Ren Ci, Arsenal of Democracy

Ren Ci, “After Two Endless Hot Wars, The U.S. Arsenal of Democracy Suffers a Severe Capacity Crisis”[1]

Introduction and Translation by David Ownby
 
Introduction

The text translated here is fairly straightforward, and the title sums up fairly well the author’s message.  Ren Ci is a young professor in the Institute of History and Cultural Heritage at Xiamen University, specializing in the United States and modern U.S. history (her CV, in Chinese, is here).  The point of her article, originally published in May by Beijing Cultural Review and recycled on BCR’s “teaser” platform (共众号) in early November, is simply that Ukraine’s demands for weaponry are exceeding American and European capacity to supply them.

Ren’s piece does not celebrate America’s failure on this point, nor does she imagine the possibilities a weaker, exhausted America might open up for China.  Although she refers to the war in Ukraine as a “proxy war,” most of what she says echoes what reporters and analysts say in the U.S. on the subject (see here for a recent New York Times piece, for example).  Indeed, her sources are American and European, and she comes very close to praising the Biden administration’s efforts to rethink and revitalize American military production, even if she concludes with a sober verdict of “time will tell” about American reform efforts.

To me, this means that readers of a major Chinese periodical can still get relatively straight news on an important topic.  Of course, when it was originally published in May, Ren’s piece may have been grouped together with other pieces in such a way to slant the message, a practice BCR engages in frequently (see here for my thoughts on this).  But Ren’s article is that of a professional scholar who follows accepted rules of research, sourcing, and argument.
 
Translation
 
Revitalize the “Arsenal of Democracy”?  The Capacity Crisis in European and American Military Production – and their Response to this Crisis.
 
The Russia-Ukraine war is the biggest geopolitical crisis in Europe since World War II, and even more important, it is a war that affects the global order. However, it is less a war between Ukraine and Russia and more a proxy war led by the United States, a competition and contest between the United States and the Western bloc and Russia. Over the past year and more, the war has experienced ups and downs, evolving from a "special military operation" into a protracted war of attrition. The arms production and supply capabilities of European and American countries have become a second front influencing the outcome of the war.
 
For this reason, Western countries led by the United States are using the Russia-Ukraine war as a testing ground to verify weapon performance and military production capacity, taking this opportunity to upgrade their weapons production model and to promote the revitalization of military and manufacturing industries, with an eye toward preparing for a protracted war and for eventual geostrategic risks in the Asia-Pacific region. On the ground, however, from a realistic perspective, this process faces many difficulties and challenges, suggesting that revitalizing the arsenal of democracy cannot be accomplished overnight.
 
The Russo-Ukrainian War and the Capacity Crisis of American and European Military Production
 
The United States has long boasted of being the arsenal of democracy and is the preponderant force in Western military aid to Ukraine. According to statistics made public by the U.S. Department of Defense, between August 2021 and the end of July 2023, the United States has authorized the transfer of military equipment from Department of Defense stockpiles to Ukraine 43 times, the amounts and types of aid having varied.  Opinions vary as to the total amount of U.S. aid to Ukraine. The Kiel Institute for the World Economy, a well-known think tank, believes that the amount exceeds 76.8 billion U.S. dollars, of which military aid accounts for as much as 61% (46.6 billion U.S. dollars). Since July 2023, the frequency of U.S. military aid to Ukraine has significantly accelerated, with the shortest interval being only one week. In terms of the amount of aid delivered to Ukraine, the United States ranks first, having contributed twice as much as the European Union, followed by the United Kingdom and Germany.
 
The U.S. government believes that the generous assistance provided by itself and its allies has helped the Ukrainian people defend their homeland and insists especially that the anti-armor and air defense systems provided by the United States "have played a real role on the battlefield." In 2023, U.S. Senators Mark Kelly and Tammy Duckworth published an article in the New York Times arguing that U.S. military assistance is crucial to Ukraine’s ability to win the war, and a key factor preventing Russia from taking Kiev in a few days or a few weeks, as they had originally hoped.  Scholars in China and elsewhere also generally believe that the military assistance provided by the United States and its allies to Ukraine has weakened Russia's military advantage and reshaped the war situation.
 
However, all-out war between Russia and Ukraine has lasted for more than a year and a half, and the situation is becoming increasingly tense, in part because Ukraine's consumption of weapons far exceeds what European and American governments had predicted.  As early as 2022, experts and the media repeatedly warned that the war had basically wiped out Ukraine’s military production capacity, and while Western arsenals have limited reserves and are slow to increase production, Russia’s weapons and ammunition are proving to be sufficient. During the first half of 2023, the difficulty of supplying Ukraine with weapons has become a prominent theme, together with Ukraine’s serious losses on the battlefield.  
 
Driven by think tank research and well-known media such as Bloomberg, CNN, the Wall Street Journal, the Washington Post, and Foreign Affairs, the international community has launched a vigorous reflection on the West's military-industrial capacity. Whether the West can provide sustained and stable military assistance to Ukraine has become the focus of this discussion; the U.S. military industry was first accused of being poorly prepared to deal with the Russia-Ukraine crisis, and critics further insisted that arms production was not keeping up with the national security needs of the United States and its allies, suggesting that “arsenal of democracy” had become a meaningless word.
 
Moreover, at the heart of various arguments about the crisis in U.S. military preparedness are concerns about whether the United States is prepared for the possibly greater future geostrategic crises. A 2023 report by the U.S. Center for Strategic and International Studies (CSIS) found that military aid to Ukraine has consumed large amounts of - or even exhausted - certain types of U.S. weapon systems and ammunition stockpiles, including but not limited to Stinger surface-to-surface missiles, 155mm artillery shells, and anti-tank missile systems, among others.
 
Military and strategic experts believe that current United States strategy has led to difficulties and conflicts between continuing assistance to Ukraine and maintaining its own operational readiness to respond to sudden crises, especially by weakening the ability of the United States to build a credible deterrent force in the Indo-Pacific region or to confront rival countries in military conflicts.  Results from war games led them to conclude that in the event of a head-on conflict between the United States and Russia or China, the United States' sophisticated weapons arsenal might be exhausted within hours, or at most days, leading to the "empty bin" problem.
 
The problem of shrinking arms stockpiles in Europe is even more serious. With the end of the Cold War, European countries shifted their focus to building the economy and social welfare, streamlined their arms production as much as possible, cut defense spending, and relied heavily on the United States for security. The United States has always hoped that the military expenditures of NATO countries would not fall below 2% of GDP, but in 2021, only 10 countries reached this threshold, and those, just barely.
 
In 2022, forced into action by the Russia-Ukraine war, Europe's overall defense spending will increase, reaching the highest level since the end of the Cold War. However, decades of underinvestment in defense construction leave EU countries suffering the consequences: lack of key defense capabilities, insufficient weapons stockpiles, and lagging combat readiness levels. Germany is a typical example. As early as 2018, the general shortage of field equipment, vehicles, and fighter aircraft in Germany triggered heated discussions, and in recent years, the army has faced the problem of ammunition shortages. In 2022, the Frankfurter Allgemeine Zeitung pointed out that military aid to Ukraine had emptied Germany’s arms stockpiles, and that the army's reserves of ammunition were only enough for two days.
 
From an overall perspective, the military-industrial foundations of the United States and other Western developed countries are deeply flawed, and their weapons supply capacity is growing only slowly. After the end of World War II, the developed world experienced deindustrialization, beginning in the United States and later spreading to Europe and Japan.   During this process, the U.S. defense manufacturing industry evolved, developing in two directions. First, in order to maximize profits, defence manufacturers outsourced part of their operations overseas, giving priority to the development of high-margin, high-value arms procurement commodities, while relying on imports for other essential parts and materials; second, the system moved toward privatization, meaning mergers and acquisitions.  
 
The result is a U.S. defense industry that is both highly concentrated and hollowed-out, with supply chains heavily dependent on foreign countries (especially China and Russia), severely affecting its ability to produce and supply key defense products. Today, there are only five major defense contractors left in the United States; their number has decreased by more than 90% since the 1990s. The Covid pandemic and the competition between major powers have further exposed the shortcomings of the U.S. supply chain, as its defense industries continue to face challenges in obtaining parts and critical minerals. Raw material shortages, rising transportation costs, and production delays are everyday problems.
 
Although military factories in the United States and other countries are adopting a 24/7 work system to produce "the largest amount of ammunition in decades," they are still encountering serious supply difficulties. The combined military production capacity of all NATO countries taken together cannot keep up with the speed at which the Ukrainian army consumes such materials.
 
Ukraine's daily consumption of artillery shells exceeds the one-month production capacity of the largest artillery shell factory in the United States (located in Scranton, Pennsylvania), and is equivalent to a year of a European country's peacetime production. The production of Javelin anti-armor missiles, armored vehicles, and other weapons and equipment faces similar problems. The U.S. government has calculated that the growth rate of its main rivals in the development of high-end weapons systems and equipment is five to six times greater than that of its own, which only adds to the sense of stress and crisis.
 
In addition, difficulty in recruiting workers is also a common and thorny problem facing the United States and its allies. Most workers are attracted to the flourishing financial and service industries, and most people believe that a job in manufacturing promises a bleak and unattractive future. The “great resignation” sparked by the pandemic has made recruitment in the manufacturing industry all the more difficult. A recent survey report by Statista, an internationally renowned statistics organization, shows that 50 million workers in the United States quit their current jobs in search of something better in 2022; McKinsey & Company calculated that as of April 2023, the U.S. manufacturing labor gap has reached one million; Deloitte and the Manufacturing Industry Association estimate that this number will reach 2.1 million by 2030.
 
The "great resignation" has had a particularly severe impact on the arms industry. The turnover rate of employees in aerospace and military-industrial enterprises is much higher than average. In addition, military jobs require special skills, and employees usually need to undergo at least two years of vocational training and apprenticeship, meaning that it is difficult and time-consuming to recruit talent.  The labor shortages this produces makes it difficult to carry out plans to increase production in Western military factories. Greg Hayes, CEO of the US military giant Raytheon, bluntly stated that the biggest problem facing European and U.S. military industrial companies at present is that "there are not enough human resources to support industry growth."
 
Finally, an issue that cannot be ignored is that the defense production methods of European and American countries are in urgent need of adjustment. Arms production in European and American countries mainly adopts a privatized military contracting system. The Ministry of National Defense signs yearly contracts with cooperative industry partners to produce weapons in a fixed and standardized manner. Unable to obtain long-term guarantees from the government, these factories are unwilling to take risks to expand production, recruit workers on a large scale, and carry costly independent research and development.
 
The government and defense contractors see this issue differently. The government hopes that the contractors will take the initiative to assume responsibilities and risks for the profits they make, while the contractors hope that the government will provide guarantees and sign long-term contracts. If these differences are not resolved, it will be difficult for Europe and the United States to achieve their goals of increasing arms production and stockpiles.
 
How European and Americans are Coping
 
At present, the United States and its allied countries are coping with the issue of arms production and inventories in two ways: long-term construction and emergency measures, both of which involve promoting domestic production while increasing and strengthening international cooperation. The United States is the leading force in international military aid to Ukraine and bears most of the pressure of Ukraine's demands for arms, as well as part of the pressure coming from European countries. Therefore, changes in the United States will have a global impact and require special attention.
 
Michael Brenes, a historian at Yale University, believes that privatization is the fundamental constraint on the development of the U.S. military industry. Only if the federal government intervenes more in the military production system can the United States become a veritable arsenal of democracy. This is a reasonable conclusion, and one direction reform could take would be for the U.S. federal government to assume more responsibility and play a greater role, but it might prove difficult to end private ownership in the U.S. military industry and implement a national system of national defense mobilization in the near future, nor is it consistent with the orientation of American values. On the core issue of public-private relations, the U.S. government mainly encourages private capital to promote defense innovation through legislation and investment.
 
The U.S. House of Representatives passed a defense budget bill for fiscal year 2024 that totals US$886 billion, an increase of US$28 billion compared with 2023, and the largest military budget the world has seen since World War II. General Charles Q. Brown Jr., chairman of the U.S. Joint Chiefs of Staff, said that all recent budget requests submitted by the U.S. military have called for long-term procurement in order to sign multi-year contracts with contractors. The above changes are not only conducive to increasing arms stockpiles, but also boost the confidence of defense contractors and related industries in expanding production.
 
The United States is accelerating its national defense modernization reform with the participation of government and society as a whole. For example, the U.S. Department of Defense issued a "Small Business Strategy," whose goal is to reduce barriers for small businesses to participate in the defense industry, increase their competitive opportunities, and better utilize Department of Defense investment projects to grow the defense industry base and enhance its capacity. In an innovative move, the U.S. Department of Defense established the Office of Strategic Capital to attract more venture capital into companies that develop new weapons technologies and produce key defense technologies and products.
 
The current market response is enthusiastic. PitchBook, which provides data on global capital markets, points out that in the first five months of 2023, U.S. venture capital institutions concluded more than 200 defense and aerospace transactions worth approximately US$17 billion, exceeding the industry’s financing in all of 2019. The proliferation of these Silicon Valley defense start-ups is driving innovation and the modernization of the defense industrial base.
 
The steady development of the national defense industry is closely related to the country's industrial strength. Strengthening certain key supply chains and revitalizing industry has become the mainstream consensus in European and American countries. The United States has closely linked reindustrialization to increasing military production capacity. A number of industrial policies have been in place for more than a decade, deploying huge public investments in key advanced technologies and related industries. The scale and intensity of such policies are considered to be "unseen in the United States for generations."  
 
The Biden administration alone has introduced important legislation such as the "Inflation Reduction Act," the "CHIPs and Science Act," and the "Infrastructure Investment and Jobs Act." As of May 2023, half of the $470 billion in private funding for the U.S. manufacturing sector is allocated to the semiconductor supply chain, which is known to be a core component of modern high-tech electronic equipment and munitions and weapons, and the foundation of many critical technologies.  The U.S. government also uses the Defense Production Act to require companies to increase their efforts to safeguard the semiconductor supply chain in defense-related fields. Arms giants such as Lockheed Martin and General Electric Group have joined the manufacturing reshoring effort, moving some production lines back to the United States and actively expanding factories to increase production capacity.
 
These military-industrial companies have benefited from the surge in global defense spending, and their performance has increased exponentially, which has indirectly boosted the popularity of industries such as steel, semiconductors, electronic equipment, and advanced materials. Objectively speaking, the fact that U.S. military industrial enterprises can basically meet Ukraine's arms needs before entering wartime production is precisely due to the re-industrialization efforts underway in the United States.
 
In response to the shortage of technical talents, the U.S. government and certain enterprises have revived the apprenticeship system. As higher education has become more universal, apprenticeship has been marginalized.  Given the shortage of professional and technical labor in the United States in recent years, employers and young people have come to view the apprenticeship system favorably, given its short training cycle, broad audience, highly targeted course content, and high return rate. The U.S. federal government is strengthening apprenticeship education across the country.
 
For example, the "Inflation Reduction Act" provides tax credits and other measures to encourage companies to develop apprenticeships; in fiscal year 2021, nearly 27,000 registered apprenticeship projects were launched across the country, involving both traditional infrastructure fields and high-end manufacturing. The United States also uses the "CHIPs and Science Act" to provide grants and loans to science and engineering students and create job opportunities so that more people can obtain necessary skills and training. In addition, the Biden administration is also considering actively absorbing immigrants with relevant skills and using artificial intelligence technology to improve industrial productivity and make up for the labor shortage.
 
At the international level, the United States has gathered more than 50 countries to build an alliance to assist Ukraine in bilateral and multilateral ways. Its core measures can be summarized as follows. 
 
The first is to win over allies and friends and continue to put pressure on Russia. As the Washington Post has revealed, the United States convinced Egypt to suspend the production of 40,000 rockets for Russia and instead sell weaponry to the United States to assist Ukraine.
 
The second is to expand weapons production in the Western world and revitalize arms production lines. For its part, NATO recommended that member states consider the target of 2 per cent of gross domestic product for annual defence spending as a "floor," and concentrate production on large orders to provide incentives for defence contractors to significantly increase the production of materiel that has not been purchased on a large scale by the government in recent years, in particular 155-mm artillery shells. In July of 2023, EU countries reached an agreement to invest 500 million euros to subsidize European weapons manufacturing.
 
Currently, the United Kingdom has purchased a production line for the production of 155mm artillery shells. France signed an agreement to cooperate with Ukraine in jointly producing weapons accessories and providing maintenance of weapons equipment. Western countries also sent a team of experts to Ukraine to repair weapons to meet urgent needs.
 
The third is to optimize weapons allocation and supply cooperation among allies. The United States encourages NATO to transfer F-16 fighter jets, Storm Shadow cruise missiles and other weapons with higher combat performance to Ukraine. This move can be said to kill two birds with one stone, because while avoiding directly crossing the red line and provoking Russia, it provides more arms to Ukraine, and in return, allies can upgrade and purchase American F-35 fighter jets. At present, the United Kingdom and the Netherlands have agreed to take the lead in establishing an "international alliance" to help Ukraine purchase F-16 fighter jets. Germany has also assisted Ukraine with two sets of Patriot air defense systems and other urgently needed armaments.
 
The fourth is to build collective supply chain security. Typical measures include the "Chip Quad Mechanism" led by the United States and the designated "trust zones" for technology, personnel, and information exchanges.
 
In the short term, the Western military industry is racing against time. If things go as planned, major European and American military factories generally say that their production capacity will reach the expected target in just a few years. However, in the long run, the defense and military industry issues in Western countries are rooted in the fabric of social development, are closely linked to domestic and foreign policies, and are influenced by many factors. For the United States, its traditional method of solving problems as they arise can no longer meet U.S. strategic needs for Europe and the Asia-Pacific under the new situation. The United States is linking the reindustrialization and increasing military production capacity with a view to achieving a mutually reinforcing effect. However, if the long-standing military contracting system is not effectively reformed, it will be difficult for private enterprises to truly mobilize their power, and the “diversification of military production” will become a meaningless slogan.
 
In addition, the development of the military industry is unique and relies heavily on the government's defense budget; everyone is concerned about the future of such arrangements.  Especially for some European countries that are financially strapped, additional defense spending will crowd out expenditures in other areas, especially those related to people's livelihood, thus affecting the foundation of the government's governance. When Western countries stop increasing their budgets for defense and industrial development, or reduce the relevant subsidies, will their manufacturing and military industries be hit again? Time will tell.
 
 Notes

[1]任慈, “两场热战骑虎难下, 美国兵工厂遭遇严重产能危机?” published on the online platform of 文化纵横/Beijing Cultural Review on November 4, 2023.