Rising Ammunition Prices Could Interfere With Western Plans To Arm Ukraine

Authored by Kyle Anzalone via The Libertarian Institute,

A top NATO official warned that rising ammunition prices could mean that Western countries do not spend enough on the military to sufficiently arm Ukraine. Washington and its allies have pledged nearly $100 billion in weapons to Kiev since the Russian invasion last year. 

On Saturday, the chair of NATO’s military committee, Dutch Admiral Rob Bauer said alliance members need to spend more on defense to account for the rising prices. "Prices for equipment and ammunition are shooting up. Right now, we are paying more and more for exactly the same," he said. "That means that we cannot make sure that the increased defense spending actually leads to more security."

Since the Russian invasion of Ukraine, the US has pledged over $43 billion in arms to Kiev. The increase in demand for arms has led to an increase in the stock prices of American weapons merchants. 

Former Pentagon officials have warned that arms makers are exploiting the war in Ukraine to price gouge the Department of Defense. Shay Assad, who worked as a Pentagon contract negotiator for 40 years, told 60 Minutes that such firms overcharge the DoD for everything from "radar and missiles … helicopters … planes … submarines… down to the nuts and bolts."

Atif Rashid, editor at Analyist News, observed, "In the weeks after Russia’s invasion, the market capitalization of Raytheon Technologies shot up to $155 billion from $128 billion at the start of the year. Lockheed Martin started 2022 worth $98 billion; by the end of year, it had reached $127 billion — its highest since records show." He continued, "Northrop Grumman started the year on $61 billion and ended at $84 billion."

However, Bauer instructed private investment funds and banks to support the arms industry’s effort to ramp up production. Washington is heavily subsidizing the arms industry to increase the rate of production for 155MM shells. The Pentagon is spending $1.5 billion in a year to ramp up the production of artillery rounds. 

Still, the US is unable to produce the number of shells Ukraine needs. According to Pentagon Acquisition Chief Bill LaPlante, the weapons makers can produce 28,000 rounds per month, but Ukraine fires as many as 10,000 per day. 

LaPlante says the arms industry is ahead of schedule and should be able to increase production to about 1.2 million rounds per year by 2025. However, that would still put the US well behind Russia, which is estimated to currently produce 2 million shells each year.