Tuesday, February 16, 2016

The War Business

In his January 2016 State of the Union Address, President Obama smugly boasted that “We spend more on our military than the next eight nations combined.” According to the Stockholm International Peace Research Institute (SIPRI), in 2014 (the most recent year for full figures) the US was responsible for 34 per cent of the world’s military spending.  It spent three times as much as China and over seven times as much as Russia. It having been calculated that each of the many thousands of armed forces personnel in Afghanistan “cost an average of an eye-popping $2.1 million” a year.

Obama’s Defence Secretary Ashton Carter gave a speech on defense affairs at the Economic Club in Washington, which is proud of the fact that it provides “a forum for prominent business and government leaders who have influenced economic and public policy both here and abroad. Members represent over 600 businesses and organizations [in Washington, DC] that are at the forefront of the private sector economy.” Carter told the Economic Club that “the Pentagon would seek a $582.7 billion budget next year and reshape spending priorities to reflect a new strategic environment marked by Russian assertiveness and the rise of Islamic State.” In his speech Carter said that “the Pentagon plans to spend about $2 billion over the next five years to buy more Raytheon Company Tomahawk missiles and upgrade their capabilities, bringing the inventory of the missiles to above 4,000.”  At midday on February 2, Raytheon shares stood at 123.47.  By 4 p.m. next day they had increased to 128.07.
After this chat to the Club of “prominent leaders” of military-focused commercial enterprises, Reuters reported that Mr Carter “flew to the Naval Air Weapons Station China Lake in California to get updates on new high-end weapons being developed and tested there, including precision Long Range Anti-Ship Missiles built by Lockheed Martin Corp. He said the [defense] department would spend nearly $1 billion over the next five years to buy the new missiles.” The effect of the announcement on Lockheed’s shares was intriguing. At 10 a.m. on February 2, just before the Carter statement, they were at 208.87 — and by 2.30 p.m. on February 3 they had gone up to 213.53.  

Carter had been “a consultant to defense contractors and when he went back to the Pentagon in 2009, he had to get a special waiver because of his work for companies like Mitre Corp, and Global Technology Partners, a defense consulting firm. As The Washington Times points out, that background seems to conflict with the president’s pledge to block the revolving door between federal employees and special-interest groups.” Mr Carter was a Senior Partner in Global Technology, which “is a specialized group of investment professionals who have formed a strategic relationship with DLJ Merchant Banking Partners to acquire and invest in technology, defense, aerospace and related businesses worldwide.”

Carter was reported as saying that “the Pentagon would ask for $3.4 billion to boost military training and exercises aimed at reassuring European countries concerned about Russia, which seized Ukraine’s Crimean peninsula in 2014 and has worried NATO allies with its strategic bomber flights.” He ignores his own spokesman’s proud declaration that “We conduct B-52 [strategic nuclear bomber] flights in international air space [around China] all the time,” and that the US operation “Polar Growl” of B-52 jaunts is aimed explicitly against Russia in “demonstrating the credible and flexible ability of our strategic bomber force,” and “saw B-52s complete simultaneous,  round-trip sorties from Minot Air Force Base, North Dakota, and Barksdale Air Force Base, Louisiana, to the Arctic and North Sea regions.”

The Pentagon is indulging in confrontational military “assertiveness” all around the world, in every region and ocean, operating from hundreds of military bases that are thousands of miles away from the borders of the United States. It is welcome news for the big spenders on military equipment in Washington where members of the Economic Club will be rejoicing in their wealth and ever-increasing profits. 


0 comments: