The Global Scramble for Patriot Missiles

0:05Ryan Knutson:Since the war in Iran started, the U.S. has been running into an urgent problem. America and its allies are firing defense weapons faster than they can make them. Specifically, interceptor missiles that shoot down incoming airstrikes. The depletion is pretty rapid. How long it can last, and I think this is part of Iran's strategy, which is can they outlast us? You can't replace them overnight. You're not probably going to even be able to replace them this year. The U.S. and Israel are trying to wipe out Iran's missile capacity before they run out of missile interceptors. Our colleague, Boyan Pachevsky, has been looking into the issue.

0:45Bojan Pancevski:There are only so many so-called interceptor missiles that you can buy on the market. And Arab allies of the United States found themselves burning through their stockpiles very quickly because the barrages coming in from Iran were extremely intense.

1:06Ryan Knutson:In the first few days of the war, the U.S. and its allies fired hundreds of missile interceptors to repel Iranian attacks. That's led to a burn rate that's threatening to exhaust supplies.

1:17Bojan Pancevski:Problem is, it's not an issue of money, it's an issue of manufacturing. America is just not in the position to manufacture enough of these crucial missiles. That's kind of mind-boggling. It's a question of basically, is the new economy of war? And I think the U.S. is lagging behind.

1:39Ryan Knutson:The Department of Defense has said the U.S. does have enough weapons to achieve its goals in Iran. But the Persian Gulf isn't the only place that relies on these missiles. In fact, they're needed all over the world, especially in Ukraine.

1:54Bojan Pancevski:For Ukraine, that means that they will probably not have enough air defenses this year if this war in Iran continues. That's, you know, if you do the match, it looks pretty bad for them.

2:12Ryan Knutson:Welcome to The Journal, our show about money, business and power. I'm Ryan Knudsen. It's Wednesday, March 11th.

2:25Ryan Knutson:Coming up on the show, the U.S. munitions shortage and what it means for Iran, Ukraine, and the rest of the world.

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4:15Ryan Knutson:Before the war in Iran began, what was the state of the war between Russia and Ukraine?

4:21Bojan Pancevski:Basically, the war in Ukraine has been reduced to a stalemate, the like of which we've seen in the First World War. So basically, the front line is frozen, so to speak. It's changed extremely little in the past two to three years.

4:35Ryan Knutson:Since the front lines on the ground are frozen, the skies above Ukraine have become the most important battlefield in the war.

4:42Bojan Pancevski:Russia has been producing huge amounts of attack drones and missiles. And this is the biggest problem for Ukraine. They are being bombarded pretty much every day, day in, day out. And the targets of this bombardment are not necessarily military targets, but they are essentially critical nodes of the infrastructure that keeps the country running. You know, heating, electricity, gas, oil, and stuff like that, which are extremely important

5:10Ryan Knutson:for the civilian population. To defend against these attacks, Ukraine has relied on a highly specialized weapon system manufactured in the United States. It's called the Patriot Interceptor System. The Patriot System was developed over half a century ago, during the Cold War.

5:28Bojan Pancevski:And essentially it's able to detect an incoming rocket very early to engage it with this radar system, and then it fires missiles towards it that shoot it down and prevent it from destroying its target. The Patriot system essentially fires missiles into incoming missiles. Experts describe this process as hitting a bullet with a bullet.

5:54Ryan Knutson:The Interceptor system, which includes the radar, the launcher, and the computers, is made by a defense company called Raytheon. The actual Patriot missiles are made by Lockheed Martin. Both are U.S. companies.

6:10Ryan Knutson:In Ukraine, Patriot missile interceptors form the backbone of the country's defenses. Throughout the war, Russia has been firing barrages of drones and ballistic missiles. According to Ukrainian and Western intelligence, Russia can manufacture around 80 ballistic missiles every month.

6:26Bojan Pancevski:Ballistic missiles are the biggest and most dangerous menace coming out of Russia. These are rockets, essentially, that fly high up in the atmosphere of the Earth and then fall down at many times the speed of sound. and they're extremely difficult to intercept. And they're extremely damaging when they hit a target. So it's practically impossible for Ukraine to defend itself from them unless they have enough Patriot missiles.

6:55Ryan Knutson:Over the past year, Ukraine has become desperate for more Patriot interceptor systems. And its allies in Europe have been buying more from the U.S. on its behalf. But the American companies that make these systems aren't making enough. In 2024, Germany ordered eight new Patriot systems for about 2 billion euros apiece, systems it plans to transfer to Ukraine. But German officials say they haven't gotten them yet, and they have no idea when they'll arrive. As for the missiles themselves, last year Lockheed Martin produced around 600 of its most advanced Patriot missiles. That works out to about 50 missiles a month.

7:34Ryan Knutson:Ukraine says it needs around 60 missiles per month to keep up with Russia. So even if every new missile went to Ukraine, it still wouldn't be enough.

7:46What is causing these delays?

7:49Ryan Knutson:Why aren't Raytheon and Lockheed Martin producing more if there's so much more demand?

7:52Bojan Pancevski:The trouble is the United States have not been commissioning these companies to produce enough of these missiles. and the military-industrial complex in the United States works in a way that it's kind of reliant on government contracts, basically thrives on taxpayer money. And if there's no sort of prospect of long-term contracts, these companies don't tend to invest into expanding their production. And if the government doesn't order stuff, no matter how many other orders they get from other countries, and they do get tons of orders at the moment, ever since the war started in Ukraine, they're not going to move until they get this kind of long-term, secure, safe contract.

8:38Ryan Knutson:But wouldn't for these companies, though, I mean, even though they are government contracts, wouldn't these companies see that there's a lot more demand, and so therefore we should invest in our ability to make more? I mean, isn't this just capitalism?

8:48Bojan Pancevski:Well, you would have thought that would work like that, but apparently it doesn't in this particular case. It's an interesting kind of paradox. It's a bit of a conundrum because the military-industrial complex, in a way, is this kind of small boutique, very sophisticated-like manufacturing where, you know, it's difficult to increase production.

9:10Ryan Knutson:Production of a single Patriot missile can cost millions of dollars and take months. They're made by hand, with components that come from all over the U.S. and from as far as Spain.

9:20Bojan Pancevski:And Lockheed told us that they are working hard to overcome these issues, that they have already expanded production manyfold, which is true. They are now at$600 a year, as we said, just over$600.

9:33Ryan Knutson:And they were making a lot less than that two, three years ago. Lockheed Martin says it's working to boost production of its Patriot Interceptors to$2 ,000 a year, by the end of 2030. For Ukraine, though, time is ticking. Raytheon's parent company, RTX, didn't return a request for comment about the missile launchers. Last week, President Trump met with the CEOs of Lockheed Martin, RTX, and other defense industry leaders at the White House. After the meeting, Trump posted on social media that the companies had agreed to, quote, quadruple production. The situation in Ukraine was already dire, and that was before the war with Iran started.

10:15Ryan Knutson:President Trump says the U.S. and Israel have launched major combat operations. Donald Trump says the objective is to defend the American people by eliminating imminent threats from the Iranian regime. How did leaders in Ukraine react to the outbreak of war in Iran and what that might mean for its defense systems?

10:35Bojan Pancevski:Well, I mean, the president of Ukraine, Volodymyr Zelensky, held a cabinet meeting which was televised and issued a statement there saying that these Patriot missiles are a matter of life and death for Ukraine, and that they are absolutely concerned that they might not be receiving enough of them. So he very explicitly said what was going on. Then a day later, Zelensky said that the United Arab Emirates, Qatar, and Saudi had fired a north of 800 Patriot missiles in the first hours of the war. And he claimed that this is more than Ukraine had been able to procure since the start of the Russian invasion.

11:17Bojan Pancevski:The expectation is that the U.S. administration will help its Gulf allies, who were obviously damaged and depleted by this conflict in Iran. It will be a scramble for everyone to get some, and there will be nowhere near enough for Ukraine.

11:34Ryan Knutson:— How would you describe the situation Ukraine finds itself in right now? — Well, they're in a very difficult position.

11:41Bojan Pancevski:They're in a pickle, you know. The problem is the product is not there on the market. So it's a very, very difficult situation for them to confront because they will be facing a huge existential challenge and there's no clarity as to how will they resolve that.

11:57Ryan Knutson:— Meanwhile, U.S. adversaries like Iran, Russia, and China are seeing a huge opportunity in America's production backlogs. That's next.

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13:55Ryan Knutson:According to intelligence and defense officials, some U.S. adversaries are keeping a close eye on the Patriot interceptor missiles being used in the Persian Gulf. Like China, for example.

14:07Bojan Pancevski:The Chinese are using their satellites to observe every Patriot system in the area. They're counting the missiles that are being fired. And it's a very simple math. You know, they know how many can be made and they know how many are being expended. So that when they do the math, they know the actual capacity of the United States to defend itself and its allies. And that's not a great thing if you want to deter someone like Russia or China.

14:33Ryan Knutson:According to Boyan's reporting, U.S. adversaries have long understood that America isn't producing enough Patriot missiles to replace its supply. And they've been looking for ways to exploit it. For instance, if they can produce more attack weapons, more cheaply, then they can theoretically outlast U.S.-made defenses and eventually overtake them.