The New Golden Age of Arms Profits and the Geopolitics That Feed Them

 

The global arms trade has entered a period of unprecedented expansion. The most recent data from the Stockholm International Peace Research Institute (SIPRI) confirms what many suspected: militarisation has become a structural feature of the world economy, fuelled by state anxiety, geopolitical tension, and a corporate sector that has learned to convert conflict into guaranteed revenue.

In 2024, the world’s 100 largest arms manufacturers recorded a staggering USD 679 billion in weapons and military services revenue, which amounts to roughly AUD 1 trillion. It is the highest total SIPRI has ever recorded, representing a 5.9 per cent increase in a single year. Wars in Gaza and Ukraine accelerated demand, but the underlying driver was a deliberate policy shift by governments across the world towards greater military spending.

A Profitable Crisis for the West’s Defence Giants

The United States remains the nucleus of the global arms economy. Of the 39 American companies that appear in SIPRI’s top 100, 30 expanded their revenues in 2024, including industry titans Lockheed Martin, Northrop Grumman and General Dynamics. Collectively, US firms pulled in USD 334 billion (AUD 512 billion), an increase of almost 4 per cent.

Yet even this torrent of revenue has not solved the chronic structural weaknesses of the US defence industrial base. SIPRI notes that widespread delays and budget overruns continue to plague major US-led programs such as the F-35 fighter jet, a project already synonymous with spiralling costs and engineering deficiencies. But in an industry where cost overruns become justification for further investment, inefficiency rarely harms profit. Instead, the F-35 illustrates a core principle of the contemporary arms economy: when governments become dependent on the output, failure becomes a feature, not a bug.

Europe’s Surge: Industry Reshaped by War

Europe registered an even sharper increase. Of 26 European companies (excluding Russia), 23 recorded higher revenues. Their combined total rose 13 per cent to USD 151 billion (AUD 232 billion). This surge was driven by the political shock of Russia’s invasion of Ukraine, which spurred European governments to rebuild stockpiles, increase defence budgets and fast-track weapons acquisitions.

Some companies experienced explosive growth. The Czech Republic’s Czechoslovak Group saw revenues rise by an astonishing 193 per cent, buoyed by a government-led initiative to procure artillery shells for Ukraine. Ukraine’s state-owned JSC Ukrainian Defence Industry climbed 41 per cent, reflecting wartime demand and attempts to restore domestic production capacity.

Despite this boom, SIPRI researchers warn that Europe faces brewing instability in its arms supply chains. New production capacity requires critical minerals and specialised components, yet China’s tightening of export controls has introduced serious uncertainty. The attempt to insulate Western arms production from Chinese material inputs may prove far more difficult than European policymakers admit.

Russia: Sanctions Bite, Domestic Demand Roars

Russian firms also expanded their revenues despite unprecedented sanctions and acute shortages of components. The two Russian firms in SIPRI’s list, Rostec and United Shipbuilding Corporation,  recorded a combined revenue increase of 23 per cent, reaching USD 31.2 billion (AUD 47.9 billion). Domestic demand from the war in Ukraine absorbed production that would otherwise have gone to shrinking export markets. However, SIPRI notes a severe shortage of skilled labour that threatens long-term production.

Israel: Rising Profits Amid International Backlash

In the Middle East, arms revenue continued to grow. Israel’s three firms in SIPRI’s top 100 saw their revenue rise by 16 per cent, reaching USD 16.2 billion (AUD 24.9 billion). This occurred despite global protests and mounting legal findings about Israel’s conduct in Gaza. According to SIPRI researcher Zubaida Karim, the backlash “seems to have had little impact” on demand for Israeli-made weapons. Many states continued to place significant orders, proving once again that in the arms trade, reputational crisis rarely competes with the imperatives of military procurement.

Asia and Oceania: A Rare Decline Amid Global Surge

Asia and Oceania were the only regions to see a decline. Revenue fell 1.2 per cent to USD 130 billion (AUD 199 billion). This drop was driven almost entirely by China, whose eight companies in the top 100 experienced a 10 per cent revenue fall. SIPRI attributes this to corruption scandals within Chinese defence procurement that caused major contracts to be delayed or cancelled.

Although modest, this decline underscores the global nature of contemporary arms production. Even China, which is the world’s second largest military spender, is sensitive to internal governance shocks that disrupt procurement and production.

The Structural Trend: Militarisation as Economic Policy

Taken together, these figures represent more than a temporary surge. They reveal how deeply the arms industry is now embedded in national economies and political systems. In every major region except Asia and Oceania, arms revenue surged even as global economic growth stagnated. War and insecurity have become predictable drivers of profit.

Three structural lessons emerge:

1. The arms industry now operates with the scale and confidence of a globalised mega-sector, comparable to energy or finance, but with unique political insulation.

2. Weapons manufacturers increasingly shape national security policy, not merely respond to it. Higher spending and greater procurement are locked in through long contracts, alliance commitments and industrial policy.

3. The moral and legal implications of militarisation are secondary to industrial momentum. Israel’s continued arms sales despite global condemnation exemplify this phenomenon.

Why This Matters for Australia — and What Today’s Announcement Reveals

Australia’s expanding entanglement with the global arms economy is not an abstract policy concern. It is reflected directly in the strategic choices made by government, as seen in today’s announcement that Australia will contribute a AUD 95 million military package to Ukraine and become one of the first non-NATO contributors to the NATO Prioritised Ukraine Requirements List (PURL). This decision, framed by the Albanese Government as a commitment to the “global rules-based order,” must be evaluated within the broader dynamics of militarisation and arms-industry influence outlined above.

The announcement commits Australia to:

• 50 million for PURL, a NATO mechanism designed to accelerate the flow of critical weapons to Ukraine

• 43 million in ADF materiel, including tactical air defence radars, munitions and combat engineering equipment

• 2 million for the Drone Capability Coalition

• New sanctions on 45 vessels linked to Russia’s shadow fleet, bringing the total sanctioned vessels to 200

• Delivery of the final tranche of 49 M1A1 Abrams tanks gifted to Ukraine

This lifts Australia’s total support for Ukraine to over AUD 1.7 billion, of which more than AUD 1.5 billion is military assistance. Australia now stands as the largest non-NATO supplier of weapons to the conflict.

There is no dispute that Russia’s invasion of Ukraine is illegal and destructive. Nor is there dispute that Ukraine has a right to defend itself. The concern arises not from the legitimacy of Ukraine’s defence, but from what the pattern of Australian decision-making suggests about the structural position of the arms industry within our political system.

1. Militarisation as Default Policy Setting

The pace with which Australia now aligns itself with NATO military procurement structures reveals the degree to which defence industry priorities have become embedded within government strategy. Becoming the first non-NATO partner to contribute to PURL effectively integrates Australia into an expanding transatlantic weapons pipeline, reinforcing the idea that Australian national security is now expressed primarily through participation in global arms flows.

This is not a neutral decision. It deepens the very dynamic identified in SIPRI’s data: the steady shift of national economies toward permanent wartime footing.

2. Rising Expenditure, Limited Public Scrutiny

The government’s justification centres on the “global rules-based order,” but provides no substantive public accounting for why militarised expenditure continues to escalate while diplomatic, humanitarian and reconstruction pathways receive far less emphasis.

Australia’s military assistance, now exceeding AUD 1.5 billion, occurs in a political climate in which arms-industry voices are prominent in media platforms, think-tanks, sovereign investment vehicles and procurement advisory networks. This raises a pointed question: to what extent is Australia’s generosity driven by strategic necessity, and to what extent by the entrenched interests of a weapons sector that benefits materially from heightened military spending?

3. The Industry Gains While Accountability Stagnates

Each commitment of materiel, including  radars, munitions, tanks, and drone systems, creates new revenue streams for defence contractors supplying the ADF and its partners. The companies that produce these systems are the same companies experiencing record global profits, as documented by SIPRI. They are also the companies whose Australian subsidiaries seek further contracts, subsidies, and sovereign capability funding.

Yet despite this, Australia has no transparent mechanism to evaluate potential conflicts of interest in decisions that directly benefit weapons suppliers. There is no public assessment of how industry lobbying or procurement momentum shapes decisions like today’s package.

4. The Irony of Supporting “Rules-Based Order” While Weakening Our Own Oversight

The Albanese Government’s rhetoric stresses legal obligations and global norms, but Australia has yet to apply similar scrutiny to its own dealings with weapons manufacturers implicated in grave human-rights violations elsewhere. As demonstrated by the Future Fund’s ongoing investments in Elbit Systems, Australia continues to expose itself to legal and moral risk by supporting firms accused of complicity in genocide in Gaza.

It is contradictory to declare an international legal obligation to support Ukraine’s sovereignty while ignoring equally binding obligations under the Genocide Convention regarding Palestine. This discrepancy suggests a hierarchy of law shaped not by principle, but by geopolitical alignment and industry embeddedness.

5. Strategic Logic or Structural Capture?

Today’s announcement reinforces a broader trend: Australia increasingly expresses its foreign policy through weapons transfers and participation in global militarised coalitions. This trend aligns neatly with the interests of weapons manufacturers, whose global revenues have surpassed USD 679 billion. It also aligns with the business models of Australian defence primes and subcontractors eager to expand domestic production under the banner of “sovereign capability.”

But the alignment of government strategy with industry profit does not automatically serve long-term national interest. It risks narrowing the conceptual horizon of Australian foreign policy until it sees only military tools for diplomatic problems, only procurement responses to instability, and only strategic obligations refracted through alliance pressure.

A Civilian Democracy in a Militarised World

Australia must reckon with a world in which arms profits grow faster than most national economies, and where conflict fuels industrial expansion. But reckoning requires clarity, transparency and independence,  qualities that are difficult to sustain when governments and industries become partners in the business of war.

The lesson of the Future Fund applies equally to today’s Ukraine announcement: when the weapons industry becomes a central architect of national strategy, democratic sovereignty is not strengthened. It is narrowed. The levers of decision-making shift subtly but decisively away from the public and toward a sector whose prosperity depends on the persistence of conflict.

Australia must decide whether its foreign policy will be grounded in independent judgement or shaped by a global arms economy that has learned to bend political systems to its own demands.

Conclusion: Who Truly Profits and Who Pays the Price

When global weapons revenues surge past USD 679 billion and Australia deepens its participation in transnational military supply chains, it is essential to ask who ultimately benefits from this enormous transfer of public wealth into private hands. The answer is not the societies locked in conflict, nor the civilians whose homes, cities and futures are destroyed in the blast radius of geopolitical ambition.

The primary beneficiaries are:

• the executives of major defence conglomerates, whose compensation packages swell in line with share performance

• institutional investors, including sovereign wealth funds like Australia’s Future Fund and private asset managers, who treat war as a portfolio-strengthening opportunity

• shareholders of arms manufacturers, many of whom have no relationship to the conflicts their investments fuel

• the political intermediaries who orbit the defence-industrial complex, moving between ministries, consultancies and corporate boards, reinforcing a culture where weapons are both a policy tool and a revenue stream

These are the actors who absorb the financial gains. But the people who pay for this profligacy are the citizens of the countries funding it. Every missile contract, every tank delivery, every sovereign capability initiative is financed by the taxes collected from ordinary Australians. The public is told these outlays are essential for security, yet they are rarely given meaningful oversight or transparent cost–benefit justification.

This is the uncomfortable truth that sits beneath today’s booming weapons economy: the wealth accumulated by defence corporations is generated by the public, and extracted from the suffering of others. The vast flows of capital that enrich the global arms industry originate in the budgets of democratic states, while the human cost is borne by civilians trapped in the conflicts those weapons sustain.

Citizens are effectively conscripted as involuntary shareholders in an industry whose prosperity depends on perpetual warfare. While Australians struggle with rising living costs, infrastructure shortfalls, healthcare strain and housing crises, billions of public dollars are diverted into systems designed not to preserve life, but to extinguish it. The opportunity cost is profound: every dollar spent on weapons is a dollar not spent on the wellbeing of the society that funded it.

For Australia, the danger is moral as well as economic. When national wealth is funnelled into weapons manufacturers, whether directly, through procurement, or indirectly, through sovereign fund investments, the country becomes complicit not only in the strategic consequences of conflict, but in its commercialisation. It becomes part of a global order in which death and displacement are line items on a quarterly earnings report.

A democracy cannot maintain its integrity while its public wealth is used to enrich an industry that profits from catastrophe. Until Australia reckons with the fact that it is the taxpayer who funds this profligacy and the civilian abroad who pays the ultimate price, it will continue to subsidise a system that corrodes both international law and domestic democratic accountability.