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Ukrainian soldier

A Ukrainian Military Forces serviceman aims with a Next generation Light Anti-tank Weapon (NLAW), a Swedish-British anti-aircraft missile launcher, on January 28, 2022. This month Britain, along with the United States and Baltic countries, agreed to send weapons, including anti-tank and anti-aircraft missiles, to Ukraine to bolster its defense capabilities. (Photo: AFP via Getty Images)

Defense Contractor CEOs Applaud Deteriorating Global Security

With candor you don't hear in official circles, top arms contractors say recent violence and tension works in their shareholders' favor.

Eli Clifton

 by Responsible Statecraft

According to chief executives of the top taxpayer-funded weapons firms, their balance sheets will benefit from the U.S. engaging in great power competition with Russia and China, the recent escalations in the Yemen war, and the potential for a Russian invasion of Ukraine. But at least one CEO didn’t want to give the impression that weapons firms are simply merchants of death, claiming that her firm, the third largest weapons producer in the world, “actually promote[s] human rights proliferation.”

CEOs from both Lockheed Martin and Raytheon outright acknowledged that a deteriorating state of global peace and security and an increase in deadly violence are very much in the interest of their employees and investors.

Those comments were all made on quarterly earnings calls this week, at which executives for publicly traded companies speak to investors and analysts who follow their industries and answer questions about their financial outlook.

The occasion brings out a degree of candor about companies’ fundamentals and their business interests that aren’t always disclosed in marketing materials and carefully worded press releases.

For example, CEOs from both Lockheed Martin and Raytheon outright acknowledged that a deteriorating state of global peace and security and an increase in deadly violence are very much in the interest of their employees and investors.

Lockheed CEO James Taiclet assured investors that the $740 billion defense budget — twelve times the budget provided to the State Department to conduct diplomacy — could continue to grow in 2023, a critical metric for weapons contractors, the ultimate recipient of nearly half of all defense spending.

Taiclet said:

But if you look at [defense budget growth] — and it’s evident each day that goes by. If you look at the evolving threat level and the approach that some countries are taking, including North Korea, Iran and through some of its proxies in Yemen and elsewhere, and especially Russia today, these days, and China, there’s renewed great power competition that does include national defense and threats to it. And the history of [the] United States is when those environments evolve, that we do not sit by and just watch it happen. So I can’t talk to a number, but I do think and I’m concerned personally that the threat is advancing, and we need to be able to meet it.

Raytheon CEO Greg Hayes took a cruder approach, appearing to celebrate a potential war over Ukraine and Houthi drone attacks on the UAE as good indicators for future weapons sales, responding to an analyst’s question about increased demand for weapons “from international countries just given the rising tensions.”

Hayes said:

…[W]e are seeing, I would say, opportunities for international sales. We just have to look to last week where we saw the drone attack in the UAE, which have attacked some of their other facilities. And of course, the tensions in Eastern Europe, the tensions in the South China Sea, all of those things are putting pressure on some of the defense spending over there. So I fully expect we’re going to see some benefit from it.

But in a moment of rare self-awareness in the calls, Northrop Grumman’s CEO attempted to distance herself from the celebration of increased global conflict by making the bold claim that the world’s  fifth largest weapons manufacturer — and a trainer of Saudi troops accused of war crimes in Yemen — is a promoter of “global human rights.”

Northrop Grumman CEO Kathy Warden said:

I do want to be clear. We are a defense contractor. And so we are supporting global security missions, largely in areas of deterrents, but also inclusive of weapon systems. And we expect to continue in those businesses because we believe they actually promote global human rights proliferation, not the contrary. But with that said, we have evaluated some portions of our portfolio that I’ve talked about in the past like cluster munitions. And today, making the confirmation that we plan to exit depleted uranium ammo as parts of the portfolio that we no longer wanted to support directly.

No doubt, their departure from the cluster munitions and depleted uranium ammunition business is a positive step for human rights, but the idea that one of the world’s biggest producers of missiles, bombers, drones, and nuclear weapons “promote[s] global human rights” tests the limits of credulity. Time and time again, the earnings calls spotlight the true interests of the weapons industry: an increase in global insecurity and violence leads to an increase in governments’ demands for lethal weapons, which in turn produce an increase in profits for investors in arms production.


© 2021 Responsible Statecraft
Eli Clifton

Eli Clifton

Eli Clifton reports on money in politics and US foreign policy. He previously reported for the American Independent New Network, ThinkProgress, and Inter Press Service.

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