By Haig Hovaness
The government of Saudi Arabia is using munitions sold by U.S. weapons makers to prosecute a brutal campaign against a faction in the Yemen civil war. The weapons in question are laser-guided bombs manufactured by a subsidiary of Raytheon, one of the top weapons makers in the U.S.
GBU-12 Paveway II bomb
The precision guidance capabilities of these bombs are irrelevant to the destruction they wreak on civilians if they are used indiscriminately. The bomb does not choose its aim point. It will accurately strike a school bus, a hospital, or an apartment building if that is where it is aimed, The Saudi military and its Gulf allies have used such high-tech weaponry indiscriminately to inflict death and injury on thousands of innocent Yemeni civilians.
The Saudi government is an oil-rich tyranny heavily influenced by the fundamentalist Wahabi sect of Islam. Saudi Arabia is a nation in which women’s rights activists are arrested and tortured. It is a country with no national elections and no synagogues. Its authoritarian absolute monarchy and intolerant clergy are anathema to American values, yet the U.S. eagerly sells weapons to this regime. We sell them because weapons makers like Raytheon welcome profits from blood money.
The prime directive motivating Raytheon, and all other corporate weapons merchants, is maximizing shareholder value. They have no interest in promoting peace or minimizing human suffering. Indeed, the more their weapons are consumed with devastating effects, the greater their profits. Their corporate hands are stained with the blood of countless victims of the indiscriminate use of their weapons. Maximizing weapons sales is accomplished by influencing the U.S. and foreign governments to adopt policies resulting in stockpiling and use of weapons of war.
There is a clear chain of political influence reaching from the boardrooms of companies like Raytheon through the well-paid lobbying firms of the Washington beltway into the campaign financing of powerful congressional representatives and the career advancement of government officials who authorize arms purchases. This primary mechanism of influence is augmented by extensive subsidies to supposedly independent defense experts at numerous think tanks and academic institutions. These experts provide intellectual respectability to the feeding frenzy of the weapons makers at the enormous trough of the U.S. defense budget.
Raytheon, like other arms makers, publicly asserts that it has no role in shaping foreign policy. Meanwhile its lobbyists privately tie crucial votes in Congress to the promise of large campaign contributions and participate in revolving door career maneuvers that place industry advocates in powerful government positions. This duplicity is so common that it has been normalized as a permanent feature of the U.S. Military-Industrial Complex. The improper influence has become so egregious that a Raytheon lobbyist, Mark Esper, was appointed Secretary of Defense in the Trump administration, and Biden’s nominee for Secretary of Defense, Lloyd Austin, sits on the Raytheon board of directors. With control of both houses of Congress and the Executive branch, Raytheon has nothing to fear from U.S. government oversight over its lavish funding. But there is something that Raytheon would fear: investor activism.
Senior corporate executives are increasingly compensated by stock grants and stock options. Thus, anything that depresses the stock price of their companies directly affects their earnings. This explains the widespread practice of companies buying back their own stock to boost stock prices instead of reinvesting their profits in productive business capabilities. In the past, investors were reluctant to punish companies for socially irresponsible behavior because the conventional economic wisdom was that nothing should interfere with market forces. Motivated only by profit, weapons makers have used campaign contributions to engineer steady increases in U.S. defense spending for decades, with utter indifference to the damage inflicted by the ill-advised use of their weaponry. But the winds of change are reshaping the priorities of investors.
After the sharp recession of 2008, the magic of the marketplace was partially discredited because unchecked exploitation of deregulated mortgage markets had led to a global financial collapse. Moreover, the looming danger of climate change led economists and investors to add consideration of “externalities,” factors not directly reflected on a corporation’s income statement, to the evaluation of investments. The result has been the growth of socially responsible investing, a practice that balances the profitability of an investment with the associated impacts on society. Initially, the focus of this movement has been on hydrocarbon and mining companies, but there is no reason why this new calculus of investment valuation could not be extended to the arms makers.
I submit that a divestment campaign targeting Raytheon Corporation would be the most direct and efficient means of halting this company’s improper manipulation of U.S. foreign policy and reducing the carnage caused by the indiscriminate use of its weapons in war zones like Yemen. The divestiture of large amounts of Raytheon stock by major public pension funds, academic endowments, and mutual funds, would significantly depress the company’s stock price and lead Raytheon management to heed the following demands:
- Halt all campaign contributions to elected officials.
- Halt all contributions to policy organizations advocating aggressive military action.
- Halt the marketing of weapons to regimes engaged in human rights violations
- Redirect lobbying funds to foreign aid efforts aimed at relief for war refugees
Although Raytheon is not the only weapons maker engaging in corrupt and harmful practices endangering lives and undermining peace, it is a prominent example of such misconduct, and effective concentrated action against it would send a powerful message to other corporate giants in the Military Industrial Complex, such as Lockheed Martin, Boeing, General Dynamics, and Northrop Grumman. For too long, the invisible hand of marketplace power has kept the U.S. government on the path of war. It is time for investors to use their economic power to turn arms makers away from being political advocates and enablers of war and limit them to functioning as responsible guardians of peace.