Conflict economy: While nations bleed, war profiteers thrive

Illustration: TBS

Daniel Ellsberg, the renowned whistleblower, once said, "A failing war is just as profitable as a winning one." 

After the bombshell revelation by the anti-war activist in 1971, what later came to be known as the Pentagon Papers, everyone got an idea about how different countries manipulate facts just to hide their involvement in this nasty job called "war".

Countries and other vested quarters do so because war is extremely profitable for some people, especially for the powerful stakeholders and arms dealers. Still, the problem is that they cannot publicly advocate for waging wars. 

That is why experts often claim that war is something that is being hatched in the clandestine chambers of those who remain mostly invisible to the governments.

While the decision-making process behind war remains as murky as ever, we can guess that billions of dollars are spent on weapons and defence contracts every year, making conflict incredibly profitable for some. So, who benefits from war, and who are the biggest players behind the war machine?

Just a few months ago (back in March), a video of Pakistan's Defence Minister Khawaja Asif went viral, where he is seen accusing the US of generating war with the intent to fish in troubled waters. 

While the minister was heavily criticised for his remarks, his accusation is not totally baseless, especially given the fact that the US remains one of the five largest arms exporters globally alongside France, Russia, China, and Germany, accounting for approximately 75% of the world's arms exports between 2019 and 2023.

War tears lives apart and destroys the very fabric of society (of the affected country), but for some, it is a business. This is the bitter truth of the "conflict economy", a system where a few get rich while entire nations are destroyed. When bombs fall and cities crumble, arms manufacturers and defence contractors see their profits soar.

Just consider whatever happened after Russia invaded Ukraine. While families were fleeing their homes, European defence companies were cashing in. Germany's Rheinmetall saw its stock value skyrocket by over 1,500%, and Italy's Leonardo gained more than 600%. In France, the arms industry was flooded with more than €30 billion in new orders.

It is impossible to truly grasp the scale of this global war economy. Fifty countries were in active conflict this year alone. Think about Ukraine, a nation spending nearly $140 million a day, 26% of its entire GDP, on a war it did not ask for. And that is just the beginning. The cost to rebuild everything that has been destroyed is expected to top half a trillion dollars.

The United Nations and Oxfam have pointed out that if G7 countries simply reallocated 2.9% of their defence budgets, about $35.7 billion, they could end global hunger. That is a small fraction of what is spent on military buildup and war profiteering. The war economy is a cruel paradox: it creates immense wealth for some, while guaranteeing unimaginable suffering for millions of others.

However, if we flip the side, we can understand the devastation any war causes in the affected country. Ukraine's economy shrank by almost a third in a single year. 

In Gaza, the devastation is even more complete. Because of the war, the economy collapsed by 80%. The unemployment rate soared to over 85%, and according to a report by the UN Conference on Trade and Development (UNCTAD), it could take 350 years for Gaza to recover. The very foundations of society, construction, farming, and manufacturing, have been erased. The entire region is operating at just 16% of its former economic capacity.

This story repeats itself across the world. A decade of civil war in the Central African Republic cut the average person's income by nearly half. Syria's long-running conflict has drained the nation's wealth for decades, and today, up to 90% of Syrians live in poverty. During the 1990s, the wars in Yugoslavia were just as brutal. Bosnia's economy shrank by 75%, and over 60% of its homes were destroyed.

The consequences of war do not stay contained within a country's borders. As of 2024, more than 114 million people have been forced from their homes worldwide. This wave of displacement puts a massive strain on neighbouring countries and disrupts everything from schools to hospitals, making it harder for the world to reach its development goals.

The whole concept of war is built on a lie — a double-edged sword that benefits no one other than the select few. It claims to create balance and bring the world to order, but it only enriches a select few while creating unimaginable poverty and suffering for the majority. 

For the nations embroiled in the fighting, the cost is everything: their economies, their jobs, their infrastructure, and the very fabric of their society.