The war in Ukraine has led Western leaders to send billions of dollars worth of military equipment to the country.
Experts say that this, combined with the role of the conflict in increasing military spending, will be unexpected for Western arms manufacturers, but there are risks.
Since the invasion, NATO countries have pledged more than $ 8 billion (£ 6.4 billion) in military equipment to Ukraine, with $ 4.6 billion (£ 3.7 billion) coming from the US.
The UK has pledged £ 750 million, while the EU has set aside £ 2bn (£ 1.7m).
Siemon Wezeman, a senior researcher in the Stock Transfer Arms Program at the Stockholm International Peace Research Institute (SIPRI), says most of the weapons shipped to Ukraine come from existing military supplies.
Some countries have sent older items that were already “underway”, but many, such as the US and UK, have sent newer stocks that will need to be replaced, he told Sky News.
The United States has already approved a $ 9 billion (£ 7.1 billion) spending package to replenish supplies shipped to Ukraine now and in the future.
Image: A Ukrainian soldier holding the Javelin missile system, produced by Lockheed Martin and Raytheon, at the front in Kyiv
Which companies will make the most money?
U.S. defense contractors are expected to be the biggest beneficiaries.
Washington is shipping 6,500 Javelin anti-tank missile systems, manufactured by Raytheon and Lockheed Martin. The cost of each missile is about $ 78,000 (£ 66,000) and the reusable launcher is another $ 100,000 (£ 85,000). Ukraine will receive more systems from France and Estonia, and 200 more from the United Kingdom.
The United States is also providing counter-artillery radar systems manufactured by the same companies, along with US defense giant Northrop Grumman.
Image: A Stinger missile launched during a training exercise. Image: AP
Another benefit for Raytheon will come from the U.S. decision to send 1,400 Stinger anti-aircraft missile launchers. The company has already been awarded a $ 625 million (£ 494 million) contract to replenish stocks. Germany is giving Ukraine 500 of the systems and more are coming from Denmark, Italy, Latvia, Lithuania and the Netherlands.
The best news for Lockheed Martin came from the US plan to give Ukraine four M142 high-mobility artillery rocket systems (HIMARS). The company also produces long-range M270 rocket launchers shipped from the UK.
Another key element is the Switchblade air system manufactured by AeroVironment, colloquially known as the “kamikaze drone”. The United States has pledged 700.
Ukraine is receiving 50 billion rounds of ammunition from the United States, which is likely to benefit Olin, the largest supplier of small arms ammunition to the U.S. military.
Image: Switchblade drone systems are produced by AeroVironment. Image: AP
Top winners in Europe
In Europe, the big winners are expected to be BAE Systems and Thales.
Britain’s BAE Systems manufactures almost all small arms ammunition in the UK and is ready to replace the 400,000 cartridges shipped to Ukraine.
The company also manufactures US-sent 108mm 155-mm howitzer artillery, as well as MILAN anti-tank guided missiles provided by France and Italy, which are produced in a joint venture with Airbus and Leonardo.
Image: A launch truck firing the High Mobility Artillery Rocket System (HIMARS) manufactured by Lockheed Martin. File image: AP
Another key piece of equipment manufactured by BAE Systems, which has factories across the UK, is the Stormer armored vehicle. The United Kingdom provides Ukraine with a “small number” of them.
The vehicles are equipped with Starstreak anti-aircraft missiles, manufactured in Britain by Thales, a French company.
Thales also manufactures the Next Generation Light Anti-Tank Weapon (NLAW), a shoulder-launched missile system praised for its success in flying Russian tanks. The United Kingdom offers more than 5,000 in Ukraine. Mounted in Belfast, it is believed to cost £ 30,000.
Germany’s Dynamit Nobel manufactures the 3,000 Panzerfaust 3 anti-tank weapons it sends to its home country, along with 5,100 MATADOR anti-tank weapons. Before the war in Ukraine, Germany had a long tradition of banning arms exports to active war zones, which limited sales.
Large defense companies are already seeing their stock prices rise as investors anticipate the impact of the war on profits. Shares of Thales have risen 35% since the invasion, while shares of BAE Systems have risen 32%. Lockheed Martin saw a 14% increase and AeroVironment a 63% increase.
Weapons “could end up in the wrong hands”
Kristen Bayes, a spokeswoman for the Arms Trade Campaign, says the supply of weapons to Ukraine is understandable but “not trouble-free.”
“You may think you’re handing out guns to people you know and like, but then they sell to people you absolutely don’t,” he tells Sky News.
Wezeman says weapons supplied to Ukraine “may end up disappearing on the black market,” an increased risk since the country “does not have full control of its territory.”
He says it is difficult to keep track of weapons when they have to be supplied at such speed and there is a risk that they will be “lost or disappear in chaos”.
He says there is little that can be done about it now, but as soon as the war is over, a good program should be put in place to collect weapons from civilians.
U.S. Secretary of Defense Lloyd Austin has previously acknowledged that some weapons donated to Ukraine have also ended up in Russian hands.
Advertising opportunities and increased military spending
Replenishment of stocks shipped to Ukraine is not the only new business opportunity for Western arms manufacturers.
Wezeman says countries that traditionally buy a lot of military equipment in Russia may be looking elsewhere because of the poor performance of some of the same products in Ukraine.
“There are Russian tanks that have been completely blown up,” he says. “This is not really a quality ad.”
He says countries are also facing growing pressure and threats from sanctions from Western states urging them to stop buying in Russia.
He says there is still more money to be made as states respond to the Ukraine war by increasing their military spending, many of which will be used for new equipment.
Since the invasion, at least 15 European countries have announced plans to increase defense spending, according to the International Institute for Strategic Studies.
The additional commitments are worth at least 200 billion euros (170 billion pounds), according to the EU.
Most significant was Germany’s commitment to spend an additional 100 billion euros (£ 85 billion) in the coming years, and Chancellor Olaf Scholz said the defense would account for 2% of GDP “from ‘now “.
This has been good news for Rheinmetall, a German tank and artillery manufacturer, which expects its sales to grow by up to 25% in 2022 and 2023. Germany has already said it will buy 35 F-35 fighter jets, which are manufactured. of Lockheed Martin and have an estimated cost of living of $ 1.6 trillion (£ 1.27 trillion).
Norway plans to spend an additional three billion Norwegian kroner (£ 270 million) on border defense this year, while Latvia will increase its defense budget from 2.2% of GDP to 2.5% in 2023.
Finland has announced an additional € 700 million (£ 600 million) for this year, as well as an additional € 2.2 billion (£ 1.9 billion) for 2023 to 2026.
Image: Germany announces the purchase of 35 F-35A fighter jets manufactured by Lockheed Martin. Image: AP
Poland has increased military spending to 3% of GDP in 2023, from 2.2% this year.
French President Emmanuel Macron has pledged to expand his country’s defense budget, while increases in Estonia’s and Lithuania’s budgets have been announced for this year.
Italy is considering increasing its military spending by 1.5 billion euros (1.3 billion pounds) in 2022, with the long-term goal of increasing spending to 2% of GDP from the current 1.4% .
Sweden has pledged to raise some three billion Swedish kronor (244 million pounds) this year, while Denmark has pledged to go from 1.4% of GDP to 2% in 2033.
The UK government had already planned increases before the war, but is still facing calls from Labor to spend more. Britain already has the fourth largest defense budget in the world, accounting for 2% of GDP.
“Many increases in the coming years”
Following a NATO summit on March 24, the alliance said its members “have decided to step up our efforts to fulfill our commitment to the Commitment to Investment in Defense in its entirety.”
The Defense Investment Commitment, adopted by NATO in 2014, called on all members to halt cuts to defense budgets and follow the NATO-agreed pattern of spending at least 2% of GDP on defense in a decade, but some countries had resisted change.
Fenella McGerty, a senior researcher in defense economics at the International Institute for Strategic Studies, said the March statement “implies that there will be many increases in the coming years.”
“Some commitments are more specific or immediate than others, but the fact that these announcements come at the end of a period of significant growth in European defense spending is indicative of a change in security dynamics,” he told Sky. News.
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5:47 In the front line with the 93rd Brigade
Trevor Taylor, a defense management expert for the Royal United Services Institute’s (RUSI) think tank, says countries are responding to the “threat.”
“You have a case in which Russia has shown its willingness to use force to change the territorial status quo,” he told Sky News.
He adds: “The question these days is whether Russia would try to take over smaller parts of Europe, whether this is part of Estonia or Latvia, whether it is or is of some kind …