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Why has the concept of war stuck around? Humans are no longer barbaric clusters of territories fighting mindlessly over land, cattle, or gold; then why does warfare linger in this day and age? Conventional wisdom would have one believe that the idea of war is detrimental to all parties involved, a classic lose-lose. The world has seen a decline in instances of war, but the God of War, Ares, somehow manages to live on. Let’s talk about the money behind the madness.

War 101: The Basics

Erich Hartmann, a German fighter pilot under the Nazi regime, was one of the best to ever grace the sky; here it what Der Schwarze Teufel (The Black Devil) had to say about war:

“War is a place where the young kill one another without knowing or hating each other, because of the decisions of old people who know and hate each other, without killing each other.”

National Geographic gives a straightforward definition of war: a violent conflict between states or nations. Famous wars include World Wars I and II, the Napoleonic Wars, the Korean War, and the Indo-Pak War of 1965. Recent examples include Myanmar’s Civil War and Russia’s War in Ukraine.

A war usually breaks out when there is an intense dispute between or among parties and matters have escalated to the point where armed conflict is the only way to solve the dispute. However, that is what politicians would like the general public to believe is the only possible scenario for starting a war. There are countless instances of, well, stupid wars; the Pastry War is probably the finest example. In the late 1830s, Monsieur Remontel, a French national living in Mexico, wrote to the French government, complaining that his pastry shop was ransacked by drunken army forces and that the Mexican government refused to pay his demanded compensation of 60,000 pesos. Ever since gaining independence from Spain in 1821, Mexico had been in a state of civil unrest; the Presidency changed hands about 20 times in the first 20 years of independence. At the time, Mexico also owed significant sums of money to European nations. France demanded that Mexico pay a compensation of 600,000 pesos for the hardships faced by French nationals during these turbulent times. Mexico denied this demand. France proceeded to blockade the Mexican port of Veracruz, and Mexico declared war on France. Remontel’s letter is said to be the tipping point and was regarded by French papers as the casus belli for the war.

In the ‘The Reasons for Wars—an Updated Survey’, Matthew O. Jackson and Massimo Morelli give two prerequisites for a war between rational actors:

  1. At least one of the sides involved has to expect that the gains from the conflict will outweigh the costs incurred.

  2. There has to be a failure in bargaining so that, for some reason, there is an inability to reach a mutually advantageous and enforceable agreement.

The object of war is simple: destroy the enemy’s ability and will to fight. Historically, the party that was able to accomplish this without encountering major losses reaped massive war benefits, such as control over conquered land, access to additional minerals, strategic ports, etc. However, in these modern times, it is not that simple. Even if a nation wins a war, massive condemnation on a global scale follows, and it will likely be cut off from the world economy. Modern wars are a tough nut to crack, but that does not mean they have no upside.

Money, Money, Money…

Wars can be fought for a multitude of reasons: ideological, religious, economic, as a means of generating national unity, or even for mere displays of power. Nikolaos Tzifakis, Associate Professor of International Relations at the Department of Political Science and International Relations of the University of the Peloponnese, writes in Encyclopedia Princetoniensis (The Princeton Encyclopedia of Self-Determination):

“In general, access to distant markets and scarce resources, imperialism, concerns about the impact of economic interdependence and population growth have been the most common economic causes of the outbreak of international wars, while the ‘greed’ and the exacerbation of ‘grievances’ are considered to be the main motivations for internal conflicts.”

Understanding the economics of making money from war is relatively easy when we talk about ancient times. The Greeks and the Romans were famous for waging war against their neighbours in a bid to seize territory and resources. This made economic sense. If the projected amount of winnings is quite significantly higher than the cost required to defeat the enemy, going to war makes perfect sense. In addition to valuable resources, add new strategic locations such as ports and trade routes to the empire’s arsenal. Julius Caesar’s conquest of Gaul is a good example of armed conflicts dictated by the pursuit of wealth. Another example that comes to mind is Mahmud Ghazni’s 17 attacks on India, including the infamous plundering of the Somnath Temple.

The New Age

When it comes to the modern era, making money is a bit complicated. The name of the game is gaining influence across territories and using that to one’s economic advantage. The instance of war also gives countries the golden opportunity of setting up their military bases in other countries, which are of great strategic value.

It is not wise on a country’s behalf to directly engage in active warfare in this day and age. So what can be done? A Polish proverb sheds some wisdom:

“Where two are fighting, the third wins.”

The idea is to avoid confrontation and instead build economic bounties by taking advantage of other parties already at war or even making them fight against each other. This can be done by selling weapons to them in their struggle for power. The ideal situation? Two parties go to war, and the third party sells its weapons to both under different contracts and emerges as the real winner. Such a situation is extremely hard to find these days because the two-faced nature of the third party will likely be repulsive for both parties at war, but the scenario provides a gist of why the party that is not directly involved will want the conflict to roll on or add fuel to the fire just when it starts going out.

The traditional benefits of a full-scale war can be obtained in part through the mechanism of proxy wars in our times. Cambridge Dictionary defines proxy war as “a war fought between groups or smaller countries that each represent the interests of other larger powers, and may have help and support from these”. Proxy wars have immense cost advantages. It is significantly cheaper to send support and train soldiers as a proxy than to fight a war themselves. Other advantages include acceptance of local fighters by the proxy population, a reduction in the chance of public uproar as it is not one’s own force laying their lives on the battlefield, and the ability to deny any involvement in supporting proxies.

Who Gets Rich?

Take, for example, Maryland-based Lockheed Martin. It is the largest defence contractor in the world. The company makes a wide range of military aircraft, including the F-16, F-22, and F-35 fighter jets, as well as sonar technologies, ships, missile defence systems, and missiles used by the US Navy.

According to USA Today, more than $35 billion of Lockheed Martin’s arms sales in 2017 came from the U.S. government; this figure is more than the entire budget of the Internal Revenue Service and Environmental Protection Agency combined.

The Middle East finds itself in a precarious situation. It has become the centre of a large number of intertwined wars and conflicts. Take the example of the Syrian Civil War. According to Vox, at one point in time, the rebels were fighting against the government; the Saudis funded the rebels, and Iran in turn stepped up to back the Assad regime (Iran and Saudi are bitter rivals); the U.S. then got involved at a later stage, and seeing this, Russia decided to enter the game as well. The separatist Kurds and Turkey also became major players in the conflict.

The war in Afghanistan is another great example of a state in war-caused turmoil. In 1979, the Soviet Union invaded Afghanistan in an attempt to back the newly established communist regime. At the time, the majority of Afghans lived in rural areas. Vox reports that the rural folk were known to be conservative and strictly devoted to Islam; the leftist policies that the government tried to implement did not sit very well with them. Independent militias, collectively known as the Mujahideen, were set up to revolt against the regime. The Mujahideen is said to have received support from the likes of the United States through ‘Operation Cyclone’. Finally, after a decade-long struggle, the Soviets left. Mujahideen groups proceeded to turn against each other in a bid for power, and Afghanistan found itself in the midst of a civil war. In 1994, Mullah Muhammad Omar laid the foundation for the Taliban in the Afghan city of Kandahar. Empowered by local support, especially from the Pashtuns, the Taliban seized power in 1996. Post the 9/11 attacks of 2001, the U.S. decided to invade Afghanistan and what followed was a two-decade-long unrest characterised by drone strikes, air bombing and night raids; Afghans suffered, and the nation was left in ruins at the end of the war in 2021.

Such hostile situations present golden opportunities for weapon sales. Conflicts lead to insecurities, and the ones at war seek to bolster their military units to the best possible extent. Researchers at Brown University estimate that the United States has spent $2.313 trillion on the war since invading Afghanistan in 2001 (including operations in both Afghanistan and Pakistan), resulting in an expenditure close to the combined GDP of Canada and Pakistan in 2021.

Coming back to Lockheed Martin, could such conflicts benefit their sales figures?

The U.S. authorises the sale of Lockheed weapons to other nations. If the sales figures are rising, will it not be beneficial to the U.S. from an economic point of view? Similarly, if any other superpower, say Russia or China, supplies weapons to a proxy, will it not lead to economic gain?

Not only Lockheed, but other companies like Raytheon and Supreme Group B.V. have also been known to benefit from war situations in the past.

But there is an interesting twist to the story. The U.S. Government was responsible for about 70% of Lockheed’s revenue in the form of federal contracts in 2020, as reported by Forbes. The lawmakers in Congress that sanction weapon deals are allowed to invest in the free market, and unsurprisingly so, quite a few of them have made money from stocks of defence companies like Lockheed as a result of massive federal expenditure outlays on arms.

It would not be a long shot to think of bureaucracy the world benefiting in a similar fashion due to the instance of war. Unfortunately, this is the ugly world of today, where war has just become another means to satisfy the selfish interests of a select few. War destroys lives and ruins communities; economic gain simply cannot justify the demolition of dreams.

It is time for humanity to unite against Ares.

By Harshbir Singh Ahuja

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