. And with the Pentagon looking to compete with China by accelerating arms sales to allies, experts say there is no end in sight. 

The European Union, meanwhile, has given Ukraine €4.6 billion ($5 billion) in military aid, marking the first time in its history that the bloc has armed a non-member country. The U.K. has also pledged £4.6 billion ($5.7 billion) in military assistance and is aiming to train 30,000 Ukrainians by the end of the year.  

Ukraine has certainly pinned its hopes of victory on shipments of sophisticated Western military equipment. But as the conflict drags on with little hope for a resolution soon, it’s the U.S. military-industrial complex that enjoys the spoils of war.

Who is benefiting from the war?

Nearly 15 months since Russia invaded, the conflict has become a war of attrition. With the International Criminal Court’s warrant of arrest against Russian President Vladimir Putin, a reluctance to negotiate, allegations of war crimes, personal jabs and no apparent peace talks in progress, the war is likely to simmer on.

So far, American defense firms have been the only winners in the conflict. Officials from Russia, China and the European Union — where it will cost €175 billion ($190 billion) to offset price hikes and supply chain issues, as well as improve its energy independence, host refugees and bolster its defense — have accused Washington of prolonging the conflict to its own benefit.

“The fact is, if you look at it soberly, the country that is most profiting from this war is the U.S. because they are selling more gas and at higher prices, and because they are selling more weapons,” an unnamed EU official told Politico in November last year.  

Regardless of declining public support for military spending and a protracted conflict, American weapons manufacturers have seen their values skyrocket since the war began. In the weeks after Russia’s invasion, the market capitalization of Raytheon Technologies shot up to $155 billion from $128 billion at the start of the year. Lockheed Martin started 2022 worth $98 billion; by the end of year, it had reached $127 billion — its highest since records show. Northrop Grumman started the year on $61 billion and ended at $84 billion. 

“It’s a huge profit center for the big companies: Lockheed Martin and Raytheon and Boeing,” says William Hartung, a senior research fellow at the Quincy Institute, where he focuses on the global arms trade and Pentagon spending. “At the moment, I think they’re riding the wave.”

Officials from Russia, China and the European Union have accused Washington of prolonging the conflict to its own benefit.

Global arms exports by the United States have increased from 33% to 40% from 2018 to 2022, as compared to the previous five-year period, according to figures from the Stockholm International Peace Research Institute. Meanwhile in Russia, where military spending has increased 175% from 2000 to 2019, the nation’s military expenditure stands at just $65.8 billion compared to America’s $801 billion.

The U.S. recently approved a $10 billion sale to Poland of ammunition and HIMARS, or high mobility artillery rocket system, which can reach a distance of 50 miles. It’s already given 20 units — thought to cost at least $5.1 million a piece — to Ukraine, with more promised. 

Lockheed Martin, the company that produces HIMARS, is going “full steam,” says Homestead. “They’ve increased their production, their rate of vehicles even. And this stuff is getting budgeted out over the next decade in the U.S. military, which is why it’s looking like it might be even close to a trillion dollars this year — the highest budget ever.”

European companies are also profiting. In Germany, whose military spending is the highest of all EU states, arms manufacturer Rheinmetall recorded its highest earnings this month, with its CEO heralding a “new era” for the company. It saw profits jump by 27% and shares rise 55% in one year. 

But it’s not just defense contractors and weapons manufacturers who benefit from the war.

“There are a lot of beneficiaries beyond the arms trade that sit back and reap those rewards on the back of the war continuing,” says Niamh Ní Bhriain, who leads the war and pacification program at the Transnational Institute think tank. 

Energy companies, too, have been reaping the profits by supplying more energy to Europe as Russian gas supplies are cut off. America supplied 60% of Europe’s liquefied natural gas in 2022, while Russia, which used to supply 40% to 50% in previous years, has had its exports to the EU cut to 12%. Even U.S. President Joe Biden has accused oil companies of “war profiteering” as they draw record profits.

And a new analysis by Greenpeace and the nonprofit journalism initiative Lighthouse Reports shows how companies have profited from and exacerbated the global food crisis following Russia’s invasion. The world’s top 10 hedge funds made about $1.9 billion from trading in wheat, corn and soybeans around the time of the invasion, they found.

Will more weapons bring peace?

Ukraine President Volodymyr Zelensky has repeatedly urged Western nations to increase supplies and speed up their delivery. “Combat aircraft for Ukraine, wings for freedom,” he told the British Parliament in February. More weapons quicker would bring an end to the war, he impressed upon French President Emanuel Macron in a visit to Paris the same month.

But not all experts agree.

“The idea that if we just up the pace and the sophistication of the weapons, the war will come to an end through a military victory, is extremely unlikely,” Hartung tells Analyst News. “So there’s got to be another path. It can’t just be about, how do you crank out weapons?”

Ní Bhriain echoes his skepticism: “When has our sending arms into a war zone ever stopped the fighting?” she asks.

Both experts argue the United States and Europe can and should do more to plant seeds of diplomacy to bring about a peaceful resolution. “I think that’s the best hope at the moment,” Hartung says. “It’s legitimate to at least put out diplomatic feelers and try to find if there are some parameters of the solution as opposed to just sending more weapons year after year.”

“When has our sending arms into a war zone ever stopped the fighting?”

Ní Bhriain points to the peace process in Ireland, her native country, stating that “at some point, you also have to realize that you have to compromise.”

She also questions what she sees as a strategy of sending Ukraine weapons gradually, “prolonging [the conflict] without exacerbating it,” as exemplified by the recent delivery of tanks despite calls to provide them when the conflict began.

“If they really believed tanks were the solution, why not send them in a year ago and end the whole thing?” she asks. “Why this kind of escalation bit by bit? With so much money being made, you just have to wonder what is actually going on.”

The might of the military-industrial complex

In 1961, former U.S. president Dwight Eisenhower warned in his farewell address “about the unwarranted influence of the military-industrial complex to push for higher and higher spending,” Hartung says.

While the military-industrial complex, or the relationship between a country’s military forces and the weapons industry, has ballooned enormously, Hartung says there appears to be little concern in Washington about the defense industry’s political sway.

“You have a company like Lockheed Martin, which gets tens of billions of dollars a year for weapons, which is far bigger than anything Eisenhower ever dreamed of. And the U.S. military budget is about twice what it was when Eisenhower gave his speech, even adjusting for inflation. So you’ve got a bigger military-industrial complex.”

Through various lobbying measures, the weapons industry has more “tools of influence” over the government, Hartung adds.

“The diplomatic, economic and cultural instruments of statecraft are underdeveloped, whereas the military gets the bulk of the money.”

“They make campaign contributions. They hire former government officials. They fund think tanks, they take hawkish positions, they serve on government commissions that decide what the alleged threat is, and then profit from addressing those threats,” he says. “They place their weapons in Hollywood movies, so they affect the culture as well as the politics.” 

These actions propel bigger budgets and make military options more likely because, as Hartung explains, “the diplomatic, economic and cultural instruments of statecraft are underdeveloped, whereas the military gets the bulk of the money.”

“And Ukraine is being used as the rationale with these long-term plans that the industry and the military have had sitting on the shelf waiting for money. There are things that are being pushed that would have a permanent effect on the size of the U.S. military-industrial complex.” 

Beyond America, too, lobbyists have used the Ukraine conflict to improve the arms industry’s image, depict its activities as essential to public safety, and push for further arms exports which are otherwise restricted, according to a November 2022 report from the Transnational Institute co-authored by Ní Bhriain.

Companies like Lockheed Martin, Airbus and Rheinmetall, who will profit from increased military spending, collectively spent some €12 million ($13 million) lobbying politicians in Germany. 

NATO and EU member states “have simultaneously used the war as a smokescreen to justify replenishing, expanding and modernizing their own stockpiles of armament and to bend and reshape existing arms trade regulations … driving unbridled militarism and a new arms race,” the report argues.

The long afterlife of arms exports

Increasing arms exports opens the door to unintended consequences that can be deadly, global and impossible to track.

Military hardware, like the equipment being delivered to Ukraine and NATO allies, can last for decades. “If you make a Kalashnikov today or a HIMARS, it’ll probably last 50 years,” Ní Bhriain explains. “Arms have a really long shelf life.”

Prior to Russia’s invasion, Ukraine had one of the biggest black markets for weapons in Europe. That raises the question: What happens to those weapons once the conflict comes to a close? 

“If the conflict stops tomorrow, is Ukraine going to return all of the missile launchers? Is it going to sit in a stockpile? Is it going to be sold in the black market?” she asks. “I can’t possibly imagine that it is controlled to the point that when the fighting stops, it will all be retrieved.”

History suggests arms will inevitably find its way into the wrong hands, fueling further violence.

“We have absolutely no control over what happens to it,” Ní Bhriain warns. “Some of the arms that were exported from Europe some years back eventually ended up in the hands of ISIS. They all have serial numbers, but if I’m a rebel fighter in Sudan today, it’s very unlikely that I’m going to stop and go, ‘Oh, let me just check my serial number to make sure that I receive this arm within the protocols that are required.’”

Most of the U.S. funding and weapons transfers to Ukraine is coming as grants through the government’s security assistance program, leaving American taxpayers footing much of the bill and crowding out other national priorities. But some aid is also coming through direct commercial sales, through which U.S. companies sell weapons directly to foreign entities. The U.S. State Department is meant to vet licenses before arms sales, but Homestead tells Analyst News that rarely happens in practice. 

History suggests arms will inevitably find its way into the wrong hands, fueling further violence.

“We’re selling a lot of weapons everywhere and only 1% of all those licenses are being checked by the State Department to ensure that end users are who they say they are, and that they’re not being abused.”

In fact, some weapons sent to Ukraine and its allies have already been found in conflict zones outside the region. 

“There’s no tracking of the weapons we’re sending abroad so we don’t know what percentage of them are on the battlefield,” Homestead says. “But we do know that they are turning up in places like Nigeria in the Sahel region, where there’s been ongoing conflict.”

Huge black markets for weapons exploded after the U.S.-led NATO military intervention in Libya in 2011 to topple Muammar Gaddafi, which fueled other conflicts, she explains. A portion of weapons pouring into Ukraine are “ending up in many conflict zones throughout the world which will have repercussions for a lot of civilians for decades to come,” she says. 

The president of Nigeria said last year that the Ukraine conflict serves as the main source of weapons for Boko Haram terrorists in the Chad basin. Homestead says weapons sent to Ukraine and its allies have also been found in white supremacist organizations throughout Scandinavia.

“That’s a byproduct that is a reality of this war. Whether you’re pro-Ukraine or not, this is happening.”

Atif Rashid is the editor-in-chief at Analyst News.