Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Keep CounterPunch ad free. Support our annual fund drive today!

Profits for the Economic Club: How US Military Spending Benefits the Few


In his January 2016 State of the Union Address, President Obama smugly declared that “We spend more on our military than the next eight nations combined,” which was a startling and repulsive boast.  What is less surprising is the Pentagon’s decision to refocus military spending, thus boosting profits for military industry companies.

Then on February 2 Obama’s Defence Secretary Ashton Carter gave a speech on defense affairs at the Economic Club in Washington, which is proud of the fact that it provides “a forum for prominent business and government leaders who have influenced economic and public policy both here and abroad. Members represent over 600 businesses and organizations [in Washington, DC] that are at the forefront of the private sector economy.”

Having no sense of humor, Mr Carter would fail to see the wonderful irony in choosing that location to define his priorities in national military affairs,  but its significance didn’t escape the financial market’s wheeler dealers, and values of defense industry corporations received a hike all round.

In his speech Carter said that “the Pentagon plans to spend about $2 billion over the next five years to buy more Raytheon Company Tomahawk missiles and upgrade their capabilities, bringing the inventory of the missiles to above 4,000.”  At midday on February 2, Raytheon shares stood at 123.47.  By 4 p.m. next day they had increased to 128.07.

After his comforting chat to the Club of “prominent leaders” of military-focused commercial enterprises, Reuters reported that Mr Carter “flew to the Naval Air Weapons Station China Lake in California to get updates on new high-end weapons being developed and tested there, including precision Long Range Anti-Ship Missiles built by Lockheed Martin Corp. He said the [defense] department would spend nearly $1 billion over the next five years to buy the new missiles.”

The effect of the announcement on Lockheed’s shares was intriguing. At 10 a.m. on February 2, just before the Carter statement, they were at 208.87 — and by 2.30 p.m. on February 3 they had gone up to 213.53.   It’s interesting to reflect on who might have made a profit.

As Forbes relates, Mr Carter had been “a consultant to defense contractors and when he went back to the Pentagon in 2009, he had to get a special waiver because of his work for companies like Mitre Corp, and Global Technology Partners, a defense consulting firm. As The Washington Times points out, that background seems to conflict with the president’s pledge to block the revolving A History of the Pakistani Army by Brian Cloughleydoor between federal employees and special-interest groups.” Mr Carter was a Senior Partner in Global Technology, which “is a specialized group of investment professionals who have formed a strategic relationship with DLJ Merchant Banking Partners  to acquire and invest in technology, defense, aerospace and related businesses worldwide.”  What goes around, comes around.

According to the Stockholm International Peace Research Institute (SIPRI), in 2014 (the most recent year for full figures) the US was responsible for 34 per cent of the world’s military spending.  It spent three times as much as China and over seven times as much as Russia.  Certainly, a vast amount of US taxpayers’ money was squandered on the Pentagon’s futile war in Afghanistan, in which the US-NATO military alliance failed to defeat a few thousand raggy-baggy militants; but there is still an awful lot of cash available to buy hugely expensive new equipment of all sorts. As noted with lip-smacking satisfaction by Zacks Equity Research, “Pentagon 2017 Budget Plan Puts Defense Stocks in Focus.”

Given the Pentagon’s withdrawal of troops from Afghanistan (it having been calculated that each of the many thousands of armed forces personnel in that unfortunate country “cost an average of an eye-popping $2.1 million” a year), there should be massive reductions in military expenditure in 2016.  But the drop in Mr Carter’s spending estimate is extremely modest — although it might eventually show that the US will spend only as much as the next five or six countries instead of the next seven or eight.  Perhaps the next President will boast about that in her first State of the Union Speech.

Mr Carter told the Economic Club that “the Pentagon would seek a $582.7 billion budget next year and reshape spending priorities to reflect a new strategic environment marked by Russian assertiveness and the rise of Islamic State.”

“Russian assertiveness”? 

It is Mr Carter’s Pentagon that is indulging in confrontational military “assertiveness” all around the world, in every region and ocean, operating from hundreds of military bases that are thousands of miles away from the borders of the United States.

Mr Carter was reported as saying that “the Pentagon would ask for $3.4 billion to boost military training and exercises aimed at reassuring European countries concerned about Russia, which seized Ukraine’s Crimean peninsula in 2014 and has worried NATO allies with its strategic bomber flights.”

He ignores his own spokesman’s proud declaration that “We conduct B-52 [strategic nuclear bomber] flights in international air space [around China] all the time,” and that the US operation “Polar Growl” of B-52 jaunts is aimed explicitly against Russia in “demonstrating the credible and flexible ability of our strategic bomber force,” and “saw B-52s complete simultaneous,  round-trip sorties from Minot Air Force Base, North Dakota, and Barksdale Air Force Base, Louisiana, to the Arctic and North Sea regions.”

Then President Obama “said the request, a four-fold increase from last year’s $789 million, would enable the United States to strengthen the US military posture in Europe. NATO Secretary-General Jens Stoltenberg called the move a ‘clear sign’ of the US commitment to European security.”

America and its ardently anti-Russian NATO adherents cannot believe — refuse to believe — that Russia has no interest whatever in threatening “European security.”  The US-NATO attitude is ludicrous.  Russia wants to trade with Europe. It wants mutual prosperity.  Russia wants to flourish and thrive, economically and socially.  Its government knows that it can’t achieve this objective for its people if it doesn’t have full, open, mutually beneficial trade with surrounding countries and with all of Europe.

It would be madness for Russia to indulge in military confrontation with its Baltic neighbours, who are important trading partners.  Their economies are bound up with that of Russia, and it makes sense for them — and for Russia — to boost cordial relations.

Russia certainly wanted Crimea to return to Russia — just as almost all Crimean citizens wanted to do.  It is sensible for the territory to remain part of Russia (as it had been for over 150 years) because the vast majority of the inhabitants of Crimea are Russian-speaking,  Russian-cultured and  Russian-educated, and voted (in the opening words of America’s Declaration of Independence) to “dissolve the political bands which have connected them with another” in order to rejoin Russia.  It would be strange if they did not desire accession to a country that not only welcomes their kinship, empathy and loyalty but is economically benevolent concerning their future, unlike Ukraine’s terminally corrupt regime.

In June 2014 President Obama declared that “we will not accept Russia’s occupation of Crimea” but has not said what he intends to do to reverse the popular accession of the Crimean people to Russia.  Does he for one moment imagine that his much-publicized goal of “a Europe that is whole and free and at peace” would be attainable if Crimea were to be wrenched from Russia and handed to Ukraine?  Does he seriously think that if Ukraine took over Crimea there would be any possibility that its inhabitants could, in the words of his own nation’s Declaration of Independence,  enjoy “Life, Liberty and the pursuit of Happiness”? Has Obama thought about what would happen if two million Crimean people, who have made it clear that they do not want to be ruled by Ukraine, were suddenly ordered to accept domination by Ukraine’s corrupt oligarchs?  And who could give such an order?

But Mr Obama’s posturing hardly matters.  Crimea is only an expedient for the war drums to be pounded and for the forces of US-NATO to be given even higher priority in their belligerently confrontational stance against Russia.  Not least,  it is welcome news for the big spenders on military equipment in Washington where members of the Economic Club will be rejoicing in their wealth and ever-increasing profits.  But they and the other warmongers had better be careful : what goes around, comes around.

Brian Cloughley writes about foreign policy and military affairs. He lives in Voutenay sur Cure, France.

More articles by:

2016 Fund Drive
Smart. Fierce. Uncompromised. Support CounterPunch Now!

  • cp-store
  • donate paypal

CounterPunch Magazine


October 26, 2016
John W. Whitehead
A Deep State of Mind: America’s Shadow Government and Its Silent Coup
Eric Draitser
Dear Liberals: Trump is Right
Anthony Tarrant
On the Unbearable Lightness of Whiteness
Mark Weisbrot
The Most Dangerous Place in the World: US Pours in Money, as Blood Flows in Honduras
Chris Welzenbach
The Establishment and the Chattering Hack: a Response to Nicholas Lemann
Luke O'Brien
The Churchill Thing: Some Big Words About Trump and Some Other Chap
Sabia Rigby
In the “Jungle:” Report from the Refugee Camp in Calais, France
Linn Washington Jr.
Pot Decriminalization Yields $9-million in Savings for Philadelphia
Pepe Escobar
“America has lost” in the Philippines
Pauline Murphy
Political Feminism: the Legacy of Victoria Woodhull
Lizzie Maldonado
The Burdens of World War III
David Swanson
Slavery Was Abolished
Thomas Mountain
Preventing Cultural Genocide with the Mother Tongue Policy in Eritrea
Colin Todhunter
Agrochemicals And The Cesspool Of Corruption: Dr. Mason Writes To The US EPA
October 25, 2016
David Swanson
Halloween Is Coming, Vladimir Putin Isn’t
Hiroyuki Hamada
Fear Laundering: an Elaborate Psychological Diversion and Bid for Power
Priti Gulati Cox
President Obama: Before the Empire Falls, Free Leonard Peltier and Mumia Abu-Jamal
Kathy Deacon
Plus ça Change: Regime Change 1917-1920
Robin Goodman
Appetite for Destruction: America’s War Against Itself
Richard Moser
On Power, Privilege, and Passage: a Letter to My Nephew
Rev. William Alberts
The Epicenter of the Moral Universe is Our Common Humanity, Not Religion
Dan Bacher
Inspector General says Reclamation Wasted $32.2 Million on Klamath irrigators
David Mattson
A Recipe for Killing: the “Trust Us” Argument of State Grizzly Bear Managers
Derek Royden
The Tragedy in Yemen
Ralph Nader
Breaking Through Power: It’s Easier Than We Think
Norman Pollack
Centrist Fascism: Lurching Forward
Guillermo R. Gil
Cell to Cell Communication: On How to Become Governor of Puerto Rico
Mateo Pimentel
You, Me, and the Trolley Make Three
Cathy Breen
“Today Is One of the Heaviest Days of My Life”
October 24, 2016
John Steppling
The Unwoke: Sleepwalking into the Nightmare
Oscar Ortega
Clinton’s Troubling Silence on the Dakota Access Pipeline
Patrick Cockburn
Aleppo vs. Mosul: Media Biases
John Grant
Humanizing Our Militarized Border
Franklin Lamb
US-led Sanctions Targeting Syria Risk Adjudication as War Crimes
Paul Bentley
There Must Be Some Way Out of Here: the Silence of Dylan
Norman Pollack
Militarism: The Elephant in the Room
Patrick Bosold
Dakota Access Oil Pipeline: Invite CEO to Lunch, Go to Jail
Paul Craig Roberts
Was Russia’s Hesitation in Syria a Strategic Mistake?
David Swanson
Of All the Opinions I’ve Heard on Syria
Weekend Edition
October 21, 2016
Friday - Sunday
John Wight
Hillary Clinton and the Brutal Murder of Gaddafi
Diana Johnstone
Hillary Clinton’s Strategic Ambition in a Nutshell
Jeffrey St. Clair
Roaming Charges: Trump’s Naked and Hillary’s Dead
John W. Whitehead
American Psycho: Sex, Lies and Politics Add Up to a Terrifying Election Season
Stephen Cooper
Hell on Earth in Alabama: Inside Holman Prison
Patrick Cockburn
13 Years of War: Mosul’s Frightening and Uncertain Future