Russia’s Invasion Set to Create Weapons Industry Boom

NATO success raising military spending coincided with escalating Ukraine tensions

By Dru Oja Jay

The Russian Federation government’s decision to order an illegal invasion of Ukraine has created major military escalations, rapid realignments resembling a new cold war, and a bonanza for arms dealers.

Canada has ramped up troop presence along Russia’s western border. Canada committed 1,260 soldiers, has an additional 3,400 military personnel ready to deploy, and has signaled its approval for Canadian citizens to join the Ukrainian military. The US, now with close to 100,000 troops in Europe, is ready to send more.

Ukrainian leaders, while actively lobbying NATO countries to escalate their involvement, have also asked for a no-fly zone, which would put NATO war planes forces in direct conflict with Russia transports, fighters and bombers. So far, the US and others have declined.

As troops build up, arms shipments are flowing. 

On Monday, Canada announced a third shipment of military hardware to Ukraine.

“I think we may be seeing just the beginning of a lot of weapons transfers toward Ukraine, from Canada and other weapons producers,” Cesar Jaramillo, the Executive Director of Project Ploughshares, told The Breach.

“Canadian equipment is already there,” said Jaramillo. “everything from the sensors that are that are used by drones in Ukraine, to anti-tank weapons that were recently announced… machine guns, pistols, rounds of ammunition, sniper rifles, and things of the sort.”

The EU has already promised $500 million in military aid, and plans are in the works to supply as many as 51 of the Soviet-era military jets that Ukraine’s air force currently uses.

Sweden is breaking with a long-time commitment against sending arms to active conflict zones by shipping thousands of anti-tank weapons to Ukraine. Germany has broken its own “pacifist” stance, announcing over $100 billion in new military spending. 

Germany’s reversal unlocked other transactions, like Estonia’s transfer of artillery to Ukraine. The small Baltic nation also needed approval for the transfer from Finland. Helsinki also broke with decades of neutrality to approve the shipment, and is now debating NATO membership, with a recent poll showing a drastic swing in favour of NATO membership.

In Washington, Joe Biden has asked Congress for an additional $6.4 billion in economic and military aid to Ukraine.  

And while no major announcements have yet been made, at least one Liberal MP in Ottawa is suggesting increases in military spending.

The International Arms Trade Treaty, which regulates international trade in conventional weapons, came into force in 2014. But it’s not clear to experts like Jaramillo that the terms of the treaty are being respected.

Speaking from Waterloo, Ontario, Jaramillo said that transfers are occurring with unprecedented speed, but circumstances do not exempt any country from conducting the required risk assessments. “Canada is obligated legally to conduct a risk assessment for every transfer, and we are concerned that given the expedited nature of the recent ones, that Canada is not properly following its obligations under the Arms Trade Treaty.”

Though the outcome of the invasion is far from clear, a slew of new windfalls for weapons manufacturers seems guaranteed. Driven by Berlin’s massive increase in arms spending, key “defence” stocks rose by as much at six per cent on that announcement alone.

On an earnings call in late January, Raytheon’s CEO noted “tensions in Eastern Europe… are putting pressure on some of the defense spending… So I fully expect we’re going to see some benefit from it.” On the same day, Lockheed’s CEO made similar comments to investors, intoning “there’s renewed great power competition that does include national defence and threats to it.”

Weapons makers, policy drivers

Global military contracting is a multi-trillion dollar business, and a lobbying powerhouse. 

Of the $14 trillion spent by the US government on the military since 2001, a study from Brown University found, about a third went to contractors. Tens of billions annually flow to the world’s largest weapons manufacturers like Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman.

These companies, in turn, spend liberally to shape government policy.

The Brown University study calculates that those benefiting from US military contracts have spent $2.5 billion on lobbying. They employ a small army of lobbyists, including an estimated 700 on Capitol Hill alone.

In Ottawa, arms dealers are also a highly effective political force. An outsized presence on Parliament Hill, they employ a phalanx of retired military commanders, backed by highly-trained former bureaucrats familiar with the inner workings of government. The total number varies, but registries show hundreds.

As one Parliament Hill observer put it, “you can’t walk around in Ottawa these days without tripping over some arms dealer on Sparks Street.” And lobbyists don’t stop at lobbying for military contracts; rather, they seek to shape the policy priorities to fit the wildly expensive equipment they are hawking.

Canada’s “defence industry,” as the government calls it, accounted for $10 billion in sales in 2016, employing 60,000 people.

NATO: an engine for military spending and provocation

The repeated—and repeatedly broken—promises not to expand NATO eastward have been discussed at length. 

What is less widely understood are the intertwined NATO roles of pushing for increases in military spending in all its member states, and a pattern of provoking Russia that dates back more than a decade.

In principle, NATO countries have agreed to a target of spending two per cent of GDP on their respective militaries. Today, only a third of NATO nations spend that amount.

That wasn’t always the case. Prior to 2014, NATO records suggest that the average military expenditure was actually declining, and only three countries (the US, Greece and United Kingdom) reached the two per cent threshold.

But 2014 marked the start of the Western-sponsored EuroMaidan uprising in Kiev that overthrew a Putin-allied president in Ukraine, the opening shots of a civil war in Eastern Ukraine, and Russia’s annexation of Crimea.

Starting in 2015, average military expenditures by NATO members changed course, and has increased each year.

Whatever the role of “defence” lobbyists in setting foreign policy stances, it’s unquestionable that the arms industry’s political influence is enormous, and that it has benefitted from escalating conflict.

Decades of escalating tensions with Russia

NATO’s expansion—and the attendant broken promises—are often cited as the crux of its provocation of Russia, but the evidence extends far beyond that.

In April 2008, the NATO heads of state met in Bucharest and declared, among other things, that they “welcome” Ukraine’s and Georgia’s “aspirations” for membership in NATO. “We agreed today that these countries will become members of NATO,” the statement declared. 

A classified cable from a few months earlier reveals diplomats were actively aware of the effect of this move on Russia. Written by then-US Ambassador to Russia William J. Burns and made public by Wikileaks, the memo reads in part:

“Experts tell us that Russia is particularly worried that the strong divisions in Ukraine over NATO membership, with much of the ethnic-Russian community against membership, could lead to a major split, involving violence or at worst, civil war. In that eventuality, Russia would have to decide whether to intervene; a decision Russia does not want to have to face.”  

A portentous statement in light of recent events. (In early 2021, President Joe Biden named Burns Director of the Central Intelligence Agency.)

The same day NATO’s Bucharest statement was released, the New York Times reported that its wording was actually a compromise carefully chosen to paper over disagreements. “Germany and France have said they believe that since neither Ukraine nor Georgia is stable enough to enter the program now, a membership plan would be an unnecessary offense to Russia, which firmly opposes the move,” the Times reported.

In other words: in 2008, the US knew that advancing Ukraine membership in NATO would inflame tensions with Russia and that membership was extremely unlikely to be accepted by two of the three most powerful members in Europe. Knowing those two things, they used considerable diplomatic efforts to portray imminent membership.

In the years to come, Ukraine would be at the receiving end of escalating tensions with Russia, knowingly stoked by the US, while receiving none of the protection of NATO membership.

With files from Dawn Marie Paley.

Dru Oja Jay | Dru Oja Jay is the Publisher of The Breach. He was the Publisher of the Dominion paper and a co-founder of the Media Co-op. He is the co-author, with Nikolas Barry-Shaw, of Paved with Good Intentions: Canada’s development NGOs from idealism to imperialism.

This article was published on March 2, 2022, at The Breach.