Alex Lo
SCMP Columnist
My Take
by Alex Lo
My Take
by Alex Lo

China a godsend for the US arms industry

  • With the end of the failed ‘forever war’ in Afghanistan, the US military-industrial complex needs to find another struggle to further enrich itself, and China now fits that bill to a T

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” - President Dwight D. Eisenhower, farewell address, 1961

The “potential” of the military-industrial complex for mischief that Eisenhower warned against in his famous speech is now actual; indeed, it has been for some time now. Much of the “war on terror”, including the occupations of Iraq and Afghanistan, have been a gravy train for private contractors and arms makers. “The Forever War” may not have made America and Americans safer, but it has made the military-industrial complex much richer and more powerful than ever.

But even a forever war must come to a close, when its utter failure has become so obvious for the world to see. And so, another forever struggle needs to be found. China, unfortunately for the Chinese and perhaps the rest of the world, now fits that bill to a T.

If there is any doubt about the claims I have made so far, just read the latest report, “Profits of War”, put out by Brown University’s Watson Institute for International and Public Affairs and the Centre for International Policy. It’s shockingly eye-opening.

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Since the start of the US war in Afghanistan in 2001, the Pentagon has been handed a total of more than US$14 trillion, one-third to one-half of which went directly to defence contractors. That’s the total Pentagon expenditures for all purposes since 2001, which include the oft-quoted US$2 trillion spent on Afghanistan.

“Corporations large and small have been, by far, the largest beneficiaries of the post-9/11 surge in military spending,” the report said.

However, the Pentagon’s largesse has been highly focused: an extraordinary one-quarter to one-third of all military contracts have gone to just five major weapons contractors: Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman.

The report says: “These five companies received over US$286 billion in contracts in Fiscal Year 2019 and Fiscal Year 2020 alone. From FY 2001 to FY 2020 these five firms alone split over US$2.1 trillion in Pentagon contracts (in 2021 dollars).

“To put these figures in perspective, the US$75 billion in Pentagon contracts received by Lockheed Martin in FY 2020 is well over one and one-half times the entire budget for the State Department and Agency for International Development for that year, which totalled US$44 billion.”

Besides the Big Five, others also benefited over the past two decades. Among these are logistics and reconstruction companies such as Kellogg, Brown and Root (KBR) and Bechtel, and private security contractors such as Blackwater and DynCorp. If these weren’t American companies, they would have been called mercenaries.

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About half of the Pentagon budget of US$370 billion in 2019 went to military contractors, for both war-related and ongoing peacetime activities. The US Congressional Research Service estimates that in 2020, the spending for contractors grew to US$420 billion, which was well over half of the total Pentagon budget.

Given the democratic nature of the US government, it should surprise no one that lobbying of leading political leaders is a major preoccupation of the arms industry.

The report says: “Weapons makers have spent US$2.5 billion on lobbying over the past two decades, employing, on average, over 700 lobbyists per year over the past five years, more than one for every member of Congress.”

But who are these lobbyists?

“The majority of these lobbyists have passed through the ‘revolving door’ from jobs in Congress, the Pentagon, the National Security Council or other key agencies involved in determining the size and scope of the annual budget for national defence,” the report said.

“These revolving door hires use their connections to their former colleagues in government to advocate for their corporate employers, often to good effect (from the standpoint of the arms industry). A report by the Project on Government Oversight found that there were 645 instances of the top 20 defence contractors hiring ‘former senior government officials, military officers, Members of Congress, and senior legislative staff as lobbyists, board members, or senior executives’ in 2018 alone.”

This file photo taken on December 26, 2011 shows the Pentagon building in Washington. Photo: AFP

Of course, the revolving door swings both ways. Four of the past five US secretaries of defence came from one of the Big Five: former Trump administration secretaries of defence James Mattis (board member at General Dynamics), Patrick Shanahan (executive at Boeing), Mark Esper (head of government relations at Raytheon) and Biden administration defence secretary Lloyd Austin (board member of Raytheon Technologies).

Needless to say, the extraordinary military spending comes with a lot of waste, fraud, abuse, price gouging, corruption and profiteering. The report also offers extensive documented cases, but they are too complex, lengthy and numerous to cover in this short space; you just have to read the 23-page report yourself.

Writing in The Guardian, Linda Bilmes, a Harvard professor and former US assistant secretary of commerce observed: “Much of the US$145 billion reconstruction money was spent on questionable projects with budgets that seemed excessive, or simply could not be accounted for.”

But just like no major American bankers suffered serious financial or criminal penalties after the US housing market collapse that triggered the last global financial crisis, so no major US defence contractor has suffered any such significant consequences either.

Interestingly, the US government has gone to extraordinary lengths to catch and prosecute foreign nationals for business and political corruption. Among such cases are former Hong Kong home affairs secretary Patrick Ho Chi-ping, Chinese tech giant Huawei’s No 2 Meng Wanzhou and Venezuelan diplomat Alex Saab.

Huawei Technologies Chief Financial Officer Meng Wanzhou returns to a court hearing following a lunch break in Vancouver, British Columbia, Canada, August 18, 2021. Photo: Reuters

Many of those cases also did not necessarily involve any American interests and took place outside of US territories. The prosecution was seemingly motivated only by US global strategic interests or vendetta against particular countries or governments.

Now that one forever war has ended, the arms industry and its government will need another “forever struggle” to maintain and justify military spending that defies any decency and logic.

What to do? One word: China

The report warns: “Exaggerated estimates of the military challenges posed by China have become the new rationale of choice in arguments for keeping the Pentagon budget at historically high levels.

“The Congressionally mandated National Defence Strategy Commission … rang an even louder alarm bell about the purported threat from China and proposed 3 to 5 per cent annual growth in the Pentagon budget to address it … Nine of the 12 members of the commission had direct or indirect ties to the arms industry, a reality that no doubt had some influence over their deliberations and conclusions.”

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In short, China has been a godsend for the US arms industry.

The report concludes: “The ‘China card’ has become the argument of choice to consolidate political support for these expenditures. The most likely impact of the shift towards China will be to further tighten the grip of major weapons makers like Northrop Grumman, Lockheed Martin, General Dynamics, and Raytheon Technologies on the Pentagon budget.”

As I was finishing this column, I cranked up Black Sabbath’s classic, War Pigs: “Generals gathered in their masses/Just like witches at black masses/Evil minds that plot destruction/Sorcerer of death’s construction … As the war machine keeps turning/Death and hatred to mankind/Poisoning their brainwashed minds.”