The Profitable Threat: How Western Arms Sales Create Risks Democracies Won’t Fund Solutions For US arms exports generate $15-75 billion annually from conflicts that create terrorist threats—yet research shows increased counterterrorism spending doesn’t reduce attacks
by Michael Lamonaca, 19 December 2025
Since 2002, American arms exports have ranged between $15 and $75 billion per year, representing as much as 4 percent of total defense industry revenue—making weapons sales a critical component of Western military-industrial economies. Middle East military spending reached $243 billion in 2024, with Saudi Arabia spending $80.3 billion and Israel increasing expenditure 65 percent year-over-year. Western democracies supply most of these weapons, generating billions in export revenue while their arms fuel conflicts that radicalize populations and create terrorist threats. Yet research analyzing counter-terrorism spending across 34 countries found no clear evidence that increased CT expenditure measurably reduces the incidence or lethality of terrorist attacks. The structural failure isn’t lack of knowledge about effective counter-terrorism—it’s that governments optimize budgets for what generates immediate revenue (arms exports) and political capital (military operations), not what prevents attacks (domestic intelligence, community programs, de-radicalization). The result: democracies profit from creating threats, then underfund the unglamorous work of mitigating consequences.
The business model operates through deliberate compartmentalization. Arms manufacturers and defense ministries in Western democracies maintain vast export operations that treat weapons sales as economic transactions divorced from their geopolitical consequences. The United States accounts for 42 percent of global arms exports, supplying advanced weapons systems to 107 countries between 2019 and 2023—more than the next two largest exporters combined. France and Russia each control 11 percent of the export market, while China, Germany, Italy, and the United Kingdom hold between 3 and 6 percent shares. The top 100 arms companies globally generated $632 billion in revenue in 2023, a real-terms increase of 4.2 percent over 2022, with particularly sharp rises among producers based in Russia and the Middle East responding to demand from the wars in Gaza and Ukraine. These numbers represent more than defense industry statistics—they reveal an economic structure where conflict generates reliable revenue streams that democracies have grown dependent on maintaining.
Arms exports to volatile regions create predictable consequences that governments choose not to prevent. Between 2015 and 2023, the volume of major arms transfers to the Middle East increased by 87 percent, with Saudi Arabia becoming the world’s largest arms importer and Israel recording defense spending at 8.8 percent of GDP—the world’s second-highest military burden. Western suppliers profit from this regional militarization: UK companies won defense orders worth £14.5 billion in 2023, a 39 percent increase over the previous year, with 32 percent of exports over the five-year period from 2019 to 2023 going to Middle East customers. The aerospace sector dominated these exports, accounting for 56 percent of total UK defense export value, primarily fighter aircraft and missile systems that extend conflicts rather than resolve them. When arms flow to regions experiencing ethnic tensions, sectarian conflicts, and political instability, the resulting violence radicalizes populations and generates terrorist organizations—consequences so predictable that their inevitability forms part of the calculation defense establishments make when approving export licenses.
The threat-response mismatch reveals systematic budget optimization favoring revenue over security. Following the September 11 attacks, US military spending rose to $356 billion, an increase of $55 billion compared to the previous year—but analysis shows most of that increase funded wars in Iraq and Afghanistan, not domestic counter-terrorism programs. Total US spending characterized as CT-related, including homeland security efforts, international programs, and wars in Afghanistan, Iraq, and Syria, reached $2.8 trillion between fiscal years 2002 and 2017. This massive expenditure generated impressive bureaucratic growth: homeland security spending more than doubled from $15.9 billion in 2001 to $33 billion by 2002, peaking at $74 billion in 2009. Yet systematic reviews examining thousands of terrorism studies found only seven containing moderately rigorous evaluations of counter-terrorism programs—and some of those evaluations showed programs either had no discernible effect on terrorism or increased its likelihood. The expenditure pattern makes political sense—foreign military operations look decisive, generate contractor revenue, and create diplomatic positioning opportunities—while investing in domestic intelligence work, community de-radicalization programs, or addressing root causes of extremism provides no immediate electoral payoff and risks accusations of being “soft” on terrorism.
Research findings governments ignore demonstrate that current approaches don’t work but serve other purposes.A Campbell Collaboration systematic review analyzing over 20,000 studies on terrorism concluded there is “little scientific knowledge about the effectiveness of most counter-terrorism interventions.” When evaluations exist, results are discouraging: UN resolutions intended to prevent crimes against internationally protected persons showed no statistically discernible effect; some defensive measures simply displaced attacks to softer targets rather than reducing overall terrorist activity; increased security spending in Western countries correlated with terrorist organizations shifting operations to Africa, Asia, and the Middle East rather than abandoning violence. Cost-benefit analyses suggest the United States would need to prevent catastrophic terrorist attacks—equivalent to one September 11-scale event every few years—to justify the trillions spent on counter-terrorism since 2001. The actual reduction in terrorism fatalities doesn’t approach the levels necessary to justify expenditure in narrow economic terms, yet spending continues and even increases during periods without major attacks, suggesting effectiveness isn’t the primary metric driving resource allocation.
Democratic political structures create incentives incompatible with threat prevention. Electoral cycles punish politicians who allocate resources to unglamorous prevention efforts that might not produce visible results within a single term. A legislator who funds community programs to de-radicalize at-risk youth won’t see measurable outcomes for years, while voters demand immediate visible action after terrorist attacks. Military operations provide that visibility—troops deployed, bases established, enemy combatants eliminated—even when post-conflict analyses show such operations often strengthen terrorist recruitment rather than weaken it. Corporate lobbying reinforces these incentives: defense contractors dependent on arms export revenues employ sophisticated advocacy operations that frame weapons sales as job creation and geopolitical necessity, while counter-terrorism effectiveness research receives minimal funding and produces findings that challenge existing approaches without offering politically palatable alternatives. The Budget Control Act’s exemption of emergency and wartime spending from fiscal caps created additional incentives to characterize expenditures as “overseas contingency operations” regardless of whether they address genuine terrorist threats, allowing billions in spending unrelated to counter-terrorism to escape budgetary scrutiny.
The revenue-security disconnect operates through deliberate information asymmetry. Defense ministries and export control agencies in Western democracies maintain opaque licensing systems that obscure the full scope of weapons transfers. The UK uses “open general export licenses” that allow registered companies to conduct unlimited exports of specified military equipment without specific permits for each sale, meaning most UK-US arms transfers don’t appear in regular export licensing data despite the UK producing 15 percent of the value of each F-35 fighter jet—aircraft sold to Israel, UAE, and other Middle East customers representing massive indirect British arms sales that remain invisible in official statistics. Similar opacity characterizes US arms sales data: exact figures for defense exports aren’t published, various definitions of what constitutes “defense” exports exist across agencies, and weapons sold through foreign military financing programs or transferred as military aid often appear in different accounting categories than commercial sales. This deliberate complexity makes comprehensive cost-benefit analysis nearly impossible while providing political cover for policies that prioritize industry revenue over security outcomes.
Historical precedents illuminate how arms export dependencies corrupt democratic accountability through specific case trajectories. Between March 2015 and April 2022, the UK licensed over £9.5 billion in arms exports to the Saudi-led coalition bombing Yemen, including £7.1 billion to Saudi Arabia alone—but license figures exclude the value of ongoing maintenance, technical support, and services that BAE Systems provided to the Royal Saudi Air Force. According to BAE’s annual reports, the company received £27.2 billion in revenues from Saudi Arabia’s Ministry of Defence between 2015-2024, dwarfing official export license figures and excluding most bombs and missiles sold by other contractors. UK-made equipment used in Yemen included Typhoon and Tornado aircraft, Paveway bombs, and Brimstone and Stormshadow missiles—weapons the UK government admitted were deployed in combat operations. On October 8, 2016, Saudi forces killed 155 people and wounded hundreds more at a funeral in Yemen’s Great Hall in what witnesses described as a “double tap” attack where a first strike was followed by a second that killed additional civilians and emergency workers. UK-made weapons were central to such attacks, yet Department for Business documents show nearly £3 billion in military sales to Saudi Arabia occurred in just nine months from April to December 2015—nearly 40 percent of total UK arms sales during that period.
This created a trajectory from arms sale to conflict escalation to radicalization that UK authorities documented but chose not to prevent. The war in Yemen killed an estimated 377,000 people through direct and indirect causes, with over 150,000 including tens of thousands of civilians killed in fighting, while six years of the Saudi-led coalition’s war caused almost a quarter of a million preventable deaths from disease and starvation. Since 2015, Yemen Data Project recorded at least 25,054 airstrikes attributable only to the coalition, killing at least 8,983 civilians and injuring 10,243, with the coalition attacking hospitals, schools, bridges, dams, farms, and irrigation works—all violations of international humanitarian law. When the Campaign Against Arms Trade brought legal challenges in 2017, the UK High Court initially ruled the government was not acting unlawfully in continuing arms exports, but in June 2019 the Court of Appeal concluded the government’s decision-making process was “irrational” and therefore “unlawful”, forcing temporary suspension of new licenses. In July 2020, the UK government announced it would resume arms sales after determining that Saudi violations of international law were simply “isolated incidents”—despite evidence of systematic patterns. The trajectory was complete: UK profited from weapons sales, those weapons fueled conflict killing hundreds of thousands, the conflict created conditions radicalizing populations across the Middle East and within UK Muslim communities, yet commercial relationships proved more durable than legal findings of unlawful conduct.
The human consequences of this optimization appear in predictable patterns. Research examining global terrorist attacks between 1970 and 2019 found that successful terrorism incidents are less likely in the United States compared to other world regions, but this doesn’t reflect counter-terrorism program effectiveness—it reflects terrorist organizations adapting to defensive measures by attacking softer targets elsewhere. The defensive spending that reduced attacks in Western democracies displaced violence to countries lacking resources for comparable security infrastructure, meaning Western counter-terrorism “success” consists largely of exporting risk to populations whose governments can’t afford protection. Meanwhile, the arms flowing from Western democracies to Middle East and North African customers fuel conflicts that generate the refugees and radicalized individuals who then attempt attacks in the countries that supplied the weapons. This circularity—profit from arms sales that create conflicts, underfund prevention of resulting threats, respond to attacks with more military operations that generate more arms sales—sustains itself because each component serves different constituencies and no single decision-maker bears accountability for the complete cycle.
Competing interpretations of the arms export-terrorism nexus reflect fundamentally different assumptions about democratic governance. Industry defenders argue weapons sales serve strategic purposes beyond profit: maintaining influence with key allies, supporting interoperability among friendly militaries, ensuring domestic defense production capacity remains viable. These arguments treat arms exports as foreign policy tools that would continue even without economic incentives. Government officials emphasize export control processes designed to prevent weapons from reaching dangerous actors, pointing to licensing requirements and end-use monitoring as safeguards against misuse. These frameworks assume the problem is implementation—better vetting, stricter conditions, more robust enforcement—not the underlying logic of profiting from regional conflicts. Counter-terrorism experts focus on addressing radicalization drivers: economic marginalization, political grievance, religious extremism, identity conflicts. They argue more effective spending would target these root causes rather than expanding military operations that often exacerbate underlying tensions. Each interpretation contains elements of accuracy while obscuring the structural reality: democratic governments have decided that arms export revenue and the political capital from military operations are worth accepting periodic terrorist attacks as a manageable cost.
The verification challenge exposes how difficult proving causation becomes when interests align against investigation. Establishing that specific arms sales contributed to specific terrorist attacks requires tracing weapons through supply chains, documenting their use in conflicts, identifying individuals radicalized by those conflicts, and connecting them to subsequent attacks in weapons-supplying countries. This investigative work rarely occurs because the institutions capable of conducting it—intelligence agencies, law enforcement, government oversight bodies—operate within systems where their continued funding depends on maintaining relationships with defense establishments they would need to scrutinize. When independent researchers document connections between Western arms exports and conflict escalation, or between conflict escalation and terrorist recruitment, governments dismiss findings as speculation, noting the difficulty of proving causation in complex geopolitical environments. Yet those same governments confidently claim their counter-terrorism spending reduces threats despite evidence showing no measurable effect—revealing that evidentiary standards vary based on whether conclusions support or challenge existing resource allocation patterns.
The consequences extend beyond occasional terrorist attacks to systematic degradation of security. As Western democracies continue optimizing budgets for arms export revenue and military operations rather than effective threat prevention, terrorist organizations adapt by developing networks that exploit these predictable patterns. They recruit from populations radicalized by conflicts Western weapons enable, attack targets in countries whose governments profit from those conflicts, and observe as democratic responses generate more military spending that funds more operations creating more radicalization. The cycle’s predictability makes it exploitable: terrorist organizations can essentially guarantee Western governments will respond to attacks with policies that strengthen rather than weaken extremist movements, because those policies serve economic and political interests more powerful than security effectiveness. This creates a perverse equilibrium where governments, defense contractors, and terrorist organizations each benefit from maintaining the status quo—governments get revenue and political capital, contractors get profits, and terrorist organizations get recruitment tools and strategic predictability—while civilian populations on all sides bear the costs through diminished security and wasted resources.
Policy alternatives exist but require confronting uncomfortable realities about democratic governance. Effective counter-terrorism would prioritize community-based prevention programs, intelligence operations focused on identifying threats before they manifest, and addressing the political and economic conditions that make extremist recruitment possible. These approaches lack the visibility of military operations and the revenue streams of arms exports, making them politically difficult despite evidence suggesting they would be more effective. Restricting arms sales to volatile regions would reduce conflicts that radicalize populations, but would cost defense industry jobs and diplomatic leverage governments value. Conducting rigorous evaluation of counter-terrorism spending would reveal how much current expenditure wastes resources on ineffective programs, but would force acknowledging that security theater serves political purposes even when it doesn’t prevent attacks.
The resistance to these alternatives operates through sophisticated influence infrastructure that makes reform structurally impossible. Defense contractors deployed $2.5 billion in lobbying spending over the past two decades, with the top five companies—Lockheed Martin, Raytheon, General Dynamics, Boeing, and Northrop Grumman—each spending over $10 million annually on policy influence operations in 2020 alone. Of the 663 lobbyists working for defense contractors, nearly three-quarters previously worked for the federal government—the highest percentage of any industry, creating what one analysis called “cozy relationships and highly useful contact lists” where overworked congressional staffers know lucrative lobbying jobs await them at the same companies pushing agendas today. At least 672 former government officials, military officers, and members of Congress worked as lobbyists, board members, or executives for the top 20 defense companies in 2022, according to Senate analysis. Over the last 30 years, nearly 530 staffers worked for Armed Services and Foreign Relations committees or Defense Appropriations subcommittees before becoming lobbyists for defense companies, creating what’s known as the “revolving door” where former Defense Secretary Mark Esper exemplifies the pattern—Senate Foreign Relations Committee staff in the late 1990s, assistant deputy secretary of defense, seven years in Raytheon’s government relations office, then Army secretary and finally Defense Department head under Trump.
This revolving door infrastructure blocks policy alternatives through multiple mechanisms that operate simultaneously. When community prevention programs are proposed as alternatives to military operations, defense contractor lobbyists work with sympathetic members of Congress to ensure such programs are either underfunded or structured to fail, protecting the larger military budget from competition for resources. The Secretary of Defense Executive Fellows program, running from 1995 to 2021, placed more than 315 military officers with ranks as high as colonel and rear admiral at top weapons manufacturers including Boeing, Raytheon, and Lockheed Martin for one-year fellowships where they wrote policy recommendations that coincidentally benefited their host companies—recommendations like “outsource everything not core to DoD,” repealing rules preventing the Defense Department from spending more than 50 percent of military budgets on contractors, and revising International Traffic in Arms Regulations to ease export restrictions. Some fellows recommended the Defense Department consider revising arms export regulations; the companies that sponsored those fellows subsequently lobbied Congress on those exact regulations. This creates a self-reinforcing cycle where military officers rotate into defense companies, recommend policies benefiting those companies, return to government positions where they implement those recommendations, then retire into lucrative defense industry positions. Congressional staffers observe this pattern and recognize that supporting aggressive counter-terrorism reform that threatens contractor profits means foregoing future employment opportunities.
The fractal nature of the problem—identical patterns at different scales—reveals this isn’t specific to counter-terrorism or arms exports. Defense ministries optimize for industry relationships over operational effectiveness. Export control agencies optimize for facilitating sales over preventing weapons misuse. Counter-terrorism agencies optimize for budget growth over measurable threat reduction. At each institutional level, the incentive structure rewards maintaining problems at manageable levels rather than solving them, because solutions would eliminate the justification for continued resource allocation. An arms export bureaucracy that actually prevented weapons from fueling conflicts would reduce the conflicts that justify its own existence. A counter-terrorism agency that successfully addressed radicalization drivers would eliminate the threat justifying its expanding budget. The alignment of these interests across scales creates resilience: even if reform occurred at one level, the broader structural incentives would reproduce the pattern elsewhere.
Recognition that current approaches serve purposes other than stated objectives creates space for honest assessment. Western democracies spend trillions on counter-terrorism while generating billions from arms exports that fuel the conflicts creating terrorist threats. They know increased CT spending doesn’t measurably reduce terrorism. They know arms sales to volatile regions predictably escalate conflicts and radicalize populations. They continue both practices because the practices serve economic and political interests powerful enough to override security concerns and maintain patterns even when evidence demonstrates they don’t work. This isn’t conspiracy—it’s ordinary institutional behavior where actors optimize for individual incentives within structures that don’t align those incentives with collective security. The political class must acknowledge this reality not to assign blame but to recognize that meaningful security improvements require restructuring incentives, not replacing personnel. Until democratic publics demand governments prioritize threat prevention over arms export revenue and political theater over effective security measures, the pattern will persist: profit from creating threats, underfund solutions, express surprise when attacks occur, repeat indefinitely.
Tags: Arms Trade, Counter-Terrorism, Defense Industry, National Security, Government Accountability, Political Economy, Terrorism Prevention, Weapons Exports, Security Policy, Democratic Governance