China blacklists US defence companies

Beijing has announced sanctions on two US companies over arms sales to Taiwan, warning of forceful retaliation against any further US military deals with the island.

Without saying what action Beijing would take, the Chinese foreign ministry said on Friday that the sanctions applied to Northrop Grumman and a unit of Lockheed Martin.

Ministry spokeswoman Mao Ning said the St Louis, Missouri, branch of Lockheed Martin was the main contractor in a US arms sale to Taipei on August 24 while Northrop Grumman, based in Falls Church, Virginia, had been involved in supplying weapons to Taiwan multiple times.

Mao said Washington was going further down the wrong and dangerous path of arming Taiwan despite Beijing’s firm opposition.

“We urge the US side … to stop selling weapons to Taiwan, to stop the US-Taiwan military collusion and to stop arming Taiwan, otherwise it will be met with resolute and forceful countermeasures of China,” she said.

The State Department announced three weeks ago that the US had approved a half billion dollar sale of advanced sensor systems built by Lockheed Martin for F-16 fighter jets to Taipei.

Lockheed Martin – along with Raytheon Missiles and Defence – was already on a Chinese Commerce Ministry blacklist over Taiwan arms sales.

Beijing later said Chinese companies were banned from doing business with the US firms and senior executives of Lockheed or RMD were not allowed to travel to or work in China.

The self-governed island has become one of the greatest sources of tension between the two powers in recent years.

Beijing regards Taiwan as a breakaway province to be brought under mainland control by force if necessary and opposes any official interactions between countries it has established diplomatic relations with and the island.

Most countries, including the US, do not recognize the island as an independent state, although Washington is opposed to any attempt to take it forcibly.

In addition to the arms sale, the Biden administration notified the US Congress last month that it had approved the first-ever US military aid – amounting to US$80 million – to Taiwan under a program generally reserved for assistance to sovereign, independent states.

The US government is also reportedly planning to redirect millions of dollars of military financing for Egypt to Taiwan.

On Friday, Mao said US arms sales to Taiwan seriously violate the one-China principle and severely harm China’s sovereignty and security interests”.

“The Chinese government’s determination to defend its national sovereignty and territorial integrity is unwavering,” she said.

Last weekend US President Joe Biden said the economic slowdown in mainland China could make it less likely to consider an invasion of Taiwan.

“I don’t think it’s going to cause China to invade Taiwan. And matter of fact, the opposite – it probably doesn’t have the – the same capacity that it had before,” he said on Sunday during a visit to Vietnam.

Beijing responded saying that resolving the Taiwan question is a matter for the Chinese ourselves.

Northrop Grumman expects strong 2023 revenue on weapon demand surge

US defense contractor Northrop Grumman Corp on Thursday forecast full-year sales above Wall Street estimates, as it benefits from strong demand for weapons from countries ramping up their defense spend.

The United States and its allies have been buying more arms and ammunitions and supporting Ukraine with billions of dollar in military aid after Russia invaded the country last year.

During the quarter, Northrop rolled out its new B-21 Raider jet, the first of a new fleet of long-range stealth nuclear bombers for the United States Air Force.

"We're raising our sales outlook for 2023 and expect to deliver strong multi-year cash flow growth," Northrop Grumman Chief Executive Kathy Warden said.

The Falls Church, Virginia-based company expects 2023 sales between US$38 billion and US$38.4 billion, ahead of the average analyst estimate of US$37.86 billion, and an adjusted profit of US$21.85 to US$22.45 per share, as compared to the estimates of US$22.30, according to Refinitiv IBES data.

Meanwhile, rivals General Dynamics Corp and Lockheed Martin Corp forecast their annual profit below estimates, as the industry grapples with labor and supply shortages.

Northrop, which produces the fuselage for the F/A-18 Super Hornet fighter jet, posted sales of about US$10.03 billion for the quarter ended December 31, 2022, ahead of analysts' average estimate of US$9.66 billion.

Sales in its space systems unit, which makes satellites and payloads, jumped 23% to US$3.28 billion, helped by higher investments towards space exploration projects.

Sale in its defense unit, which makes integrated battle management systems, weapons systems, rose to US$1.66 billion, from US$1.38 billion.

Overall adjusted net income stood at US$7.50 per share, ahead of analysts' average estimate of US$6.57 per share.

 

 

 

 

US military-industrial complexes the biggest beneficiary of Afghan war

Brown University’s Costs of War Project released a new report Monday, detailing post-9/11 spending by the Pentagon. The study found that of the over US$14 trillion spent by the Pentagon since the start of the war in Afghanistan, one-third to one-half went to private military contractors.

The report, authored by William Hartung of the Center for International Policy, said US$4.4 trillion of the total spending went towards weapons procurement and research and development, a category that directly benefits corporate military contractors. Private contractors are also paid through other funds, like operations and maintenance, but those numbers are harder to determine.

Out of the US$4.4 trillion, the top five US weapons makers — Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman — received US$2.2 trillion, almost half. To put these huge numbers into perspective, the report pointed out that in the 2020 fiscal year, Lockheed Martin received US$75 billion in Pentagon contracts, compared to the combined US$44 billion budget for the State Department and USAID that same year.

Besides getting paid for weapons and research, US corporations profit from private contractors that are deployed to warzones. The most notorious private security contractor previously employed by the Pentagon is Blackwater, the mercenary group whose employees massacred 17 people in Iraq’s Nisour Square back in 2007.

Besides armed mercenaries, the Pentagon employed private contractors for just about every task in US warzones. Demonstrating the Pentagon’s reliance on contractors, at the end of the Trump administration, only 2,500 US troops were left in Afghanistan, but over 18,000 Pentagon contractors were still in the country.

The report explained how China is the new justification for military spending. “The most likely impact of the shift towards China will be to further tighten the grip of major weapons makers like Northrop Grumman, Lockheed Martin, General Dynamics, and Raytheon Technologies on the Pentagon budget,” the report reads.

United States biggest arms seller

Over the years it is being said that the United Sates creates most of the conflicts around the world but very few people are able to understand the underlying motive. It is the lust to keep its arsenal factories running at highest capacity utilization.

My second blog posted on 26th June highlighted this aspect. One of the latest reports by Reuters provides the latest numbers, though these pertain to 2011 and a lot has changed lately.

The report says that during 2011 the US arms sales touched record level US$66.3 billion, mainly because of $33.4 billion sales to Saudi Arabia alone. Other key buyers included United Arab Emirates and India.

The US sales were nearly 78 per cent of the global arms sales, which rose to $85.3 billion during 2011. The previous US record sales of $38.2 billion were achieved during 2008.

While Washington remained the world’s leading arms seller, nearly all other major suppliers, except France, recorded decline in sales during 2011. France signed arms sales valued at $4.4 billion in 2011, up from $1.8 billion a year earlier.

Russia, the world’s number two arms dealer, saw its sales nearly halved to $4.8 billion in 2011. The four major European suppliers — France, the United Kingdom, Germany, and Italy — saw their collective market share drop to 7.2 per cent in 2011 from 12.2 per cent a year earlier.

Saudi Arabia emerged the biggest arms buyer among developing countries, concluding $33.7 billion weapons deals in 2011, followed by India with purchases of $6.9 billion and the United Arab Emirates with $4.5 billion. A point worth laughing is ‘Iran is fueling arms sales especially to Saudi Arabia and the United Arab Emirates’.

The three major beneficiaries of the arms sales were Boeing, United Technologies and Lockheed Martin. The sale of $33.4 billion to Saudi Arabia comprised of 84 Boeing F-15 fighters, dozens of helicopters built by Boeing and Sikorsky Aircraft, a unit of United Technologies Corp.

The sale of $3.49 billion to the United Arab Emirates comprised of Lockheed Martin Corp’s Terminal High Altitude Area Defense, an advanced missile shield and $940 million for 16 Chinook helicopters built by Boeing.

The United States seems to be following a unique strategy whereby extreme volatile situation in created in the Middle East and imposition of economic sanctions on Iran. This helps in keeping crude oil price high. However, all these petrodollars are bagged by selling arms to oil rich countries.

The only point of concern is that the arms sales are on the rise due to growing animosity among the Muslim countries, especially Arabs vs. Iran. In the past Iraq assaulted Iran and the war continued for a decade.

During this war Saudi Arabia and Kuwait gave billions of dollars to Iraq to wipeout Iran from the global map. The stage is being prepared once again for a better coordinated assault on Iran but all remain shy of the nuclear capabilities of Iran. Though, Israel keeps on talking about attacking Iran, threat of nuclear war makes all jittery.