Commentary
Germany’s recent agreement to provide $400 million worth of NATO standard 155 mm shells to Ukraine is very generous, although it may end up being irrelevant, since there’s reasonable doubt as to whether the war will still be going on in 2025, when the shells are due to be delivered.
The $400 million breaks down to two major orders: a $305 million order from an undisclosed French company for 68,000 155 mm shells, and a $110 million order from Rheinmetall that’s guesstimated to total some 24,000-plus shells, bringing the total number of shells that Germany will send to Ukraine to about 92,000.
These artillery purchases average out to a whopping $4,485 price per shell, but apparently, that’s a bargain, as purchasing smaller quantities can yield prices of up to $8,500 per round. That’s a lot per round but not enough to purchase precision-guided rounds. Consequently, we can assume that the purchases for Ukraine are mostly for standard unguided high-explosive fragmentation rounds. These rounds will be roughly comparable to the U.S. Army’s 155 mm M795 round, which in 2020 was going for $1,400 per round. So we’re looking at price premiums of roughly 300 to 600 percent above what’s already a high price for an unguided round.
Clearly, this is a matter of supply and demand, and the arms suppliers selling to Germany are able to command a high price as NATO’s reserve stocks of 155 mm shells have been depleted to the point that NATO countries are hanging on to whatever remains for their own purposes, as well as buying 155 mm rounds to replenish their own stocks.
The tens of thousands of shells that Ukraine will eventually receive are sorely needed, as 155 mm high-explosive unitary rounds are more effective in destroying fortifications and heavy armor than the controversial 155 mm cluster munitions that the United States has been supplying to Ukraine. But given that the shells won’t make it to Ukraine until sometime in 2025, there’s legitimate concern as to whether the war will still be ongoing.
Meanwhile, Sergei Shoigu, Russian defense minister, recently announced that since February 2022, when Russia invaded Ukraine, Russia has increased artillery shell production by a factor of 17.5 times. That’s a stupendous number and frankly hard to believe, especially if we’re talking about the larger 122 mm and 152 mm rounds. It becomes slightly more believable if small-caliber mortars are being counted as artillery.
For reference, prior to the Russian invasion of Ukraine, The Jamestown Foundation estimated Russia’s annual production of 122 mm and 152 mm shells, including the refurbishment of 570,000 existing shells, at about a maximum of 1.7 million shells in 2021. But it must be noted that Western analysts have consistently underestimated Russia’s ability to get around sanctions, and predictions that Russia would soon run out of artillery rounds, rockets, and missiles have proven wrong.
With Russia going to 24/7 three-shift production schedules and the addition of new weapons production factories, it’s no doubt well on its way to producing more than 2 million large-caliber shells per year. While only Russia truly knows how many millions of rounds of artillery ammunition are being produced in Russian factories, a senior defense official of NATO ally Estonia estimates that Russia is outproducing the West by seven times when it comes to artillery ammo production. So while Russia almost certainly hasn’t upped artillery shell production by a factor of 17.5 since February 2022, it’s undoubtedly manufacturing a whole lot more artillery shells than it was prior to the war.
In the United States, production of 155 mm shells is planned to go from about 28,000 per month today to 100,000 per month sometime in 2025. We see an even more gradual ramp-up of artillery production in Europe.
The sense of urgency by the United States and its NATO partners to increase production is anemic compared to what we’re seeing in Russia. This lack of urgency tells us that the United States and Europe don’t consider Russia to be an existential threat. Instead, what we see are low-risk contracts being put in place that, in the near term, will deliver very little to Ukraine.
Of course, even if Ukraine is forced to sue for peace before the contracts really begin to deliver significant quantities of artillery shells, these contracts for Ukraine could potentially be repurposed to help replenish U.S./NATO stocks of ammunition that have been depleted by the U.S./NATO proxy war against Russia.
As it sits right now, other than China, the biggest long-term winners in this war are Western arms suppliers, who will benefit for years to come by selling hundreds of billions of dollars of weapons and ammunition at premium prices to replenish and build up the stocks of the United States and NATO countries, which have collectively supplied Ukraine with some $100 billion in military aid since the war began.
While the relatively slow ramp-up by Western defense companies limited war-related profits and revenues in 2022, in 2023, war-related profits began to increase and should continue to increase for years to come.
The biggest loser is Ukraine, whose economy has collapsed while suffering hundreds of thousands killed in action and wounded in a war that has callously and fruitlessly expended Ukrainian and Russian lives.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
