Who benefited from the ‘forever war'?

The Afghanistan war effort was effectively a privatised endeavour as the US military relied on private contractors to power the logistics of America’s ‘forever war’

The Taliban’s stunning takeover of Afghanistan in the aftermath of a bungled 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, over the 20 years since 2001. 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 in the US budget is the estimated interest payments on the money the US government borrowed to fund the war. A Brown University study projects that the cost of interest on the US' Afghan war debt will go up to $6.5 trillion by 2050.

Within weeks of the US withdrawal, the 300,000-strong Afghanistan armed force laid down arms in the face of the Taliban’s advances. The $145 billion spent by the US to rebuild Afghanistan has also turned out to be a damp squib. 90% of the Afghan population still lives 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 endeavour, 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 a Pentagon report in 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 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 defence companies are other major beneficiaries of the war in Afghanistan.

Think about this: $10,000 invested in US defence stocks (evenly divided among America’s top five defence companies) when the ‘War on Terror’ began in September 2001 is now worth about $100,000. This is a far greater return earned than the average in the overall US stock market over the same period. $10,000 invested in an S&P 500 index fund in September 2001 would now be worth $61,613.

The top five biggest US defence 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 defence stocks outperformed the overall US stock market returns by 58% during the period of the Afghanistan war. In addition to defence companies, oil companies like ExxonMobil, which shipped fuel for the US army, profited immensely from Washington’s lucrative defence contracts.

In fiscal 2020, US defence contract spending hit a record high of $447 billion — representing nearly two-thirds of overall federal contract spending. Lockheed Martin led the US defence companies by bagging contracts totalling more than $74 billion. Raytheon, General Dynamics and Boeing bagged contracts worth $27.4 billion, $22.6 billion and $21.5 billion, respectively, in 2020.

Corporate ties with the US defence companies have to rule the roost at Pentagon. According to Bloomberg, the current US Secretary of Defence, 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). He has also been a partner in an investment firm that has been buying small defence firms.

The decision by President Joe Biden to nominate Gen Austin as Secretary of Defence has drawn a new wave of questions about the corporate ties of the Pentagon boss. Gen Austin's move from the weapons business to a leadership role in the Pentagon continues a pattern begun by former President Trump. President Trump picked James Mattis, also a retired four-star general who later served on the board of General Dynamics, as his first defence secretary.

After 20 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 defence companies, middlemen and go-getters that profited immensely. The Afghan people are not the winners. Osama bin Laden may have been killed, but terrorism has not been.

(The writer is a retired corporate professional)