Russia’s nearly four-year war in Ukraine has delivered record windfalls to the global arms industry while propelling Europe toward unprecedented militarization. As defense contractors like Rheinmetall and Lockheed Martin reap billions from aid packages and replenishment orders, the EU’s ReArm Europe Plan aims to mobilize €800 billion in new spending amid surging budgets and production ramps. Yet, with peace talks gaining momentum in December 2025 causing sharp drops in defense stocks—the conflict’s profiteers face uncertainty, raising questions about whether rearmament is driven by security needs or entrenched industry interests.
Newswriters Research Desk
Since Russia’s full-scale invasion of Ukraine in February 2022, the global arms industry has experienced an unprecedented surge in revenues, transforming geopolitical tragedy into corporate windfall.
The conflict, now approaching its fourth year as of December 2025, has not only depleted arsenals across Europe but also catalyzed a profound policy shift: from decades of post-Cold War restraint to aggressive rearmament. Major defense contractors—both American and European—have posted record profits, while lobbying efforts have intensified to sustain and expand military spending.
This analysis examines how the arms sector has capitalized on the war, the resulting push toward European militarization, and the broader implications amid flickering hopes for peace.
The Profiteers: Record Revenues Amid Ongoing Conflict
The Stockholm International Peace Research Institute (SIPRI) reported that arms revenues for the world’s top 100 producers reached a record $679 billion in 2024, marking a 5.9% increase from the previous year. This surge was largely fueled by demand stemming from the wars in Ukraine and Gaza, alongside heightened global tensions. Ukraine became the world’s largest arms importer between 2020 and 2024, with imports skyrocketing nearly 100-fold compared to the prior five-year period.
U.S. firms dominate the landscape, accounting for nearly half of total revenues. Lockheed Martin, the world’s largest defense contractor, led with revenues exceeding $71 billion in defense-related sales in recent rankings, bolstered by contracts for systems like the F-35 fighter jets and missile defense. RTX (formerly Raytheon) and Boeing also saw substantial growth, driven by supplies of precision munitions and air defense systems to Ukraine and NATO allies. Northrop Grumman and General Dynamics rounded out the top tier, benefiting from replenishment orders as Western stockpiles were drawn down to support Kyiv.
European companies, however, have seen some of the most dramatic gains, positioning the continent’s defense sector as a primary beneficiary of the war’s prolongation. Germany’s Rheinmetall exemplifies this boom: its arms revenues doubled in certain segments, with overall profits soaring and its stock price rising 15-fold since the invasion began. The company, a key supplier of artillery shells, tanks, and armored vehicles to Ukraine, reported weapons profits of €339 million in 2024 alone. BAE Systems (UK) and other firms like Thales (France) and Leonardo (Italy) also posted sharp increases, with aggregate European arms revenues jumping significantly.
Emerging players have thrived too. Turkey’s Baykar, producer of the Bayraktar drones widely used by Ukraine, saw arms revenues hit $1.9 billion in 2024. Czech firms, part of the Czechoslovak Group, recorded a 193% revenue spike to $3.6 billion, largely from ammunition production. Even Ukraine’s own defense industry entered the SIPRI Top 100, reflecting domestic production ramps.
Much of the “aid” sent to Ukraine has ultimately flowed back to arms manufacturers. These profits are not abstract or incidental; they are rooted directly in the structure of multibillion-dollar military aid packages. The United States alone has provided approximately $66.9 billion in military assistance since Russia’s full-scale invasion in February 2022, according to the U.S. State Department. This figure refers specifically to security cooperation—separate from broader financial and humanitarian assistance—which together have pushed total U.S. appropriations related to Ukraine beyond $175 billion.
A significant portion of this military aid is spent on replenishing U.S. stockpiles and procuring new weapons systems, channeling funds through established procurement mechanisms that benefit major defense contractors. Europe has followed a similar path, contributing tens of billions of euros through bilateral agreements and EU mechanisms, generating sustained orders as member states replace depleted arsenals. In effect, war-time aid has become a steady revenue stream for the global arms industry.
Yet by mid-December 2025, cracks are beginning to appear. Reports of progress in Ukraine peace talks—reportedly shaped in part by renewed U.S. diplomatic engagement—have triggered sharp pullbacks in defense stocks. Shares of Rheinmetall plunged, underperforming broader market indices as investors priced in the risk of easing military demand.
Analysts caution, however, that even a ceasefire would not translate into an immediate slowdown. Years of depleted stockpiles, delayed procurement, and long-term rearmament plans mean that arsenal rebuilding would continue well beyond any negotiated pause, sustaining defense-sector profits.
The Ukraine war ended Europe’s post-Cold War defense complacency, driving a sharp surge in military spending after decades below NATO’s 2% target. EU defense outlays reached 1.9% of GDP in 2024—up 63% since 2020—with nominal spending 50% higher than in 2022 and R&D nearly doubling to €17 billion by 2025. Germany’s €100-billion Zeitenwende fund set the tone, while Poland now spends over 4% of GDP and NATO debates targets as high as 5% by 2035. At the EU level, the 2025 ReArm Europe (Readiness 2030) plan aims to mobilize €800 billion by easing deficit rules, boosting joint procurement, and prioritizing European arms production.
Proponents of Europe’s rearmament drive present it as an unavoidable deterrent against Russian aggression, warning that Moscow poses an enduring and expanding security threat. Yet critics argue that this danger is often overstated by political and strategic elites to justify permanent militarization. They point out that Russia, already stretched by the Ukraine war, lacks the economic and conventional capacity to mount a large-scale assault on NATO, making the threat less immediate than official rhetoric suggests.
From this perspective, Europe’s sweeping defense buildup risks locking the continent into a militarized future, diverting scarce public resources away from social welfare, climate transition, and economic resilience, while normalizing high military spending as a structural feature of European governance rather than a temporary response to crisis.
The Industry’s Hand: Lobbying and Influence
The arms sector has actively shaped this trajectory. Lobbying budgets for major European defense firms surged 40% between 2022 and 2023, with top ten companies doubling spending from €2.8 million to €5.6 million annually over five years. In Brussels, this has translated into a “gold rush,” with intensified pressure on EU institutions to channel funds toward industry priorities.
Influence is evident in policies favoring joint European procurement and innovation grants, often aligned with contractor interests. Transparency advocates highlight revolving doors and direct access, accusing the sector of “hijacking” defense policy. As one report notes, the war provided a pretext for long-sought funding increases.
Security Imperative or Perpetual Cycle?
The Ukraine war has unmistakably transformed conflict into profit, propelling the arms industry to historic highs even as Europe accelerates its militarization. Vast spending plans, record earnings, and intensified lobbying have embedded defense production deep into the continent’s economic and political calculus, ensuring sustained demand through arsenal replenishment even as late-2025 peace talks briefly unsettle markets.
The result is a troubling feedback loop: security fears—often amplified by elites—justify ever-greater rearmament, while industry profits help entrench escalation as policy. In an era of constrained public resources, Europe’s choices will determine not only how it defends itself, but whether militarization comes to define its future at the expense of social and civic priorities.
