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money, ukraine, weapons

War in Ukraine Spells Bounty for Weapons Contractors

War isn’t devastating for weapons manufacturers, and provides the Pentagon another excuse to increase the budget.

Words: William D. Hartung
Pictures: Jake Allen

The scenes from Ukraine are heart-rending — civilians killed by Russian bombs, families taking shelter in subway stations, one million refugees on the move, and more. But there’s one group that stands to benefit handsomely from the conflict, no matter how it plays out from here: American weapons contractors.  

The Wall Street Journal summed up the arms industry’s bright new prospects in a Mar. 1 headline: “Ukraine Crisis Stokes Defense Industry Shares.” The article notes that Lockheed Martin shares have hit an all-time high. Meanwhile, BAE Systems, Europe’s largest defense contractor, saw its stock value rise 25% in the wake of promises by Germany and other European states to sharply increase their military budgets. 

There are billions to be made on a new military buildup in Europe, from the recent offer of $6 billion worth of General Dynamics M-1 tanks to Poland to reports that Germany may consider purchasing Lockheed Martin’s F-35 combat aircraft. And this is on top of the costs of sending large shipments of anti-tank and anti-aircraft systems to Ukraine. But the value of contracts tied to the current crisis in Ukraine may be small change when compared with an even larger potential boon for the industry — locking in big increases in the Pentagon’s already massive budget for years to come. 


Even before the Russian invasion, defense industry leaders were expressing confidence that the crises in Ukraine and beyond would pad their bottom lines. Gregory Hayes, the CEO of Raytheon Technologies, put it bluntly in an earnings call with the company’s investors:

“…[W]e are seeing, I would say, opportunities for international sales. We just have to look to last week where we saw the drone attack in the UAE, which have attacked some of their other facilities. And of course, the 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.”

Raytheon makes the Javelin anti-tank missiles that are being sent to Ukraine (in a joint venture with Lockheed Martin) that have already become a symbol of Ukrainian resistance as it has helped them hold their ground against Russian forces. Raytheon also makes the Stinger anti-aircraft missiles that have been approved for delivery to the Ukrainian military. 


As I note in a new issue brief on Pentagon spending and strategy released last week by the Quincy Institute, spending on national defense, which was authorized at $778 billion by Congress in December 2021, is substantially larger than the levels reached at the peak of the Korean or Vietnam Wars, or at the height of Cold War spending in the 1980s.  

One impact of the Ukraine crisis will be a tendency to look the other way at the wasteful spending and misguided strategy that has led to overspending on the Pentagon in the first place, on the dubious theory that in a time of crisis more is always better.

Given that the Biden administration has wisely declared that it will not send US troops to fight Russian forces in Ukraine — a move that could risk a nuclear confrontation — the costs of moving some US troops to Eastern Europe to reassure allies there along with continuing arms aid to Ukraine should be able to be accommodated by reallocating some of the more than three-quarters of a trillion dollars that will be provided to the Pentagon this year alone. But don’t count on it. The Biden administration has already requested that Congress pass an emergency supplemental that will include billions for moving US troops to Europe and sending more arms to Ukraine.  And the administration has made it clear that this may not be the last such request.  

In addition, House Armed Services Committee Chair Adam Smith has suggested that the regular Fiscal Year 2023 budget for the Pentagon and related activities could also be raised substantially from the more than $800 billion figure that some Pentagon officials had suggested would be the administration’s proposal prior to the Russian invasion of Ukraine. Pentagon spending hawks are crying out for long-term increases to address what they describe as the twin threats posed by Russia and China. If they are successful, this is where the real money that could fuel the arms industry’s profits and revenues will come from — not just now, but for years to come.

The other impact of the Ukraine crisis will be a tendency to look the other way at the wasteful spending and misguided strategy that has led to overspending on the Pentagon in the first place, on the dubious theory that in a time of crisis more is always better. Of particular concern is the possibility that the Russian invasion and the nuclear threats emanating from President Vladimir Putin will further reduce the prospects for reconsideration of the Pentagon’s three-decades-long plan to build a new generation of nuclear weapons at a cost of up to $2 trillion. Advocates of a more sensible and effective defense policy should nonetheless persevere in opposing the nuclear plan, especially the proposal to build a new generation of land-based missiles, which former secretary of defense William Perry has described as “some of the most dangerous weapons in the world” because a president would have only a matter of minutes to decide whether to launch them on warning of an attack, greatly increasing the risk of an accidental nuclear war based on a false alarm.


Pressing for a Pentagon budget that increases our security rather than just padding the profits of the arms industry will be particularly challenging in the months and years ahead. But on a planet threatened by pandemics, climate change, growing inequality, racial and economic injustice, and an attack on the foundations of democracy itself, it is fair to ask whether throwing more money at the Pentagon is the best route to making us safer. 

The arms industry, however, will most certainly disagree with this assessment. In fact, we should expect the arms industry to press for an approach that says otherwise, not necessarily by directly challenging a new approach to security, but by using its lobbying power — including $117 in lobbying expenditures and over 700 lobbyists in 2021 alone — and the force of pork-barrel politics in an effort to push Pentagon spending to the highest levels the political market will bear.

William D. Hartung is a senior research fellow at the Quincy Institute for Responsible Statecraft.

William D. Hartung

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