Afghanistan: Who benefited from 'The Forever War'?

The Afghanistan war effort was effectively a privatised endeavor, with the US military relying heavily on private contractors to power the logistics of America’s “forever war”

Representative image
Representative image

V Venkateswara Rao

The Taliban’s stunning takeover of Afghanistan in the aftermath of a bungling US departure, has triggered a debate as to who really benefited from 'The Forever War'?

The US spent $2.26 trillion on the war in Afghanistan, or $300 million a day, on the twenty-year-long war. About $800 billion was spent on direct war-fighting costs and $88 billion for training the now trounced Afghan army. The US government also spent $145 billion in trying to rebuild Afghanistan. The second biggest line item of $530 billion is the estimated interest payments on the money the US government borrowed to fund the war. Brown University projects that the cost of interest on the United States' Afghan war debt will go up to $6.5 trillion by 2050.

Within weeks of US withdrawal, the 3,00,000-strong Afghanistan armed force laid down arms in the face of the Taliban’s advances. The objective of keeping Taliban at bay has become a null. The $145 billion spent by US to rebuild Afghanistan has also turned out to be damp squib. 90% of Afghan population still live on less than $2 a day. Afghanistan's economy grew 9.4% between 2003 and 2012, mainly driven by the aid-supported services sector. But between 2015 and 2020, economic growth slowed to about 2.5% per year.

The Afghanistan war effort was effectively a privatised endeavor, with the US military relying heavily on private contractors to power the logistics of America’s “forever war”. The workers of military contractors outnumbered US soldiers in Afghanistan three to one. There were nearly 7,800 DOD contractors in Afghanistan, according to the Pentagon quarterly contractor census report of July. These contractors were tasked with supporting the military with everything from lodging, laundry, and food to transportation, equipment maintenance, and fuel. The Pentagon has spent $107.9 billion on contracted services in Afghanistan since 2002, a Bloomberg Government analysis shows.

It turned out to be a profiteering exercise till the very end. A former CIA contractor and academic Chalmers Johnson says, “I guarantee you, when war becomes that profitable, you’re going to see more of it.” Top US defense companies are other major beneficiaries of the US 'forever war' in Afghanistan.

$10,000 invested in US defense stocks (evenly divided among America’s top five defense companies) when Afghanistan war began - precisely on September 18, 2001 - the day President George W. Bush signed the Authorization for Use of Military Force in Afghanistan in response to the 9/11 terrorist attacks - is now worth about $1,00,000. This is a far greater return earned than the average return earned in the overall US stock market over the same period. $10,000 invested in an S&P 500 index fund on September 18, 2001, would now be worth $61,613. The top five biggest US defense companies - Boeing, Raytheon, Lockheed Martin, Northrop Grumman, and General Dynamics - are of course part of the S&P 500 index. It means that the top US defense stocks outperformed the overall US stock market returns by 58% during the period of Afghanistan War. In addition to defense companies, oil companies like ExxonMobil which shipped the fuel for the US army, are some of the other US companies that have profited immensely from Washington’s lucrative defense contracts.

In fiscal 2020, US defense contract spending hit a record high of $447 billion - representing nearly two thirds of overall federal contract spending. Lockheed Martin Corp led the US defense companies by bagging contracts totaling more than $74 billion.

Raytheon Technologies Corp, General Dynamics Corp and Boeing Company came a distant second by bagging contracts worth $27.4 billion, $22.6 billion and $21.5 billion respectively in 2020.

Corporate ties with the US defense companies have to rule the roost at Pentagon. The US Secretary of Defense and retired US Army General Lloyd Austin may have received as much as $1.7 million when he divested his shares in Raytheon, of which he was a director in the four years between 2016 and 2020 (during the period after his retirement from the US Army and assuming his current post of Secretary of Defense), according to Bloomberg. Raytheon is not the only General Austin’s link to military contractors. He has also been a partner in an investment firm that has been buying small defense firms. The decision by President Biden to nominate General Austin as Secretary of Defense has drawn a new wave of questions about the corporate ties of the Pentagon boss. General Austin's move from the weapons business to a leadership role in the Pentagon continues a pattern begun by the former President Trump. President Trump picked James N. Mattis, also a retired four-star general who later served on the board of General Dynamics - another major military contractor - as his first defense secretary.

After twenty years and trillions of dollars flowing through the Pentagon’s war chest, the real winners of 'The Forever War' were thousands of private military contractors, US defense companies, middlemen and go-getters that profited immensely. Afghan people are not the winners. Osama Bin Laden was killed, but terrorism was not killed.

( V Venkateswara Rao is an alumnus of IIM, Ahmedabad and a retired corporate professional)

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