Who’s benefiting from Russia’s war on Ukraine? It’s the arms dealers and manufacturers
ABU DHABI, United
Arab Emirates — There’s always an element of the surreal at arms fairs. You catch it in the chipper tone of salespeople hawking new instruments of destruction; in the euphemisms — “defense” instead of “warfare,” “weapons platforms” rather than “guns” — sprinkled throughout glossy brochures; in the mini-lesson given by a jovial ex-soldier on best practices for operating an anti-tank missile system.
Now, there’s the added frisson of Europe’s biggest terrestrial armed conflict in decades — namely, Russia’s invasion of Ukraine, which has made one thing clear: Nothing invigorates the business of war like a war.
The combat in Ukraine, now in its second year, has jacked the global arms trade, fueling a new appetite for materiel not just in Moscow and Kyiv but also around the world as nations gird themselves for possible confrontations. The war has rocked long-standing relationships within the weapons industry, rejiggered the calculations of who sells what to whom and changed customers’ tastes in what they want in their arsenal.
Signs of those shifts abounded at last week’s International Defense Exhibition and Conference, or IDEX, the biennial arms bazaar held in the Emirati capital, Abu Dhabi. This year’s show was the largest in the event’s 30year history, organizers said, bringing in 1,350 companies, 350 delegations and about 130,000 attendees from 65 countries.
They flooded Abu Dhabi’s national exhibition center with enough armored vehicles, attack aircraft and air, land and sea drones to equip a not-so-small army.
Defense spending is surging in European nations seeking to keep up stocks at home while helping to arm Kyiv with rocket launchers, missiles and tanks. The German government has shaken off its usual hesitancy regarding military matters and pledged to spend $100 billion on reequipping its armed forces, though no money has yet been spent on weaponry.
In Asia, Japan and South Korea are boosting military spending in response to China, whose defense budget grew by 7% in
2022. That translates into Beijing’s largest-ever annual increase in absolute terms — $16 billion, adjusted for inflation, according to a report by the London-based International Institute for Strategic Studies.
Weapons companies are seeing their shares rise on the stock market to their best level in years, with indexes for the defense sector outperforming those tracking the broader market by a wide margin, experts say. That reverses a trend before the yearold Ukraine war of people putting their money in so-called ESG investments — those focusing on the environment and social and corporate governance — rather than the defense industry, said Kevin Craven, who heads the ADS Group, a trade organization representing British aerospace, defense, security and space companies.
“Now, one year on, you find people remembering that a government’s first duty is to defend its citizens, and actually the freedoms that we have require a strong military capability and defense industry,” Craven said.
He added that Britain’s robust support for Ukraine — it’s the second-largest contributor of military assistance after the U.S., supplying anti-tank missiles, artillery and armored vehicles — has generated interest in those products from prospective buyers.
Emirati officials insisted that the event was about commerce, not geopolitics. During his visit to the fair, Emirati President Mohammed bin Zayed al Nahyan said it highlighted the Emirates’ “approach of building bridges of communication and cooperation” so as to achieve “peace, stability and a better future for humanity,” according to local media — despite the lethal nature of the merchandise.
An example of new cooperation would be the Emirates’ growing military relationship with Israel, which had no fewer than 60 companies in its pavilion. The two nations, which formally recognized each other less than three years ago, have embarked on joint weapons development; at IDEX, the Emirati defense conglomerate Edge debuted an unmanned boat it had worked on with Israel Aerospace Industries.
But the war in Ukraine has made business with Russia a tricky one. The Emirates, a top regional ally of the U.S. that has sought deeper military links with Washington, risked backlash by welcoming a significant portion of Russian business — along with many emigres — blacklisted by the West.
Washington sent Treasury officials to the Emirates in January to warn Abu Dhabi that it would “continue to aggressively enforce its sanctions” against Russian individuals and institutions, and that companies doing business in what it called “permissive jurisdictions” could risk losing access to U.S. and European markets. Last week, it imposed sanctions on a Russian bank recently allowed to begin operations in the Emirates.
Despite the international sanctions, Moscow dispatched its top defense firms to Abu Dhabi. In what was perhaps a nod to political sensitivities, their displays were placed in the outdoor area of the convention — a roughly seven-minute walk and a sky bridge away from the Ukrainian and American pavilions in the main exhibition area.
To one side of Russia’s display, a quartet of blond women urged visitors to check out civilian versions of helicopters from manufacturers Mil and Kamov as a giant screen showed footage of their military counterparts in combat. On the other side was a large tent that served as a dedicated pavilion to Russian firms Kalashnikov, Rosoboronexport and Almaz-antey, which brought in about 200 fullscale samples of weapons, military equipment and ammunition, including many examples of the materiel now deployed in Ukraine.
Inside the tent, dozens of prospective customers — Algerian generals, representatives of several Asian countries, paunchy men surrounded by grimfaced bodyguards — milled around dioramas featuring Grad missile launchers and checked out shelves lined with weapons.