Inside The Ukraine-Induced Defense Contractor ‘Gold Rush’ At The Pentagon

The Russian invasion of Ukraine has brought immense suffering to the people of that land, while sparking calls for increased military spending in both the United States and Europe. Though that war may prove to be a tragedy for the world, one group is already benefiting from it: U.S. arms contractors.

Even before hostilities broke out, the CEOs of major weapons firms were talking about how tensions in Europe could pad their profits. In a January 2022 call with his company’s investors, Raytheon Technologies CEO Greg Hayes typically bragged that the prospect of conflict in Eastern Europe and other global hot spots would be good for business, adding that “we are seeing, I would say, opportunities for international sales… [T]he 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.”

In late March, in an interview with the Harvard Business Review after the war in Ukraine had begun, Hayes defended the way his company would profit from that conflict:

“So I make no apology for that. I think again recognizing we are there to defend democracy and the fact is eventually we will see some benefit in the business over time. Everything that’s being shipped into Ukraine today, of course, is coming out of stockpiles, either at DoD [the Department of Defense] or from our NATO allies, and that’s all great news. Eventually we’ll have to replenish it and we will see a benefit to the business over the next coming years.”

Arms to Ukraine, Profits to Contractors

The war in Ukraine will indeed be a bonanza for the likes of Raytheon and Lockheed Martin. First of all, there will be the contracts to resupply weapons like Raytheon’s Stinger anti-aircraft missile and the Raytheon/Lockheed Martin-produced Javelin anti-tank missile that Washington has already provided to Ukraine by the thousands. The bigger stream of profits, however, will come from assured post-conflict increases in national-security spending here and in Europe justified, at least in part, by the Russian invasion and the disaster that’s followed.

Indeed, direct arms transfers to Ukraine already reflect only part of the extra money going to U.S. military contractors. This fiscal year alone, they are guaranteed to also reap significant benefits from the Pentagon’s Ukraine Security Assistance Initiative (USAI) and the State Department’s Foreign Military Financing (FMF) program, both of which finance the acquisition of American weaponry and other equipment, as well as military training. These have, in fact, been the two primary channels for military aid to Ukraine from the moment the Russians invaded and seized Crimea in 2014. Since then, the United States has committed around $5 billion in security assistance to that country. – READ MORE