Fundamental political and economic changes are astir in Saudi Arabia. Domestic developments and challenges are altering intra-elite relations, especially among members of the royal family, and casting doubt on the resilience of old and traditional norms of behavior that enhance stability and assure legitimacy. Additionally, regional and international conditions are presenting the kingdom with unwarranted--indeed, unwelcome--choices it is hard-pressed to make because of their uncertain outcomes. To be sure, birth pangs of the fourth Saudi state are reverberating inside and outside the kingdom, but it remains far off in the future.
Sitting at the helm of the mechanism of political, economic, and social change today in Saudi Arabia is Crown Prince Mohammed bin Salman (MbS) who either relishes the instability his decisions and actions are creating or is oblivious to it. MbS’s arrest of prominent Saudi princes on sedition charges and his upending of oil production and prices are only two examples of defiance of the rules of stability set forth by his distant grandfather and founder of the third Saudi state, King Abdulaziz bin Abdulrahman Al Saud.
This defiance is not in the long-term interest of Saudi Arabia. In the apparent absence of decisive leadership by his father, King Salman bin Abdulaziz, MbS’s chaotic and authoritarian stewardship at this pivotal moment in Saudi history may well impede the establishment of the fourth Saudi state the crown prince would very much like to lead.
On direct orders from the crown prince--no one else, save the monarch, can be assumed to countenance such action--security forces arrested some 20 princes of the Al Saud royal family, most prominently King Salman’s brother Ahmed bin Abdulaziz and former Minister of the Interior and Crown Prince Mohammed bin Nayef. While the initial suspicion was that the two were accused of organizing a coup against MbS, another interpretation was that members of the Allegiance Council--a body established by the late King Abdullah bin Abdulaziz in 2007 to help choose future crown princes and, effectively, kings--wanted Prince Ahmed to be the council’s leader. They probably reasoned that such a move could block MbS from assuming the throne upon his father’s death. It is noteworthy that Prince Ahmed and two others on the council objected to the choice of MbS as crown prince in 2017, a sure sign of opposition to him—thus providing a good reason for arresting them.
That Princes Ahmed and Mohammed bin Nayef--belonging to King Salman’s Sudairi branch of the royal family--were arrested speaks volumes about MbS’s wish to be the undisputed leader of the family and the kingdom. Completely sidelining them and erasing whatever institutional influence they may wield arguably eliminates any level of opposition in the proverbial deep state. In fact, their arrest and demotion close the circle on the many shake-ups in ministries and agencies and reassignments of military, intelligence, and security services leaders since King Salman’s accession to the thrown in January 2015. Accompanying—perhaps concluding—these changes has been King Salman’s September 2019 replacement of Minister of Energy Khalid al-Falih with his son (and MbS’s half-brother and supporter) Abdulaziz bin Salman, thus placing the economic fate of the kingdom fully in the crown prince’s hands.
Consolidating this royal, political, and economic change has been the arrest in mid-March of some 300 civilian and military government officials accused of corruption. This follows a campaign in 2017 against business and government leaders, including prominent princes, that according to the Saudi government netted $106 billion in assets and real estate. The latest such action gives the crown prince the aura as a fighter against corruption, one who is determined to end the endemic graft that has beset Saudi public and private life. But it also sends clear signals that no matter how powerful, government and business elites are under the watchful eye of the man in charge and risk being publicly excoriated if they dare oppose him. Such a populist message cannot but be grasped by Saudi citizens, but it nonetheless helps to consolidate the position of the person sending it.
Playing with the oil fire
As MbS looks to further consolidate his political power, he gambles with the most resilient status Saudi Arabia has had since its early years: as the indispensable oil state. In early March, negotiations to further limit oil production between the Saudi-led Organization of Petroleum Exporting Countries (OPEC) and non-OPEC countries failed, in effect ending what came to be known as the OPEC+ agreement reached in 2016. Russia, a party to the OPEC+ deal, was the main protagonist rejecting the added limits because Moscow refused to give American shale oil producers a free ride as they were not part of the deal and did not have to limit their output. The collapse of the agreement immediately resulted in a steep decline in the price of oil, a situation that was exacerbated by the general slowdown in the international economy because of the coronavirus pandemic.
The folly of this shortsighted outcome was worsened when Saudi Arabia decided to increase its production and flood the market with crude in order to keep and widen its market share. On March 11, Riyadh announced that it would increase its output to 13 million barrels per day (bpd)—from 9.8 million bpd prior to the collapse of the OPEC+ deal—so that it could make up for the drop in price. On March 16, the CEO of Saudi ARAMCO, Amin Nasser, declared that the kingdom would maintain that production quota until May and that his company would accept a price of $30 per barrel. With the general slowdown in the international economy, such decisions may result not only in the collapse of the 60-year-old OPEC but arguably in the demise of the trust in Saudi Arabia’s credibility as a partner. Additionally, and as the London School of Economics’ Steffen Hertog reasons, Saudi Arabia’s dependence on oil revenues may not be able to sustain a competition with Russia, since the latter can rely on other sectors of the economy to blunt its loss of revenue.
While the collapse in the price of oil--trending around $20 per barrel on April 2--is normally good news to consumers and the international economy, it could not have come at a worse time. Economies in East Asia (China, South Korea, Japan, and India, to name a few), Europe, and the United States have been hit hard by the coronavirus pandemic, which has forced social lockdowns and economic shutdowns. The natural tendency to exploit low oil prices for expansion and growth is simply absent despite the current glut of available crude, made even more abundant by Saudi Arabia’s increased production. In fact, the kingdom’s decision to flood the market may not even help it secure more market share since the added supply will quickly fill the current storage capacity of the consuming industrialized economies.
The more urgent implication of Saudi Arabia’s gamble with the oil war is domestic. Almost immediately after the announcement of increased production, the Saudi Ministry of Finance asked all government agencies to submit proposals for 20 to 30 percent cuts in their 2020 budgets, an action that would practically halt projects and development plans but not salaries and benefits. It is clearly meant to limit the deficit spending that has become a fact of life in the oil-rich country over the last few years. For a balanced budget in 2020, Saudi Arabia needs a benchmark price of $84 per barrel; without it, the country would run a deficit of 15 percent as its sovereign wealth fund gets depleted year after year. Moreover, financial turmoil threatens the fate of MbS’s hallmark “Vision 2030” plan for economic development and diversification. Such a vision depends also on ARAMCO’s valuation, but the company’s share has seen a 13 percent decline between January 2 (35.15 rials/share) and April 1 (30.60 rials/share), following the collapse in the price of crude. This decreasing share price came on top of a 20.6 percent decline in net profits for the company in 2019, a fact that may make it less attractive to foreign investors in 2020 and beyond.
Uncertain relations with the United States
Following the many internal and foreign missteps Mohammed bin Salman has taken since his ascension to the position of crown prince in June 2017, his path to power may not be as smooth as he assumed it would be in the early days of the Trump Administration. As MbS probably calculated in 2017, President Donald Trump is enamored of world leaders who sing his praises and offer him services he can use domestically, such as acquiring American weapons systems. Indeed, Saudi Arabia was Trump’s first foreign destination. He succeeded in building an ironclad relationship with King Salman and his son, one that has so far resulted in large arms deals. It has also meant that the United States looks the other way when there are transgressions against Saudi critics of MbS’s policies--from the arrests and silencing of women activists to the assassination of Washington Post columnist Jamal Khashoggi--as well as dangerous Saudi entanglements such as the war in Yemen.
But Mohammed bin Salman may have missed the equally important Trumpian desire to be spared the negative complications of imprudent decisions such as the ongoing oil price war. Seeing that neither Saudi Arabia nor Russia appears to want to negotiate a compromise, Trump warned that this war is “bad for them, bad for everybody,” adding that “both went crazy.” At a time when the United States under Trump’s leadership is still losing the battle against the coronavirus outbreak, the American president does not want to be distracted from devising a plan that can help secure his reelection.
Before his latest comments on the oil war, the president dispatched former national security aide and Department of Energy official Victoria Coates to Saudi Arabia to act as a special energy representative in the kingdom. It is hard to see this except as a move to try to influence Riyadh’s decision-making about such a vital issue. It remains to be seen if Coates will be able to behave as if she were a high commissioner to override, or at least influence, Saudi wishes; but the move sends a clear message to MbS that he may be stepping too far away from American expectations. Two days later, Secretary of State Mike Pompeo had a conversation with MbS that must have revolved around the inadvisability of the current oil impasse; its non-resolution indicates that American entreaties may not be working to soften MbS’s stance.
The administration is undoubtedly trying to mollify domestic worries about the current global oil glut. A group of Republican senators from oil-producing US states have recently introduced legislation that would force the Trump Administration to withdraw troops from Saudi Arabia because of the kingdom’s role in the price and production war. Such a move will always put the White House on edge and remind President Trump that he may not have much freedom of action when it comes to the financial interests of his specific constituencies. The same can be said about the negative impact of low oil prices on the American stock market, which is currently experiencing the worst first quarter since its establishment.
To be sure, MbS’s policies toward other princes of the royal family and his latest oil fiasco could very much erode Trump’s appreciation of the Saudi prince’s leadership and friendship. Sidelining the royal family creates internal instability and naturally increases the crown prince’s enemies and paranoia, which in turn prompt him to continue his crackdowns--practically an endless and vicious cycle. Neither can Mohammed bin Salman continue to “cry wolf” about plots against him for he soon will find that not many believe his stories. Such volatility in domestic politics only adds to Trump’s confusion about the crown prince because of the president’s loathing of and ignorance about the nuances of other countries’ internal affairs. As for the oil price and production crisis, it is likely to wear Trump down as he tries to deal with the deleterious effects of the coronavirus pandemic on his reelection campaign, and thus may prompt him to withdraw his support from the mercurial bin Salman.
The Fourth Saudi State remains a distant vision
Saudi media is careful to show that King Salman is still in charge of the kingdom and its affairs, notwithstanding his advanced age and frailty. Meanwhile, Crown Prince Mohammed bin Salman has already helped reshape Saudi Arabia in an image to his liking, one that he thinks may be a good basis for a fourth Saudi state under his control. But what has transpired over less than three years of his stewardship indicates that the winds may not be blowing his way, and all because of his own impulsiveness and ill-advised decisions.
Bin Salman’s detention of royal family princes robs them of dignity and deprives him of their loyalty while his gambling with economic policy costs Saudi Arabia dearly. MbS’s Yemen impasse (now beginning its sixth year), his stubborn refusal to resolve the divisive Gulf crisis with Qatar, his leadership of the Arab authoritarian order, and his challenge of the American principles for regional stability are some reasons that portend a possible collapse of the dream of building a new Saudi state on the ruins of another.
This article has been republished with permission from the Arab Center Washington DC.
Imad K. Harb is the Director of Research and Analysis at Arab Center Washington DC. He is the Founder and Director of Quest for Middle East Analysis, a research and consulting firm. Previously, he worked as Adjunct Professor of Middle East Studies at the Center for Contemporary Arab Studies, Georgetown University. He also served as Senior Analyst at the Abu Dhabi, UAE-based Emirates Center for Strategic Studies and Research and taught political science and international relations at the University of Utah and San Francisco State University. In addition, he worked as Senior Program Officer at the United States Institute of Peace. Harb writes and publishes on a number of topics including civil-military relations, regional politics, and US policy in the Middle East/North Africa and the Arabian Gulf, and is co-author, with John Bruni, of Domestic and Regional Challenges to US-Iran Relations (Emirates Center for Strategic Studies and Research, 2015). He is the co-editor, with Zeina Azzam, of The Arab World Beyond Conflict (ACW, 2019). Harb earned a PhD in political science from the University of Utah.
Saudi Crown Prince Mohammed bin Salman (source: U.S. State Department)
Two years ago on Feb. 24, 2022, the world watched as Russian tanks rolled into the outskirts of Kyiv and missiles struck the capital city.
Contrary to initial predictions, Kyiv never fell, but the country today remains embroiled in conflict. The front line holds in the southeastern region of the country, with contested areas largely focused on the Russian-speaking Donbas and port cities around the Black Sea.
Russian President Vladimir Putin, having recognized the Russian-occupied territories of Donetsk and Luhansk as independent days before the invasion, has from the beginning declared the war a “special military operation” to “demilitarize and denazify” Ukraine. His goals have alternated, however, between existential — bringing all of Ukraine into the influence of Russia — and strategic — laying claim to only those Russian-speaking areas in the east and south of the country.
It is in the latter that Russia has been much more successful. Yet after two winters of brutal fighting and hundreds of thousands of casualties on both sides, as of the end of 2023 Russia only laid claim to 18% of Ukraine’s territory, as compared to 7% on the eve of the war and 27% in the weeks after the invasion.
Meanwhile, the West’s coffers have been opened — and, as some say, drained — to help Ukraine’s government, led by President Volodymyr Zelensky, defend itself against Moscow.
Regardless, Ukraine’s military forces have been wholly depleted as they compete with a much more resourced and populous Russia. While Ukraine’s military campaign was able to take advantage of Russian tactical mistakes in the first year, its much-heralded counteroffensive in 2023 failed to provide the boost needed not only to rid the country of the Russian occupation, but also to put Kyiv in the best position to call for terms.
If anything, as Quincy Institute experts Anatol Lieven and George Beebe point out in their new brief, “there is now little realistic prospect of further Ukrainian territorial gains on the battlefield, and there is a significant risk that Ukraine might exhaust its manpower and munitions and lay itself open to a devastating Russian counterattack.”
The only and best solution, they say, is to drive all sides to the negotiating table before Ukraine is destroyed.
The narrative of the war — how it began, where it is today — is well documented. On the second anniversary of Russia’s full-scale invasion, RS thought it might be instructive to look at the numbers — weapons, aid, polling, population, and more — that illustrate the cost and the contours of the conflict over 24 months, and counting.
The U.S. Congress has allocated a total of $113 billion in funding related to the war. The vast majority of this money went directly to defending Ukraine ($45.2 billion in military aid) and keeping its government and society functioning ($46 billion in economic and humanitarian aid). Other funds went to rearming allies ($4.7 billion) and expanding U.S. military operations in Europe ($15.2 billion).
After two years of war, that funding has dried up. The Biden administration, which once shipped two or three new weapons packages each month, has not sent Ukraine a major arms shipment since Dec. 27, 2023. As Congress struggles to pass an additional $60 billion in Ukraine-related funding, observers increasingly believe that aid package may have been the last.
The Pentagon has sent at least 3,097,000 rounds of artillery to Ukraine since Russia’s invasion. Most of those (2,000,000) have been 155 mm shells, the standard size used by the U.S. and its NATO allies. For perspective, that’s about 95,000 tons of 155 mm ammunition alone.
Despite ramping up military manufacturing, the U.S. still only produces about 340,000 155 mm shells per year, meaning that Ukraine has been firing rounds at three times the rate of American production.
Washington has also given Kyiv 76 tanks, including 31 Abrams tanks and 45 Soviet-era T-72Bs. Ukraine has received 3,631 American armored vehicles of various types, from infantry fighting vehicles to personnel carriers and medical trucks.
Meanwhile, Ukraine has made use of 39 American-made HIMARS, a mobile rocket launcher that has become famous for its utility in the war. As for smaller arms, the U.S. has sent at least 400,000,000 grenades and bullets in the past 24 months.
The war has killed at least 10,378 civilians and injured an additional 19,632, according to the UN. More than three in four non-combatant casualties occurred in areas held by the Ukrainian government, indicating that Moscow is responsible for the lion’s share of civilian harm.
When it comes to military casualties, good data still remains hard to come by and estimates are sometimes wildly different. Neither Russia nor Ukraine have offered detailed, public indications of the war’s impact on their soldiers.
The U.S. estimated in August that 70,000 Ukrainian soldiers had died and an additional 100,000 to 120,000 had been injured, putting the number of total casualties at over 170,000. Russia, for its part, claimed in November that 383,000 Ukrainian soldiers had been killed or wounded.
On the other side, the United Kingdom estimates that Russia has suffered at least 320,000 casualties, with 50,000 deaths among Russian soldiers and 20,000 deaths among Wagner Group mercenaries. Washington said in December that Moscow had suffered 315,000 casualties, though American officials did not provide a breakdown of deaths and injuries.
The United Nations estimates that the Ukrainian population (the entire country within internationally recognized borders), which totaled 43.5 million people in 2021, dropped to 39.7 million in 2022 as war swept through the country’s east. This trend continued into 2023, as the population dropped to 36.7 million — the lowest level since Ukraine became independent in 1990.
As of January, 6.3 million Ukrainians have become refugees abroad, with another 3.7 million displaced internally. As the frontlines have settled, Ukraine’s population has slowly started to grow again, reaching 37.9 million in early 2024. Meanwhile, demographer Elena Libanova estimates that only 28 million of those people live within areas currently under Ukrainian government control (outside of Crimea and the Donbas).
Two new polls that came out within the last week illustrate the complexities of Americans’ feelings toward the war in Ukraine and the U.S. role in it.
First, a Pew poll published February 16 found that a large majority of Americans (74%) see the war between Russia and Ukraine as somewhat (30%) or very important (43%) to U.S. interests. And another survey, from the Harris Poll and the Quincy Institute, which publishes Responsible Statecraft, found that Americans broadly support a U.S.-led negotiated end to the conflict.
But the past few months in Washington have been largely focused on U.S. aid to Ukraine, specifically whether Congress will pass President Biden’s request for roughly $60 billion for Kyiv’s fight against Russia.
According to Pew, in March 2022, 74% of Americans said U.S. aid to Ukraine was “just right” or “not enough.” In December 2023, that same survey found that just 47% said the same. The biggest change came from Republicans: 49% said in March, 2022 that U.S. aid was “not enough,” while just 13% said the same in December.
Meanwhile, Gallup found in August 2022 that 74% of Americans said U.S. aid to Ukraine was “about right” (36%) or “not enough” (38%). Those numbers came down slightly in Gallup’s latest track on this question in October, 2023, with 58% saying U.S. aid was about right (33%) or not enough (25%).
There have been several attempts to bring nations together to outline talks to end the war. Russia and Ukraine engaged in five rounds of talks in Belarus and Turkey shortly after the invasion, but the talks collapsed amid allegations of Russian war crimes and Western pressure on Kyiv to keep fighting.
Since then, the belligerents have spoken directly about secondary issues, like Black Sea shipping and prisoner swaps. Ukraine, meanwhile, laid out a “10-point peace plan” that has formed the basis for five international summits, none of which included Russia. These took place in Copenhagen, Denmark, in June 2023; in Jeddah, Saudi Arabia, in August 2023; in Malta in October, 2023; in Riyadh, Saudi Arabia, in December 2023; and Davos, Switzerland, in January of this year.
Since the start of the war, Congress has passed four aid packages for Ukraine, totaling $113 billion. While none of the four packages were identical and aid for Ukraine was sometimes bundled with other spending, the trends for support for Kyiv in Congress are similar to those we see in polling, particularly among congressional Republicans.
The 2022 supplemental, which became law in May 2022 and provided Ukraine with $39.34 billion in aid passed the House 368-57 and the Senate by a vote of 86-11. By September 2023, when the House voted on the Ukraine Security Assistance and Oversight Supplemental Appropriations Act, which provided Kyiv with $300 million in security assistance, it passed by a vote of 311-117, with a majority of Republican members opposing the legislation.
On February 12 of this year, the Senate voted 70-29 to pass a national security supplemental, which would provide approximately $60 billion in aid for Kyiv alongside money for Israel and partners in the Indo-Pacific. The bill has not yet been voted on in the House.
Ben Armbruster, Blaise Malley, Connor Echols and Kelley Vlahos contributed reporting. Graphics by Khody Akhavi.
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A woman lays flowers at the monument to the victims of political repressions following the death of Russian opposition leader Alexei Navalny, in Moscow, Russia February 16, 2024. REUTERS/Stringer
President Biden was entirely correct in the first part of his judgment on the death of Alexei Navalny: “Putin is responsible, whether he ordered it, or he is responsible for the circumstances he put that man in.” Even if Navalny eventually died of “natural causes,” his previous poisoning, and the circumstances of his imprisonment, must obviously be considered as critical factors in his death.
For his tremendous courage in returning to Russia after his medical treatment in the West — knowing well the dangers that he faced — the memory of Navalny should be held in great honor. He joins the immense list of Russians who have died for their beliefs at the hands of the state. Public expressions of anger and disgust at the manner of his death are justified and correct.
The problem comes with the other part of Biden’s statement, that “[Navalny’s death] is a reflection of who [Putin] is. And it just cannot be tolerated.” If he had said “approved,” “justified,” or “defended,” that would have been absolutely right. But “tolerated”? What can Biden do in response, that he has not done already?
The U.S. president has promised major new sanctions intended to “cut Russia off from the world economy” — but that requires Washington to control the world economy. Economic sanctions against Russia in response to the invasion of Ukraine have failed, and even strengthened the Russian economy and the state’s grip on it. They cannot be significantly extended, because this would damage and infuriate countries that are dependent on Russian energy exports, including India, a key U.S. partner. As to sanctions against Russian individuals part of or linked to the Russian regime, there are already thousands of them, and they have had no effect whatsoever.
Statements like Biden’s are both pointless and dangerous. For the spoken or unspoken implication is that it is impossible to deal with Putin. But like it or not, Putin is the president of Russia. To all appearances, he will remain so for a considerable time to come, and will hand over to a successor of his own choosing. The Biden administration has said that it wants Ukrainian victory (whatever that now means), but it has also said that it believes that the war will end in negotiations, and following the failure of last year’s Ukrainian offensive, is now reported to be moving in this direction.
Who does Biden think that he will negotiate with, if not Putin? Seeking talks on an end to the Ukraine war does not imply approval of Putin’s crimes or his invasion of Ukraine, any more than the Eisenhower administration’s negotiation of an end to the Korean War implied approval of the North Korean regime and its invasion of South Korea.
By its own account, the Biden administration has supposedly made the promotion of democracy around the world a central part of its diplomacy, with the clear implication that only democratic governments that respect human rights are truly legitimate. Actual U.S. diplomacy does not work like this and never has; not because of American imperialist or capitalist wickedness, but because the world does not work like this.
Nobody should be required to like or admire the governments of Abdel Fattah Al-Sisi, Mohammed Bin Salman or Narendra Modi (though we might well wish that U.S. officials had been less effusive in their praise of them). Like Putin, they are however the heads of their countries’ governments, and likely to remain so. You deal with Saudi Arabia and India — and you have to deal with Saudi Arabia and India — you deal with MBS and Modi.
The other thing to be wary of in the outpouring of outrage at the death of Navalny, is that this is already being used to build a strategy of greatly increased Western official support for the Russian opposition. Many (not all) people and groups in the Russian liberal opposition are personally and politically admirable. Some, like Navalny, have shown tremendous courage. To say this is quite different from believing that they are ever likely to form the government of Russia, and that the U.S. should base its policy towards Russia on the hope that this will be so.
The sad truth is that the Ukraine war has placed the Russian liberal opposition in a politically impossible position. Having been largely chased into exile by Putin, they are dependent on Western support. This means however that their principled opposition to the Russian invasion can be portrayed by the Russian government — and is seen by many ordinary Russians — as treason in time of war. As with the Iranian, Chinese, and other oppositions, official support from Washington only allows the ruling regimes to paint the name “traitor” in brighter colors.
A combination (differing from individual to individual) of idealism, dependence on the West and hatred of Putin means that instead of advocating a compromise peace in Ukraine, many Russian oppositionists have — willingly or unwillingly — identified themselves with Ukrainian and Western positions that explicitly demand complete Russian defeat.
And while not many Russians wanted the war, not many Russians want to see Russia defeated. As I have remarked before, even many Americans who strongly opposed the war in Vietnam were outraged when Jane Fonda went to Hanoi. If she stood a chance of being elected to any office in the U.S. before that trip, she certainly didn’t afterwards.
Any hope of rebuilding liberalism in Russia (and indeed Ukraine, albeit to a much lesser extent) therefore requires an end to the war. For some degree of authoritarianism is a natural accompaniment to every war, and regimes all over the world have exploited this to increase their own power. Equally importantly, mass support for Putin is critically dependent on the general belief that the West intends not just to defeat Russia but to cripple it as a state, and that to prevent this it is essential to support the government.
For the moment at least, this has eclipsed previously widespread resentments —which Navalny channeled — at regime corruption. No amount of Western or Russian opposition propaganda can change this Russian picture. Peace might, if it is given a chance.
For the third year in a row, globally, the number of investors in nuclear weapons producers has fallen but the overall amount invested in these companies has increased, largely thanks to some of the biggest investment banks and funds in the U.S.
“As for the U.S., while there is, like past years, indeed a dominance, and total financing from U.S.-based institutions has increased, the total number of U.S. investors has dropped for the third year in a row (similar to our global findings), and we hope to see this number will continue to fall in the coming years,” Alejandar Munoz, the report’s primary author, told Responsible Statecraft.
In 2023, the top 10 share and bondholders of nuclear weapons producing companies are all American firms. The firms — Vanguard, Capital Group, State Street, BlackRock, Wellington Management, Fidelity Investments, Newport Group, Geode Capital Holdings, Bank of America and Morgan Stanley — held $327 billion in investments in nuclear weapons producing companies in 2023, an $18 billion increase from 2022.
These companies are also profiting from the enormous government contracts they receive for developing and modernizing nuclear weapons.
“All nuclear-armed states are currently modernizing their nuclear weapon systems,” says the annual “Don’t Bank on the Bomb” report from PAX and ICAN. “In 2022, the nine nuclear-armed states together spent $82.9 billion on their nuclear weapons arsenals, an increase of $2.5 billion compared to the previous year, and with the United States spending more than all other nuclear powers combined.”
American weapons companies are some of the biggest recipients of contracts for nuclear weapons. Northrop Grumman and General Dynamics are “the biggest nuclear weapons profiteers,” according to the report. Combined, the two American weapons manufacturers have outstanding nuclear weapons related contracts with a combined potential value of at least $44.9 billion.
Those enormous government contracts for nuclear weapons, alongside contracts for conventional weapons, have helped make nuclear weapons producers an attractive investment for American investment banks and funds.
“Altogether, 287 financial institutions were identified for having substantial financing or investment relations with 24 companies involved in nuclear weapon production,” says the report. “$477 billion was held in bonds and shares, and $343 billion was provided in loans and underwriting.”
The report notes that while the total amount invested in nuclear weapons has increased, the number of investors has fallen and trends toward firms in countries with nuclear weapons.
ICAN and PAX suggest that concentration may be a result of prohibitions on nuclear weapons development for signatories to the Treaty on the Prohibition of Nuclear Weapons (TPNW), a 93 signatory treaty committing to the ultimate goal of the total elimination of nuclear weapons. The report says:
The TPNW comprehensively prohibits the development, manufacturing, testing, possession, use and threat of use of nuclear weapons, as well as assistance with those acts. For companies that build the key components needed to maintain and expand countries’ nuclear arsenals, access to private funding is crucial. As such, the banks, pension funds, asset managers and other financiers that continue to invest in or grant credit to these companies allow for the production of inhumane and indiscriminate weapons to proceed. By divesting from their business relationships with these companies, financial institutions can reduce available capital for nuclear weapon related activities and thereby be instrumental in supporting the fulfilment of the TPNW’s objectives.
Susi Snyder, managing director of the Don’t Bank on the Bomb Project, told Responsible Statecraft that even U.S. banks, like Pittsburgh based PNC Bank, are facing shareholder pressure to divest from nuclear weapons and that the tide may be shifting as shareholders in U.S. companies grow increasingly sensitive to investments in nuclear weapons.
“For three years shareholder resolutions have been put forward at PNC bank raising concerns that their investments in nuclear weapon producers are a violation of the Treaty on the Prohibition of Nuclear Weapons (TPNW), and that they are not in line with the bank's overall human rights policy guidelines,” she said.