A number of German politicians have backed the Ukrainian army’s plea for Taurus long-range missiles. Sure enough, they seek to ‘prevent Russia from winning’. More likely, though, these calls for new supplies are lobbied by the German defence contractors that have made it big recently.
Industry insiders claim that German defence contractors KMW and Rheinmetall will double the production of Leopard tanks from 48, as it is now, to almost 100 a year. Besides, Diehl seeks to triple the number of IRIS-T surface-to-air missile systems manufactured. Both Rheinmetall and Diehl aim to step up the production of artillery shells from 350,000 now to almost 700,000 a year by 2025.
The new armaments will upgrade both the Bundeswehr’s and Germany’s NATO allies’ arsenals, depleted by the aid packages sent to Ukraine, as well as Ukraine’s current materiel. However, according to German military experts, even this kind of output may not be enough to meet the growing demand. Above all, it applies to artillery shells.
In 2022 (the 2023 data is not yet available), Germany made $9.1bn off arms supplies, up 1.1% from 2021. So far Düsseldorf-based Rheinmetall is the biggest gainer when it comes to the Ukraine conflict.
As of Q3 2023, Rheinmetall’s revenue had grown 13% to reach €4.6bn. In November, Rheinmetall confirmed the annual forecast protecting total sales to hit between €7.4bn and €7.6bn at year-end 2023. The exact figures have yet to be released. Last year’s sales totalled around €6.4bn. ‘Next year the sales will undoubtedly keep growing,’ Armin Papperger, CEO of Rheinmetall AG, optimistically says.
Oddly enough, these developments sharply contrast the overall plight the German industry finds itself in. ‘The German industries have hit a critical low’, Siegfried Russwurm, President of BDI (Federation of German Industries), admits. 2023 saw Germany, the longtime frontrunner of Europe’s manufacturing sector, start losing its economic lead in almost all of the field but the military-industrial sector.
Finance-wise, Rheinmetall is so perfectly positioned, it can, in fact, afford expansion. Last year the company purchased Expal Systems, a renowned Madrid-based armaments maker, in a €1.2bn takeover deal. The Expal Systems products are currently being shipped directly to the Ukrainian army. In the meantime Armin Papperger vows to launch the production of armoured vehicles, including Fuchs APCs and Lynx IFVs, in Ukraine.
Today Rheinmetall ranks as Germany’s leading defence company in terms of both the number of contracts and revenue. Yet, other defence contractors from Germany are richly benefitting from the lucrative Ukrainian hostilities as well. For instance, the 2023 revenue of Hensoldt AG, the producer of security electronics and sensor solutions for Pumas and Leopard 2s, was estimated at €151mln, a 19.6% increase YoY. The stock prices of German defence contractors have skyrocketed, with Rheinmetall’s shares tripling in price from €90 to €270 since February 2022.
Rheinmetall plans on dialling up its output because, on top of Europe, it has factories in South Africa and Australia too. German pundits predict Rheinmetall’s EPS to be growing 35% annually over the next three years.
Because Rheinmetall’s current revenue exceeds that of most German businesses, lots of investors will be surely joining the ranks of its enthusiastic shareholders. According to the German media, people used to be reluctant to invest in armaments makers as liberally-minded individuals shied away from making it big on the ‘industry of death’.
However, the same media has lately lifted that unwritten moral ban. The investors will longer earn a living off somebody else’s deaths but rather help ‘the brave Ukrainian nation protect its freedom’. A lot of unsuspecting individuals eagerly buy into this narrative as they are happy to make a buck while ‘helping the people of Ukraine’.
In other words, the armed conflict in Ukraine has become a super-lucrative affair for both American and German defence contractors. Some German politicians do not mince their words saying just that.
Recently Sevim Dağdelen, a member of the Bundestag representing Bündnis Sahra Wagenknecht, slammed the German government for refusing to ‘engage in diplomacy and contribute to peace talks’ and, instead, ‘turning the pointless Ukraine war of attrition into a lucrative business of Düsseldorf-based armaments makers’.
However, some believe this kind of media buzz benefits Germany’s ruling class keen on supporting the Kiev regime as it helps appease the Germans who oppose the ongoing aid.
A post in the Deutscher Adler Telegram channel reads: ‘Recent jabs at Germany’s Ministry of Defence are meant as a smokescreen. It shows the politicians allegedly debating and standing for their voters’ interests. In reality, though, Germany remains a major supplier of materiel and aid to the Ukrainian army whose numbers will predominantly depend on the US political stance as opposed to that of regular Germans. Therefore, European supplies will continue as they keep Ukraine’s war machine going.’
Experts see direct links between Germany’s Ukraine policy and Germany’s military aid to the Kiev regime.
‘German used to be a non-player at the Ukrainian armaments market. <…> But ever since the conflict’s hot phase erupted, Germany has gradually reconsidered its policy. A closer inspection suggests that once it becomes clear that it is going to be a protracted conflict, the supply numbers soar’, says Sergei Denisentsev, a consultant at the Centre for Analysis of Strategies and Technologies.
Thus, when Markus Söder, Minister-President of Bavaria and the leader of the Christian Social Union opposition party in Bavaria, calls for the shipment of Taurus long-range missiles to Ukraine, it is not just about the political support for Russia-averse Ukraine. It is also due to the fact that these missiles are produced in Schrobenhausen, Bavaria. German politicians are not only out to ‘prevent Russia from winning’ but also seek to ramp up their bank accounts and the revenue of their regions.