When Peace is Bad for Business

When Peace is Bad for Business March 25, 2015

If you want to know what may be the real motivation behind opposition to a negotiated agreement with Iran, at least on the part of the American neo-con wing, this may be the answer. Listen as a banker that works with a major defense contractor worries that a less threatening Iran may reduce arms sales to the Middle East and thus profits as well.

The possibility of an Iran nuclear deal depressing weapons sales was raised by Myles Walton, an analyst from Germany’s Deutsche Bank, during a Lockheed earnings call this past January 27. Walton asked Marillyn Hewson, the chief executive of Lockheed Martin, if an Iran agreement could “impede what you see as progress in foreign military sales.” Financial industry analysts such as Walton use earnings calls as an opportunity to ask publicly-traded corporations like Lockheed about issues that might harm profitability.

Hewson replied that “that really isn’t coming up,” but stressed that “volatility all around the region” should continue to bring in new business. According to Hewson, “A lot of volatility, a lot of instability, a lot of things that are happening” in both the Middle East and the Asia-Pacific region means both are “growth areas” for Lockheed Martin.

The Deutsche Bank-Lockheed exchange “underscores a longstanding truism of the weapons trade: war — or the threat of war — is good for the arms business,” says William Hartung, director of the Arms & Security Project at the Center for International Policy. Hartung observed that Hewson described the normalization of relations with Iran not as a positive development for the future, but as an “impediment.” “And Hewson’s response,” Hartung adds, “which in essence is ‘don’t worry, there’s plenty of instability to go around,’ shows the perverse incentive structure that is at the heart of the international arms market.”

That’s why the defense industry always supports going to war, no matter the target or the reason. If a politician seriously suggested invading Canada, they would no doubt be the beneficiary of a big boost in contributions from that sector. But maximizing the profits of the arms industry is not in the best interests of the country or of humanity as a whole.

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