Guns and Roses: The war-mongering peace paradox

Peace means having a bigger stick than the other guy

Howard Stark

The above line is from a movie based on aliens and magic but still has a strong relevance to the world we live in today. The world is no longer divided into the factions of the East or West, capitalist or socialist, communist or democratic but rather on geopolitics and economic might. It has become a multi-polar world. It is not ‘he, who controls the dollar, controls the world’, but is the state or individual who can capitalize and extract the most wealth from any situation – the good, the bad, or the ugly. The world is neither utopian nor dystopian, but it seems humanity is progressing towards the latter.

Broken window fallacy

They say there are no winners in a war, but I say there are. Being in a state of war or an impending war initiates an economic cycle, which creates wealth but not in sectors that lead to economic development. This is called the ‘broken window fallacy’, a concept that highlights the unseen costs behind a seemingly positive cycle of events. For example, a kid accidentally breaks the window of a shop while playing with a ball. Now this may seem like a good thing from the repairman’s point of view, who would come and replace the glass and get monetary benefit, which he might use to purchase something else. The shopkeeper too gets a brand new window which might enhance the aesthetics of his shop which might attract customers and increase his yield. All these are perfect indicators of a healthy economy, ie:- flow of currency, but is that the case? The amount utilized for repairing the window could have been used for shop advertisements or buying new equipment. This lost opportunity is called the opportunity cost, something all of us have learned in school. The broken window fallacy emphasizes the fact that destruction doesn’t create wealth, it just redirects it. That’s what is going to be the crux of this article.

Israel-Gaza

Let’s start with the current hot topic, the Israel – Gaza conflict. All of the seven crossing corridors, including the Rafah crossing have been shut and are now in control of Israel. This has not stopped a firm called ‘Hala Consulting and Tourism Services’ from capitalizing on this situation. It provides transfer services to and from Egypt and Gaza and reportedly charges $5,000 for an adult transfer and $2,500 for a child. Several reports have suggested that they have earned over $118 million with daily earnings of $2 million. Despite the media scrutiny and international condemnation, the operations still continue in the name of humanitarian assistance. Before the war, they charged $350, but the price has now increased more than 14-fold. This firm is controlled by an Egyptian businessman and tribal leader Ibrahim al-Organi who is a close aide to Egyptian president Abdel Fattah el-Sisi, leader of a country that is currently in an economic downtrend and in dire need of funds. Although Egypt has denied war profiteering, it clearly does not seem the case; the dots can easily be connected.

Wagner and Africa

Another example would be the Wagner group, a Russian state-funded private militia that was actively in the news up until 2023 (until the death of Yevgeny Prigozhin) due to the Ukraine conflict. It grew in prominence in around 2014 during the Crimean annexation and the rise in Donbas liberation operations. Wagner has earned a lot of funds from the central Africa region, especially the Sahel region which has recently seen multiple coups in the likes of Mali, Niger, Burkina Faso, and Sudan. Wagner has acted as the extended arm of the Russian state and has carried out several activities such as resource extraction, gems and precious stone trade, arms supply, and bounty operations to name a few in the name of intergovernmental contracts for providing assistance (some contracts even including the military force of the group).

The entire continent of Africa is rich in resources such as gold (40% of the world’s gold reserves), chromium and platinum (90% of the world reserves), cobalt, nickel, and diamonds just to name a few. Adding cheap labor and unstable governments to this provides bigger and stronger countries to exert influence. World War two is a good example to showcase how the Axis and the Allies fought over the entire northern and eastern Africa to create puppet states in the name of harboring peace and prosperity, but the real reason was the extraction of resources and having strategic influence over the other. Major countries now exert influence by providing aid in the form of loans and investments (Hambantota and the CPEC projects being the best recent examples) thus securing their influence over their preferred government. Stronger countries have influenced regime changes in this way by covertly aiding the military of the targeted country. And all this is done in the name of peace and prosperity.

Françafrique

Often spoken about is British colonialism and its impact, but in the past few years, there has been another silent revolution taking place in several countries previously ruled by France, especially in Africa. French colonialism’s impact and influence can still be seen today but many nations seem to be decoupling from it. Francafrique refers to the sphere of influence of France over its former colonies.

CFA Franc countries (both West African CFA and central African CFA), a type of currency used by many African countries follow the fixed exchange rate system which is fixed to the Euro, and the member countries deposit half their foreign exchange reserves in the French treasury. Since the CFA is pegged to the Euro, it restricts the member countries’ sovereignty, making it entirely dependable and at risk with the monetary policy of the EU. French government uses this as an advantage to control its trade with the Françafrique nations. Although previous French president François Hollande made a commitment to reduce the French footprint in Africa, the commitment has not gained much traction. It can be said that France’s commitment to this multilateralism is genuine, but it is not absolute, meaning that the French government and policymakers do not shy away from operational unilateralism if conditions demand so, which would then help in carrying out robust and swift military actions whenever required, as was the case in 2014 during Operation Serval (request of the government of Mali to send French troops to oust the Islamic militants in north Mali). 

The current sentiment in these nations does not look good. Coups in Mali, Burkina Faso, and Niger have led to the French troops exiting from those nations. Anti-France sentiment is on the rise. The most recent example is the nation of Senegal where Prime Minister Ousmane Sonko raised the possibility of closing French military bases in this West African country.

Having a military presence in Africa provides France a justification for having a permanent seat in the Security Council. Emmanuel Macron wants to make France have a prominent position in this multi-polar world. Although the country may be losing out in the economic growth rate, its military is still powerful being the country with the second highest (Wezeman, 2023) military exports as of 2023, and this power helps them influence their interests in these African nations, it helps them to perpetuate and safeguard durability of favorable regimes.

Another major example, not from Françafrique but under French influence would be of the Pacific island territory of New Caledonia. It is still a colony of France and is not sovereign, despite being literally halfway around the world from France. It is no secret that the Indo-Pacific is now a major flashpoint in global geopolitics. Having a military presence in Oceania provides France a strong foothold in this region. New Caledonia is the world’s 4^th largest producer of Nickel, which is used in car batteries. There have been increased protests due to an idea of electoral reform which would lead to the indigenous population of New Caledonia becoming a minority. The success of these protests would undermine France’s authority in this region.

The US in Afghanistan

The United States has played a big role in arms trade over the years. Before entering World War 2, the United States made a profit by selling arms and ammunition to the Allies. Companies like Ford switched their gears from being automobile manufacturers to war production. The company famously mass-produced the B-24 Liberator bomber aircraft (Trainor, 2019). Even after World War 2, the country has been actively profiting from the arms trade. Military Funding, proxy wars, and regime changes were a few factors that defined the Cold War era. This era has been marked by regime changes, the fall of empires, creation and destruction of political leaders.

From 2001 to 2021, it is estimated that the US spent around $ 2 trillion (Bateman, 2022) on its war in Afghanistan. After the 9/11 attacks, the United States waged a war against Al-Qaeda and the Taliban in Afghanistan intending to wipe it out completely. What followed was 20 years of death and destruction.

The aim was to prevent countries from becoming satellite states (as was the issue during the Cold War) or harbingers for any future attack. Instead, it became a full-blown economic cycle with the factors of demand and supply being controlled and created as needed. This war led to the displacement of refugees, food insecurity, the economic collapse of Afghanistan, and the devastation of healthcare, just to name a few. The United States was able to profit from all the factors mentioned above. A few examples are mentioned below:

1. Robert J. Stevens- CEO Lockheed Martin (2004-2013) – His annual compensation (CTC) went from $2 million a year to $31 million (CTC) over the years due to the war (Martin, 2000) (COMMISSION, 2008). To put it in perspective, Lockheed Martin got contracts worth $ 75 billion in 2020 whereas in the same FY21, the entire State Department ( their foreign ministry ) had a budget of just $ 44 billion (Congressional Research Service, 2021)
2. Stephen Orenstein- Owner Supreme Group- Got contracts over $5.5 billion to provide food to the military. He grossly overcharged his products and created fake subcontracting companies to get more contracts. His business increased 50-fold. (Contracting to feed U.S troops in Afghanistan, 2013 SUBCOMMITTEE ON NATIONAL SECURITY).
3. Erik Prince – Former US Navy SEAL- Founder Blackwater Security (Private Military Contractor)-PMC in simple terms are soldiers for hire. He trained military and security forces and basically privatized a portion of the military. The Pentagon hired Blackwater personnel to provide security to US compounds and assets in Afghanistan. This company got over a billion dollars of contracts over the years.
4. David Packouz and Efraim Diveroli – aka ‘War Dogs’ were 25 and 21 years old when they started an ammunition company. They got contracts worth over $300 million to provide ammunition but what they were actually doing was buying cheap ammo from Albanian mercenaries who in turn had procured it from China and then sold it to the US government · (FindLaw, 2015).

Now these above examples are just some of the high-profile cases that took place. There were even some Afghans who benefitted from smaller contracts. Local people were used as translators and infiltrators, and some were even trained in cyber security. The business of war was booming and creating a huge bridge between the benefactors and the affected. The US Congress does not prevent its congressmen from having a stake in these companies. The laws and directives that are then passed are affected and influenced by these same people who in turn benefit from these orders. 

Russia – Ukraine conflict

The Russia-Ukraine conflict is no exception. This conflict will eventually boil down to which side can sustain the longest. With the issue of the Nord Stream pipeline, European and US oil giants have stepped up. The giants in this field, the big five fossil fuel companies (Shell, BP, Chevron, ExxonMobil, and Total Energies) have paid more than $200 billion to the shareholders (Witness, 2024) ever since the invasion of Ukraine. UK-based Shell and BP combined have made 75 billion pounds. Chevron and ExxonMobil have made $136 billion and Total Energies has made €15 billion payout to the shareholders (Witness, 2024).

The defense industry has seen a boom during this period. This geopolitical conflict underscores the growth of the defense industry aiding industrial growth. Lockheed Martin has been one of the biggest winners. Its HIMARS has been used extensively in Ukraine which has resulted in more orders by the US government leading to Lockheed Martin increasing its workforce in the Camden, Arkansas facility by 20% to meet the demand. (Berzina, 2023). Its sales and profits have also increased. Similarly, General Dynamics has also decided to build a new production facility in Mesquite, Texas.

There has been demand for the F-16 jets and the Patriot missiles. Germany has been the second-largest military aid contributor to Ukraine and third largest overall (military, humanitarian, and financial aid.) (Pietro Bomprezzi, 2024). Its biggest and most significant contributor has been the Leopard tanks and the MARDER infantry fighting vehicles (Bundesregierung, 2024). The United Kingdom has also provided NASAMs (National Advanced Surface to Air Missile) for air defense along with several other systems and ammunitions (Mills, 2024). On the other side, Russia’s economy seems to be growing at a good rate.

This list can go on and on. Military aid, financial aid, and humanitarian aid have been flowing continuously and agreements have been made by different countries and their government to continue sending these. There is no doubt that to compensate for this decrease in the stockpile from their own inventory, countries order more of these from the respective manufacturers. More orders equal to more revenue equals more profit, basic logic, but, that’s not what we are going to focus on here. Unlike the Israel – Gaza issue, where everyone is working towards an immediate ceasefire, the Ukraine conflict seems to be dragging on. Orders/commitments have been made to provide military aid and equipment that would be provided in the future (a major example being the F-16 jets). This means that the governments are no longer eager to put an end to the hostilities and that this conflict has become a war of sustenance where the winner would be determined by the side that sustains and holds ground logistically and economically till the end.

Conclusion

A lot of examples and case studies can be examined and debated. From Ford to Rolls Royce to Boeing to Raytheon and many more. It is not just the traditional war that is creating business but elements such as cybercrime and artificial intelligence have entered this field. Private companies such as SpaceX are launching rockets filled with satellites that can block the internet service at war zones, thus preventing reliable communication (as in the case of the Ukraine conflict). SpaceX too has contracts with the US government.

‘Defense is the best offense‘, a saying which is very popular in sports is being used in a different sense in the military. Manufacturing of ships, submarines, tanks, aircraft, etc is being given out as contracts, which in turn creates demand for its parts, which in turn is given out as contracts to a third company, which again gives contracts to a fourth company for the raw materials. This is a never-ending cycle, which in the end drains important resources that could have been used elsewhere, as we discussed in the beginning (the broken window fallacy). 

The biggest factor affecting this war economy is the ‘ideological push’. We seem to be going back to the Cold War era. The growth and establishment of right-wing parties in the West has put a halt on this ideology but a perfect utopian world is still far from reality and nearly impossible. Business in the war economy is now a guaranteed money-maker bet, combine this with the ‘ideological push’, and we get an endless cycle of military manufacturing. 

The business of military manufacturing is ever-growing and ever-evolving. Individuals and governments always get their way by saying it is for the greater good. The same wooden stick which is used to build houses can be sold and used as a weapon. It’s the perspective of the buyer and seller to use it in whichever way they want and exploit it in whatever way possible.

---

 Bibliography

1. CONTRACTING TO FEED U.S. TROOPS IN AFGHANISTAN: HOW DID THE DEFENSE. (2013 SUBCOMMITTEE ON NATIONAL SECURITY). Retrieved from https://www.govinfo.gov/content/pkg/CHRG-113hhrg81829/html/CHRG-113hhrg81829.htm
2. Bateman, K. (2022). United States Institue for Peace. Retrieved from In Afghanistan, Was a Loss Better than Peace?: https://www.usip.org/publications/2022/11/afghanistan-was-loss-better-peace
3. Berzina, K. (2023). GMF. Retrieved from US Military Support for Ukraine is Helping Put American Industry Back on Track: https://www.gmfus.org/news/us-military-support-ukraine-helping-put-american-industry-back-track
4. Bundesregierung. (2024). Retrieved from Bundesregierung: https://www.bundesregierung.de/breg-en/news/military-support-ukraine-2054992
5. COMMISSION, U. S. (2008). Retrieved from Lockheed Martin 2008 proxy statement: https://www.sec.gov/Archives/edgar/data/936468/000119312508043460/dpre14a.htm#toc41634_54
6. Congressional Research Service. (2021). Retrieved from Department of State, Foreign Operations, and Related Programs: FY2021 Budget and Appropriations: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://sgp.fas.org/crs/row/R46367.pdf
7. FindLaw. (2015). Retrieved from DIVEROLI AEY v. UNITED STATES (2015): https://caselaw.findlaw.com/court/us-11th-circuit/1715373.html
8. Martin, L. (2000). Retrieved from Notice of 2000 Annual Meeting of Stockholders April 27, 2000, Proxy Statement: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://sgp.fas.org/crs/row/R46367.pdf
9. Mills, C. (2024). House of Commons Library. Retrieved from UK Parliment: https://com monslibrary. parliament.uk/research-briefings/cbp-9477/
10. Pietro Bomprezzi, I. K. (2024). Kiel Institute. Retrieved from Ukraine Support Tracker: https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/
11. SENATE HEARING. (2007). Retrieved from COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM HOUSE OF REPRESENTATIVES: https://web.archive.org/web/20110818015432/https://house.resource.org/110/org.c-span.201290-1.1.pdf
12. Trainor, T. (2019). Assembly. Retrieved from How Ford’s Willow Run Assembly Plant Helped Win World War II: https://www.assemblymag.com/articles/94614-how-fords-willow-run-assembly-plant-helped-win-world-war-ii
13. Wezeman, P. D. (2023). Stockholm International Peace Research Institute. Retrieved from TRENDS IN INTERNATIONAL ARMS TRANSFERS, 2023: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.sipri.org/sites/default/files/2024-03/fs_2403_at_2023.pdf
14. Witness, G. (2024, February). US & European big oil profits top a quarter of a trillion dollars since the invasion of Ukraine. Retrieved from https://www.globalwitness.org/en/press-releases/us-european-big-oil-profits-top-quarter-trillion-dollars-invasion-ukraine/#:~:text=In%20total%2C%20Shell%2C%20BP%2C,to%20keep%20the%20lights%20on.