As soon as Donald Trump withdrew the US from the Iran nuclear deal, and Israel bombed Syria, stocks of the top weapons corporations immediately increased. Author Andrew Feinstein says this sabotage of the JCPOA offers companies new opportunities for war profiteering
BEN NORTON: It’s The Real News, I’m Ben Norton. President Donald Trump unilaterally withdrew the United States on May 8th from the Iran nuclear deal, which is known as the Joint Comprehensive Plan of Action, or JCPOA. Trump then immediately moved to reimpose sanctions on Iranian officials and business people. Following the U.S. withdrawal from the deal, the stock prices of arms corporations begin to soar. Military contractors such as Raytheon, Lockheed Martin, Boeing, Northrop Grumman, L3, and others saw their market value increase by hundreds of millions of dollars in a matter of a few hours.
This dramatic rise in weapons stocks also came at a time when Israel escalated its military attacks in Syria, bombing numerous sites. Joining us to discuss this war profiteering is Andrew Feinstein. Andrew is the executive director of Corruption Watch UK and the author of The Shadow War: Inside the Global Arms Trade. His book was recently made into a film. Andrew is also a former Member of Parliament for the ANC in South Africa. Thanks for joining us, Andrew.
ANDREW FEINSTEIN: Great to be with you.
BEN NORTON: So, immediately after the U.S. withdrew from the Iran deal, the JCPOA, media outlets here in the US noted that Trump’s announcement was linked to a steep rise in stock value for U.S. arms manufacturers. Why would investors in these companies believe that the company’s sales or profits should rise due to the resumption of sanctions on Iran?
ANDREW FEINSTEIN: I think there are two primary reasons why investors would think the share prices would rise on the sort of news. The first is the reality that by withdrawing from what was effectively a nuclear peace deal, President Trump is increasing the likelihood of conflict or war with Iran. And this is simply good news for weapons makers. Any possibility of greater conflict, especially involving a wide variety of country, is very good news for the defense contractors- the weapons companies.
I suppose that the second reason is obviously that those defense contractors involved in the nuclear business work on the assumption that it is likely to lead to more activity in the nuclear weapons space. Now, taking both of those into account, what one can see is that the economics of the defense industry, of the defense contractors, is very closely tied to instability and conflict.
I refer in the book, and we refer in the film of the same name, to the fact that this is an industry that counts its profits in the billions of dollars and its costs in human lives. So, the greater the conflict, the greater the human suffering, the more these companies are making money. Because, after all, one has to bear in mind that this equipment doesn’t last forever. So, if you buy a hundred bombs or missiles, there will come a point beyond which you can no longer use them, and therefore you buy additional bombs or missiles. However, if you are using huge numbers of bombs and missiles, obviously that is increasing the inventory on the parts of the weapons manufacturers.
So, the ongoing conflict in Yemen, for instance, from which U.S. and British weapons makers are making an absolute fortune, because of the rapidity with which, and the quantities of bombs that are being dropped by the Saudi led coalition on Yemen. Now, they see the prospect of another conflict in Iran that could really be the mother of all conflicts in the region, and they’re licking their lips because of the sort of inventory turnover that is likely from such a conflict.
BEN NORTON: Yeah, and what’s interesting, related to this, is that although, as you mentioned, there is certainly an increased potential for another war to break out, for more violent conflict, and thus, profits for arms manufacturers. There are also potential deals that may be lost. So, for instance, Boeing has said that it may lose several billion dollars of deals because the U.S. is withdrawing from the JCPOA, but actually, Boeing was not concerned about this, because it opens new doors for possibilities for further arms sales. Can you speak about the opportunity cost? So, there might be lost deals, but new ones that are assigned.
ANDREW FEINSTEIN: So, whenever a decision like Trump’s, around withdrawing from the Iranian nuclear deal, takes place, whoever is making that decision ensures that the defense contractor is going to be fine. So, if one even looks at the peace deal itself- when President Obama made that deal with Iran, there were massive sales of weaponry to Israel and to Saudi Arabia, America’s main allies in the region, not only for political purposes, but also for economic purposes.
So, the sale of over thirty billion dollars of weaponry to each of those countries was doing two things. It was effectively saying to them, “So, we’re coming off of one possible avenue of conflict that you would like us to pursue, but to show our alliance is strong, we’re selling you billions and billions of our weapons anyway.” So, the defense contractors are particularly happy in that instance, as well. So, there’s is a diminution of conflict, but there’s an increase in orders. Plus, the Iranian orders, the European orders, are also opened up.
Now, what we have is a situation where the United States is effectively closing down certain opportunities, because of the sanctions imposed that go together with the withdrawal from the nuclear peace deal. But the calculation would have been done by the defense companies to where they’re going to do better. And let me tell you, that if the calculation was by the continuation of this peace deal- their revenues would be increased, there would be so much pressure on the White House, that the deal would not have been reneged on as it has by Donald Trump.
And what do I mean by that? If Boeing are going to lose any contracts, potentially, as a consequence of this decision by Donald Trump- by far the biggest spender on military equipment in the world, which is the government of the United States of America, will have guaranteed, for Boeing, revenues in excess of those they will be losing. But the reality is, what the Iranian decision does is it creates greater instability, greater uncertainty, and a greater likelihood of conflict, not just in Iran, not just in the region, but globally. So, overall the picture for the defense contractors is an incredibly healthy one, although for humanity it’s an absolutely desperate situation.
BEN NORTON: Yeah. And Andrew, in your book, The Shadow World, you wrote about the global arms industry and the U.S. arms industry – the U.S. specifically, the arms industry- noting that it’s, in fact, the biggest exporter of weapons. And, in fact, the U.S. exports more weapons than much of the world combined.
You also referred to Israel, in your book, as the U.S. “shopping window.” And in fact, Israel didn’t wait twenty-four hours after Trump’s announcement that the U.S. is withdrawing from the JCPOA- immediately, Israel began ramping up its bombardment campaign in Syria. So, how do these Israeli attacks affect the U.S. arms industry, and how is this linked to the JCPOA and the War in Syria?
ANDREW FEINSTEIN: The role of the Israeli arms industry is absolutely central to the Israeli economy. So, that’s the first question. The Israeli economy has become hugely dependent on the defense sector and what they describe as the “homeland security industry.” To be able to do the sort of business that Israel does, is at two levels.
On the one hand, Israel sells globally. There are probably more Israeli arms dealers around the world than citizens of any other country. And in that instance, how Israel benefits its industry from conflict- why they wouldn’t wait even twenty-four hours before bombing Syria, therefore showing their elation at the the end of the Iranian nuclear deal- is that Israel would then hold what I would describe as “mobile arms fairs,” where immediately after using key elements of its weaponry, it will invite its best customers from around the world to an arms fair that will be hastily convened in some sort of secure location, where Israel will then show footage of the use of its newest weaponry in the field. So, every incursion into the occupied territories is followed by one of these mobile arms fairs.
The bombing of Syria, any aggression toward Iran, is really marketing opportunities for Israel. Now, I’m not saying there are not geopolitical reasons that Israel is making these decisions, as well, but they’re also extremely important economic decisions. And the way in which this integrates back into the U.S. defense sector is as follows- as I mentioned in the book, Israel is used as a shop window for a lot of U.S. technology and U.S. weaponry, as well. A key component of the Israeli defense sector is the work it does with American defense contractors, particularly in the area of research and development. So, what is benefiting the Israeli defense sector is of huge benefit to the U.S. defense sector, as well.
So, this is a symbiotic relationship, so that one can see both at a political level, a coming together of the belligerence of the Trump and Netanyahu administrations. But there is also an extremely important economic dimension to that, which again, is a very important marketing moment for the Israeli and American defense industries.
BEN NORTON: And then finally here, before we wrap up, I wanted to name some names, if you will. Who do you think is the voice of the weapons industry in the Trump administration and in some of these other governments, and do you think that these figures had a role in convincing Trump to abandon the Iran deal? Clearly, there are many other political factors so, it’s not just the arms industry. But do you think that the arms industry played a role, or elements within the arms industry played a role, in convincing Trump finally to abandon this international deal?
ANDREW FEINSTEIN: I think it would be easier for me to tell you who hasn’t been influencing Trump to abandon this nuclear peace deal. And I think here we must just understand this concept of the revolving door in the United States of America, where a number of people in the military leadership, in the Pentagon, a number of people who are senior executives of America’s biggest defense contractors- Lockheed Martin, Northrop Grumman Boeing, and various others- there is this constant movement of people between these sorts of positions and between government positions. The sorts of ways in which the Cheney’s and Rumsfeld’s of this world moved effortlessly between government and the private sector, generals between the military and the private sector.
Now, all of these people, through the team that Trump has put together, the team of John Bolton, Mike Pompeo, etc, etc. These are all people who are an integral part of this national security elite. And I’m not talking about some sort of conspiracy here, where these people meet in dark, smoke-filled rooms on a regular basis to discuss what they need to do and how they need to go about convincing the president. These people, who have huge political, personal, and economic interests at stake in these sorts of decisions, know exactly the sort of direction they need to move into not only for their own personal benefit, but to ensure that their own position politically is retained, maintained, and reproduced.
So, there is a massive grouping of people, starting with the executives of the defense contractors and their tens of thousands of lobbyists. Then, very senior figures, both within the Pentagon now, and those who’ve retired from the Pentagon- who go straight into very well-paid executive positions amongst the defense contractors and are the very commentators we see in the mainstream media talking up the need to, for instance, end the Iranian deal. And then there would be the people who are bought from the stratas of society into the government itself, who are sitting at the right hand of the president. And here you have to include his Chief of Staff, John Kelly.
So, all of these people with a military background or with some sort of role in the defense industry, the intelligence community, literally all move in the same circles or walk through the same revolving door. And these are the voices that are persuading the president on these sorts of irrational, illogical actions that he’s taking- that in my opinion, are not in the interest of the United States of America, are in the interests of the vast majority of the people in the world.
I should also just add, then, that this is not just an American problem. In the United Kingdom, where I live and work, our prime minister, Theresa May, has an informal adviser, her husband. He happens to be a senior partner at a huge private equity firm. It has come out in the United Kingdom in the past couple of months- from the bombings of Syria, from the decision to end the peace deal with Iran, the Prime Minister, Theresa May’s husband, has made a huge personal fortune out of these decisions. And it is for that reason that Theresa May will follow Donald Trump’s lead in taking actions that are not in the United Kingdom’s best interests. And, as I say, Not in the United States or the world’s best interests. So, there are geopolitical factors, absolutely. But there are also economic factors at play here.
BEN NORTON: Well we’ll have to conclude our discussion now. I was joined by Andrew Feinstein, who is the executive director of Corruption Watch UK, and the author of The Shadow World: Inside the Global Arms Trade, which was recently made into a film. Thanks for joining us, Andrew.
ANDREW FEINSTEIN: Thanks for having me.
BEN NORTON: Reporting for The Real News, I’m Ben Norton.