Who profits from war?

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In the wake of recent ally-airstrikes against Syria and the prospect of a new cold war, we look at the role the arms industries play in a variety of economies across the globe. Everyone knows, war is big business. So, who profits from war?

Where are the most successful arms manufacturers based? Whom do they supply their arms to? Can governments turn a blind eye when it comes to the supply of arms to oppressive regimes?

Have affluent countries contributed to an increase in wars because of their arms supplies? Is the arms industry so important and economically essential that war becomes a plus for the economies in their country of origin? Is it in the interest of some governments to covertly promote war for profit?

How do western-manufactured arms end up in the hands of terrorists? Is there a duty on the general public to highlight these issues and demand change? Do we need to regulate the arms industry more stringently to prevent unnecessary wars?

In this article, we aim to shed some light on these issues and answer the question, who profits from war. This is a contentious issue that requires far more debate than it has seen up until now.

Arms manufacturers have seen a significant rise in demand in recent years

New figures released by the Stockholm International Peace Research Institute in February 2017, show that the global arms industry has experienced significant growth, most notably, since 2003. An increased demand from Asia and the Middle East has allowed weapons manufacturers to grow their businesses significantly.

The increase shown on the above chart represents an 8.4 percent growth between 2007 and 2011 and between 2012 and 2016. The five-year period from 2012 to 2016 saw the biggest increase in weapons transfer in a five-year period since the end of the Cold War. This surge is down to an increase in demand from Asia and the Middle East.

What economies rely on the arms industry?

According to Sipri, 74 per cent of the total arms volume originates in the United States, China, France, Germany, and Russia, but a number of other countries also boast billion-dollar arms industries.

What nations buy the arms?

Asian countries and states in the Middle East are the biggest arms importers. India, in particular, has increased its arms import volume significantly in the past few years. In fact, between 2012 and 2016 India increased its imports by 43 per cent.

China has begun replacing imports with home-produced weapons. As a result, India now imports a far greater arms volume than China and Pakistan. During the same period, Vietnam also markedly boosted its arms imports. In 2017, Vietnam was the 10th biggest arms importer in the world.

Middle East states have also grown their weapons import volumes. Between 2007 and 2011 and 2012 and 2016 respectively, states in the region added 86 per cent to their previous arms import volumes. Imports to the Middle East now make up 29 per cent of the global volume.

Saudi Arabia also bolstered its imports during that period. In fact, it saw an increase of 212 per cent. Qatar boosted its arms imports, even more, adding 245 per cent to its previous arms imports volume. States in the Middle East have been sourcing most of their imports in Europe and in the US.

46 per cent of all arms imports to Africa were destined for Algeria during the same period.

Only Europe and the Americas saw a significant decrease in arms imports, so Sipri statistics show. However, imports to Mexico increased by 184 per cent.

Government revenue and the ethics of arms manufacturing and supply

The multi-billion global arms industry provides governments across the globe with multiple sources of income. For starters, national purses are filled with sales tax. In addition, arms producers provide plenty of employment, paying out significant amounts of money on income tax and secondary wage costs. Supporting industries such as shipping companies also benefit, adding further financial gains for governments. So, what are governments doing to regulate arms manufacturers and exports?

The UK example

Let’s take the UK. Here like in many arms-exporting countries, arms manufacturers and exporters require an operating license. However, it appears that the controls in place may not be adequate.

According to an article in the Independent published in 2015, the UK sold more than £5 billion of arms to countries on the UK government’s blacklist for human rights abuses. The parliamentary Committees on Arms Export Controls questioned whether government ministers were doing enough to prevent arms ending up in authoritarian regimes.

Two types of licenses are available. SIELs (Standard Individual Export Licences) and OIELs (Open Individual Export Licences). SIELs are specific to a limited shipment, whereas OIELS allow an unlimited supply to one destination in a set five-year period.

Holders of an OIELS do not have to disclose the ‘end recipient’ immediately. According to the same article in the Independent, an increase in the issuing of OIELS has been observed, leading to fears of a lack of transparency when it comes to arms exports and the end recipients in particular.

The UK government also has an embargo and restrictions in place on some countries including North Korea, Armenia, and on a significant number of other countries.

Still, the British arms industry was estimated to be contributing 0.27 per cent to the GDP in 2015, even though some experts have pointed out that the British taxpayer may, in fact, be subsidising the arms industry mainly by paying for relevant research and development projects, so the Guardian reports.

In recent months, one organisation continuously highlighting the issues and campaigning against the global arms trade, the UK-based Campaign Against Arms Trade has been especially vocal in its opposition to the supply of weaponry to Saudi Arabia.

The Saudi Arabia question

Last year, the Guardian reported that during the first half of 2017, the UK sold £1.1 billion worth of arms to Saudi Arabia in the first half of the year alone. Saudi Arabia reportedly purchased ballistic shields, body armour, sniper rifles, aircraft components, air-to-air missiles, and anti-riot gear.

In March 2018, Theresa May and Mohammed bin Salman unveiled a partnership plan which has been condemned as a ‘national disgrace’ by many. Since Brexit, the UK government has been looking at new export expansion options and considers deals such as this as providing significant export opportunities post-Brexit. However, human rights activists have been outraged because of Saudi Arabia’s actions in Yemen.

According to Lloyd Russell-Moyle’s opinion piece published in the Guardian late last year, the UK arms export control regime outlines that the government must not licence arms to oppressive, human rights-violating regime. In addition, Russell-Moyle explained that the UN has said that the Arab nation is targeting Yemeni civilians.

According to the Yemen Data Project, thousands of raid have hit civilians sites. This has led many to believe that British-manufactured arms could be used to target schools, hotels, hospitals and many other non-military sites. This, of course, would be contrary to British law, the Guardian reports.

After the unveiling of the partnership deal, numerous MPs voiced their vehement opposition, including Labour MP Kate Osamor, the shadow international development secretary.

“Over 22 million Yemeni lives depend on permanent, full access for aid, food and fuel in Yemen. Instead, she (Theresa May) has won no concessions and simply handed on a plate to Saudi Arabia a new humanitarian partnership and an endorsement from DfID [the Department for International Development], the world’s best aid agency. It will whitewash Saudi Arabia’s reputation and role in the war, and it is a national disgrace.”

Head of policy and government affairs at Amnesty International UK, Allan Hogarth, also expressed his concerns:”It is not good enough for the UK to provide humanitarian aid on the one hand and supply the weapons that fuel a humanitarian crisis on the other.”
Since 2014, Yemen has been embroiled in civil war between government forces and Houthi rebels. Saudi Arabia has been supporting the Yemeni government. The humanitarian disaster in Yemen continues.

How do terrorist organisations get arms?

Conflict Armament Research is an organisation who visits war zones to investigate where groups like IS get their weapons from.

Final Thoughts

So, there you have some answers to the question, who profits from war. The manufacture, sale, and supply of arms appears profitable indeed, however, not at an affordable humanitarian cost.

5 thoughts on “Who profits from war?

  1. This is a really interesting take on the profits of war, which, at the end of the day, is what most wars are about in one form or another.

    That bar graph you have included here really illustrates the point well, and no surprise the US is way out on top when it comes to war profits.

    You certainly know your stuff on this subject and your article is extremely well researched. I enjoyed reading it.

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