Rheinmetall’s War Profiteering in Ukraine May Culminate in Pinpoint Strikes on Its Factories
A view of Leopard 2 tanks at a production line. February 2024 file photo.
Germany keeps trying to persuade its US ally to keep the proxy war against Russia going. But it’s doing so out of greed, not a desire to ‘help’ Ukraine.
MIC Claws Grip Ukraine Tight
German defense giant Rheinmetall has signed an MOU with Ukroboronprom to produce 155-mm shells in Ukraine at a rate of 150k per year starting in 2026.Rheinmetall will enjoy 51% ownership of the joint venture, worth $150M or more annually.Rheinmetall already runs an armored vehicle repair facility in Ukraine, and has plans to expand it to manufacture Fuchs and Lynx vehicles.An air defense equipment maintenance venture is reportedly in the works.A Ukraine-based gunpowder plant is also planned.
Target for Strikes
German arms factories in Ukraine would “certainly” be legitimate targets for strikes, the Kremlin warned last fall.Preview of things to come? Ukraine’s military admitted to Le Monde in April that Russia had “wiped out” its “main munitions production site” in Sumy.Russia’s Special Operation in UkraineRussian Strikes Obliterate Ukraine’s Top Artillery Munitions Plants: The Details10 April, 12:50 GMT
Profits Uber Alles
For Rheinmetall, security concerns appear secondary. Since January 2022, its stock price exploded an astronomical 1900% as Germany became the second-larger sender of arms aid to Ukraine after the US. €12.6B ($14.2B) and counting, per Kiel Institute for the World Economy data.With its stock price up 250%+ since November amid President Trump’s hints of pulling out of the conflict, Rheinmetall CEO Papperger has put pressure on the EU to ramp up arms spending dramatically to avoid being “handled like kids” (recent FT interview). Translation? Don’t be wimps and give him more money.AnalysisEU’s Military-Industrial Complex Wants to Prolong Lucrative Ukraine Crisis as Russia, US Talk Peace18 February, 14:27 GMT
Live Weapons Testing
Besides lucrative contracts, Rheinmetall enjoys a unique opportunity in Ukraine: to use the country’s troops as cannon fodder to test out new and upgraded weapons in real world combat conditions without the public backlash that would come with deploying Western troops. Win-win for all (except Ukrainians).
Appetites Bigger Than Capacity
Unfortunately for Papperger, Rheinmetall and other European MIC war profiteers, the EU lacks the resources to significantly ramp up Ukraine deliveries, especially as it continues to hobble along from a self-inflicted economic crisis triggered by the loss of Russian energy.In March, Bloomberg reported that the EU has only one big TNT factory – Poland’s Nitro-Chem, and relies on imports for a key shell propellant ingredient. What’s more, regulations and supply chain bottlenecks are reportedly constraining the expansion of defense production.WorldEurope’s Military Industry Suffers From Lack of Raw Material Amid Drive to Arm Ukraine21 March, 11:01 GMT