Investing in war

War and tensions imply a very profitable arms race for arms traders. Banks know this well, and are very keen to profit from it. The only problem is uncertainty, which the market doesn't like. A French financial expert was saying in March 2003, "When we get ready for war, as we are now, shares fall; but we expect them to rise again as soon as the first bombs are dropped on the enemy." In February 2002, Merrill Lynch, the famous US investment institution, published a note saying that a military campaign in 2002 or 2003 against the Saddam Hussein regime would profit companies producing ammunition. That same note was trying to study the various possible scenarios, not all of them being profitable in the same way. Alliant Techsystems was an overall winner, whilst Raytheon was favourite for air attacks - as opposed to General Dynamics for a ground invasion.

If Iraq could bring down enough allied planes, Boeing and Lockheed would profit from it - unless attacks like those of 11 September 2001 resulted, in which case the fall of the civilian market could balance the rise of the military one... Aaaargh. Uncertainty really gets too hard to handle.

Anyway, war being profitable, temptation is very high; but something else has become fashionable (and therefore profitable as well): ethical investment.

Money-making professionals can't lose any opportunity, so you have to be able to invest in arms trade companies at the same time as offering ethical bonds. Axa thought this dual approach would not be a problem, until a Belgian campaign challenged it at the company's AGM ("My Money Clear Conscience").

The media at war Let's just remember the attitude of Fox News in 2003 to understand how much the media can profit from a war - even pushing for it, if necessary. Al-Jazeera has also got famous and gained more viewers through the wars in Afghanistan and Iraq. In any country, most commercial publishers - whether through television, radio, web or paper - have been profiting from wars.

Of course, not every conflict is money-making, so some are unknown or become forgotten by the general public - in particular if TV misses the live drama. So, for example, the Chechen conflict in Russia will reappear in the media when school pupils or a theatre audience next become visible hostages ... with commercials alternating with the news specials.

Tikiri, French activist