America’s post-9/11 wars have cost more than $8 trillion. Up to one-half of the Pentagon’s annual budget goes to contractors, so it stands to reason that arms companies would be major beneficiaries of this enormous sum of war spending. But the revenues reaped by arms companies over the past two decades go well beyond spending on the wars themselves, as noted in a new report from the Center for International Policy and the Costs of War Project at Brown University.
The reaction to the 9/11 attacks created a political climate that opened the floodgates to massive increases in Pentagon spending, with few questions asked. In the era of America’s Global War on Terror (GWOT), trillions of dollars have gone straight to the biggest military contractors. This concentrated power allows for outsized influence, often to the detriment of genuine security needs. The top 5 contractors alone — Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman — have received over $2.1 trillion in Pentagon contracts from FY 2001 to FY 2020, in inflation-adjusted, 2021 dollars.
WHERE’S THE MONEY GOING?
Some of the profits generated by this flood of spending are legitimate. The Pentagon’s increasing reliance on private contractors over the past two decades, however, raises multiple questions of accountability, transparency, and effectiveness. The privatization of key functions undertaken in Iraq and Afghanistan has increased the risk of waste, fraud, and abuse, since it reduces the military’s control of activities within war zones. An extreme case of this phenomenon was Blackwater, which has undergone several transformations and is now part of the security contractor Triple Canopy. In 2007, Blackwater security guards opened fire on a crowd in Baghdad’s Nisour Square, killing 17 civilians in the process. Another security contractor, Dyncorp, overcharged on its contract for training the Iraqi police, submitting false bills, and it failed miserably in its efforts to train the Afghan police. These are just two examples of the risks of privatizing work in war zones. It has also resulted in shoddy work and a diversion of weaponry to US adversaries that has put our troops at risk.
For the major arms makers, their profits over the past two decades have had less to do with activities in Afghanistan than with profitable lines of business that lie elsewhere. The same holds true for the war in Iraq. Lockheed Martin’s biggest program is the troubled but highly lucrative F-35 combat aircraft; Boeing makes transport and refueling aircraft like the C-17 and KC-46 and combat aircraft like the F-15 and F-18; General Dynamics makes tanks and ballistic missile submarines; and Northrop Grumman is building both the next generation nuclear-capable bomber and a new intercontinental ballistic missile. These are just a few of the highlights of the scores of weapons programs these firms are involved in, most of which will continue long after the wars in Iraq and Afghanistan are over.
Until the US military footprint is scaled back, there will be little hope of significant reductions in Pentagon outlays, and little hope of fully reining in the waste, fraud, and profiteering that come with excessive military spending.
This is not to suggest that the Big 5 didn’t profit from the wars. It may not have been their primary source of revenue, but the direct and indirect revenues they derived from the war still amounted to billions of dollars. For example, Raytheon trained Afghan pilots; Raytheon and Lockheed Martin produced bombs and missiles used in the air war in Iraq and Afghanistan, and General Dynamics and Lockheed Martin built armored vehicles and helicopters employed in the conflict. But the biggest beneficiaries of war spending — and the greatest source of fraud and price gouging — were reconstruction contractors like Halliburton’s Kellogg, Brown, and Root (KBR) division.
According to the Defense Contract Audit Agency (DCAA), KBR (a Halliburton spin-off that is now independent) received over $30 billion in contracts in the first five and one-half years of the Iraq war. When it was part of Halliburton — the company that was helmed by Dick Cheney prior to his selection as George W. Bush’s vice president — KBR was engaged in vastly overcharging the Pentagon for fuel, food, and other basic support services in Iraq. The company’s malfeasance not only cost untold sums of taxpayer money, but it also put lives at risk. In a particularly tragic case, the firm installed faulty electrical systems that resulted in the electrocution of several soldiers serving in Iraq. Overcharges and shoddy work didn’t stop with Halliburton. The Commission on Wartime Contracting in Iraq and Afghanistan estimated that waste, fraud and abuse in the two war zones as of 2011 had totaled $31 billion to $60 billion.
CHINA! CHINA! CHINA!
As for the major weapons makers, they will be just fine despite the winding down of the Afghan and Iraq conflicts because of the Pentagon’s talent for finding (and too often exaggerating) new threats to justify continued, massive budgets. As anyone who has heard even a few minutes of any recent Washington national security discussion is aware, the new challenge justifying $750 billion-plus Pentagon spending is China, China, China. This is true despite the fact that the US spends almost three times as much as China does on its military, has an active nuclear stockpile 13 times as large as China’s, and has capable military allies in Asia, while China has none. The real question is how best to address the challenge posed by China, and how best to cooperate with Beijing on issues like climate change and heading off future pandemics. Launching a new arms race is not the answer.
Finally, the end of the Afghan war will not in and of itself change the US policy of global military reach, underscored by its possession of 11 aircraft carrier task forces, 800 overseas military bases, and counterterrorism operations in dozens of countries. Until the US military footprint is scaled back, there will be little hope of significant reductions in Pentagon outlays, and little hope of fully reining in the waste, fraud, and profiteering that come with excessive military spending.
William D. Hartung is the director of the Arms and Security Program at the Center for International Policy.
“The Long Tunnel” is a series of articles reflecting on the impact of September 11 and how it has shaped the world we live in today. You can read more in the series here.
