The Turkish Ministry of Trade said: “Export and import transactions related to Israel have been suspended for all products. Turkey will implement these new measures strictly and decisively until the Israeli Government allows an uninterrupted and sufficient flow of humanitarian aid to Gaza.”

This move follows a previous trade restriction announced last month, during which Turkey restricted exports in 54 categories, including iron and steel products, jet fuel, construction equipment, machinery, cement, granite, chemicals, pesticides, and bricks.

In 2023, trade between Turkey and Israel amounted to $6.8 billion, with 76% representing Turkish exports to Israel. According to the Turkish Statistical Institute (TÜİK), Israel ranked 13th on Turkey’s list of export destinations in 2023, with $5.4 billion in exports.

Turkish exports played a crucial role in Israel’s economy. Before the embargo, Turkey had been Israel’s largest steel and cement exporter. Azerbaijani oil and even barbed wire were shipped to Israel through Turkish ports. Additionally, Zorlu Holding, a Turkish company, produced 7 percent of Israel’s annual electricity.

A Move to Regain Domestic Support?

During the campaign for the elections held on March 31, Erdoğan’s governing Justice and Development Party (AKP) faced criticism for maintaining trade relations with Israel despite the ongoing conflict in Gaza.

TRT World Video: “Türkiye halts trade with Israel until Gaza ceasefire”

Meanwhile, pro-government voices were claiming that the shipments to Israel were actually destined for Palestine. In December 2023, Trade Minister Ömer Bolat stated: “Goods arriving in Israel are destined for Palestine. [On the shipments], the destination must be written as Israel. Unfortunately, trade with Palestine must necessarily be conducted through Israel.”

AKP’s former ally, the hardline Islamist New Welfare Party (YRP), repeatedly criticized the government’s Gaza policy, using the slogan “Trade with Israel is a betrayal to Palestine.”

Before the local elections, Erdoğan criticized YRP by accusing them of harming AKP by dividing their votes. In response, YRP leader Fatih Erbakan said, “We are not making you lose; continuing trade with Israel is what is causing you to lose.”

While Turkey’s economic problems, such as decreasing pensions and salaries amidst soaring inflation, were the main factors behind AKP’s electoral loss, Turkey’s ongoing trade with Israel also played a role among conservative voters. This was even acknowledged by Erdoğan himself during a party meeting discussing the election results, as reported by party insiders.

On April 7, a week after the elections, police violently dispersed demonstrators on Istanbul’s Istiklal Street who were protesting trade with Israel. Despite the peaceful nature of the pro-Palestine protests, police detained 43 people.

Economic Impact

Israeli-Turkish relations under Erdoğan have been characterized by significant fluctuations and tensions. In the early 2000s, relations between Israel and Turkey appeared to be warming until the Gaza flotilla incident in 2010.

Despite strained diplomatic relations since 2010, trade between Israel and Turkey has flourished. In 2022, the two countries restored diplomatic relations, but their relationship has been deteriorating again since October 7.

Turkish investigative journalist Metin Cihan has been highlighting Turkish shipments to Israel since the beginning of the war. After the Ministry of Trade announced the trade suspension, Cihan claimed that he identified ships in Turkish ports that reported their destination port as Israel.

And, on May 5, Good Party (IYI) MP Turhan Çömez shared port records from his X account, revealing that Turkon Istanbul, a cargo vessel, departed from Iskenderun port and arrived in Haifa two days after the trade suspension with Israel.

According to the Israeli financial newspaper Globes, Azerbaijani oil was still being loaded onto tankers bound for Israel at the Turkish port of Ceyhan. Azerbaijani oil is transported via the Baku-Tbilisi-Ceyhan (BTC) pipeline, and from Ceyhan, it is transported to Haifa.

Moreover, Reuters reported that Turkish exporters are exploring alternatives to resume trade with Israel by considering routes through third countries such as Egypt, Jordan, or Lebanon. Four owners of export companies said that Turkey’s decision to suspend trade with Israel caught them off guard.

Israeli Foreign Minister Israel Katz criticized Turkish President Recep Tayyip Erdoğan’s decision to halt trade with Israel, saying “This is how a dictator behaves, disregarding the interests of the Turkish people and businessmen, and ignoring international trade agreements.”

Katz also added that he instructed the Israeli Foreign Ministry Director General Yaakov Blitshtein to “immediately engage with all relevant parties in the government to create alternatives for trade with Turkey, focusing on local production and imports from other countries.”

In conclusion, Turkey’s decision to suspend trade with Israel amid the ongoing humanitarian crisis in Gaza may be seen as a genuine expression of solidarity with Palestine. However, given the timing following an election loss and amidst protests, it’s plausible that this drastic policy change could also be interpreted as an attempt by Erdoğan to regain support from conservative voters.

Moreover, Turkey has stated that the trade suspension will continue until Israel permits an uninterrupted and sufficient flow of humanitarian aid. Whether Israel will reconsider its policies towards Gaza in light of international isolation remains uncertain.

The Biden administration’s sales pitch for the purported benefits of military outlays began in earnest last October, when the president gave a rare Oval Office address to promote a $106-billion emergency allocation that included tens of billions of dollars of weaponry for Ukraine, Israel, and Taiwan. MAGA Republicans in Congress had been blocking the funding from going forward and the White House was searching for a new argument to win them over. The president and his advisers settled on an answer that could just as easily have come out of the mouth of Donald Trump: jobs, jobs, jobs. As Joe Biden put it:

“We send Ukraine equipment sitting in our stockpiles. And when we use the money allocated by Congress, we use it to replenish our own stores… equipment that defends America and is made in America: Patriot missiles for air defense batteries made in Arizona; artillery shells manufactured in 12 states across the country — in Pennsylvania, Ohio, Texas; and so much more.”

It should be noted that two of the four states he singled out (Arizona and Pennsylvania) are swing states crucial to his reelection bid, while the other two are red states with Republican senators he’s been trying to win over to vote for another round of military aid to Ukraine.

Lest you think that Biden’s economic pitch for such aid was a one-off event, Politico reported that, in the wake of his Oval Office speech, administration officials were distributing talking points to members of Congress touting the economic benefits of such aid. Politico dubbed this approach “Bombenomics.” Lobbyists for the administration even handed out a map purporting to show how much money such assistance to Ukraine would distribute to each of the 50 states. And that, by the way, is a tactic companies like Lockheed Martin routinely use to promote the continued funding of costly, flawed weapons systems like the F-35 fighter jet. Still, it should be troubling to see the White House stooping to the same tactics.

Yes, it’s important to provide Ukraine with the necessary equipment and munitions to defend itself from Russia’s grim invasion, but the case should be made on the merits, not through exaggerated accounts about the economic impact of doing so. Otherwise, the military-industrial complex will have yet another never-ending claim on our scarce national resources.

Military Keynesianism and Cold War Fallacies

The official story about military spending and the economy starts like this: the massive buildup for World War II got America out of the Great Depression, sparked the development of key civilian technologies (from computers to the internet), and created a steady flow of well-paying manufacturing jobs that were part of the backbone of America’s industrial economy.

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There is indeed a grain of truth in each of those assertions, but they all ignore one key fact: the opportunity costs of throwing endless trillions of dollars at the military means far less is invested in other crucial American needs, ranging from housing and education to public health and environmental protection. Yes, military spending did indeed help America recover from the Great Depression but not because it was military spending. It helped because it was spending, period. Any kind of spending at the levels devoted to fighting World War II would have revived the economy. While in that era, such military spending was certainly a necessity, today similar spending is more a question of (corporate) politics and priorities than of economics.

In these years Pentagon spending has soared and the defense budget continues to head toward an annual trillion-dollar mark, while the prospects of tens of millions of Americans have plummeted. More than 140 million of us now fall into poor or low-income categories, including one out of every six children. More than 44 million of us suffer from hunger in any given year. An estimated 183,000 Americans died of poverty-related causes in 2019, more than from homicide, gun violence, diabetes, or obesity. Meanwhile, ever more Americans are living on the streets or in shelters as homeless people hit a record 650,000 in 2022.

Perhaps most shockingly, the United States now has the lowest life expectancy of any industrialized country, even as the International Institute for Strategic Studies reports that it now accounts for 40% of the world’s — yes, the whole world’s! — military spending. That’s four times more than its closest rival, China. In fact, it’s more than the next 15 countries combined, many of which are U.S. allies. It’s long past time for a reckoning about what kinds of investments truly make Americans safe and economically secure — a bloated military budget or those aimed at meeting people’s basic needs.

What will it take to get Washington to invest in addressing non-military needs at the levels routinely lavished on the Pentagon? For that, we would need presidential leadership and a new, more forward-looking Congress. That’s a tough, long-term goal to reach, but well worth pursuing. If a shift in budget priorities were to be implemented in Washington, the resulting spending could, for instance, create anywhere from 9% more jobs for wind and solar energy production to three times as many jobs in education.

As for the much-touted spinoffs from military research, investing directly in civilian activities rather than relying on a spillover from Pentagon spending would produce significantly more useful technologies far more quickly. In fact, for the past few decades, the civilian sector of the economy has been far nimbler and more innovative than Pentagon-funded initiatives, so — don’t be surprised — military spinoffs have greatly diminished. Instead, the Pentagon is desperately seeking to lure high-tech companies and talent back into its orbit, a gambit which, if successful, is likely to undermine the nation’s ability to create useful products that could push the civilian sector forward. Companies and workers who might otherwise be involved in developing vaccines, producing environmentally friendly technologies, or finding new sources of green energy will instead be put to work building a new generation of deadly weapons.

Diminishing Returns

In recent years, the Pentagon budget has approached its highest level since World War II: $886 billion and counting. That’s hundreds of billions more than was spent in the peak year of the Vietnam War or at the height of the Cold War. Nonetheless, the actual number of jobs in weapons manufacturing has plummeted dramatically from three million in the mid-1980s to 1.1 million now. Of course, a million jobs is nothing to sneeze at, but the downward trend in arms-related employment is likely to continue as automation and outsourcing grow. The process of reducing arms industry jobs will be accelerated by a greater reliance on software over hardware in the development of new weapons systems that incorporate artificial intelligence. Given the focus on emerging technologies, assembly line jobs will be reduced, while the number of scientists and engineers involved in weapons-related work will only grow.

In addition, as the journalist Taylor Barnes has pointed out, the arms industry jobs that do remain are likely to pay significantly less than in the past, as unionization rates at the major contractors continue to fall precipitously, while two-tier union contracts deny incoming workers the kind of pay and benefits their predecessors enjoyed. To cite two examples: in 1971, 69% of Lockheed Martin workers were unionized, while in 2022 that number was 19%; at Northrop Grumman today, a mere 4% of its employees are unionized. The very idea that weapons production provides high-paying manufacturing jobs with good benefits is rapidly becoming a thing of the past.

More and better-paying jobs could be created by directing more spending to domestic needs, but that would require a dramatic change in the politics and composition of Congress.

The Military Is Not an “Anti-Poverty Program”

Members of Congress and the Washington elite continue to argue that the U.S. military is this country’s most effective anti-poverty program. While the pay, benefits, training, and educational funding available to members of that military have certainly helped some of them improve their lot, that’s hardly the full picture. The potential downside of military service puts the value of any financial benefits in grim perspective.

Many veterans of America’s disastrous post-9/11 wars, after all, risked their physical and mental health, not to speak of their lives, during their time in the military. After all, 40% of veterans of the Iraq and Afghan wars have reported service-related disabilities. Physical and mental health problems suffered by veterans range from lost limbs to traumatic brain injuries to post-traumatic stress syndrome (PTSD). They have also been at greater risk of homelessness than the population as a whole. Most tragically, four times as many veterans have committed suicide as the number of military personnel killed by enemy forces in any of the U.S. wars of this century.

The toll of such disastrous conflicts on veterans is one of many reasons that war should be the exception, not the rule, in U.S. foreign policy.

And in that context, there can be little doubt that the best way to fight poverty is by doing so directly, not as a side-effect of building an increasingly militarized society. If, to get a leg up in life, people need education and training, it should be provided to civilians and veterans alike.

Tradeoffs

Federal efforts to address the problems outlined above have been hamstrung by a combination of overspending on the Pentagon and the unwillingness of Congress to more seriously tax wealthy Americans to address poverty and inequality. (After all, the wealthiest 1% of us are now cumulatively worth more than the 291 million of us in the “bottom” 90%, which represents a massive redistribution of wealth in the last half-century.)

The tradeoffs are stark. The Pentagon’s annual budget is significantly more than 20 times the $37 billion the government now invests annually in reducing greenhouse gas emissions as part of the Inflation Reduction Act. Meanwhile, spending on weapons production and research alone is more than eight times as high. The Pentagon puts out more each year for one combat aircraft — the overpriced, underperforming F-35 — than the entire budget of the Centers for Disease Control and Prevention. Meanwhile, one $13 billion aircraft carrier costs more to produce than the annual budget of the Environmental Protection Agency. Similarly, in 2020, Lockheed Martin alone received $75 billion in federal contracts and that’s more than the budgets of the State Department and the Agency for International Development combined. In other words, the sum total of that company’s annual contracts adds up to the equivalent of the entire U.S. budget for diplomacy.

Simply shifting funds from the Pentagon to domestic programs wouldn’t, of course, be a magical solution to all of America’s economic problems. Just to achieve such a shift in the first place would, of course, be a major political undertaking and the funds being shifted would have to be spent effectively. Furthermore, even cutting the Pentagon budget in half wouldn’t be enough to take into account all of this country’s unmet needs. That would require a comprehensive package, including not just a change in budget priorities but an increase in federal revenues and a crackdown on waste, fraud, and abuse in the outlay of government loans and grants. It would also require the kind of attention and focus now reserved for planning to fund the military.

One comprehensive plan for remaking the economy to better serve all Americans is the moral budget of the Poor People’s Campaign, a national movement of low-income people inspired by the 1968 initiative of the same name spearheaded by the Reverend Martin Luther King, Jr., before his assassination that April 4th. Its central issues are promoting racial justice, ending poverty, opposing militarism, and supporting environmental restoration. Its moral budget proposes investing more than $1.2 trillion in domestic needs, drawn from both cuts to Pentagon spending and increases in tax revenues from wealthy individuals and corporations. Achieving such a shift in American priorities is, at best, undoubtedly a long-term undertaking, but it does offer a better path forward than continuing to neglect basic needs to feed the war machine.

If current trends continue, the military economy will only keep on growing at the expense of so much else we need as a society, exacerbating inequality, stifling innovation, and perpetuating a policy of endless war. We can’t allow the illusion — and it is an illusion! — of military-fueled prosperity to allow us to neglect the needs of tens of millions of people or to hinder our ability to envision the kind of world we want to build for future generations. The next time you hear a politician, a Pentagon bureaucrat, or a corporate functionary tell you about the economic wonders of massive military budgets, don’t buy the hype.

Copyright 2024 William D. Hartung

Via Tomdispatch.com

In December, President Biden signed a record authorization of $886 billion in “national defense” spending for 2024, including funds for the Pentagon proper and work on nuclear weapons at the Department of Energy. Add to that tens of billions of dollars more in likely emergency military aid for Ukraine and Israel, and such spending could well top $900 billion for the first time this year.

Meanwhile, the administration’s $100-billion-plus emergency military aid package that failed to pass Congress last month is likely to slip by in some form this year, while the House and Senate are almost guaranteed to add tens of billions more for “national defense” projects in specific states and districts, as happened in two of the last three years.

Of course, before the money actually starts flowing, Congress needs to pass an appropriations bill for Fiscal Year 2024, clearing the way for that money to be spent. As of this writing, the House and Senate had indeed agreed to a tentative deal to sign onto the $886 billion that was authorized in December. A trillion-dollar version of such funding could be just around the corner.  (If past practice is any guide, more than half of that sum could go directly to corporations, large and small.)

A trillion dollars is a hard figure to process. In the 1960s, when the federal budget was a fraction of what it is now, Republican Senator Everett Dirksen allegedly said, “A billion here, a billion there, and pretty soon you’re talking real money.” Whether he did or not, that quote neatly captures how congressional attitudes toward federal spending have changed. After all, today, a billion dollars is less than a rounding error at the Pentagon. The department’s budget is now hundreds of billions of dollars more than at the height of the Vietnam War and over twice what it was when President Eisenhower warned of the “unwarranted influence” wielded by what he called “the military-industrial complex.”

To offer just a few comparisons: annual spending on the costly, dysfunctional F-35 combat aircraft alone is greater than the entire budget of the Centers for Disease Control and Prevention. In 2020, Lockheed Martin’s contracts with the Pentagon were worth more than the budgets of the State Department and the Agency for International Development combined, and its arms-related revenues continue to rival the government’s entire investment in diplomacy. One $13 billion aircraft carrier costs more than the annual budget of the Environmental Protection Agency. Overall, more than half of the discretionary budget Congress approves every year — basically everything the federal government spends other than on mandatory programs like Medicare and Social Security — goes to the Pentagon.

It would, I suppose, be one thing if such huge expenditures were truly needed to protect the country or make the world a safer place. However, they have more to do with pork-barrel politics and a misguided “cover the globe” military strategy than a careful consideration of what might be needed for actual “defense.”

Congressional Follies

The road to an $886-billion military budget authorization began early last year with a debt-ceiling deal negotiated by President Biden and then-House Speaker Kevin McCarthy. That rolled back domestic spending levels, while preserving the administration’s proposal for the Pentagon intact. McCarthy, since ousted as speaker, had been pressed by members of the right-wing “Freedom Caucus” and their fellow travelers for just such spending cuts. (He had little choice but to agree, since that group proved to be his margin of victory in a speaker’s race that ran to 15 ballots.)

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There was a brief glimmer of hope that the budget cutters in the Freedom Caucus might also go after the bloated Pentagon budget rather than inflict all the fiscal pain on domestic programs. Prominent right-wing Republicans like Representative Jim Jordan (R-OH) pledged to put Pentagon spending reductions “on the table,” but then only went after the military’s alleged “woke agenda,” which boiled down to cutting a few billion dollars slated for fighting racism and sexual harassment while supporting reproductive freedom within the armed forces. Oh wait, Jordan also went after spending on the development of alternative energy sources as “woke.” In any case, he focused on just a minuscule share of the department’s overall budget.

Prominent Republicans outside Congress expressed stronger views about bringing the Pentagon to heel, but their perspectives got no traction on Capitol Hill. For instance, Kevin Roberts, the head of the Heritage Foundation, perhaps America’s most influential conservative think tank, made the case for reining in the Pentagon at American Conservative magazine:

“In the past, Congress accepted the D.C. canard that a bigger budget alone equals a stronger military. But now, facing down a record debt to the tune of $242,000 per household, conservatives are ready to tackle an entrenched problem and confront the political establishment, unaccountable federal bureaucrats, and well-connected defense contractors all at once in order to keep the nation both solvent and secure.”

Even more surprising, former Trump Secretary of Defense Christopher Miller released a memoir in which he called for a dramatic slashing of the Pentagon budget. “We could,” he argued, “cut our defense budget in half and it would still be twice as big as China’s.”

Ultimately, however, such critiques had zero influence over the Pentagon budget debate in the House, which quickly degenerated into a fight about a series of toxic amendments attacking reproductive freedom and LGTBQ and transgender rights in the military. Representative Colin Allred (D-TX) rightly denounced such amendments as a “shameful display of extremism” and across-the-board opposition by Democrats ensured that the first iteration of the National Defense Authorization Act for fiscal year 2024 would be defeated and some of the most egregious Republican proposals eliminated later in the year. 

In the meantime, virtually all mainstream press coverage and most congressional debate focused on those culture war battles rather than why this country was poised to shove so much money at the Pentagon in the first place.

Threat Inflation and the “Arsenal of Democracy”

Perhaps you won’t be surprised to learn that the strategic rationales put forward for the flood of new Pentagon outlays don’t faintly hold up to scrutiny. First and foremost in the Pentagon’s argument for virtually unlimited access to the Treasury is the alleged military threat posed by China. But as Dan Grazier of the Project on Government Oversight has pointed out, that country’s military strategy is “inherently defensive”:

“[T]he investments being made [by China] are not suited for foreign adventurism but are instead designed to use relatively low-cost weapons to defend against massively expensive American weapons. The nation’s primary military strategy is to keep foreign powers, and especially the United States, as far away from its shores as possible in a policy the Chinese government calls ‘active defense.’”

The greatest point of potential conflict between the U.S. and China is, of course, Taiwan. But a war over that island would come at a staggering cost for all concerned and might even escalate into a nuclear confrontation. A series of war games conducted by the Center for Strategic and International Studies (CSIS) found that, while the United States could indeed “win” a war defending Taiwan from a Chinese amphibious assault, it would be a Pyrrhic victory. “The United States and its allies lost dozens of ships, hundreds of aircraft, and tens of thousands of servicemembers,” it reported. “Taiwan saw its economy devastated. Further, the high losses damaged the U.S. global position for many years.” And a nuclear confrontation between China and the United States, which CSIS didn’t include in its assessment, would be a first-class catastrophe of almost unimaginable proportions.

The best route to preventing a future Chinese invasion of Taiwan would be to revive Washington’s “One China” policy that calls for China to commit itself to a peaceful resolution of Taiwan’s status and for the U.S. to forswear support for that island’s formal independence. In other words, diplomacy, rather than increasing the Pentagon budget to “win” such a war, would be the way to go.

The second major driver of higher Pentagon budgets is allegedly the strain on this country’s arms manufacturing base caused by supplying tens of billions of dollars of weaponry to Ukraine, including artillery shells and missiles that are running short in American stockpiles. The answer, according to the Pentagon and the arms industry, is to further supersize this country’s already humongous military-industrial complex to produce enough weaponry to supply Ukraine (and now Israel, too), while acquiring sufficient weapons systems for a future war with China.

There are two problems with such arguments. First, supplying Ukraine doesn’t justify a permanent expansion of the U.S. arms industry. In fact, such aid to Kyiv needs to be accompanied by a now-missing diplomatic strategy designed to head off an even longer, ever more grinding war.

Second, the kinds of weapons needed for a war with China would, for the most part, be different from those relevant to a land war in Ukraine, so weaponry sent to Ukraine would have little relevance to readiness for a potential war with China (which Washington should, in any case, be working to prevent, not preparing for). 

The Disastrous Costs of a Militarized Foreign Policy

Before investing ever more tax dollars in building an ever-expanding garrison state, the military strategy of the United States in the current global environment should be seriously debated. Just buying ever more bombs, missiles, drones, and next-generation artificial intelligence-driven weaponry is not, in fact, a strategy, though it is a boon to the military-industrial complex and an invitation to a destabilizing new arms race.

Unfortunately, neither Congress nor the Biden administration seems inclined to seriously consider an approach that would emphasize investing in diplomatic and economic tools over force or the threat of force. Given this country’s staggeringly expensive failures in its wars in Iraq and Afghanistan in this century (which cost trillions of dollars), resulting in hundreds of thousands of civilian casualties, and leaving staggering numbers of American veterans with physical and psychological injuries (as extensively documented by the Costs of War Project at Brown University), you might think a different approach to the use of your tax dollars was in order, but no such luck.

There are indeed a few voices in Congress advocating restraint at the Pentagon, including Representatives Mark Pocan (D-WI) and Barbara Lee (D-CA), who have proposed a $100 billion reduction in that department’s budget as a first step toward a more balanced national security policy.  Such efforts, however, must overcome an inhospitable political environment created by the endlessly exaggerated military threats facing this country and the political power of the arms industry, as well as its allies in Washington. Those allies, of course, include President Biden, who has labeled the U.S. an “arsenal of democracy” in his efforts to promote a new round of weapons aid to Ukraine.  Not unlike his predecessor, he is touting the potential benefits of arms-production investments in companies in electoral swing states.

Sadly, throwing more money at the arms industry sacrifices future needs for short-term economic gains that are modest indeed. Were that money going into producing green jobs, a more resilient infrastructure, improved scientific and technical education, and a more robust public health system, we would find ourselves in a different world. Those should be the pillars of any American economic revival rather than the all-too-modest side effects of weapons development in fueling economic growth. Despite huge increases in funding since the 1980s, actual jobs in the arms manufacturing industry have, in fact, plummeted from three million to 1.1 million — and, mind you, those figures come from the arms industry’s largest trade association. 

The United Auto Workers, one of the unions with the most members working in the arms industry, has recognized this reality and formed a Just Transition Committee. As noted by Spencer Ackerman at the Nation, it’s designed to “examine the size, scope, and impact of the U.S. military-industrial complex that employs thousands of UAW members and dominates the global arms trade.” According to Brandon Mancilla, director of the UAW’s Region 9A, which represents 50,000 active and retired workers in New York, New England, and Puerto Rico, the committee will “think about what it would mean to actually have a just transition, what used to be called a ‘peace conversion,’ of folks who work in the weapons and defense industry into something else.”

The UAW initiative parallels a sharp drop in unionization rates at major weapons makers (as documented by journalist Taylor Barnes). To cite two examples: in 1971, 69% of Lockheed Martin workers were unionized, while in 2022 that number was 19%; at Northrop Grumman today, a mere 4% of its employees are unionized, a dip that reflects a conscious strategy of the big weapons-making firms to outsource work to non-union subcontractors and states with anti-union “right to work” laws, while exporting tens of thousands of jobs overseas as part of multinational projects like the F-35 program. So much for the myth that defense industry jobs are more secure or have better pay and benefits than jobs in other parts of the economy.

A serious national conversation is needed on what a genuine defense strategy would look like, rather than one based on fantasies of global military dominance. Otherwise, the overly militarized approach to foreign and economic policy that has become the essence of Washington budget-making could be extended endlessly and disastrously into the future, something this country literally can’t afford to let happen.

Copyright 2024 William D. Hartung

Via Tomdispatch.com

Not surprisingly, following Russia’s February 24th invasion, coverage has focused mainly on the day-to-day fighting; the destruction of Ukrainian economic assets, ranging from buildings and bridges to factories and whole cities; the plight of both Ukrainian refugees and internally displaced people, or IDPs; and the mounting evidence of atrocities. The war’s potential long-term economic effects in and beyond Ukraine haven’t attracted nearly as much attention, for understandable reasons. They’re less visceral and, by definition, less immediate. Yet the war will take a huge economic toll, not just on Ukraine but on desperately poor people living thousands of miles away. Wealthier countries will experience the ill effects of the war, too, but be better able to cope with them.

Shattered Ukraine

Some expect this war to last years, even decades, though that estimate seems far too bleak. What we do know, however, is that, even two months in, Ukraine’s economic losses and the outside assistance that country will need ever to achieve anything resembling what once passed for normal are staggering.

Let’s start with Ukraine’s refugees and IDPs. Together, the two groups already make up 29% of the country’s total population. To put that in perspective, try to imagine 97 million Americans finding themselves in such a predicament in the next two months.

As of late April, 5.4 million Ukrainians had fled the country for Poland and other neighboring lands. Even though many — estimates vary between several hundred thousand and a million — have started returning, it’s unclear whether they will be able to stay (which is why the U.N.’s figures exclude them from its estimate of the total number of refugees). If the war worsens and does indeed last years, a continuing exodus of refugees could result in a total unimaginable today.

That will put even more strain on the countries hosting them, especially Poland, which has already admitted nearly three million fleeing Ukrainians. One estimate of what it costs to provide them with basic needs is $30 billion. And that’s for a single year. Moreover, when that projection was made there were a million fewer refugees than there are now. Add to that the 7.7 million Ukrainians who have left their homes but not the country itself. The cost of making all these lives whole again will be staggering.

Once the war ends and those 12.8 million uprooted Ukrainians begin to try to rebuild their lives, many will find that their apartment buildings and homes are no longer standing or not habitable. The hospitals and clinics they depended on, the places they worked, their children’s schools, the shops and malls in Kyiv and elsewhere where they bought basic necessities may have been razed or badly damaged, too. The Ukrainian economy is expected to contract by 45% this year alone, hardly surprising considering that half of its businesses aren’t operating and, according to the World Bank, its seaborne exports from its now embattled southern coast have effectively ceased. To return even to pre-war levels of production will take at least several years.

About one-third of Ukraine’s infrastructure (bridges, roads, rail lines, waterworks, and the like) has already been damaged or demolished. Repairing or rebuilding it will require between $60 billion and $119 billion. Ukraine’s Finance Minister reckons that if lost production, exports, and revenue are added in, the total damage done by the war already exceeds $500 billion. That’s nearly four times the value of Ukraine’s gross domestic product in 2020.

And mind you, such figures are approximations at best. The true costs will undoubtedly be higher and vast sums in assistance from international financial organizations and Western countries needed for years to come. At a meeting convened by the International Monetary Fund (IMF) and the World Bank, Ukraine’s Prime Minister estimated that the rebuilding of his country would require $600 billion and that he needs $5 billion a month for the next five months just to bolster its budget. Both organizations have already swung into action. In early March, the IMF approved a $1.4 billion emergency loan for Ukraine and the World Bank an additional $723 million. And that’s sure to be just the beginning of a long-term flow of funds into Ukraine from those two lenders, while individual Western governments and the European Union will doubtless provide their own loans and grants.

The West: Higher Inflation, Lower Growth

The economic shock waves created by the war are already hurting Western economies and the pain will only increase. Economic growth in the wealthiest European countries was 5.9% in 2021. The IMF anticipates that it will fall to 3.2% in 2022 and to 2.2% in 2023. Meanwhile, between just February and March of this year, inflation in Europe surged from 5.9% to 7.9%. And that looks modest compared to the leap in European energy prices. By March they had already risen a whopping 45% compared to a year ago.

The good news, reports the Financial Times, is that unemployment has fallen to a record low of 6.8%. The bad news: inflation outran wages, so workers were actually earning 3% less.

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As for the United States, economic growth, projected at 3.7% for 2022, is likely to be better than in leading European economies. However, the Conference Board, a think tank for its 2,000 member businesses, expects growth to dip to 2.2% in 2023. Meanwhile, the U.S. inflation rate reached 8.54% in late March. That’s twice what it was 12 months ago and the highest it’s been since 1981. Jerome Powell, chair of the Federal Reserve, has warned that the war will create additional inflation. New York Times columnist and economist Paul Krugman believes that it will drop, but if so, the question is: When and how rapidly? Besides, Krugman expects price increases to get worse before they begin to ease. The Fed can curb inflation by jacking up interest rates, but that could end up further reducing economic growth. Indeed, Deutsche Bank made news on April 26th with its prediction that the Fed’s battle against inflation will create a “major recession” in the U.S. late next year.

Along with Europe and the U.S., the Asia-Pacific, the world’s third economic powerhouse, won’t escape unscathed either. Citing the effects of the war, the IMF cut its growth forecast for that region by another 0.5% to 4.9% this year compared to 6.5% last year. Inflation in the Asia-Pacific has been low but is expected to rise in a number of countries.

Such unwelcome trends can’t all be attributed to the war alone. The Covid-19 pandemic had created problems on many fronts and U.S. inflation was already creeping up before the invasion, but it will certainly make matters worse. Consider energy prices since February 24th, the day the war started. The price of oil was then at $89 a barrel. After zigs and zags and a March 9th peak of $119, it stabilized (at least for now) at $104.7 on April 28rd — a 17.6% jump in two months. Appeals by the U.S. and British governments to Saudi Arabia and the United Arab Emirates to increase oil production went nowhere, so no one should expect quick relief.

Rates for container shipping and air cargo, already hiked by the pandemic, rose further following the invasion of Ukraine and supply-chain disruptions worsened as well. Food prices also rose, not only due to higher energy costs but also because Russia accounts for nearly 18% of global exports of wheat (and Ukraine 8%), while Ukraine’s share of global corn exports is 16% and the two countries together account for more than a quarter of global exports of wheat, a crucial crop for so many countries.

Russia and Ukraine also produce 80% of the world’s sunflower oil, widely used for cooking. Rising prices and shortages of this commodity are already apparent, not only in the European Union, but also in poorer parts of the world like the Middle East and India, which gets nearly all of its supply from Russia and Ukraine. In addition, 70% of Ukraine’s exports are carried by ships and both the Black Sea and the Sea of Azov are now war zones.

The Plight of “Low-Income” Countries

The slower growth, price hikes, and higher interest rates resulting from the efforts of central banks to tame inflation, as well as increased unemployment, will hurt people living in the West, particularly the poorest among them who spend a far larger proportion of their earnings on basic necessities like food and gas. But “low-income countries” (according to the World Bank’s definition, those with an average per-capita annual income below $1,045 in 2020), particularly their poorest denizens, will be hit so much harder. Given Ukraine’s enormous financial needs and the West’s determination to meet them, the low-income countries are likely to find it far more difficult to get the financing for the debt payments they’ll owe because of increased borrowing to cover the rising costs of imports, especially essentials like energy and food. Add to that reduced export earnings owing to slower global economic growth.

The Covid-19 pandemic had already forced low-income countries to weather the economic storm by borrowing more, but low interest rates made their debt, already at a record $860 billion, somewhat easier to manage. Now, with global growth ebbing and the costs of energy and food rising, they’ll be forced to borrow at far higher interest rates, which will only increase their repayment burden.

During the pandemic, 60% of low-income countries required relief from their debt-repayment obligations (compared to 30% in 2015). Higher interest rates, along with higher food and energy prices, will now worsen their predicament. This month, for instance, Sri Lanka defaulted on its debt. Prominent economists warn that that might prove to be a bellwether, since other countries like Egypt, Pakistan, and Tunisia face similar debt problems that the war is aggravating. Together, 74 low-income countries owed $35 billion in debt repayments this year, a 45% increase from 2020.

And those, mind you, are not even considered low-income countries. For them, the IMF has traditionally served as the lender of last resort, but will they be able to count on its help when Ukraine also urgently needs huge loans? The IMF and the World Bank can seek additional contributions from their wealthy member states, but will they get them, when those countries are also coping with growing economic problems and worrying about their own angry voters?

Of course, the greater the debt burden of low-income countries, the less they’ll be able to help their poorest citizens handle higher prices for essentials, especially food. The Food and Agricultural Organization’s food price index rose 12.6% just from February to March and was already 33.6% higher than a year ago.

Soaring wheat prices — at one point, the price per bushel nearly doubled before settling at a level 38% higher than last year — have already created shortages of flour and bread in Egypt, Lebanon, and Tunisia, which not long ago looked to Ukraine for between 25% and 80% of their wheat imports. Other countries, like Pakistan and Bangladesh — the former buys nearly 40% of its wheat from Ukraine, the latter 50% from Russia and Ukraine — could face the same problem.

The place suffering the most from skyrocketing food prices may be Yemen, a country that has been mired in civil war for years and faced chronic food shortages and famine well before Russia invaded Ukraine. Thirty percent of Yemen’s imported wheat comes from Ukraine and, thanks to the reduction in supply created by the war, the price per kilogram has already risen nearly five-fold in its south. The World Food Program (WFP) has been spending an extra $10 million a month for its operations there, since nearly 200,000 people could face “famine-like conditions” and 7.1 million in total will experience “emergency levels of hunger.” The problem isn’t confined to countries like Yemen, though. According to the WFP, 276 million people worldwide faced “acute hunger” even before the war began and if it drags on into the summer another 27 million to 33 million may find themselves in just that precarious position.

The Urgency of Peace — And Not Just for Ukrainians

The magnitude of the funds needed to rebuild Ukraine, the importance the U.S., Britain, the European Union, and Japan attach to that goal, and the increasing cost for critical imports are going to put the world’s poorest countries in an even tougher economic spot. To be sure, poor people in wealthy countries are also vulnerable, but those in the poorest ones will suffer so much more.

Many are already barely surviving and lack the array of social services available to the poor in wealthy nations. The American social-safety net is threadbare compared to its European analogues, but at least there is such a thing. Not so in the poorest countries. There, the least fortunate scrape by with little, if any, help from their governments. Only 20% of them are covered in any way by such programs.

The world’s poorest bear no responsibility for the war in Ukraine and have no capacity to bring it to an end. Other than the Ukrainians themselves, however, they will be hurt worst by its prolongation. The most impoverished among them are not being shelled by the Russians or occupied and subjected to war crimes like the inhabitants of the Ukrainian town of Bucha. Still, for them, too, ending the war is a matter of life or death. That much they share with the people of Ukraine.

Copyright 2022 Rajan Menon

Ironically, Russia already seems to see Iran as one lifeline it could use to hedge against sanctions. Moscow is threatening to derail the Vienna negotiations seeking to bring the US back into the 2015 Iran nuclear deal unless it is guaranteed the same right to profit from a reemerging Iranian economy as everyone else.

So here are the paths Iran has taken around US boycotts and sanctions:

1. Faced with US third-party sanctions on anyone who bought Iranian petroleum without a Treasury Department waiver, Iran sold its petroleum to small private refineries in the south of China. These firms do no business with the United States or Europe and have no assets overseas that could be seized. They are private businesses and so their trade with Iran does not imperil large state companies like Sinopec. The trade goes on in soft currencies or Chinese yuan rather than in dollars, denying the Treasury Department any jurisdiction over it. Iran has also sold a lot of petrochemicals for e.g. fertilizer to various countries under the radar.

If Russia has trouble offloading its petroleum in Western markets because of US pressure, it will offer it at a discount to China with the same sorts of arrangements that make it difficult to punish China for the trade.

2. Iran ships the oil on disguised tankers flying third party flags that turn their Automatic Identification System, or AIS, off so that they cannot be traced as they go to Shanghai from Bushehr.

Such stealth tankers can also carry Russian petroleum.

3. Because trading in dollars could attract US sanctions, Iran resorted to other currencies. Tehran sold petroleum to India and accepted rupees for it. Rupees are a soft currency, meaning that no one but Indians really wants them. So Iran cannot buy goods from other countries with the rupees it accumulated. It has to buy Indian goods. Iran thus imported more from India. Likewise, Iran agreed to accept soft currencies from China in return for its oil. China has accumulated a lot of such bills from Africa and Asia and can unload them on Iran because the latter country is desperate. Again, if Iran gets Kenyan shillings, it has to import goods from Kenya with them. Still, Iran may be able to get some needed commodities from Kenya this way. Having to deal in soft currencies reduces the profits on Iran’s oil by perhaps 25%, but that is better than losing 100%.

Especially if Russia is kicked off the SWIFT bank exchange, Moscow would likewise probably have to start dealing in soft currencies for its oil trade, and would likewise suffer significant losses that way. It would, however, still sell enough oil and gas at a discount to stay in business as a country. More important to Putin is that the oil income would flow to him and his cronies, keeping them in power.

4. Iran dealt with other countries under US sanctions such as Venezuela. Washington has sanctioned Venezuela so heavily that there isn’t much else it can do to Caracas, so Venezuela has imported from Iran natural gas concentrates used as diluents, which are needed to refine petroleum into gasoline. Markets such as Venezuela, which is rich in petroleum but poor in methane gas, would also be open to Putin’s Liquefied Natural Gas exports.

5. Iran laundered money on a vast scale through banks in neighboring countries such as Dubai in the United Arab Emirates or Turkey. Russia will also seek out shady bank executives, including in Dubai, who will launder funds for it.

6. Iran protested the strangulation of its economy by targeting neighbors that helped the US enforce the US boycott. Thus, Iran or its allies were somehow responsible for a series of tanker fires in the Gulf that targeted UAE and Saudi ships, and even an Israeli one. Likewise, it or its allies were behind a devastating attack on Saudi Arabia’s Abqaiq oil refinery complex in September, 2019. Iran carried out or instigated this sabotage cleverly, with plausible deniability. This endangerment of their oil proceeds likely made Abu Dhabi and Riyadh more open to negotiating with Iran and caused their lobbyists in Washington to soften their hard line in favor of sanctioning Iran to the hilt.

The analogy should be clear. Russia’s pro-American neighbors such as Poland could see Russian terrorism in response to smothering sanctions, but it would be carried out wearing gloves and leaving no fingerprints.

7. Iran continued to offer neighbors the help of its Iranian Revolutionary Guards Corps special operations forces, cultivating soft power this way in Iraq, Syria, Lebanon and to a lesser extent Yemen. The US could not sanction Iran into geopolitical irrelevancy.

Russia has already deployed Wagner Group mercenaries somewhat in the way that Iran uses the IRGC Jerusalem Brigade, and loaned its Aerospace Forces to Syrian dictator Bashar al-Assad to put down the Syrian revolutionaries. We could see Russia making some money in this way, or at least remaining a power to be reckoned with.

Corporations large and small have left the financial feast of that post-9/11 surge in military spending with genuinely staggering sums in hand. After all, Pentagon spending has totaled an almost unimaginable $14 trillion-plus since the start of the Afghan War in 2001, up to one-half of which (catch a breath here) went directly to defense contractors.

“The Purse is Now Open”: The Post-9/11 Flood of Military Contracts

The political climate created by the Global War on Terror, or GWOT, as Bush administration officials quickly dubbed it, set the stage for humongous increases in the Pentagon budget. In the first year after the 9/11 attacks and the invasion of Afghanistan, defense spending rose by more than 10% and that was just the beginning. It would, in fact, increase annually for the next decade, which was unprecedented in American history. The Pentagon budget peaked in 2010 at the highest level since World War II — over $800 billion, substantially more than the country spent on its forces at the height of the Korean or Vietnam Wars or during President Ronald Reagan’s vaunted military buildup of the 1980s.

And in the new political climate sparked by the reaction to the 9/11 attacks, those increases reached well beyond expenditures specifically tied to fighting the wars in Iraq and Afghanistan. As Harry Stonecipher, then vice president of Boeing, told the Wall Street Journal in an October 2001 interview, “The purse is now open… [A]ny 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.”

Stonecipher’s prophesy of rapidly rising Pentagon budgets proved correct. And it’s never ended. The Biden administration is anything but an exception. Its latest proposal for spending on the Pentagon and related defense work like nuclear warhead development at the Department of Energy topped $753 billion for FY2022. And not to be outdone, the House and Senate Armed Services Committees have already voted to add roughly $24 billion to that staggering sum.

Who Benefitted?

The benefits of the post-9/11 surge in Pentagon spending have been distributed in a highly concentrated fashion. More than one-third of all contracts now go to just five major weapons companies — Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman. Those five received more than $166 billion in such contracts in fiscal year 2020 alone. To put such a figure in perspective, the $75 billion in Pentagon contracts awarded to Lockheed Martin that year was significantly more than one and one-half times the entire 2020 budget for the State Department and the Agency for International Development, which together totaled $44 billion.

While it’s true that the biggest financial beneficiaries of the post-9/11 military spending surge were those five weapons contractors, they were anything but the only ones to cash in. Companies benefiting from the buildup of the past 20 years also included logistics and construction firms like Kellogg, Brown & Root (KBR) and Bechtel, as well as armed private security contractors like Blackwater and Dyncorp. The Congressional Research Service estimates that in FY2020 the spending for contractors of all kinds had grown to $420 billion, or well over half of the total Pentagon budget. Companies in all three categories noted above took advantage of “wartime” conditions — in which both speed of delivery and less rigorous oversight came to be considered the norms — to overcharge the government or even engage in outright fraud.

The best-known reconstruction and logistics contractor in Iraq and Afghanistan was Halliburton, through its KBR subsidiary. At the start of both the wars in Afghanistan and Iraq, Halliburton was the recipient of the Pentagon’s Logistics Civil Augmentation Program contracts. Those open-ended arrangements involved coordinating support functions for troops in the field, including setting up military bases, maintaining equipment, and providing food and laundry services. By 2008, the company had received more than $30 billion for such work.

Halliburton’s role would prove controversial indeed, reeking as it did of self-dealing and blatant corruption. The notion of privatizing military-support services was first initiated in the early 1990s by Dick Cheney when he was secretary of defense in the George H.W. Bush administration and Halliburton got the contract to figure out how to do it. I suspect you won’t be surprised to learn that Cheney then went on to serve as the CEO of Halliburton until he became vice president under George W. Bush in 2001. His journey was a (if not the) classic case of that revolving door between the Pentagon and the defense industry, now used by so many government officials and generals or admirals, with all the obvious conflicts-of-interest it entails.

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Once it secured its billions for work in Iraq, Halliburton proceeded to vastly overcharge the Pentagon for basic services, even while doing shoddy work that put U.S. troops at risk — and it would prove to be anything but alone in such activities.

Starting in 2004, a year into the Iraq War, the Special Inspector General for Iraq Reconstruction, a congressionally mandated body designed to root out waste, fraud, and abuse, along with Congressional watchdogs like Representative Henry Waxman (D-CA), exposed scores of examples of overcharging, faulty construction, and outright theft by contractors engaged in the “rebuilding” of that country. Again, you undoubtedly won’t be surprised to find out that relatively few companies suffered significant financial or criminal consequences for what can only be described as striking war profiteering. The congressional Commission on Wartime Contracting in Iraq and Afghanistan estimated that, as of 2011, waste, fraud, and abuse in the two war zones had already totaled $31 billion to $60 billion.

A case in point was the International Oil Trading Company, which received contracts worth $2.7 billion from the Pentagon’s Defense Logistics Agency to provide fuel for U.S. operations in Iraq. An investigation by Congressman Waxman, chair of the House Government Oversight and Reform Committee, found that the firm had routinely overcharged the Pentagon for the fuel it shipped into Iraq, making more than $200 million in profits on oil sales of $1.4 billion during the period from 2004 to 2008. More than a third of those funds went to its owner, Harry Sargeant III, who also served as the finance chairman of the Florida Republican Party. Waxman summarized the situation this way: “The documents show that Mr. Sargeant’s company took advantage of U.S. taxpayers. His company had the only license to transport fuel through Jordan, so he could get away with charging exorbitant prices. I’ve never seen another situation like this.”

A particularly egregious case of shoddy work with tragic human consequences involved the electrocution of at least 18 military personnel at several bases in Iraq from 2004 on. This happened thanks to faulty electrical installations, some done by KBR and its subcontractors. An investigation by the Pentagon’s Inspector General found that commanders in the field had “failed to ensure that renovations… had been properly done, the Army did not set standards for jobs or contractors, and KBR did not ground electrical equipment it installed at the facility.”

The Afghan “reconstruction” process was similarly replete with examples of fraud, waste, and abuse. These included a U.S.-appointed economic task force that spent $43 million constructing a gas station essentially in the middle of nowhere that would never be used, another $150 million on lavish living quarters for U.S. economic advisors, and $3 million for Afghan police patrol boats that would prove similarly useless.

Perhaps most disturbingly, a congressional investigation found that a significant portion of $2 billion worth of transportation contracts issued to U.S. and Afghan firms ended up as kickbacks to warlords and police officials or as payments to the Taliban to allow large convoys of trucks to pass through areas they controlled, sometimes as much as $1,500 per truck, or up to half a million dollars for each 300-truck convoy. In 2009, Secretary of State Hillary Clinton stated that “one of the major sources of funding for the Taliban is the protection money” paid from just such transportation contracts.

A Two-Decade Explosion of Corporate Profits

A second stream of revenue for corporations tied to those wars went to private security contractors, some of which guarded U.S. facilities or critical infrastructure like Iraqi oil pipelines.

The most notorious of them was, of course, Blackwater, a number of whose employees were involved in a 2007 massacre of 17 Iraqis in Baghdad’s Nisour Square. They opened fire on civilians at a crowded intersection while guarding a U.S. Embassy convoy. The attack prompted ongoing legal and civil cases that continued into the Trump era, when several perpetrators of the massacre were pardoned by the president.

In the wake of those killings, Blackwater was rebranded several times, first as XE Services and then as Academii, before eventually merging with Triple Canopy, another private contracting firm. Blackwater founder Erik Prince then separated from the company, but he has since recruited private mercenaries on behalf of the United Arab Emirates for deployment to the civil war in Libya in violation of a United Nations arms embargo. Prince also unsuccessfully proposed to the Trump administration that he recruit a force of private contractors meant to be the backbone of the U.S. war effort in Afghanistan.

Another task taken up by private firms Titan and CACI International was the interrogation of Iraqi prisoners. Both companies had interrogators and translators on the ground at Abu Ghraib prison in Iraq, a site where such prisoners were brutally tortured.

The number of personnel deployed and the revenues received by security and reconstruction contractors grew dramatically as the wars in Iraq and Afghanistan wore on. The Congressional Research Service estimated that by March 2011 there were more contractor employees in Iraq and Afghanistan (155,000) than American uniformed military personnel (145,000). In its August 2011 final report, the Commission on Wartime Contracting in Iraq and Afghanistan put the figure even higher, stating that “contractors represent more than half of the U.S. presence in the contingency operations in Iraq and Afghanistan, at times employing more than a quarter-million people.”

While an armed contractor who had served in the Marines could earn as much as $200,000 annually in Iraq, about three-quarters of the contractor work force there was made up of people from countries like Nepal or the Philippines, or Iraqi citizens. Poorly paid, at times they received as little as $3,000 per year. A 2017 analysis by the Costs of War project documented “abysmal labor conditions” and major human rights abuses inflicted on foreign nationals working on U.S.-funded projects in Afghanistan, including false imprisonment, theft of wages, and deaths and injuries in areas of conflict.

With the U.S. military in Iraq reduced to a relatively modest numberof armed “advisors” and no American forces left in Afghanistan, such contractors are now seeking foreign clients. For example, a U.S. firm — Tier 1 Group, which was founded by a former employee of Blackwater — trained four of the Saudi operatives involved in the murder of Saudi journalist and U.S. resident Jamal Khashoggi, an effort funded by the Saudi government. As the New York Times noted when it broke that story, “Such issues are likely to continue as American private military contractors increasingly look to foreign clients to shore up their business as the United States scales back overseas deployments after two decades of war.”

Add in one more factor to the two-decade “war on terror” explosion of corporate profits. Overseas arms sales also rose sharply in this era. The biggest and most controversial market for U.S. weaponry in recent years has been the Middle East, particularly sales to countries like Saudi Arabia and the United Arab Emirates, which have been involved in a devastating war in Yemen, as well as fueling conflicts elsewhere in the region.

Donald Trump made the most noise about Middle East arms sales and their benefits to the U.S. economy. However, the giant weapons-producing corporations actually sold more weaponry to Saudi Arabia, on average, during the Obama administration, including three major offers in 2010 that totaled more than $60 billion for combat aircraft, attack helicopters, armored vehicles, bombs, missiles, and guns — virtually an entire arsenal. Many of those systems were used by the Saudis in their intervention in Yemen, which has involved the killing of thousands of civilians in indiscriminate air strikes and the imposition of a blockade that has contributed substantially to the deaths of nearly a quarter of a million people to date.

Forever War Profiteering?

Reining in the excess profits of weapons contractors and preventing waste, fraud, and abuse by private firms involved in supporting U.S. military operations will ultimately require reduced spending on war and on preparations for war. So far, unfortunately, Pentagon budgets only continue to rise and yet more money flows to the big five weapons firms.

To alter this remarkably unvarying pattern, a new strategy is needed, one that increases the role of American diplomacy, while focusing on emerging and persistent non-military security challenges. “National security” needs to be redefined not in terms of a new “cold war” with China, but to forefront crucial issues like pandemics and climate change.

It’s time to put a halt to the direct and indirect foreign military interventions the United States has carried out in Afghanistan, Iraq, Syria, Somalia, Yemen, and so many other places in this century. Otherwise, we’re in for decades of more war profiteering by weapons contractors reaping massive profits with impunity.

Copyright 2021 William D. Hartung

Via Tomdispatch.com

U.S. Secretary of State John Kerry chats with Foreign Minister Saud al-Faisal of Saudi Arabia on Mar. 5, 2015, in Riyadh, Saudi Arabia, before the two and their counterparts attended a meeting of the regional Gulf Cooperation Council. Credit: U.S. State Department/public domain

UNITED NATIONS, May 15 2015 (IPS) – When the United States sells billions of dollars in sophisticated arms to Arab nations, they are conditioned on two key factors: no weapons with a qualitative military edge over Israel will ever be sold to the Arabs, nor will they receive any weapons that are not an integral part of the U.S. arsenal.

But against the backdrop of a White House summit meeting of Arab leaders at Camp David this week, the administration of President Barack Obama confessed it has dispensed with rule number two.
“This raises some major questions about the seeming lack of arms control in the region and the potential risks of further one-sided procurement of advanced weapons by GCC states.” — Pieter Wezeman

According to Colin Kahl, national security advisor to Vice-President Joe Biden, the United Arab Emirates (UAE) flies the most advanced U.S.-made F-16 fighter planes in the world.

“They’re more advanced than the ones our Air Force flies,” he told reporters at a U.S. State Department briefing early this week, without going into specifics.

The six members of the Gulf Cooperation Council (GCC) – Bahrain, Oman, Kuwait, Qatar, UAE and Saudi Arabia – which participated in the summit were, not surprisingly, promised more weapons, increased military training and a pledge to defend them against missile strikes, maritime threats and cyberattacks from Iran.

An equally important reason for beefing up security in the region is to thwart any attacks on GCC countries by the Islamic State of Iraq and Syria (ISIS).

“I am reaffirming our ironclad commitment to the security of our Gulf partners,” President Obama told reporters at a news conference, following the summit Thursday.

But he left the GCC leaders disappointed primarily because the United States was not willing to sign any mutual defence treaties with the six Arab nations – modeled on the lines of similar treaties U.S. has signed with Japan and South Korea.

Still, Bahrain, Egypt, Israel, Jordan and Kuwait (along with Pakistan) are designated “major non-NATO (North Atlantic Treaty Organisation) allies.”

Kahl told reporters: “This administration has worked extraordinarily closely with the Gulf states to make sure they had access to state-of-the-art armaments.”

He said that although the U.S. has not entertained requests for F-35s, described as the most advanced fighter plane with the U.S. Air Force, “but keep in mind under this administration we moved forward on a package for the Saudis that will provide them the most advanced F-15 aircraft in the region.”

Taken as a whole, Kahl said, the GCC last year spent nearly 135 billion dollars on their defence, and the Saudis alone spent more than 80 billion dollars.

In comparison, the Iranians spent something like 15 billion dollars on their defence, said Kahl, trying to allay the fears of GCC countries, which have expressed strong reservations about an impending nuclear deal the U.S. and other big powers are negotiating with Iran.

Still, arms suppliers such as France and Britain have been feverishly competing with the United States for a share of the rising arms market in the Middle East, with continued turmoil in Iraq, Syria, Libya and Yemen.
Related IPS Articles

Middle East Conflicts Give Hefty Boost to Arms Merchants
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Pieter Wezeman, senior researcher, Arms and Military Expenditure Programme at the Stockholm International Peace Research Institute (SIPRI), told IPS that GCC countries have long procured weapons from both the U.S. and several European countries.

Qatar is probably the one country in the GCC where U.S. military equipment makes up a low share of its military equipment and instead it has been more dependent on French, British and other European arms, he pointed out.

Last year, Qatar ordered a large amount of new arms from suppliers in Europe, the U.S. and Turkey, in which U.S. equipment was significantly more important than it had been in the decades before in Qatari arms procurement.

“None of the GCC countries has been mainly dependent on a single arms supplier in the past four to five decades. The U.S., UK and France have long been the main suppliers to the GCC, competing against each other,” he added.

In an article last week on the GCC summit, William Hartung, director of the Arms and Security Project at the Center for International Policy and a senior advisor to the Security Assistance Monitor, described it as “an arms fair, not diplomacy.”

He said the Obama administration, in its first five years in office, entered into formal agreements to transfer over 64 billion dollars in arms and defence services to GCC member states, with about three-quarters of that total going to Saudi Arabia.

He said items on offer to GCC states have included fighter aircraft, attack helicopters, radar planes, refueling aircraft, air-to-air missiles, armored vehicles, artillery, small arms and ammunition, cluster bombs, and missile defence systems.

On any given day, Kahl said, the United States has about 35,000 U.S. forces in the Gulf region.

“As I speak, the USS Theodore Roosevelt Carrier Strike Group is there. The USS Normandy Guided Missile Cruiser, the USS Milius Aegis ballistic missile defense destroyer, and a number of other naval assets are in the region,” he said.

“And we have 10 Patriot batteries deployed to the Gulf region and Jordan, as well as AN/TPY-2 radar, which is an extraordinarily powerful radar to be able to track missiles fired basically from anywhere in the region.”

The mission of all of these forces, he said, ”is to defend our partners, to deter aggression, to maintain freedom of navigation, and to combat terrorism and weapons of mass destruction.”

Still, in the spreading Middle East arms market, it is business as usual both to the French and the British.

Wezeman told IPS Qatar has acquired the Rafale to replace its Mirage-2000 aircraft which France supplied about 20 years ago.

The UAE has been considering the purchase of Rafale to replace Mirage-2000 aircraft procured about 10 years ago from France.

Similarly Saudi Arabia has in the past decade ordered British Typhoon combat aircraft and U.S. F-15SAs, just like it ordered British Tornado combat aircraft and U.S. F-15Cs in the 1980s and 1990s.

Oman has recently ordered U.S. F-16s and British Typhoon aircraft to replace older U.S. F-16s and replace UK supplied Jaguar aircraft.

“The same arms acquisition patterns can be seen for land and naval military equipment. It would be a real change if the GCC countries would start large-scale procurement of arms from Russia and China. This has, however, not yet happened,” said Wezeman, who scrupulously tracks weapons sales to the Middle East.

He said access to certain technology has occasionally been one of several reasons for the GCC countries turning to Europe, as the United States tried to maintain a so-called ‘Qualitative Military Edge’ for Israel, in which it refused to supply certain military technology to Arab states which was considered particularly threatening to Israel.

He said for a while the U.S. was not willing to supply air launched cruise missiles with ranges of about 300 km to Arab states. Instead Saudi Arabia and the UAE turned to the UK and France for such weapons and the aircraft to integrate them on.

However, the U.S. has now become less restrictive in this regard and has agreed to supply certain types of cruise missiles to Saudi Arabia and the UAE.

Finally, what is particularly interesting is that U.S. officials once again emphasise the military imbalance in the Gulf region when mentioning that GCC states’ military spending is an estimated nine times higher than that of Iran (figures which are roughly confirmed by SIPRI data).

“This raises some major questions about the seeming lack of arms control in the region and the potential risks of further one-sided procurement of advanced weapons by GCC states,” he added.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

Licensed from Inter Press Service

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Related video added by Juan Cole:

Arirang News: “Obama vows possible military support to defend Gulf Arab partners”