American defence firms pose bigger risk than Beijing: Top US official

American defence companies are hurting the nation’s security interests by prioritising share buybacks over delivering weapons to the US military and its allies, according to the outgoing US envoy to Japan.

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Ambassador Rahm Emanuel said the firms are more focused on increasing their stock value than on investing in production capacity. This has contributed to delays in weapons shipments, which could harm US security and weaken American alliances, he said in an interview on Wednesday.

“The US defense industry is a bigger risk to America’s security and the credibility of our deterrence than China is,” Emanuel said in Tokyo.

Emanuel, who was confirmed as ambassador to Japan in 2021, said he had witnessed the damaging impact of years-long delays in defence equipment shipments on US military and its allies.

“I can’t tell you how many times here I’ve had to use my political capital to cover for their failure,” he said.

One solution – he added – would be to ban defence contractors from buying back their own stock for several years if they fail to deliver orders on time.Rising geopolitical tensions and conflicts in the Middle East and Ukraine have fueled demand for defence products, benefiting companies like RTX Corp., Northrop Grumman Corp. and Lockheed Martin Corp.In 2023, Lockheed Martin and RTX spent a combined total of $18.9 billion on stock buybacks, compared with just $4.1 billion on capital expenditures, according to data.

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Source of information and images “economictimes.indiatimes”“