A Ukrainian soldier receives an American delivery of FGM-148 Javelins at Boryspil airport in kyiv on February 11, 2022 (AFP/Sergei SUPINSKY)
The thousands of missiles, drones and ammunition sent by the United States to Ukraine have not directly filled the coffers of American arms dealers, but the latter should profit from the conflict in the longer term, with Western countries anxious to beef up their defense against Russia.
Washington, like some of its allies, dipped into its stocks to supply the Ukrainian army with its Stinger and Javelin missiles, weapons long paid for by their manufacturers Lockheed-Martin and Raytheon Technologies.
Their first quarter financial accounts, which will be released in the coming weeks, should therefore not be excessively inflated.
But we will have to replenish these stocks.
The Pentagon thus intends to use 3.5 billion dollars for this purpose, provided for in a law adopted in mid-March, a spokeswoman for the Ministry of Defense told AFP.
The Javelin is currently produced by a joint venture between Lockheed and Raytheon. Raytheon’s Stinger had ceased production before a $340 million order from the Pentagon last summer.
“We are exploring options to more quickly replenish U.S. stockpiles and replenish depleted stocks from allies and partners,” the spokeswoman said. “It will take time to relaunch the industrial base — at the main suppliers and subcontractors — to allow the resumption of production.”
The profits that these groups could derive from these missiles, known for their ease of use, should not be extraordinary, believe several experts from the defense sector interviewed by AFP.
According to Colin Scarola of CFRA, “if 1,000 Stingers and 1,000 Javelins are sent to Eastern Europe every month for the next year, that could be $1-2 billion in revenue” for Raytheon. and Lockheed. A not insignificant sum but to relate to their respective turnovers of 64 and 67 billion last year.
“Raytheon is probably making a lot more money selling a Patriot defense system to Saudi Arabia than it is making Stinger missiles,” notes Jordan Cohen, an arms sales specialist at the Cato Institute think tank. “They’re not necessarily going to want to put too many resources into it.”
Among the largest companies in the defense sector in the United States, Lockheed, Raytheon and Northrop Grumman did not respond to requests from AFP. General Dynamics stressed that it had not changed its forecasts since January, while Boeing simply noted that it was up to governments to make their budgetary decisions.
– Competition between great powers –
Some leaders had implied during the publication of the results of their groups at the end of January that the environment was favorable for their activities.
Greg Hayes, CEO of Raytheon, has thus acknowledged that the rise of tensions in Asia, the Middle East or Eastern Europe will undoubtedly benefit international sales, “not immediately” but “later in 2022 and beyond”.
His counterpart at Lockheed-Martin, James Taiclet, referred to the “renewed competition between great powers” likely to increase the American defense budget.
“The war in Ukraine is reshuffling the cards of the geopolitical order as we have not seen it for 30 years”, remarks Burkett Huey, of the firm Morningstar. “People are realizing that the world is much less secure and that there is probably going to be a need for increased defense investment that can benefit companies in the sector.”
Same story with Eric Heginbotham, from the Center for International Studies at MIT, for whom Western governments, as in recent years in Asia, “will seek less to lower their spending” in this area.
In the United States, Joe Biden has proposed a 4% increase in the defense budget, a figure to be put into perspective with regard to inflation. But at least the budget is not shrinking.
Germany, after having dragged its feet for a long time on its military spending, announced at the end of February the immediate release of an envelope of 100 billion euros to modernize its army.
In this context, “the countries will also probably seek to increase the interoperability (of their equipment) with that of the United States, which is after all the pillar of NATO”, adds Mr. Heginbotham.
Germany thus decided in mid-March to acquire F-35 fighter jets from Lockheed, the start of a process of several years before their delivery, which is when manufacturers receive the bulk of the income.
This “F-35-ification” of militaries outside the United States is good news for American companies, and the American military surely sees a practical side to it, notes Eric Gomez, a specialist in defense policies at the Cato Institute.
“But it makes it harder for the United States to consider pulling back in Europe” at a time when the Biden administration “regularly repeats that its priority (in terms of defense) is China”, adds- he.
© 2022 AFP
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