War industry Scams and inflated prices: the pitfalls of the arms race Even European states have plunged into the arms race, often confused. Enough to buy back the same cars at ridiculous prices after selling them.

The European Peace Facility, despite its name, is the EU’s box of funds for war supplies to Ukraine. Its budget was recently increased to around 8 billion euros to allow member states to finance the shipment of ammunition to Kiev, in particular the 155 mm caliber required for heavy artillery vehicles. But there are many pitfalls behind Europe’s arms race, starting with some states’ inexperience in dealing with the arms market.

at the mercy of merchants

“At the beginning of the war, Luxembourg was looking for ways to help Ukraine. But since it did not have a large arsenal, which is normal for a small country, it decided to seek ammunition in the market through local arms dealers”, analyst Pieter Wezeman, Stockholm International Peace Research Institute trade and military procurement specialist told EuropaToday. But on behalf of the Grand Duchy, buyers faced inflated prices, outdated weapons, and orders that were never delivered. “This case showed how European countries, especially in the early stages of the war, tried to act on their own, taking the risk of buying unwanted weapons from Ukraine or buying them at a very expensive price.”

The old means to work

Another example is Belgium, which had to deal with a private company that bought its old tanks literally sold by the armed forces. When the old tanks worked again to protect Kiev from Russian invasion, “the company had bought them for around 15,000 euros each around 2010 and then tried to revise each for half a million”. In one of these cases, Wezeman said, “Private traders have the upper hand with an artillery order signed by the UK. These cases show how competition can be created between states in the quest for armaments.”

company revenues

Improvisations in the early months of the arms race gave way to more reliable mechanisms for the supply of military vehicles and ammunition through major industries in the industry. However, it is too early to measure the profit margins of individual companies. “Many have not yet delivered their annual results for 2022, so it is not very clear to what extent they are able to increase their income based on the war,” said the expert. Germany’s Rheinmetall is one of the few companies to release the first figures: it posted a net profit of 469 million euros in 2022, a sharp increase from 291 million euros in the previous year.

The war industry is beautifying itself

Undoubtedly, the war has changed the social perception of those who produce weapons. “The industry is seizing opportunities to build its brand as a guarantee of the security of the free world,” Wezeman said, citing the example of a Swedish aerospace and defense equipment company that now supports its operations with outdoor billboards outside of train stations. “Companies should not be blamed for this, but this is an interesting trend,” says the researcher, revealing the rhetoric of the European war industry, which claims that it “want to play an important role in the fight against Russia and in defending Europe.” Like companies supplying urgently needed goods during Covid”.

ammunition race

Faced with the new needs of Ukraine in recent weeks, the EU decided to support the supply of ammunition to Kiev with 2 billion euros. Although it may seem like an important allocation, it should be noted that “it is not a high figure when compared to the costs of individual countries’ defense projects, which cost billions of euros per state”. Therefore, what worries Wezeman, more than the amount of resources allocated, is the quality of choices made in the absence of reliable information. “The predictions of the Russian invasion of Ukraine were completely wrong. How can we be so sure of what we need after only a year of the war?” by EU countries

“It is very easy to determine the urgent demand for ammunition”, saying, “It can easily calculate how much Ukraine uses on average, and based on that, what it will need in the coming months and years.” But the same is not true for defense vehicles and systems, where Europe risks having to turn to foreign suppliers.

international market

“Europeans have always bought large quantities of weapons from the United States, which is the main supplier of fighter jets to countries that do not manufacture them,” Wezeman said. Besides the dependence on aircraft from the US, there are other wartime supply chains involving non-EU countries due to the displacement of European industries in the sector. “The European arms industry has internationalized,” with the “German company” selling Boxer armored vehicles to Australia and manufacturing them directly in the country. From Rheinmetall to Leonardo, they all have factories in the USA and the rest of the world” . Factors that Europe will have to reckon with in the arms race, an obstacle course where no one can predict whether it will be a sprint or a marathon.

Source: Today IT