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President Trump delivers remarks at the White House Digital Assets Summit.
They discuss the desire to pass Stablecoin legislation before the August recess and building America up to be "the Bitcoin superpower of the world."
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Last June, the Kyiv School of Economics’ KSE Institute and the Yermak-McFaul International Working Group on Russian Sanctions discovered that much of Russia’s weaponry, including ballistic and cruise missiles, uses electronic components from the US, UK, Germany, Netherlands, Japan, Israel and China, obtained by roundabout routes and with the connivance of Chinese traders.
The arms trade sometimes involves unlikely actors. Ukraine’s Come Back Alive is probably the only NGO in the world supplying drones, rocket launchers and other heavy weapons to troops with government authorisation. Other NGOs supply tablets to be used for artillery guidance, body armour and anything else that makes life easier for soldiers (6).
A wealth of new equipment is flooding the arms market. Drones are now an indispensable part of military arsenals, and use of satellite systems is becoming widespread; the US has a sizeable lead in this area
How the Ukraine war increased U.S. dominance of the global arms trade
U.S. arms exports reached 43 percent of the worldwide total as Ukrainian imports skyrocketed following the Russian invasion, according to research by SIPRI.
By Adam Taylor
As the world rearms, the defence industry licks its lips
Arms spending has rocketed since Russia invaded Ukraine, as nations scramble to upgrade their arsenals in a volatile geopolitical climate. For arms manufacturers, this means fat profits.
Global military spending rose for an eighth consecutive year in 2022 to a post-cold war peak of $2.24trn or 2.2% of global GDP, according to the Stockholm International Peace Research Institute (SIPRI). French army chief of staff General Pierre Schill has warned that ‘major wars are back, and once more becoming a favoured way of settling differences’ (1).
Things started to get out of control when Russia annexed Crimea in 2014, and later parts of the Donbass. Since then the world has been rearming. Defence industries have stepped up production and are competing for export market share. Russia has pulled out of several arms treaties and its 2024 defence budget is up nearly 70% year on year, back to 1980s levels. Finance minister Anton Siluanov says it includes ‘everything needed for the front, everything needed for victory’. The 10.8trn roubles ($120bn), around 6% of GDP, will be used to accelerate production of munitions, tanks and drones, pay troops and compensate the families of those killed in action.
Russia was once the world’s second largest arms supplier (after the US), accounting for 20% of global sales, mostly to Asia, the Middle East and Africa, but has exported little since 2022. Its industry is currently busy supplying its own army in Ukraine, where more munitions and equipment have been lost or expended than at any time since the second world war. Russia is estimated to have fired more than two million shells in Ukraine in 2023, twice as many as in 2022, and the Dutch defence analysis website Oryx says it has lost 10,000 military land vehicles (damaged or destroyed). Western, especially US, sanctions have also prevented major Russian deals with the Philippines (Mil Mi-17 helicopters), Indonesia (Sukhoi Su-35 fighters) and Kuwait (T-90 tanks).
Nor will there be any orders from former Warsaw Pact members or from the Baltic states, which have joined NATO. These countries too are rearming. Between 2014 and 2022 Lithuania’s defence spending rose by 270%, Latvia’s by 173%. The defence budgets of Finland, Hungary, Slovakia, Romania, Poland and the Czech Republic have also soared. Poland now spends 4% of GDP on defence and wants to double the size of its army. It is buying Abrams tanks, HIMARS rocket launchers and Apache helicopters from the US, and tanks and howitzers from South Korea, which will make it a NATO heavyweight, alongside Germany.
Germany has yet to spend the $110bn allocated to the special fund for modernising the Bundeswehr in 2022 but, showing little regard for ‘European preference’ (prioritising EU suppliers), has recently signed a deal to buy US-Israeli Arrow missile defence systems and placed an order for F-35 fighters with Lockheed Martin.
With Russia’s spare capacity taken up by the Ukraine war, France has risen to second place in the global supplier rankings, with total exports worth a record $30bn in 2022, thanks notably to Dassault’s sale of Rafale fighters to the United Arab Emirates. Although these were initially slow to sell (partly because of their price), they are now a key part of France’s export lineup.
Alongside Europe’s major arms exporters – the UK, Germany, Italy and Spain – new actors are emerging. Profiting from the ‘Ukraine effect’, South Korea, already one of the world’s top ten producers, is openly aiming for fourth place in the export rankings after France and Russia (2).
Japan, though uncomfortable with the idea of rearmament, fears that ‘Ukraine today may be East Asia tomorrow’, as prime minister Fumio Kishida put it. Japan is worried by growing tensions between China and the US, its close ally since 1945, and has decided to abandon pacifism (3). Its new national security strategy highlights the ‘unprecedented challenge’ posed by China’s regional ambitions. Its defence budget (just over $50bn in 2023), has until now been capped at a notional 1% of GDP but is due to rise to 2% by 2027. This will make Japan a regional heavyweight and a new client for arms dealers. The US has already promised Tomahawk long-range cruise missiles, until now restricted to the UK and Australia.
Several Eastern European countries, including Poland, have given Ukraine some of their older, often Soviet-era, equipment. Slovakia’s arms industry, dormant since the cold war due to a lack of customers, is now producing self-propelled howitzers, some of which are intended for Ukraine, the rest for its own army. They are being promoted as cheaper and more up to date than the French equivalent, the Caesar (4).
Major wars are back, and once more becoming a favoured way of settling differences General Pierre Schill
France spent $2.2bn on munitions in 2023, partly to rebuild its own stocks, depleted by the supply effort to Ukraine. Its 2024 defence budget of $51.7bn is up 7.5% year on year. According to a National Assembly report, it is, with Germany and the UK, among the countries that have done the most to ‘give Ukraine the means to stand up to the Russian army’ (5), with total aid worth $3.5bn, including transfers of artillery, armoured vehicles, shells and missiles, and training.
France also makes a large contribution to the European Peace Facility, an off-budget fund established by the EU mainly to fund actions such as providing defence equipment to Ukraine. Like the other countries involved, France regularly repeats that supplying weapons to a country that has been attacked and is exercising its legitimate right of self-defence does not make it a party to the conflict. However, it hopes its own arms industry will profit from the current situation.
Ethics and morality are secondary considerations in the arms business. Last June, the US finally agreed to send cluster munitions to Ukraine – ‘a very difficult decision’, Joe Biden maintained, even if it was ‘the right thing to do’. Over 120 countries (not including the US, Russia or Ukraine) have signed a convention banning them, because they kill indiscriminately and claim many civilian lives long after the fighting has ceased
Another example is the political whitewashing of Viktor Bout, a Russian arms dealer who inspired the film Lord of War (2005). Bout spent 15 years in prison in the US but in December 2022 was exchanged for Brittney Griner, a US basketball player convicted in Russia of smuggling and possessing cannabis. In July 2023 Bout was elected to the legislative assembly of Russia’s remote Ulyanovsk oblast, as a member of the ‘opposition’ Liberal Democratic Party of Russia.
Last June, the Kyiv School of Economics’ KSE Institute and the Yermak-McFaul International Working Group on Russian Sanctions discovered that much of Russia’s weaponry, including ballistic and cruise missiles, uses electronic components from the US, UK, Germany, Netherlands, Japan, Israel and China, obtained by roundabout routes and with the connivance of Chinese traders.
The arms trade sometimes involves unlikely actors. Ukraine’s Come Back Alive is probably the only NGO in the world supplying drones, rocket launchers and other heavy weapons to troops with government authorisation. Other NGOs supply tablets to be used for artillery guidance, body armour and anything else that makes life easier for soldiers (6).
A wealth of new equipment is flooding the arms market. Drones are now an indispensable part of military arsenals, and use of satellite systems is becoming widespread; the US has a sizeable lead in this area. There are tools for exploring the deep seabed (monitoring submarine cables, prospecting for polymetallic nodules) (7) as well as hypersonic missiles (a field led by the US and Russia), which are likely to be of interest to a growing number of militaries. There is equipment used to mount cyberattacks and defend against them, for information warfare or to protect telecoms networks. And of course, arms manufacturers are hard at work developing the next generation of tanks, fighter aircraft and ships for 2035-45.
Philippe Leymarie
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