Later On

A blog written for those whose interests more or less match mine.

A bank analyst points out a problem with a peaceful Middle East: Weapon sales will suffer

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Banks have narrow-gauge worries: no “big picture” for them. Lee Fang reports in The Intercept:

Could a deal to normalize Western relations with Iran and set limits on Iran’s development of nuclear technology lead to a more peaceful and less-weaponized Middle East?

That’s what supporters of the Iran negotiations certainly hope to achieve. But the prospect of stability has at least one financial analyst concerned about its impact on one of the world’s biggest defense contractors.

The possibility of an Iran nuclear deal depressing weapons sales was raised by Myles Walton, an analyst from Germany’s Deutsche Bank, during a Lockheed earnings call this past January 27th. Walton asked Marillyn Hewson, the chief executive of Lockheed Martin, if an Iran agreement could “impede what you see as progress in foreign military sales.” Financial industry analysts such as Walton use earnings calls as an opportunity to ask publicly-traded corporations like Lockheed about issues that might harm profitability.

Hewson replied that “that really isn’t coming up,” but stressed that “volatility all around the region” should continue to bring in new business. According to Hewson, “A lot of volatility, a lot of instability, a lot of things that are happening” in both the Middle East and the Asia-Pacific region means both are “growth areas” for Lockheed Martin.

The Deutsche Bank-Lockheed exchange “underscores a longstanding truism of the weapons trade: war — or the threat of war — is good for the arms business,” says William Hartung, director of the Arms & Security Project at the Center for International Policy. Hartung observed that Hewson described the normalization of relations with Iran not as a positive development for the future, but as an “impediment.” “And Hewson’s response,” Hartung adds, “which in essence is ‘don’t worry, there’s plenty of instability to go around,’ shows the perverse incentive structure that is at the heart of the international arms market.”

Listen to the exchange here: . . .

Continue reading.

Written by LeisureGuy

20 March 2015 at 11:49 am

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