War and Profit: Military Bull Market Soars

The Soaring Profits of the Military – Industrial Complex And the Soaring Costs of Military Casualties

by James Petras

The launch of two major wars by the US government had two major beneficiaries, one domestic and one foreign. The three major weapons manufacturers, Lockheed Martin (LMT), Northrop Grumman (NOG) and Raytheon (RTN) have delivered record-shattering returns to investors, CEOs and investment banks during the past decade and a half.

The Israeli regime has expanded its territory and increased its power and influence in the Middle East. Israel’s territorial dispossession of Palestinians, was aided and abetted by the US invasion and destruction of the Palestinian’s Iraqi allies. Washington destroyed Iraq’s armed forces and fragmented its society and state.

The cost in US physical and mental casualties’ runs in the hundreds of thousands of soldiers who at one time served in the war zones. The financial costs run in the trillions of dollars and counting. Both the military-industrial complex and the pro-Israel power configuration continue to wield a major role in keeping Washington on a wartime footing.

For the weapons manufactures there are no peaceful economic activity that can yield a comparable return – hence the need to continue to pressure for new wars to sustain weapons spending. For the pro-Israel power configuration, peace agreements would put an end to land grabs, reduce or curtail new weapons transfers and undermine pretexts to sanction or bomb countries (like Iran) opposing Tel Aviv’s vision of “Greater Israel”.

Yet the political and financial costs of almost a decade and a half of warfare weigh heavily on the US Treasury and electorate. The wars themselves were dismal failures if not outright defeats. New conflicts have emerged in Syria, Iraq and the Ukraine in which the military-industrial complex and the pro-Israel lobbies hope to capitalize for profits and power.

Yet the cumulative costs of past and continuing wars hangs over the launch of new costly military interventions. Political discontent among the US public with past wars also weighs heavily against new wars for profits and Israel.

War Profits

The power and influence of the military-industrial complex in promoting serial wars is evident in the extraordinary rates of return over the past fifty years. Stocks in military-industries have risen 27,699% versus 6,777% for the broad market according to a recent study by Morgan Stanley (cited in Barron’s, 6/9/14, p. 19). Over the past three years, Raytheon has returned 124%, Northrup Grumman 114% and Lockheed Martin 149%.

The Obama regime talks of reducing the military budget and makes a show of doing so via the annual appropriation bill, and then, uses emergency supplemental funds to pay war costs… which actual increases military spending and fattens the profits for the military-industrial complex.

War profits have soared because of multiple military interventions in the Middle East, Africa and South Asia. The lobbyists for the industry use their influence over Congressional and Pentagon decision-makers to join forces with the pro-Israel lobby to pressure for greater direct US military involvement in Syria, Iraq and Iran. The growing ties between Israeli and US military industries reinforce their political leverage in Washington by working with liberal interventionists and neo-conservatives. They criticize Obama for not bombing Syria and for withdrawing from Iraq and Afghanistan. They call for sending troops to Iraq and the Ukraine. Obama argues that proxy wars do not require heavy US military expenditures. Responding to Wall Street pressure to reduce the budget deficit the Obama regime argues that retreating from Iraq and Afghanistan was necessary to reduce US financial and military losses. But withdrawal also reduces profits for the weapons makers and angers Israel and its supporters in Congress.

The Fight over the Military Budget: Veterans versus the Complex and the Lobby

In the face of rising pressure to reduce the deficit and cut the military budget, the military-industrial complex and its Zionist accomplices are heavily engaged in retaining their share of the military budget, by reducing the amount allocated for the medical programs of active and retired soldiers. Disability costs are soaring and will continue for decades. The cost of health care is expected to double to 15% of the defense budget in five years and according to the financial press “that is bad news for defense stocks” (Barron’s, 6/9/14, p. 19).

In response the military-industries are pressing to close Veterans Administration hospitals and reduce benefits, claiming fraud, incompetence and inferior service. The same corporate warlords and lobbyists who pressed the Government to send American soldiers to wars, in which they lost lives, limbs and mental health, are now in the forefront of the fight to reduce spending on their recovery and health. Economists point out that the less the percentage of the military budget spent on veteran’s health, the greater the share allocated for missiles, warships and war planes. The long term costs for VA medical and disability spending resulting from the Afghan and Iraq wars are at present $900 billion and rising.

The corporate warlords are pressuring Congress to increase co-pays, enrollment fees and deductibles for veterans enrolled in public health plans.

The fight is on over Pentagon expenditures: for soldiers health or weapons programs that fatten the profits of the military industrial complex.