Steel monsters

The Western economy is slowly but surely preparing to switch to a military footing

Any prolonged war is a very serious test of strength for the economy of the warring parties. In addition to the nationwide character of resistance to the invaders, the rapid and high-quality mobilisation of industry was one of the keys to the victory of the Soviet Union over fascist Germany. The Third Reich, on the other hand, failed to gain access to serious reserves of resources, as well as to organise its economy according to the ‘Everything for the front! Everything for victory!’ principle. The result was that the German system had overstrained itself by the time of the radical change on the fronts, and since then its situation has been constantly deteriorating. Now we are in the third decade of the 21st century, and the world is again facing the prospect of being drawn into a full-scale conflict and the transition of the economy to a wartime format. The global West has already begun this process, increasing the production of weapons and ammunition.

Bloody billions

Special military operation has become real pennies from heaven for weapons manufacturers around the world. With its help, the already mentioned German concern got out of the crisis and jumped straight into the top military-industrial corporations of the continent without a run-up, increasing its profits by 122 percent. In total, the assets of the European defenсe industry have risen in price by an average of 22 percent for almost a year of active fighting in Ukraine and the continuous pumping of the Kiev regime with all kinds of weapons, and the total capitalisation has exceeded $705 billion. If the share of Rheinmetall on the stock exchange in March last year was worth only 53 euros, then by December its value soared to 220.
Overseas partners also gained profit following 11 months of confrontation: they supplied the Armed Forces of Ukraine with weapons worth $25 billion, twice as much to their allies around the world. Such giants as Northrop Grumman, Raytheon, Pratt & Whitney and Lockheed Martin still remain among the leaders of the death conveyor. Soon this list may be replenished by the manufacturer of Abrams tanks, General Dynamics.

During a December reception on the occasion of the 31st anniversary of the creation of the Armed Forces of Ukraine at the US Embassy in Kiev, the logos of the largest supplying companies flaunted on invitation cards as a reminder of what hundreds of thousands of Ukrainian soldiers actually die for at the front.

Each of the listed arms concerns increased the value of their shares by more than 15 percent. Thus, Javelin ATGM manufacturer Lockheed Martin has risen in price by 26 percent, and the production of new HIMARS launchers both for Ukraine and for other countries will bring the company at least another $1.1 billion in profit.
However, Northrop Grumman is now considered the most promising player. Compared to competitors, it did not rise as high — the value of shares rose by 15 percent. However, the fact that this particular corporation is engaged in the production of artillery shells, the shortage of which is now observed both in the Armed Forces of Ukraine at the front and among the Europeans who support it, can bring Northrop Grumman to the top of the deadly list in the second year of the war. Moreover, on January 25th, the US Department of Defenсe issued an order to increase the number of 155-mm shells produced in 2 years by 6 times.

Gnashing of metal

The Rheinmetall AG concern is perhaps one of the most visible and weighty symbols of German militarism. Within a couple of decades of its inception in 1889, it had grown from a small firm into Germany’s largest arms and ammunition manufacturer. The defeat of the Second Reich in the World War I almost put an end to the prospects for the development of the enterprise, but the Nazis came to power literally saved it.

Now, when the largest military conflict since the World War II has unfolded in Europe, and Germany has actively sided with the now Ukrainian Nazis, the defence giant is again declaring its readiness to expand production and calls on the government to finance the construction of new military factories throughout the country.

To begin with, it is assumed that Scholz and his comrades will allocate money to businessmen from Rheinmetall for the construction of a gunpowder production in Saxony worth €700-800 million. Next, the management of the concern, headed by Armin Papperger, plans to put into operation a line for the production of medium-calibre ammunition, and then, in co-operation with the Americans from Lockheed Martin, to launch the production of HIMARS MLRS that have proven themselves well in the Ukrainian steppes.
Napoleonic plans, you see. But where does Germany, which is experiencing serious economic problems due to the imposition of sanctions against Belarus and Russia, get the money for militarisation in the style of the early Third Reich? The answer seems to have been given at the end of the week before last by an unnamed Blumberg source in the government: defence funds will be redirected from projects to build a green economy. This is how the ‘environmentalists’, for whom the unforgettable Greta Thunberg campaigned so sweetly in 2021, easily forget their ideals.

A year and a half after the elections, it became clear that Germany was ruled by paradoxical people. They advocate an environmental agenda, but lobby for arms deals with the oil monarchies of the Persian Gulf, talk about peace, but send hundreds of tanks to Ukraine.

Traps and pitfalls

Transferring the economy to a military footing in the 21st century is fraught with a bunch of obvious and not very complexities. First, many types of weapons, such as modern battle tanks, jet fighters, attack helicopters, are difficult to manufacture and require significant labour costs.

For example, the Abrams MBT is produced at a single plant in the United States at a rate of 12 units per month. Accordingly, in preparation for a major war or to continue deliveries to Ukraine at the same pace as now, Western concerns will either have to increase the number of factories or urgently develop mobilisation models of equipment that will be less technologically advanced and not as effective on the battlefield, but relatively simple and cheap to produce.

Secondly, the sanctions war unleashed by the West against Belarus and Russia dealt a blow to the defence industry of opponents. For example, the production of new Leopard tanks to replace those transferred to Ukraine will face a number of serious obstacles.

On the one hand, the manufacture of armoured vehicles is a very energy-intensive process, and in the conditions of the energy and fuel crisis, the production of heavy vehicles will become more difficult. On the other hand, the Rheinmetall concern does not independently produce a number of important components: engines are produced by MTU Friedrichshafen, armoured steel is produced by the Swedish SAAB. All of these companies, in one way or another, have faced the consequences of a failed sanctions policy and will not be able to immediately meet the increasing demand for their products.
Both the German leadership, which is preparing to invest billions of euros in the expansion and re-equipment of the army, and the top managers of the defence giants understand the essence of the current situation and are taking measures to remove obstacles. So, permission for the production of armoured steel was issued to Saarstahl, but its management will have to work hard to complete a responsible task: production volumes had to be reduced due to high energy prices, and workers were massively transferred to part-time jobs.
However, if the leadership of the Western countries really tuned in to a protracted confrontation with Russia, it will gradually begin to transfer the economy to a military footing. Experts believe that this will take from 2 to 5–7 years and will cost simply mind-boggling costs, which will inevitably lead to a further deterioration in the lives of ordinary citizens.
Nonetheless, the accumulated weapons, by the mere fact of their presence, will provoke nervousness between states and increase the risk of a collision even due to a minor incident. After all, if someone in the first act hangs a gun on the wall, in the final it will definitely shoot.

By Anton Popov