Weapons factories thrive with Ukraine’s war – 03/21/2023 – Market

More than a year after the Russian invasion, it can be said that who is winning the War in Ukraine is not any of the countries involved, but the arms industry. The ten largest arms and ammunition companies in the United States and Europe showed an average growth of 7.5% in the last quarter of 2022 alone.

According to data from the Ministry of Defense of Ukraine, the country consumes around 400,000 artillery shells, such as bullets from rifles or machine guns, per month, which means an average of more than 13,000 per day.

Washington, for example, sent nearly 1 million 155 mm shells to Kiev, which in peacetime would mean five years of production.

It is a volume that has hindered, but not prevented, the purchase of ammunition by other countries. The fact is that, with the war in Europe, the other countries on the continent rushed to arm themselves as well.

According to the Stockholm International Peace Research Institute (Sipri), European arms imports increased by 92% in 2022 compared to the previous year.

In this account is Ukraine, which by far had the biggest increase, of 6,700%, buying 68 times more than in 2021. The account varies in the rest of the continent, but the data indicate that the closer to Putin you are, the more want weapons and ammo in your stash.

Neighboring Poland, for example, increased its purchases by 764%. Belarus, the Kremlin’s main ally, at 226%. Hungary (211%), Sweden (161%) and the Czech Republic (109%) round out the top 5. Even Spain, a country farther geographically from the conflict, grew its spending on war equipment by 28% last year.

The ammunition market inflated so much that the European Commission decided to repeat the same scheme that it applied to vaccines at the beginning of Covid-19: the joint purchase of inputs worth 2 billion, preventing allies from competing with each other and, thus, encouraging further escalating prices.

All of this goes against a target that each country in NATO, the western military alliance, spends 2% of its GDP on defense inputs. The number was established in 2006, at the Riga Conference, but until now, few countries had reached it.

In 2014, when Russia invaded the Ukrainian Crimea, only three of the 30 NATO countries spent the established amount: United States, United Kingdom and Greece. Last year, there were six more: Estonia, Latvia, Lithuania, Poland, Croatia and Slovakia.

But after the invasion, the race intensified. Germany has announced that it will exceed 2% and, last month, Denmark abolished a religious holiday so that taxes collected from that extra day of work go directly to military spending.

With the exception of the Chinese, the five largest arms companies in the world are American: Lockheed Martin (with sales of around US$ 60 billion per year), Raytheon, Boeing, Northrop Grumman and General Dynamics. That’s where the $30 billion the Joe Biden government is earmarking for Ukraine goes. The remaining companies in the top ten are, in order, British, German, plus an American, Italian and French.

In global terms, last year the United States exported around 60% of the world’s armaments, compared to just 16% for Russia. And that was before the sanctions that prevent it from selling to everyone. China accounts for only 5% of world sales.