By Xin Ping – Nov 11, 2022
For the United States, war is an extremely profitable business. In fact, the country was crowned as the world’s sole superpower by the largest and most devastating war in human history.
Its gross national product (GNP), measured in constant dollars, grew from $88.6 billion in 1939 to $135 billion in 1944, and the share of war-related production in GNP jumped from only 2% to an astonishing 40%, according to British economic historian Alan Milward.
Right now, history seems to be repeating itself. Eight months into the Russia-Ukraine conflict, when the flames of war are putting ordinary folks in Europe through a hard time, Uncle Sam’s war business is also on fire—riches are piling up from arms sales, Europe’s energy crunch, and dollar weaponization.
Arms production and sale have always been a cash cow for the United States. Just when the country’s general economy is struggling against multiple headwinds, its notorious military-industrial complex is enjoying a golden opportunity.
Kiel Institute, a German think tank, found that the US support has accounted for about 75% of the total military assistance of more than $35 billion committed by Western countries to Ukraine as of October 21.
Just one month after the crisis broke out, the overall market value of the West’s weapon-manufacturing sector had grown by 12%, from $630 billion to $705 billion, noted the Russian newspaper Novye Izvestia. The lethal business is expected to secure a 7% growth in the second half of 2022, and the annual revenue of the West’s military-industrial complex will reach $510 billion in 2025, an increase of 106 billion dollars from that of 2021. Pocketing most of it will be top American defense contractors, apparently.
The United States is also plundering Europe’s burning house to make money by pressuring Europe to stop energy inflows from Russia, so that they have to buy energy resources from the United States at a high price. Data from Business Insider showed that American companies can earn more than $100 million from every ship transporting liquid natural gas to Europe. No wonder ExxonMobil, an American energy giant, has witnessed a 58% jump in its stock price this year.
French President Emmanuel Macron has openly complained that the US energy prices for France were four times those on US soil. European politicians are taking from their US friends business lesson 101: never mix friendship and business.
And as always, the United States is having a rake-off from its powerful dollar. In times of crisis, global investors flock to dollar assets for safety. Adding to this are the Fed’s rate hikes, which have come after it flooded the world with cheap dollars in 2020 and 2021 to boost an American economy hit by COVID-19. Central banks of other economies have to follow suit to avoid capital outflows.
Around the world, commodity prices are surging; inflation is galloping; debt servicing becomes unbearably expensive; capital flight is bringing vulnerable countries to the brink of economic disaster. Even advanced economies such as Britain, the European Union and Japan are not spared.
We are now at the other high end of the “dollar smile”—a miserable world economy pushing up the dollar value—but frowns are all we can see in the rest of the world.
There are winners and losers in wars. Yet somehow, the United States has always managed to emerge triumphant. While the prospects of the current conflict remain uncertain, one thing is sure: the United States will be having a party.
Xin Ping is a commentator on international affairs, writing regularly for Xinhua News Agency, Global Times, CGTN, China Daily, etc.
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