This article has been adapted from remarks delivered to the Middle East Policy Council.
The gods of war in Washington have decreed that the international situation is now being shaped by two transcendent forces: great power rivalry (especially between our country and China) and authoritarian efforts to dismantle democracy. But trends in the Middle East clearly contradict both this worldview and the U.S. policies that flow from it. To those in the region, the U.S. seems to be combating the China of its nightmares, not the China they observe.
Let me begin by reviewing trends and events in West Asia and North Africa over the past year or so. Consider what impact, if any, contention between China and the United States had on them.
In my view, these are the most notable recent developments in the region.
• The constraints on Iran’s nuclear program, imposed by the nuclear deal that the U.S. first hammered out with Iran and then unilaterally abrogated, have largely withered away.
• The UAE has become a major politico-military actor and astute practitioner of Realpolitik, as evidenced in its rapprochements with Iran, Israel, and Turkey.
• Saudi Arabia is undergoing an astonishing cultural opening and liberalization even as its de facto ruler, Mohammed bin Salman, remains persona non grata in most of the West.
• Qatar and the other GCC states are reconciling.
• Saudi Arabia is seeking an honorable exit from its military misadventures in Yemen and failing to find one.
• The humanitarian disasters and political impasses in Yemen are worsening, while the suffering in Gaza, Libya, and Syria remains intense but selectively ignored by the West.
• Invasive Turkish and U.S. troop presences in Syria persist amidst an appalling lack of international attention to Syria’s need for reconstruction.
• The Arab League is reincorporating Syria, and GCC members are gradually normalizing relations with the Asad government.
• Turkey has distanced itself from Europe and the United States and seeks to assert both Middle Eastern and pan-Turkic identities.
• Indigenous defense production capabilities are beginning to take root in Saudi Arabia.
• The U.S.-brokered “Abraham Accords” have so far survived, despite the failure of the U.S. to make good on its promised military gifts to the UAE, Israel’s resumption of aggressive ethnic cleansing and settlement activity in the Occupied Territories, and the growing divergence of Emirati views of Iran from those of Israel.
• Jordan’s monarchy has once again surmounted severe internal and external pressures and Oman has made a successful transition to rule by a new sultan.
• Efforts by the countries of the region to diversify their politico-military relationships have accelerated in the wake of America’s bungled wars in Afghanistan and Iraq and its passivity in the face of Iranian challenges to Arab states’ security.
None of these developments was driven either by China or Sino-American contention.
The reality is that Arab states are both responding to the opportunities engagement with China affords them and reacting to the perceived unreliability of American protection and the fecklessness of U.S. Iran policies by hedging their bets. Israel has its own interests and is resisting American efforts to ban projects with Chinese companies. Iranian decisions are largely reactions to the U.S. policy of “maximum pressure,” an approach with a well-established historical record of both futility and catastrophic failure and no record of success.
U.S. dollar-based sanctions have compelled Iran’s decoupling from the West and driven it toward Central, South, and East Asia. Faute de mieux, Iran is betting that, with European and U.S. companies out of reach, it can leverage China’s rising prosperity to its own. It is simultaneously pursuing ties to the Russian-dominated Eurasian Economic Union, which is itself increasingly integrated into China’s “Belt and Road” (BRI) initiative.
The developments I just listed are the consequences of the end of Euro-American hegemony in West Asia, longstanding rivalries between the region’s various polities (large and small), and disparate internal political evolutions. “Great power rivalry” is not the major dynamic reshaping the region. Meanwhile, claims that “America is back” are belied by its visible retrenchment.
And, if democracy is not faring well in the Middle East, this reflects local factors exacerbated by the tarnishing of America as a model rather than predatory authoritarianism. For instance:
• Egypt’s military dictatorship is more absolutist than ever.
• Tunisia has lost its democracy to its government’s perceived mismanagement of COVID.
• The Lebanese state, economy, and democracy are at death’s door, with life support only from Iran and Syria, themselves enfeebled.
• Sudan is subject to on-again, off-again military rule.
• The democratic freedoms of Israeli Jews are contracting, and the Zionist state’s heartless mistreatment of its conquered Arab populations is ever more unapologetic.
• In Turkey, Erdoğan has overthrown Kemalism and is busy eroding democracy.
• Iraqis have tired of being martyred while they wait for democratic governance.
• The Islamic Republic of Iran’s ’s electoral processes have lost credibility with its citizens.
These are, without exception, locally generated developments. As in the United States, the authoritarian trend is home-grown, not imported. It does not involve China. After ousting governments in Iraq and Libya failed to democratize them, America too – for now, at least – does not seek to impose its values and system of government on the states of the region.
In short, in the Middle East, the Washington narrative that Chinese rivalry with the United States or predatory Chinese authoritarianism account for the way the new world disorder is evolving does not compute. On inspection, China’s increasing presence in the Middle East seems driven more by local demand than by a diplomatic or ideological push from Beijing. This raises a question. If Beijing is not pursuing a zero-sum anti-American game in West Asia and North Africa or striving to undermine democracy there, what is it doing?
The answer is that China is behaving very much as America did in the first half of the 20th century. Back then, Britain dominated the Middle East. Americans thought that what was good for American oil companies was good for the U.S.A., that we should focus on the energy trade and avoid taking sides in foreign disputes, and that the region’s political cultures were something we should study and learn to live with rather than denounce or subvert.
American influence gradually displaced British hegemony. Still, for decades Washington carefully avoided any implication that it sought to supplant London as the guarantor of regional stability. But, when London pulled out, it had little choice but to do so. Now Beijing is following a similar path: seeking to promote the exchange of goods and services for energy supplies without levying any political or cultural demands and keeping as aloof as it can from entanglement in local disputes.
Of course, China is now so big economically that it cannot help but be a growing factor in the regional worldview. Between 2000 and 2020, China’s GDP quintupled in size. Its industrial economy is now twice as large as America’s, though its services economy remains much smaller. China has become the world’s largest consumer market and its biggest importer of hydrocarbons. It is an emerging technological superpower in an increasing number of fields.
One-third of China’s energy imports are from the GCC, with the largest portion from Saudi Arabia. Chinese companies buy one-sixth of GCC oil exports, one-fifth of Iran’s, and half of Iraq’s. China has become the region’s largest foreign investor and trading partner. The states of the region want more, not less Chinese engagement. As China takes a lead in global technological innovation, it has become a significant collaborator and customer for Israel’s high-tech companies and a partner in Saudi Arabia’s efforts to develop a domestic armaments industry. Seventeen Arab states have joined the Belt and Road Initiative. Last week, the foreign ministers of Saudi Arabia, Kuwait, Oman, and Bahrain as well as the Secretary General of the GCC were in Beijing to discuss the expansion of their relations with China. They were followed by the foreign ministers of Iran and Turkey.
Meanwhile, Americans seem determined to evade further politico-military involvement in West Asia. But, as we do this, we create both a vacuum and a real possibility that, just as the United States reluctantly succeeded Britain as the dominant power in the Middle East in the last century, China will end up eclipsing America in this century. China’s interests echo those that first drew America into engagement with the Middle East:
• China has a compelling interest in securing reliable access to the uniquely rich energy resources of the Persian Gulf.
• It sees the region as a crucial entrepôt and crossroads for trade and travel between Asia, Europe, and East Africa, making its stability a matter of strategic interest.
• There is rapidly growing demand for Chinese companies’ engineering services, construction capabilities, automotive and telecommunications equipment, armaments, and consumer products.
• China’s citizens and entrepreneurs are establishing an ever-larger presence in the region. (There are now more than 200,000 Chinese residents in the UAE alone.)
Like America a century ago, China has no apparent imperial or ideological agenda in the Middle East. Unlike today’s United States, China does not ask countries in the region to change their political systems and values, punish them for failing to do so, or demand exclusive relationships with them. It has yet to profess opposition to continuing American involvement in the region. Instead, it has suggested the formation of a multilateral dialogue on security issues and, when the time is ripe, a regionally managed “collective security mechanism for the Gulf.” In short, China proposes to help bridge Iranian and Gulf Arab views rather than impose its own or take sides.
But the logic of China’s interests in the new world disorder suggests future evolution in Chinese policies:
• With the U.S. Navy preparing for war over Taiwan and no longer protecting global interests in the Persian Gulf, the Chinese navy will sooner or later have to assume responsibility for securing China’s access to the region and its resources.
• Chinese civilians in the Middle East will expect and demand protection from natural or human disasters (including terrorist attacks) and, if necessary, emergency evacuation and repatriation.
• Supporting Chinese interests in a region so distant from China will generate requirements for Chinese naval access to local ports and facilities. This means more installations like the logistics base in Djibouti that supports China’s anti-piracy patrols in the Gulf of Oman and its U.N. peacekeeping operations in East Africa.
• China will find it increasingly difficult to avoid the inference by its customers that its arms sales imply defense commitments.
• Aggressive U.S. opposition to Chinese involvement in infrastructure and other projects in the region will stimulate Chinese efforts to undercut or dislodge U.S. influence in the region.
• Sino-Indian naval contention has already begun to focus both countries on being able to impede each other’s oil and gas trade with the Gulf.
Unlike the United States, China has cordial contact with all parties to the numerous disputes in the region. The former head of Israel’s intelligence agency, Mossad, recently suggested that China was the only country that could conciliate Iran and other countries in the Middle East. He may be right. For better or ill, China is likely to become an increasing force in efforts to manage peace and security in the Persian Gulf.
The question is whether China will choose to accept an active role in stabilizing the region. “Great power rivalry” or a putative Manichean struggle between China and democracy will not drive this decision. On the evidence to date, it will instead reflect the broadly overlapping national interests of China, Europe, India, Japan, and Korea, the fractious states of West Asia and North Africa, and the United States. All share a compelling interest in a stable Middle East whose quarrels do not export radicalism or endanger access to crucial energy supplies.
It would be in America’s interest for China and other countries that rely on Middle Eastern energy exports to share the burden of preserving global prosperity by coming together to safeguard the world’s energy trade. If China faces a choice in this regard, so does America. The United States can cooperate to mutual advantage with China, other rising powers, and the oil producing countries of the region, or it can overwrite obvious interests it shares with China and others with irrational antagonism and pursue a pointless game that no one can hope to win.
Ambassador Freeman is currently a visiting scholar at Brown University’s Watson Institute for International and Public Affairs. He was Assistant Secretary of Defense for International Security Affairs from 1993-94, earning the highest public service awards of the Department of Defense for his roles in designing a NATO-centered post-Cold War European security system and in reestablishing defense and military relations with China. He served as U. S. Ambassador to Saudi Arabia (during operations Desert Shield and Desert Storm). He was Principal Deputy Assistant Secretary of State for African Affairs during the historic U.S. mediation of Namibian independence from South Africa and Cuban troop withdrawal from Angola.Chas Freeman served as Deputy Chief of Mission and Chargé d’Affaires in the American embassies at both Bangkok (1984-1986) and Beijing (1981-1984). He was Director for Chinese Affairs at the U.S. Department of State from 1979-1981. He was the principal American interpreter during the late President Nixon’s path-breaking visit to China in 1972. In addition to his Middle Eastern, African, East Asian and European diplomatic experience, he served in India.Ambassador Freeman earned a certificate in Latin American studies from the National Autonomous University of Mexico, certificates in both the national and Taiwan dialects of Chinese from the former Foreign Service Institute field school in Taiwan, a BA magna cum laude from Yale University and a JD from the Harvard Law School. He is the recipient of numerous high honors and awards. He is the author of three books on U.S. foreign policy and two on statecraft. He was the editor of the Encyclopaedia Britannica entry on “diplomacy.” He is a sought-after speaker on a wide variety of foreign policy issues.
Oil tanker leaves port in Dubai, United Arab Emirates (shutterstock.com).
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.