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War Profiteering: Global Challenges And Conflicts Involved

A war profiteer is a person who makes unreasonable financial gain through war by providing arms, ammunition and sometimes a whole private army to fight side by side with the national troops. To give you a better idea about what a war profiteer is and what he does, I'd like to quote a line from the 2005 Hollywood movie, "Lord of war". The opening lines of the movie said by Yuri, an arms dealer, "There are over 550 million firearms in worldwide circulation. That's one firearm for every twelve people on the planet. The only question is: How do we arm the other 11?"

War profiteering is an even bigger business than war itself. It is a means by which companies can make money by taking advantage of conflict and chaos. Armed conflict is a breeding ground for risk, which is why investors often flock to the industries that fuel it. It is also a market with a huge demand for a specific type of product: weapons.

War profiteering is a global industry, and the same companies that profit from conflict in one part of the world will often find success in others. The global arms trade is a prime example of this phenomenon. The United States is the largest arms dealer in the world, and sells billions of dollars' worth of weapons every year. Most of this arms' trafficking occurs abroad, with the United States delivering weapons to allies and selling weapons to unstable regions around the world.

War profiteering is not a new concept even in 2006 when the Iraq war was its height an analysis of the pay of the CEOs of the 34 corporations that were at the time the top military contractors showed a considerable jump in their pay after 9/11 attacks. Pentagon funding and revenues of weapons contractors increased dramatically after the 9/11 attack. Between the years 2001 and 2005 on average the pay of the CEOs of military contractors jumped by 108 percent in comparison to the 6 percent increase witnessed by their counterparts at other large U.S. companies.

In 2004, a year into the Iraq war scores of examples of shoddy construction, overcharges, and outright theft by contractors engaged in the rebuilding of Iraq were exposed by the Special Inspector General for Iraq Reconstruction (SIGIR) but relatively few companies suffered significant financial or criminal consequences.

There are two kinds of war profiteers, the passive ones and the active ones. While passive war profiteers, on one hand, make profits from war, they do not influence the duration or the outcome of a war in any manner. Active war profiteers, on the other hand, influence duration of the in order to increase their own profits.

The thought that private inspiration assumes a significant part in dragging out struggle is upheld by the instances of Sudan, Sierra Leone, and Liberia. Many accept that strong private interests are likewise behind the conflict in Iraq started in 2003. Significant opportunists in the present conflicts incorporate organizations engaged with weapons making, security, military insight, mineral extraction, and recreation drives.

Most of this profiteering happens through selling weapons to both the countries in war, providing inferior products to what was agreed upon, escalating the war by using illegal methods.

To understand it in much more detail, we would need to look at the United States, the world's largest defense spender. Most of the wars fought by US aren't even for defensive reasons but for taking over oil reserves in turbulent countries. Pentagon has reportedly spent 14 trillion dollars since the beginning of Afghanistan war.

Post 9/11, the political climate had started a new era of warfare, the global war on terror. Pentagon had its largest share of funding in years which was used to hire private contractors to fight in the ongoing conflicts in Afghanistan and Iraq. Out of the 14 trillion allotted to pentagon, 2 trillion was just spend on Pentagon's Overseas Contingency Operations (OCO) account. With about 800 overseas military bases and massive expenditure on weapons of mass destruction, it can be safe to say, that war is a profitable venture.

Providing further evidences are the statistics, the increase in U.S. military spending between Fiscal Year 2002 and Fiscal Year 2003 was more than the entire military budget of any other country, including major powers like China, Russia, the United Kingdom, Germany, and France. Even with the new Biden administration the numbers have gone down but still a whopping $753 billion is spent on Department of energy for nuclear warhead development.

The most benefited private companies through this sudden surge in war and military expenditure are : Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman and armed private security contractors like Blackwater and DynCorp these seven companies acquire at least 1/3rd of all pentagon contracts.

CEOs of major military contractors benefit from the escalation of conflict. This became evident immediately after the assassination of Soleimani as the share prices of these companies began to hike. Wall Street traders are well aware that more lucrative contracts would be possible for U.S. weapons makers if there was a war between U.S.

Politicians benefit by way of lobbying which was apparent in the case of Lockheed Martin which donated $75,000 to House Armed Services Committee chair Representative Mac Thornberry who later passed a bill in favor of the company, whereas others like the modern defense conglomerates which manufacture defense equipment like Lockheed Martin, Boeing, BAE Systems, General Dynamics, and Raytheon have outperformed the stock market overall by 58 percent during the Afghanistan War.

The CEOs of the top five contractors of Pentagon i.e. General dynamics, Northrop Grumman, Boeing, Lockheed Martin and Raytheon it can be seen that they held company stock approximately worth $319 million before the assassination of the Iranian leader Qasem Soleimani. The value of their combined shared had increased to $326 million by the time the market closed the following day.

Another aspect of war profiteering is the scientific research. With an increasing demand for military technology modernization, more and more research organizations have come up in last few decades which not only provide wartime logistics and other technologies to states and corporations alike. One such example is 'Siri', an artificially intelligent "personal assistant" programmed into Apple devices which was a spin-off of a cognitive assistant program. It was a project funded by the government military development group.

War profiteering has many faces, and it is often difficult to detect the hand of the profiteer when it is present. However, the global nature of the industry means that even if a war does not take place in your backyard, it is likely to have an impact on the profits of a multinational company. This is especially true of the largest and most powerful corporations. These companies profit from three ways: logistics and reconstruction, private security contracting, and supplying weapons. These are also where these companies take most advantages of during wartime conditions through overcharging or straight up fraud.

It also includes a complex network of financial institutions, companies and individuals whose money makes war possible or who profit financially from militarization or war. As long as violence continues to be profitable war will continue to persist because peace and liberation will be put below the economic interests of the powerful. When talking about war profiteering the first thing that comes to our mind is weapons manufacturing but it goes deeper than that.

Examples of war profiteering and war economy are: financial institutions or Banks that invest in arms scompanies loan them money or provide them with insurance and extractive industries like mining companies that use military support to exploit natural resources.

Critics have also pointed out how these large government contracts are always given to the same handful large firms with unreasonable pricing, fraudulent contracts and poor pay for employees working for the said companies.

These are just not limited to military contracts but also intelligence agencies like Central Investigation Agency (CIA), National security agency (NSA) and Homeland security where there are more private employees than government servants. A lot of this can be blamed on unchecked corruption, as per reports weapon manufactures spent almost 2 billion dollars to employ more than 700 lobbyist per year over the past year.

Why War Happens?
History shows that the leading cause for war has been territorial disputes. Some of such examples would be Kashmir, the Golan Heights, Alsace-Lorraine ad the Beagle Channel. In comparison to other types of diplomatic disputes territorial disputes lead to militarized conflict more often. Such territorial disputes can be resolved peacefully with the help of conflict management tools such as arbitration and adjudication through international courts.

Article 33 of the UN Charter states that "the parties to any dispute, the continuance of which is likely to endanger the maintenance of international peace and security, shall, first of all, seek a solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial settlement, resort to regional agencies or arrangements, or other peaceful means of their own choice." (The United Nations, 2017).

During the conflict between India and China which started back in May 5, 2020 the then President of the United States had sought to mediate in the border dispute. On May 27 President Trump had offered to mediate or arbitrate the dispute between both the countries India and China but was rejected by China claiming that they do not want a third-party intervention to resolve the military standoff.

The offer was also diplomatically turned down by India saying that they were engaged with China to peacefully resolve the border dispute. Mediation plays an important role in border diplomacy and helping in securing international peace and security. Mediation has served as a process of settling disputes peacefully.

War is bad for nearly everyone and therefore alternative methods like mediation and arbitration should be considered when resolving disputes. But as long as the powerful people like CEOs of war profiteering companies continue to reap rewards their profit motive for war will continue to persist.

War profiteering is a particularly interesting phenomenon when it comes to cross-border disputes. In many cases, these disputes are the result of individual companies taking advantage of a conflict that has already started. For example, the Iraq War is often cited as a major contributor to the current instability in the Middle East, but it was the decision of one company, Halliburton, to bid for a piece of the Iraqi reconstruction pie that kick-started the war in the first place. Similarly, the ongoing crisis in Ukraine is the result of a series of decisions by junior politicians to take advantage of the uncertainty created by the conflict in the Donbass region. Written By:
  1. Sayantan Chowdhury &
  2. Vidhan Singh

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