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The US government has announced a major crackdown on defence industry “incentivisation and prioritisation of investor returns over the nation’s warfighters”.
Large defence companies have been accused of “underperforming on existing contracts” while providing excessive dividends to shareholders, according to the newly announced presidential action, unveiled on 7 January by US President Donald J Trump.
“Many large contractors, while underperforming on existing contracts, pursue newer, more lucrative contracts, stock buybacks, and excessive dividends to shareholders at the cost of production capacity, innovation and on-time delivery,” according to the order.
“Effective immediately, they are not permitted in any way, shape or form to pay dividends or buy back stock, until such time as they are able to produce a superior product, on time and on budget.
“The United States will no longer allow defence contractors to single-mindedly pursue investor profits at the expense of warfighter capability and readiness. Major defence contractors will no longer conduct stock buybacks or issue dividends at the expense of accelerated procurement and increased production capacity.”
The order goes further to state that within 30 days, Secretary of War Pete Hegseth will identify defence contractors who are underperforming on their contracts and engaging in stock buyback or corporate distribution.
In addition, the White House has also released a separate presidential order on 7 January, “Withdrawing the United States from international organisations, conventions, and treaties that are contrary to the interests of the United States”.
The order contains a review of all international intergovernmental organisations attended in membership by the United States and announces the withdrawal from several international organisations.
Mentioned agencies to be withdrawn from include the Global Counterterrorism Forum, Global Forum on Cyber Expertise, International Institute for Justice and the Rule of Law, Regional Cooperation Agreement on Combatting Piracy and Armed Robbery against Ships in Asia, Science and Technology Center in Ukraine, UN Democracy Fund and UN Register of Conventional Arms, among others.
