authored by

John Kierans
January 2023

We all know the cliché; the first casualty of war is truth. However, looking at war through the prism of economics can be very revealing. We run straight into another useful cliché, money talks and propaganda walks. If you follow the money interests, you may be surprised at what it reveals.

For the purpose of this analysis, I think it will be useful to examine the conflict inside Ukraine and the wider global conflict outside Ukraine separately.


We all know the cliché; the first casualty of war is truth. However, looking at war through the prism of economics can be very revealing.  We run straight into another useful cliché, money talks and propaganda walks.  If you follow the money interests, you may be surprised at what it reveals.

There appears to be two protagonists (USA and Russia) and one victim (Europe, including Ukraine) in this conflict.  At a very basic level both USA and Russia have had no change in their supply of food or energy.  Europe is struggling with energy and millions of displaced Ukrainians.

America and Russia have completely different goals in Ukraine.  America wants a long war and Russia wants a short war.  Europe appears to have lost its collective mind. I will deal with these three parties separately.

THE FIRST PARTY – United States of America

The most cursory look at recent history shows that the United States was not attacked or threatened by any of its adversaries in the last 20, 30 or even 80 years.  Their ‘homeland’ was not threatened, nor is it now.  Furthermore, it is very difficult to figure out what the US has gained in most of these conflicts.  It’s ‘victories’ have offered few, if any, discernible benefits for its citizenry.  The US did not conquer new territories, in fact it does not appear to have won anything.  For example, what good or profit was gained in Afghanistan?  A good detective might ask cui bono (who benefited)?

The US, without doubt, loses blood and treasure in every war.  Much of this treasure is given to its own war profiteers – arms manufacturers.  The ‘defense industry’ is a consistent winnerin all US wars.  This industry is winning when America is at war.  They want continuous war, and it appears as though they generally get what they wish for.  In my opinion, American arms manufacturers are a key driver of US foreign policy.  I think there is abundant evidence to support this.  

Wikipedia lists 30 wars involving the United States since 1950.  Some of these wars overlap and some have lasted for decades.  I have listed below the wars for this century in order of their finish date.  Remember none of the countries below threatened to invade or attack the US.

While there may appear to be a ‘good’ reason for each war, there is definitely a pattern.  It is difficult to see how any of these enemies posed any serious economic or military threat to the United States.  The US is almost continuously at war.  Russia is a notoriously over militarized nation and yet the US spends 12 times as much as Russia every year.  The US has a war economy.  Defense spending sucks up 1 in every 3 tax Dollars collected every year. The chart below is courtesy of Wikipedia.


US government propaganda supports the arms industry by telling their public that each war is both necessary and an ongoing success.  For example, the United State spent 20 years ‘fighting the good fight’ in Vietnam, until they airlifted the last people from the US embassy in Saigon.  The US public finally tired of the war, political support for it drained away and thus ended the boom in arms sales.  You may view the image below as a ‘war lost.’  Others see it as ‘lost arms sales.’

A Human Tragedy - Local Supporters Left Behind (Saigon 1975)


Wikipedia tells us that in today’s Dollars the United States spent $1,470Bn over 20 years on the Vietnam war.  America gained nothing in Vietnam.  Afghanistan cost the United States $1,435Bn over 20 years according to a much-cited Brown University study.  And yet US propaganda drummed out a continuous positive spin on all things relating to their Afghan adventure.  Once again America gained nothing in Afghanistan.  When the public finally tired of it and it became a political embarrassment, the US simply pulled out.  Thus ended another boom in arms sales.

A Human Tragedy - Local Supporters Left Behind (Kabul 2021)


It bears repeating, US foreign policy is for continuous war.  When a war is ongoing the arms industry is winning and when it ends, they are losing until the next one can begins.  2021 was a tough year for arms suppliers.  War revenues from Iraq and Afghanistan dried up.  The loss of these revenue streams contributed to a relatively poor stock market performance in 2021 for arms dealers.  Arms manufacturers Northrop Grumman, Raytheon Technologies, Lockheed Martin, and BAE Systems underperformed the general stock market by 13% in 2021.  This underperformance is easy to calculate:

2021   --->    Stock market up 27% - Arms Dealers up 14% = 13% underperformance.

2022  --->    Stock market down 20% - Arms Dealers up 33% = 53% overperformance.


They did much better in 2022 with the onset of the Ukraine war.  It appears as though Northrop Grumman, Raytheon Technologies and Lockheed Martin are important sponsors of the Ukraine war effort as indicated in the invite below.

The Last Two Words - Supported by

General Milley is the top military commander and spokesman for the United States.  However, he could easily pass as a spokesman for the US arms industry.  Within a short number of weeks after the war started, General Milley told Congress that he expects the USA to be involved in this war (arms sales bonanza) for a long time – “years”: When asked in congress how long he said:

“I do think this is a very protracted conflict, and I think it’s at least measured in years. I don’t know about a decade, but at least years for sure.”

He went on to project that the US would be supporting the Ukraine war effort for years to come.  This is hardly a talk of a commander that has any interest in winning a war. Like I stated at the beginning, the US wants to have a war.  It defines winning as being in a war.  Losing is when the war ends.

General Milley within 6 weeks predicts a decade of arms spending to support Arms Manufacturers

It is also becoming apparent that the US military may not be as powerful or effective as we generally imagine. The US pledged more money to Ukraine in 10 months than Russia spends annually on defense. The US is a greater military power than Russia.  However, its power is spread rather thinly around the globe.  Unlike Russia, the US can project power in many different parts of the globe.  However, the US cannot and does not win major conflicts far away from home.  Arguably it is not designed to do so.  


The US foreign policy directors(arms industry) have every reason to believe that they will be successful.  They have a proven skillset in maintaining long term wars in order to sell arms.  It would be hard to bet against them.


THE SECOND PARTY – The Russian Federation

Russian objectives are pretty straight forward. They want NATO to back off, Ukraine to be neutral and ethnic Russians in Ukraine to be treated fairly.  And they want all of this done with the least amount of spending and effort etc.

While Russia has had some success, it has had more failure. It has made inroads into protecting ethnic Russians in Ukraine and it has killed some Ukrainian Nazis.  It has also expanded its territories into eastern Ukraine.  The cost of their victories has been paid for with a lot more blood and treasure than they hoped for.  NATO has not backed off, it has enlarged and become more aggressive.  Additionally Ukraine is closer to NATO.

It is going to be hard for Russia to quickly win a war against an enemy that just wants to have a war. They will have to content themselves with winning slowly.




The biggest loser in this conflict is without doubt Europe.  For its own political reasons Europe is not energy self-sufficient. They are shunning cheap Russian energy and shutting down nuclear plants. Germany is Europe's largest economy, it is an industrial giant in the world coming in at 4.6% of world GDP and fourth only to USA, China, and Japan.  Their political choices present a new and permanent challenge to their largest energy consumers– manufacturers.  It is of course an oversimplification, but where Germany goes, Europe goes.  

Recently, German politicians, sport stars, and celebrities happily insulted Qatar at the world cup while simultaneously agreeing to import Qatari Gas, (2m tonnes pa for 15 years).

Because they care..............about Virtue Signaling


Europe is now adding the Ukrainian refugee crisis to its existing Syrian, Libyan and Afghani refugee crisis.  It really does appear as though Europe has no other objective beyond virtue signaling.  In many respects European tolerance for this war underpins its continuance.

The American energy and arms industries are gaining from this war.  The Russians are gaining (slowly).  Europe is losing.



In my view the world is transitioning from a unipolar world dominated by the USA to a multipolar world made up of an expanding number of players.  US power has a symbiotic relationship with the Dollar.  That is, US political power is derived from the Dollars usage as the de facto world currency. Therefore, a reduction in Dollar usage worldwide will cause a concurrent loss in American power.



Since the collapse of the Berlin wall just over 30 years ago, the USA has been able to do whatever it pleases, wherever it pleases.  It has had no credible opposition.  The USA was unstoppable.  That has changed recently.  Much of the USA’s power is derived from its own physical resources and industry.  However, its superpower status comes from the fact that the world uses its domestic currency (the Dollar) for almost all international trade.  We all know the golden rule – ‘He who has the gold makes the rules.’  In the case of the USA, this rule was modified to – ‘The USA makes the dollars, so the USA makes the rules.’

On February 28th, 2022, the USA stole $300Bn of Dollar denominated assets from the Russian Federation.  Although this is not the first time that the United States has used its power to steal Dollars from enemies, it was nevertheless unexpected.  Previously they had exercised this power on smaller prey.  Russia is the world’s largest commodity exporter and a substantial military power.

Stealing Russia’s Dollar assets was a dumb move.  It changed nothing in the Ukraine.  For no real gain, the US has persuaded other powers and commodity producers’ countries to diversify away from Dollar use.  As the world reduces its use of Dollars it simultaneously reduces US power.  

This loss of American power was clearly demonstrated by Saudi Arabia in 2022.  President Biden wanted the Saudis to produce more oil this year to help lower oil prices. They did the exact opposite – cut production!  This decision is best understood as pro-Saudi and not necessarily anti-American.

Mohammed bin Salman (de facto Saudi ruler) is investing a little less in his relationship with the US and a little more in his relationship with China.  China is one of the Saudi Kingdom’s largest customers accounting for 18% of its oil exports.  The Kingdom of Saudi Arabia has not gone mad nor is it self-destructing.  It is acting in its own interests.  It regards the US as an important partner in matters of defense cooperation, China as a partner in trade and Russia as a partner in oil production via its regular OPEC +meetings.  This change in attitude in international relationships may seem subtle or trivial at first glance.  In terms of logic, the next step for the Saudis is to conduct their trade with China in a currency other than the US Dollar.  Discarding the Dollar will not seem as subtle or trivial.  

International organizations such as the Shanghai Cooperation Organization - SCO (China, Russia, India, Pakistan, Turkey, Egypt etc., see chart below) and the BRICS (Brazil, Russia, India, China & South Africa) are attempting to deepen their trade relationships.  

Shanghai Cooperation Organization


These trade groupings are not necessarily anti-American.  All of the member countries have their own problems and challenges.  Not unlike the Saudis, they are interested primarily in their own affairs.  However, there is one problem that they all share. The Dollar.  If the USA is willing to steal Russia’s Dollars you can bet your bottom dollar that they will eventually steal China’s Dollars, and Saudi Arabia’s Dollars etc.

The loss of US global dominance will probably happen like Hemingway’s description of his bankruptcy – slowly at first and then suddenly at the end.  But it is important to understand that it is happening now.  India and China are buying Russian oil in their own currencies and negotiations are underway to purchase Saudi oil in the Rupees and Renminbi.  In addition to this, many larger countries have told the G7 that they will not abide by the $60 price cap on Russian oil.   Clearly America is not getting its own way and is presently unable to enforce its will on ‘friendly’ nations.

Our new multipolar world is still in its infancy.  It is not anti-American per se.  Nevertheless, it impinges US power and thus benefits Russia in this conflict.

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