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War in Ukraine revives global arms industry

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Russia-Ukraine war continues to make global arms industry giants earn money, especially the U.S. and Europe. Strong arms companies, particularly in Europe, aim to increase their production capacity to be able to keep up with the orders.

The famous British company BAE Systems, for example, decided to restart the discontinued production of M777 howitzer, which had succeeded in the war. According to the BAE, Central European countries are interested in M777. The company’s vice president, Mark Signorelli, added that they need order of at least 150 new M777 to start production again.

U.S. military approval is expected to start reproduction. New orders are also coming in for American HIMARS and Anglo-Swedish co-made NLAW portable anti-tank missiles.

U.S. based usual suspects Raytheon Technologies, Lockheed Martin and L3Harris Technologies are also winners of the war. L3Harris received an order worth $200 million to be sent to Ukraine. Raytheon has started using obsolete parts from the old Stingers and has called his retired staff back into office to increase production. Lockheed Martin doubled the production of Javelin anti-tank missiles and increased the production of HIMARS rocket launchers and GMLRS missiles by 60 per cent.

The war ‘relieves’ German Industry

Struggling German industry due to the cutting of cheap Russian gas, has been given a consolation called war. Germany’s automotive and defence company and one of Europe’s leading arms manufacturers Rheinmetall AG, acquired the Spanish explosive manufacturing company Expal for 1.2 billion euros. Armin Papperger, CEO of the company, said the customers will sign contracts with companies who have the capacity. According to Rheinmetall, Expal expected sales of around 400 million euros in 2023.

Rheinmetall shares have gained 115 per cent since January 1st. The company announced that it has increased tank ammunition manufacturing from 70,000 to 140,000 in one year. Rheinmetall, which also increased its cannon production from 70,000 to 110,000, also doubled its mortar production capacity. Papperger noted that they increased their potential medium-calibre ball production capacity from 1.2 million to 2.2 million annually and increased their capacity to produce military trucks from 2,500 to 4,000.

Rohde & Schwarz, who developed German military communication equipment other than Rheinmetall, Traton of Volkswagen, who developed military vehicles together with Rheinmetall, and Krauss-Maffei Wegmann (KMW), the manufacturer of Leopard 2 tanks, are also struggling to fulfil orders.

The German government had recently ordered 100 Panzerhaubitze 2000 self-propelled howitzer to be sent to Ukraine. KMW will be responsible for their production. The contract is said to be worth 1.7 billion euros. These howitzers have recently become a hot topic in the German media, claiming that they are the subject of a complaint in Ukraine because of their maintenance.

KNDS, the joint venture between KMW and France’s Nexter says governments should shape new arms contracts. KNDS CEO Frank Haun underlines that they cannot risk increasing capacity with just speeches and announcements.

The German government’s rearmament programme is also an incentive for its struggling economy. Carl Jonasson, CEO of Snigel Design, a Swedish maker of military gear, did not hide the fact that he was surprised by the size of the order they received from Germany in May.

Eastern and Central Europe find new export markets

In addition to German armament manufacturers, the war industry of the former Warsaw Pact countries has also achieved a significant market with the Ukrainian war.

Sebastian Chwalek, CEO of PGZ, the state-owned weapons and ammo consortium in Poland, said they have an important opportunity to enter new markets and increase export revenues in the coming years. The PGZ consortium controls over 50 companies, from weapons to shipping.

PGZ plans to invest 1.75 billion euros in the next decade, Chwalek told Reuters. That’s more than double its pre-war investment plan. The new production facilities will be built away from the border with Russia’s ally Belarus for security reasons, he said.

In 2023, Chwalek announced that they had reached the capacity to produce 1000 pieces of Piorun MANPAD systems. This figure was 600 in 2022 and 300 to 350 in previous years. The company’s pre-war 2022 revenue target was 1.43 billion euros. With the new situation, it is thought that this income will be much higher at the end of the year.

Czechia is also one of the countries that put the arms industry at the service of war in Ukraine. Prague has sold 2 billion euros of weapons and equipment to Kyiv, Czech Deputy Defence Minister Tomas Kopecny told Reuters. Czechia (then Czechoslovakia), the largest weapons producer after the USSR during the socialist bloc period, has realized its highest arms export since 1989.

David Hac, chief executive of Czech STV Group, the largest ammunition producer in Czechia, said that they would create new production lines for small-calibre ammunition and that they were considering expanding its large-calibre capability. Considering the tight labour market, Hajj added, they are trying to get new workers from a slowing automotive industry.

Another Czech war giant, the Czechoslovak Group, nearly doubled its revenues in the first half of 2022 compared to the same period of the previous year. The Group’s spokesman, Andrej Cirtek, said their sales to the Ukrainian army multiplied after the war in Ukraine started.

Surprise attack from South Korea

South Korea, which has become the world’s fourth largest arms exporter, is also one of the winners of the Ukrainian war. The K2 tanks developed by ROTEM, an affiliate of the Hyundai-Kia Automotive Group, are already targeted by many countries from Mexico to Qatar.

Although Seoul has declared that it will not provide lethal aid to Ukraine directly, it is reported that the United States wants to buy ammunition from Korea to send to Ukraine. When details of the deal surfaced in the Wall Street Journal, the South Korean Defence Ministry insisted that they believed the U.S. was the ammunition’s end user.

Despite all these statements, South Korea’s relation with the Ukrainian war is not new. Last September, South Korea inked the largest arms agreement with Poland in its history to supply 1,000 K2 tanks, more than 600 Hanwha K9 self-propelled howitzers and dozens of combat aircraft to Warsaw. This deal will help Poland to send more weapons to Ukraine.

Customers of Hanwha K9 howitzers include Finland, India, Norway, Estonia, Australia, Egypt, and Turkey.

Limits of the arms industry

Under threat of deindustrialisation, the consolation that Europe found in war has its limits. The defence industry’s renaissance may begin to descend again due to the rising cost of materials and energy and dependence on imports from third countries.

Most of the raw materials needed to produce military products are not mined or are mined in limited amounts in EU countries, Jiří Hynek, head of the Association for Weapons and Defence Industry of the Czech Republic, told EURACTIV. Hynek underlined that most of the crucial materials are imported from Asian and African countries.

The materials that are in short supply on the market today are: all packaging materials, many chemicals but also the cellulose required for manufacturing gunpowder, and synthetic rubber, whose prices are astronomical, Hynek said. The latest material is used for ballistic resistant vests, and the EU is dependent on Asia, especially China, for this substance.

The price of steel has gone from 700 euros per tonne to 3500 euros, while aluminium has risen from 5 euros per kilo to 15 euros, according to Paolo Può, president of the Italian military shipbuilder Cantiere Navale Vittoria. Noting that most of their contracts are signed with the state, Può added that they are asking the government for intervention in the sector.

Rheinmetall also announced that they are stockpiling raw materials. The German arms manufacturer said that they purchased aluminium and important plastics in the first place, adding that they also obtained semiconductors to avoid supply problems in the medium term. The company also mentioned they have significantly increased working capital this year.

In France, on the other hand, the war industry has been experiencing production difficulties since before the Ukrainian war due to the semiconductor and chip problems.

DIPLOMACY

The puny raw of US’s love

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In February 2022, when Volodymyr Zelensky, the president of Ukraine, briefed his people that he would stay in his homeland and resist the Russian war, Ukraine had not yet been destroyed, and hundreds of thousands of people had not yet been killed and wounded.

Only a few months before Zelensky’s declaration of resistance against Russia, the President of Afghanistan, Ashraf Ghani, had fled his homeland against the Taliban, the current ruler of the country that was occupied by US forces for the past 20 years.

In those days, nothing showed the distance between the patriotism and welfare of the two leaders better than Zelensky’s stay in Ukraine and Ashraf Ghani’s escape from Afghanistan. Everyone said, “Look at that zealous stay and this humiliating escape,” referring to Zelensky stay in Ukraine, and Ashraf Ghani’s escape from Afghanistan. But this was not the whole story.

What few people talked about was that Zelensky and Ghani, despite all their differences, had one thing in common – both of them had the “strings of America’s support on their necks”. It was so much that in the case of Ghani, the time had come to cut that string, and in the case of Zelensky, there was still more time left.

America brought Ghani to power in Afghanistan and kept him in power (as long as it was necessary to keep him). He had also made a promise to Ghani’s government, which had the “strategic” adjective.

According to that agreement, the US supported the Afghan government against opposition and subversive forces (such as the Taliban group). But when the time came, the Americans said which agreement? Which commitment? And they turned their backs on the republican government as if they had no familiarity with this system from the first day.

When Zelensky began to resist the Russian attack (with the approval and support of America), the United States rushed to help Ukraine with a large number of weapons, money, communication tools, and intelligence assistance.

Backup in case of Ukraine: US is not loyal

Ukraine was destroyed, but did not fall. Zelensky, who before the war could not come out of the shadow of his “comedian” in the past, became a tough and fearless hero, who has fought with one of the great powers of the world.

But for all the hopeful signs war-torn Ukrainians were getting from their leaders, one tried and tested variable (elsewhere) was still missing: How far America will stand with Ukraine. The Kurds had seen America’s loyalty as well as the Afghans.

These two experiences were not so far apart. But Zelensky should have seen with his own eyes what it is like to go to the well with America’s crude thread. When Donald Trump became the president, America did the same to Ukraine as it did to Afghanistan. Zelensky suddenly found himself in the position of Ashraf Ghani.

Now Trump’s America is going to release the rope that was tied around Zelensky’s neck and leave him alone. Worse, even accuse him of starting the war and ruling with a dictatorship.

Trump reminded Zelensky that he was a comedian again, not a war hero. Some will say that Trump is an exception. This statement is not true. Because the representatives of the US Congress and Senate, the same ones who previously considered Russia to be America’s number one or at least number two enemy, are now lining up behind Trump and clapping for everything he says.

Now, if Zelensky is removed (as Ghani was removed), it is not unlikely that Zelensky will also be forced to throw away the mantle of champion and become Ghani’s teammate. America is not loyal.

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UK considers post-war air patrols over Ukraine

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Sources in the British government and the Royal Air Force have told The Times that Britain may deploy Typhoon fighter jets to patrol the skies over Ukraine after the war ends and a peace agreement is signed.

London is reportedly considering setting up an “air police” mission similar to the NATO program that has protected the airspace of the Baltic states since 2004.

One of the sources told The Times that this option was more likely than establishing a no-fly zone over the country, which would require aircraft to patrol the skies over Ukraine 24 hours a day.

Dozens of “heavily armed” fighter jets, planned to be stationed in Poland and ready to take off at any time, are expected to take part in this “police mission.”

According to The Times, this solution could be part of the security guarantees for Ukraine and allow for a smaller military contingent to be brought in to monitor compliance with the peace agreements on the ground.

This would require the UK to deploy a significant number of aircraft and air defense systems.

“We are prepared to do whatever we are told to do,” said The Times’ source in the Royal Air Force, adding that discussions on the matter were still at an early stage.

Ukrainian President Volodymyr Zelenskyy has previously stated that his country needs 100,000 European peacekeepers to prevent Russia from attacking again after the end of the military conflict.

According to The Washington Post, however, the European Union (EU) is only able to send 25,000 to 30,000 troops.

Germany, Italy, and Poland doubted the appropriateness of this decision, while France suggested that the peacekeepers should not be sent to the line of contact with the Russian army, but to the rear of Ukraine, where they would train soldiers and supply the Ukrainian army.

US President Donald Trump supported the idea of deploying European peacekeepers in Ukraine but emphasized that there would be no US contingent.

In the first official talks between the US and Russia since the start of the military intervention in Ukraine, Russian Foreign Minister Sergei Lavrov expressed Moscow’s dissatisfaction with the proposals for the deployment of European forces in Ukraine.

Lavrov said that the Russian side conveyed to the American officials that the appearance of NATO troops on the territory of Ukraine, even “under a foreign flag, the flag of the European Union or national flags,” is unacceptable.

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First official Russia-US talks since Ukraine war begin in Riyadh

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Representatives from Russia and the United States (US) have commenced their first official high-level talks since the onset of the Ukrainian war in Riyadh, Saudi Arabia.

The meeting is being held at the Diriyah Palace, a residence of the Saudi royal family. The Russian delegation includes Foreign Minister Sergei Lavrov, Deputy President Yuri Ushakov, and Russian Direct Investment Fund (RDIF) President Kirill Dmitriev. Representing the US are Secretary of State Marco Rubio, National Security Advisor Mike Waltz, and White House Special Envoy for the Middle East Steve Witkoff.

Discussions are anticipated to cover preparations for potential negotiations to end the Russia-Ukraine war, as well as the arrangement of a direct meeting between Russian President Vladimir Putin and US President Donald Trump.

Before the talks began, RDIF President Dmitriev indicated that Russia had presented the US with several proposals in the trade and economic sectors, anticipating progress within two to three months.

“The American business community has lost over $300 billion by withdrawing from the Russian market. Thus, identifying mutual economic avenues and constructive solutions is crucial for the United States and other nations, which are recognizing the Russian market’s appeal and the necessity of maintaining a presence there,” Dmitriev stated.

Dmitriev further mentioned that Russia and the US should initiate joint projects, particularly in the Arctic.

A Washington Post source revealed that the Kremlin’s primary objective in the negotiations is the removal of sanctions against Russia, including those impacting senior officials and prominent Russian billionaires.

Ukrainian President Vladimir Zelensky previously stated that Kyiv would not acknowledge the outcomes of the Russia-US talks in Riyadh.

“Ukraine views any discussions about Ukraine without Ukraine’s participation as unproductive. We cannot accept any outcomes or agreements made about us without our involvement,” Zelensky asserted.

NBC News television sources reported that the US plans to conduct a separate meeting with Ukrainian officials prior to direct negotiations between Moscow and Kyiv.

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