Global Arms Profits Soar Amidst Geopolitical Tensions
The global arms industry is experiencing a boom, reaping nearly $600 billion in profits last year – a 4.2% increase from the previous year. This surge in earnings, as reported by the Stockholm International Peace Institute (SIPRI), coincides with ongoing conflicts in Gaza and Ukraine, as well as a broader climate of global security concerns.
While European arms companies saw a smaller 0.2% increase in profits, analysts believe this figure doesn’t fully capture the surge in demand and orders. This trend is mirrored in the performance of smaller arms manufacturers in countries like Sweden, Ukraine, Poland, Norway, and the Czech Republic, who have experienced significant profit increases driven by a surge in weapons orders.
“We will see in the coming years that this is just the beginning, because we have seen how the smaller players have been involved in increasing revenues, in this global growth," SIPRI researcher Lorenzo Scarazzato said. "But the biggest players are not yet reflecting these demands,” adding, “Once these larger companies, both in Europe and in the US, create these demands, we will see a significant upswing".
Some of the world’s largest arms companies, many with multinational operations, continue to dominate the industry. Airbus, the European aerospace giant, derived 18% of its overall revenue from arms production in 2023. While best known for its commercial aircraft, Airbus has been implicated in supplying weapons used in the conflict in Yemen and surveillance systems deployed against migrants attempting to reach Europe via the Mediterranean Sea.
In 2018, Airbus secured a $600 million (€570) deal with Israel Aerospace Industries to lease Heron TP drones to the German Ministry of Defence, highlighting the company’s involvement in the development and proliferation of drone warfare technologies.
The war in Ukraine has directly fueled a significant increase in profits for German arms manufacturers. Rheinmetall, headquartered in Dusseldorf, saw a 10% surge in profits due to its production of 155-mm ammunition and deliveries of Leopard tanks to the Ukrainian government.
Meanwhile, Turkish companies are also experiencing substantial growth, partly due to the country’s ambitious efforts to become self-sufficient in arms production and partly due to exports linked to the war in Ukraine. Baykar, a Turkish-owned company that produces armed unmanned aerial vehicles (UAVs) widely utilized in the Ukrainian conflict, witnessed a 25% profit increase, reaching $1.9 billion (€1.8).
The SIPRI analysis also highlights a concerning trend: a renewed focus on nuclear weapons modernization across the global arms industry. Nuclear development is emerging as a major profit driver for these companies. In the United Kingdom, Atomic Weapons Establishment, responsible for designing, manufacturing, and maintaining nuclear warheads, recorded the largest percentage increase in profit among British companies listed in the top 100, reaching $2.2 billion (€2.0).
The growing profits of the global arms industry raise complex ethical and security questions, particularly in light of ongoing conflicts and the escalating risk of nuclear proliferation.
