Ukraine: the United States sends billions in aid, the arms industry (and its shareholders) rub their hands

An envelope obtained through hard work. On Wednesday April 25, American President Joe Biden signed the law authorizing a $95 billion American aid program for the Ukraine, Israel and Taiwan triptych. An almost historic vote, after eight months of a fierce blockade by pro-Trump Republicans in Congress, supporters of a strict “America first”.

Two-thirds of this sum will be spent on purchasing new military equipment for the three countries, as well as increasing American production. So, summarizes the Wall Street Journal, more than 60 billion dollars from the new aid program will be transformed into lucrative internal commercial affairs in the country.

Profits of $6.9 billion for Lockheed Martin

Because the American decision is a dizzying promise of benefits for the American arms industry, boosted by the ongoing conflicts. So far, notes the Wall Street Journal, defense and security companies Lockheed Martin (producer of the very famous, and very dysfunctional, F-35 Lightning II) and RTX have been the main beneficiaries of the $30 billion in federal contracts. allocated to supply Ukraine and, in the process, replenish American arms stocks. Other contractors, including General Dynamics, and L3Harris reported strong quarterly sales in April.

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In 2023, for the whole year, Lockheed generated a net profit of 6.9 billion US dollars (US$G), up sharply (+21%), recalls Zonebourse.

Lockheed Martin CEO Jim Taiclet told the company’s investors that he expected the presidential budget requests for fiscal 2025 and additional funding to Ukraine, Israel and Taiwan constitute a solid foundation for the future growth of our company over the coming years.

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Oh, the phenomenon of “war profiteers” is nothing new under the sun. Already during the First World War, the pamphlet War is a racket of Major General Smedley Butler criticized war profiteering by American companies. In particular, he explains how certain companies and companies have increased their revenues and profits by up to 1,700%.

“War profiteers” and share buybacks criticized

Today, defense companies, led by Lockheed Martin and RTX, have used war-induced profits to invest in stock buybacks. The process allows them to increase their share of equity and therefore governance over their company, while increasing profits per remaining shareholders.

A lucrative process, and very little focused on investment, research and development. Thus, details the Wall Street Journal, Lockheed and RTX bought back $19 billion in shares last year. Lockheed bought back another $1 billion in the first quarter, Northrop Grumman bought back almost $350 million, and General Dynamics bought more than $100 million.

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The practice has drawn widespread criticism from some lawmakers and military officials in the United States. Thus a group of legislators called in March to put an end to “war profits”.

“You cannot ask the American taxpayer to make greater public investments while you continue to inflate your stock price through stock buybacks, postponement of promised investments and other accounting maneuvers”added Navy Secretary Carlos Del Toro, according to Defensenews, during an industry conference in January.