The Afghanistan and Iraq Case: Strategic Reliance of Business on State - Research Paper Example

The Afghanistan and Iraq Case: Strategic Reliance of Business on In the wake of the devastating September 11, 2001 attacks, the United s invaded and occupied Afghanistan in 2001 and a US-United Kingdom combined effort launched an attack against and occupied Iraq in 2003. The Afghan military campaign was justified on the ground of pursuing the perpetrators to the 9/11 attacks who were allegedly hiding and being concealed by the Taliban within the Afghan borders. On the other hand, the attack and invasion of Iraq was grounded in the name of international security. Sadam Hussein was purportedly developing and concealing caches of nuclear armaments in Iraq and the joint force of US-UK deemed it wise to preempt the latter from foisting a nuclear threat against the world by launching the first attack. Although both invasions and occupations, unsurprisingly, entail heavy costs on the American and British pockets (Wolk 2006), they nevertheless are equating to huge business advantage for defence-related businesses which are presently raking in big profits out of these military occupations. On the other hand, the huge money spent on these endeavour meant a displacement of standard government expenditures on infrastructures and the like which stimulate the economy, spelling disaster for business in general. In this sense, the Iraq and Afghanistan invasion and occupation illustrate the strategic relationship between the state and business. According to a CNNMoney.com article, a total of $1 trillion has already been spent by the American government on the military campaigns against Afghanistan and Iraq combined since 2001 up to the present. President Barack Obama has recently announced that he will be sending in new troops (about 30,000) to Afghanistan to reinforce the 68,000 American troops already in that country. This implies that the US government will spend $30 billion more a year for the additional troops (Sahadi 2009). On the other hand, the UK government is seriously considering additional military enhancements to shore up the present firepower and military capabilities in Afghanistan through better equipment and weapons to arm and protect UK soldiers from roadside bombs and mines, more military vehicles like Huskies and Jackals, additional Chinook helicopters, upgrades for heavy-lift aircrafts and Hercules, better surveillance equipment and the like. All these will entail an additional cost of about £900 million to be taken from the country’s coffers (Codner 2009). Although taxpayers may balk at such huge amounts being spent by their governments in activities outside of their respective territories many of which see as a waste of time and generally unbeneficial, a sector of society are clearly welcoming them and profiting from such huge government spending. Companies like Northrop Grumman, General Dynamics, and Lockheed Martin are just some of the entities that are benefitting from the US and UK military occupation in Afghanistan and Iraq (Clifton 2009). General Dynamics, for example, which is located in Virginia and is considered the largest supplier of armored vehicles to the US Military, had reported gain of about 42% in its earnings in armored vehicles in the fourth-quarter of 2008. In sum, the company increased profits from $408 million in 2007 to $579 million in 2008, registering profits in three out of its four divisions. The combat systems division which supplies the US with Abrams tanks and Stryker troop transport, among others, registered profits of 67% from year 2006 to year 2007 alone; the aerospace unit increased its operating profits by 26% and was expected to boost its revenues in 2008 with expected deliveries of 157 jets to the US military; the company’s marine unit, on the other hand, increased sales by 3.4% from 2006’s $1.22 billion. In addition, the company’s shares increased by 20 cents in the New York Stock Exchange composite trading in 2008 (Lococo 2008). Another big US defence contractor, the Northrop Grumman, increased its sales and profits in both information and services division and electronic division by 15% and 7%, respectively, in 2007. The contract with the company includes revising the information technology system of Virginia and relevant intelligence programs (Merle 2007). The Lockheed Martin also registered an increase of profit by 34% coming primarily from its global services and information systems divisions which provide the US government with information technology services. Lockheed also figured in the $24 billion modernization of the US Coast Guard fleet. Boeing, on the other hand, reported an increase of 3% in its revenues which it chiefly earned from the missile defence and intelligence projects for the US government and a project to build a virtual perimeter wall along the US-Mexico border it (Merle 2007). At home, the Aegis Defence Services has seen a “100-fold” increase in profits since 2003 to year 2006 engendered by contracts with the US Pentagon relative to the Iraq war. In 2005 alone, the company saw a £62 million profit from contracts overseeing and coordinating communication among troops in Iraq, civilian contractors and their guards – in other words, providing intelligence on the enemy’s movements. Private military contractors, such as the Aegis Defence Services, abound in Iraq and are estimated to have individual personnel of about 25,000 to 35,000 in the war-torn country, the largest force coming in second only to the US force. The services they provide to US and UK ranged from “risk advice, training of local forces, armed site security, cash transport, intelligence services, workplace and building security, war zone security, weapons procurement” and others. Contracts for these private services ranged from $10-20 billion but there are reports of existing $100 billion contracts (Thompson 2006). The buoyant spirits in the defence business in unfortunately not shared, however, by the other business sectors. The concentration of government expenditures in the Iraq-Afghanistan wars have, according to Nobel Prize-winner Joseph Stiglitz, caused the failure of the US government to stimulate the economy and the Iraq war is in fact “very much related to the present economic mess.” Not only is it responsible for the soaring prices of oil, - which increased from $1.39 in 1999 to $3 a gallon in 2006 (Lett 451) - but the money spent in the occupation have deprived businesses unrelated to defence services as it dislocated expenses that should have gone into infrastructures, education and other government expenditures on private businesses. Stiglitz opined that the failure in economy stimulation caused the government to resort to extraordinary measures of letting forth “a flood liquidity; that, together with lax regulations, led to a housing bubble and a consumption boom” which in the end largely triggered the 2008 American economic recession that rippled throughout the globe (qtd Kristof 2008). The impact of the US invasion and subsequent occupation of Afghanistan in 2001 and the combined US-UK invasion and occupation of Iraq in 2003 on business illustrate the strategic connection between business and state. As discussed, these occupations directly benefited big defence companies like Northrop Grumman, General Dynamics, Aegis Defence Services, among others, with unprecedented growth in profits in their respective divisions that provide combat equipment, intelligence facilities and services to both US and UK. The same activities, however, had proved catastrophic to business sectors not related to defence as the money that could have gone to pump-priming the economy is being spent in Afghanistan and Iraq causing casualties in employment, among others. Government expenditures in infrastructures, education and the like are known factors that help stimulate respective economies of countries. Nobel-winner Stiglitz went on to offer that the US government activities in Iraq had been largely responsible for the recent economic recession, proving once and for all, the large part that the state plays in the status quo of business. References Clifton, Eli. “As Iraq Costs Soar, Contractors Earn Record Profit.” Global Policy Forum. 2 August 2007. http://www.globalpolicy.org/component/content/article/167/35673.html Codner, Michael. “Defence: The Cost of Afghanistan.” Guardian.cp.uk. 15 December 2009. http://www.guardian.co.uk/commentisfree/2009/dec/15/helicopters-afghanistan-defence-spending-review Kristof, Nicholas. “Iraq, $5,000 Per Second?” The New York Times. 23 March 2008. http://www.nytimes.com/2008/03/23/opinion/23kristof.html?_r=1 Lett, Donald. Phoenix Rising: The Rise and Fall of the American Republic. Phoenix Rising, 2008. Lococo, Edmond. “General Dynamics Net Jumps 42% on Sales for Iraq War.” 23 January 2008. Bloomberg.com. http://www.bloomberg.com/apps/news?pid=20601103&refer=news&sid=a9jyUuOK6RpM Merle, Renae. “Defense Earnings Continue to Soar: War Technology Drive Up Spending.” The Washington Post. 30 July 2007. http://www.washingtonpost.com/wp-dyn/content/article/2007/07/29/AR2007072900806.html. Sahadi, Jeanne. “Afghanistan: 30,000 Troops, $30 Billion a Year.” CNNMoney.com. http://money.cnn.com/2009/11/25/news/economy/paying_for_Afghanistan_war/index.htm Thompson, Harvey. “Iraq Occupation Makes Possible Record Profits for British Private Military Contractor.” Global Research. 2 March 2006. http://www.globalresearch.ca/index.php?context=va&aid=2054 Wolk, Martin. “Cost of Iraq War Could Surpass $1 Trillion.” MSNBC. 17 March 2007. http://www.msnbc.msn.com/id/11880954/ Read More