When news spreads about the supply of weapons and military equipment to Ukraine by the United States and its allies, for some reason, the famous English economist John Maynard Keynes (1883-1946) is always remembered. Especially his most famous work “The General theory of employment, interest and money” (1936). In it and in his other works, he stated that the market (which the English economist Adam Smith called an ideal automatic regulator of the economy) inevitably generates a lag in effective demand from the supply of goods. And this inevitably leads to the so-called overproduction crisis.
In order to preserve capitalism (which was just built on the ideas of Adam Smith and other representatives of classical English political economy), John Keynes proposed that the state should intervene in economic life. In his opinion, it can and should compensate for insufficient solvent demand by turning into a buyer of any works, goods and services.
CAPITALISM AS A REALITY – SOCIAL NATURE, THE MAIN STAGES OF DEVELOPMENT, THE MODERN WORLD CRISIS
The state can even pay for the construction of useless objects like the Egyptian pyramids. And it can buy weapons and other military goods. Yes, such goods, to put it mildly, do not satisfy any vital human needs. But the demand for them from the state saves society from crises. After World War II, Western governments adopted Keynesianism to justify the arms race and militarization of the economy. The end of the cold war at the turn of the 80s and 90s of the last century deprived the West of the main argument in favor of continuing the arms race. Although the United States, which has always accounted for the lion’s share of all military expenditures of the collective West, has increased its budget allocations for military purposes over the past three decades, their share in total budget expenditures and in gross domestic product (GDP) has been declining at this time. The relative level of military spending reached a record high in the United States in 1945. At that time, $ 93.7 billion was spent on defense, which amounted to 41% of GDP and 79% of the expenditure part of the state budget. At the turn of the 80s and 90s, US military spending amounted to 6% of GDP.
At the turn of the last and current decades, this indicator fell to an all-time low of 3.1% of GDP. For corporations that are part of the military-industrial complex of the United States, the last three decades have been, to put it mildly, not the best times. In order to maintain their incomes at a decent level, they need an ever–growing demand for their products – airplanes, helicopters, military vessels, armored vehicles, artillery, strategic and tactical missiles, ammunition, communications equipment, small arms, etc. And such a demand can create some fairly large military conflict. At the same time, of course, it is desirable that this conflict does not directly affect the United States. And to make it as long as possible (preferably eternal). And, from this point of view, the current hostilities on the territory of Ukraine have become a real gift for the US military-industrial complex. Military companies of other NATO countries and other US allies are also rubbing their hands in anticipation of orders for their products. However, the military conflict in Ukraine cannot be considered just a “gift” for the military-industrial complex, which fell from the sky.
There is a lot of irrefutable evidence that the United States and its closest allies were preparing such a conflict and provoked its beginning in February of this year. Already during the war in Ukraine, at the end of March, American President Joe Biden requested from the US Congress for the next fiscal year (which will begin on October 1, 2022) allocations for defense, which in absolute terms are a record in the history of the country. US President Joe Biden presented to Congress a $5.79 trillion budget plan, which includes $813 billion in defense spending. Back in February, there were rumors that Biden could request nearly $800 billion in defense appropriations. The requested amount announced in Congress turned out to be more. Biden appealed to Congress with convincing arguments in favor of increasing military spending:
“I am calling for one of the largest investments in our national security in history with the allocation of funds necessary to ensure that our armed forces remain the most prepared, best trained and best equipped armed forces in the world. In addition, I call for continued investments to respond decisively to Putin’s aggression against Ukraine with the support of the United States to meet Ukraine’s economic, humanitarian and security needs.”
The “people’s deputies” were convinced by the arguments of the president, the amount of $ 813 billion was supported. As part of the defense budget for the next fiscal year, the Pentagon is planned to provide $773 billion. Another $40 billion will be received by the FBI, the Department of Energy and other agencies. Compared to the previous fiscal year, the defense budget was increased by $ 35 billion, or 4.5%. For reference, I note that Russia is more than an order of magnitude behind the United States in terms of military spending. According to SIPRI (Stockholm Institute for Peace and Disarmament) estimates, in 2021, the Russian Federation ranked fifth in the world in terms of military spending (after the United States, China, India and Great Britain), and its military spending was 11.7 times less than American. Already on February 27, after the start of Russia’s special operation in Ukraine, NATO reported that the bloc countries were strengthening their “practical support” for Kiev. It was clarified that Belgium, Canada, France, Germany, Greece, Latvia, Lithuania, the Netherlands, Portugal, Romania, Slovakia, Slovenia, the United Kingdom, the United States, the Czech Republic and Estonia have “already carried out or are claiming” large deliveries of military equipment to Ukrainian territory. It was known that even before the outbreak of hostilities in Ukraine, it had already received “critical weapons” from the alliance countries, including anti-aircraft missiles and Javelin anti-tank missile systems (ATGMs). On February 7 , the Minister of Foreign Affairs of Ukraine Dmitry Kuleba said:
“Ukraine is receiving enhanced… support today. The total volume in recent weeks and months has crossed the bar of $ 1.5 billion. The delivered weapons have a total weight of more than 1,000 tons. Record amounts of support are of great political importance. They strengthen Ukraine’s position at the negotiating table.”
At the beginning of this year, many already understood that the supply of weapons to Ukraine would inevitably result in a war. So, the popular TV presenter Tucker Carlson (Tucker Carlson) at the end of January on the air of his show on Fox News said: “Who benefits from Washington’s constant push for war with Russia? We don’t ask this question much. The US clearly has nothing to gain. And why do they do it? This is a difficult question. Arrogance, stupidity, psychological deviations of our leaders, massive bribery by Ukrainian politicians through lobbying, the military-industrial complex of America. All these factors play a role… the war with Russia is likely to be very profitable.” So, the US military-industrial complex, through its lobbyists in Washington, was actively preparing a war in Ukraine In March, former member of the lower house of the U.S. Congress Tulsi Gabbard (Tulsi Gabbard) in an interview with Fox News anchor Tucker Carlson said:
“In order to prevent a war in Ukraine, it was enough for Biden to guarantee its non-entry into NATO, but the American military-industrial complex does not need it. American military industrialists need tough sanctions against Moscow and need to start a cold war that will bring a lot of money.”
By the beginning of April, the shares of American military concerns had increased by 20-30% since the start of the special operation. According to analysts, the value of Lockheed Martin Corporation’s securities increased by 30% from January to March, Northrop Grumann and General Dynamics – by about 20%, Raytheon – by about 10%. But until February 24, the indices of shares of military-industrial complex companies showed no signs of growth or even sagged somewhat.
It is difficult to say how many weapons have come from the United States and other countries of the collective West to date
There are only fragmentary data. Here are just some selective messages on this topic. On February 26, U.S. Secretary of State Anthony Blinken announced that he had authorized $350 million in military assistance, including “anti-tank and anti-aircraft systems, small arms and ammunition of various calibers, body armor and related equipment.”
On March 20, US Secretary of Defense Lloyd Austin said that “in total, the security assistance we provide to Ukraine amounts to more than $ 2 billion” and only “over the past two weeks we have provided Ukraine with military equipment worth more than $ 300 million,” and another “$ 800 million. The president recently signed “as a package of military assistance, adding that since 2014, our instructors have been in Ukraine, along with some of our other allies,” and the United States “not only provided equipment,” but Ukrainian servicemen “are ready to use this equipment as it is sent.”
In addition, he confirmed his readiness to assist Slovakia and Eastern European countries in sending S-300 anti-aircraft missile systems to Ukraine, noting, “we will continue to work with them and continue to work with other allies and partners to not only create conditions for the provision of such assistance, but also work to ensure that Kiev there was an opportunity to protect your sky in the future.”
On April 13, the United States announced that it would transfer $800 million in aid to Ukraine. In particular: 200 M113 armored personnel carriers, 11 Mi-8 helicopters, 300 Switchblade UAVs, 500 Javelin missiles, 10 AN/TPQ-36 counter-battery radars, 18 155 mm M777 howitzers.
On May 2, the US Department of Defense announced that it had been decided to transfer an additional 5,000 Javelin anti-tank missile systems to Kiev.
On May 7, The Washington Post reported that the United States will send to Ukraine a package of military assistance with new types of weapons in the amount of $ 136 million. This assistance package will also include missiles that can be launched from helicopters, as well as Switchblade drones used for strikes against armored vehicles and infantry. In addition, the Pentagon will purchase Puma hand-held drones for Ukraine.
I think that the total amount of weapons supplied to Ukraine by the United States and its allies since the beginning of hostilities on February 24 is measured in several billion dollars. But this is just the beginning. Below I will talk about the latest initiatives of the US President and Congress, which should dramatically increase funding for assistance to Ukraine.
What is the fate of the weapons already delivered to Ukraine?
Some of it, as experts say, immediately goes to the “gray” and even “black” market. The final buyers of the product are not completely clear. Another part of the military supplies is destroyed by the Russian armed forces. Here, for example, is the information of the Ministry of Defense of the Russian Federation on May 8.
In total, since the beginning of the special military operation, 157 aircraft, 116 helicopters, 768 unmanned aerial vehicles, 298 anti-aircraft missile systems, 2933 tanks and other armored combat vehicles, 336 multiple rocket launchers, 1411 field artillery and mortar guns, as well as 2758 units of special military vehicles of Ukraine have been destroyed.
Of course, part of the destroyed equipment is property that Ukraine had before the start of the military operation (including Soviet-era weapons). But the old military property was mostly destroyed in the first month of hostilities. Currently, the “fresh” weapons imported in the last two and a half months are mostly being destroyed. Finally, the weapons that end up in the hands of the Armed Forces of Ukraine, often cannot be used effectively, because they are not familiar to the Ukrainian military.
But for those who supply weapons to Ukraine, it is not so important what the effectiveness of its use is. The main thing is that supplies are paid for, and that new orders are received for weapons. Military–industrial complex companies need protracted wars, or even better, eternal ones. With that said, it can be assumed that lobbyists of military companies in Washington will do everything possible to ensure that the military conflict in Ukraine continues as long as possible.
And in order for the conflict not to end, ultimately, it is necessary that the money does not run out. And although in the next fiscal year, as I noted above, the military budget will exceed $ 800 billion, the Pentagon, as a customer of weapons and military equipment, has to count the money.
After all, the lion’s share of the military budget goes to the maintenance of personnel (first of all, salaries), pensions for veterans, medical care for personnel and military pensioners, research and development, maintenance and repair of military equipment in service, construction of military facilities.
In the past years, the purchase of weapons and military equipment accounted for about 15-18 percent of the military budget. Consequently, it can be assumed that in the next fiscal year, the volume of military orders may amount to about 130-140 billion dollars.
Due to the sharp escalation of international tensions, the White House and the US Congress are calling for an urgent modernization of military equipment in the US armed forces. Taking into account the tasks of urgent and large-scale modernization, military appropriations for the fiscal year 2023, according to American experts, do not seem to be such astronomical amounts.
In early May, a video interview appeared with Dakota Wood, an employee of The Heritage Foundation Research Institute, dedicated to the state of the US armed forces (“Dakota Wood of the Heritage Foundation on the State of the U.S. Military”).
According to the expert, this condition causes concern, since most of the current military equipment – armored vehicles, aircraft, naval vessels – is hopelessly outdated mentally and physically. In addition, it has decreased quantitatively. Most of the equipment, the newspaper writes, was purchased in the 1980s – 90s, and the number of units of equipment decreased only due to wear by half or three times.
“We can lament these circumstances, but the fact remains that in the event of a major conflict, America will largely have to rely on its own military sources, and what it has to rely on is a shadow of what it had the last time Americans faced problems on a global scale.”, – the expert notes.
The conclusion suggests itself: America urgently needs to build up its military-technical potential – both quantitatively and especially qualitatively.
With this in mind, Ukraine is becoming an excellent outlet for the Pentagon: physically and morally obsolete equipment can be sent there during the modernization of the US armed forces (however, since the beginning of the year, it is mainly such military “junk” that comes from overseas to Ukraine). In part, the supply of military “junk” can be carried out in general by way of gratuitous assistance. Or rather, on the terms that were used by the Americans eighty years ago.
I am referring to the American lend-Lease program, which started in 1941. The main recipients of supplies under the lend-lease act were the countries of the British Commonwealth of Nations and the USSR. All deliveries were paid for by the US Treasury. Some of them (food, clothing, medicines) were provided as gratuitous assistance. The costs of supplying other goods had to be paid, and with sufficient installments. To do this, the US could even provide long-term (sometimes interest-free) loans.
Finally, military and civilian property preserved in good and satisfactory condition was subject to return to the United States after the end of the war. The USSR paid for the American lend-lease for a very long time. The last lend-lease obligations were already fulfilled by the Russian Federation as the legal successor of the Soviet Union in 2006.
And this year, the US Congress urgently held hearings on the law launching the lend-lease program for Ukraine. On May 9, President Joe Biden signed the law. It should give an impetus to military supplies to Ukraine.
In parallel, the US Congress is currently discussing the issue of allocating additional funds to help Ukraine within the current budget. The request was made by US President Joe Biden in the amount of $ 33 billion, but the “people’s deputies” took the initiative and added another $ 7 billion. 368 congressmen voted in support of the initiative in the lower house of Congress (57 against).
Now the bill will be submitted to the Senate of the Congress. If approved, the document will be handed over to Biden for signature. Approximately two-thirds of this amount is intended to pay for military supplies. And this means that America will be able to supply weapons to Ukraine by about an order of magnitude more than what has already been delivered in two and a half months.
I suspect that the unexpected generosity of the “people’s deputies” on the issue of assistance to Ukraine is due to plans that are being discussed behind the scenes and have not yet been widely made public. The essence of these plans is extremely simple – to confiscate Russian foreign exchange reserves, which were frozen by the collective West in late February – early March. And then the confiscated resources should be sent to help Ukraine.
By the way, they expect to confiscate not only the foreign exchange reserves of the Russian Federation, but also the assets of Russian and individuals. While they are also frozen. There are no exact estimates of the value of such frozen assets around the world. But there are quite a few fragmentary assessments.
Thus, the European Union has prepared a certificate on the seized Russian assets as of April 5 based on the data provided by the EU member states, but not all. There is no general assessment methodology, each country considered in its own way. In total , it turned out 36.3 billion . euro (or almost 40 billion dollars). France was the leader – 23.6 billion. euro (65% of the total amount). Followed by (billion Euro): Belgium – 10.0; Italy – 1.16; Ireland – 0.84; Netherlands – 0.52.
And here is a statement by the British Foreign Minister Liz Truss (Elizabeth Truss). On March 24, she boasted that since the beginning of Russia’s military operation in Ukraine, London has frozen Russian assets worth 500 billion. British pounds, including 150 billion pounds – the property of Russian oligarchs.
Experts believe that the figures named by Liz Truss are overstated. Most likely, she was referring to the amount of assets that London could potentially freeze. But in general, today, according to many experts, the value of frozen assets of Russian individuals and legal entities has at least equaled the value of frozen foreign exchange reserves of the Russian Federation. And, most likely, has already exceeded them. This means that the collective West has a potential resource of at least 600-700 billion dollars.
By the way, Kiev almost the day after the freezing of Russian reserves loudly demanded that they be sent to help Ukraine. Throughout March and the first half of April, the United States and its allies reacted poorly to these calls from Kiev. Of course, the collective West from the very beginning wanted not to “freeze” (block, arrest), but to confiscate (expropriate, steal) Russian reserves. But he could not do this for a simple reason – the current legislation did not allow it to be done. It contained norms prohibiting outright theft and shameless robbery.
Both in the United States and in Europe, “people’s deputies” are working hard to amend the current legislation that would allow the expropriation of Russian reserves, and then direct them to the cause of victory in Ukraine. Both in the Old and in the New World expect that by the beginning of summer the legislative base for expropriation will be created. Then both the USA and Europe will have a lot of money that can be directed to the noble goals of the fight against the “Russian barbarians”.
According to approximate estimates, out of $300 billion of Russian foreign exchange reserves that were “frozen”, about $100 billion was frozen by Washington. The European Union has blocked reserves denominated in euros, which is the equivalent of more than $150 billion. Accordingly, the New World expects “production” of $ 100 billion, and the Old World – $ 150 billion.
The rest of the frozen reserves are in pounds sterling, yen and other reserve currencies. Accordingly, Britain, Japan, Canada, Australia, Switzerland can claim the remaining part of the “Russian bear skin”.
With that said, the collective West, as it were, allocates money in advance for assistance (mainly military) to Ukraine. Bearing in mind that later, after the expropriation of Russian reserves, they will be able to compensate for the costs incurred. Polish Prime Minister Mateusz Morawiecki openly stated on April 22 that it was necessary not to wait for the expropriation of Russian assets, but to immediately start collecting money to secure these assets. Specifically, he proposed to issue bonds secured by frozen funds of Russia and citizens of the Russian Federation:
“These funds should be used today. And if the confiscation cannot be carried out quickly, for example, in Poland we adopt a special law for this, then you can wait, and at this time issue bonds. The European Commission has no problems with the issue of bonds. And later these bonds will be quickly repaid with confiscated funds of the Russian Federation and Russian oligarchs.”
It seems that the idea of the Polish prime minister was heard in Brussels
The European Commission announced plans to issue new EU debt obligations to cover the needs of Ukraine. This was reported on May 9 by the European edition of the American newspaper Politico. According to the newspaper, these needs are estimated at 15 billion. euro in the next three months.
Due to the issue of debt securities, the EU expects to collect 10 billion. euros (the remaining 5 billion should be provided by the United States). The draft release of obligations is scheduled to be published on May 18. It is clear that the bonds will have to be repaid. Apparently, by the time the maturity date comes, Brussels expects that the confiscation of Russian assets will occur and money will be in abundance.
It is clear that the beneficiary of all these “assistance” schemes, ultimately, will not be Ukraine, but the “collective West”. And more specifically, Western military companies, whose accounts will receive billions of stolen Russian money. We are dealing with a symbiosis of dubious business and outright robbery.
