{TEXT} THE television pictures this week looked like a rerun of the first days of the Gulf War and of the operation to drive Serbian troops out of Kosovo. F-15 fighters took off from aircraft carriers in a roar of burning jet fuel; Tomahawk cruise missiles exploded in white flashes viewed through shimmering green night 'scopes. We have been through this before.

And just as in the last two US-led wars, the deployment of planes and missiles has raised the prospect of a huge increase in military spending in the United States, and drawn investors to rush to buy up defence stocks. When the markets opened after the September 11th attacks on the World Trade Centre and the Pentagon, stocks in the defence sector rose by up to one-fifth, while almost everything else fell through the floor. On Monday, after the strike against Afghanistan began, they soared again.

But is this war really comparable to Desert Storm and Kosovo? Mr James Fetig, corporate relations director of Lockheed Martin and a retired US army colonel, does not think so.

"Here's your point of comparison," he said. "On the first day of Desert Storm the United States and its allies put about 1,000 aircraft into the air. And on the first day of Afghanistan they put about 30. I don't know how many cruise missiles the American and other coalition forces have in their inventories but, I'll tell you, it's enough to do Afghanistan."

This cautionary note was echoed by General David Baker, a defence consultant with Charles Schwab's Washington Group.

"We have no idea how quickly we will use these munitions up," he said, referring to current missile stocks. "The word has been put out, though, we will not run out."

Uncertainty about the extent of the United States's armed reaction makes it difficult to predict how much the military industrial complex will benefit.

The scale of this war is entirely different. There is no Cold War-type arms race. Air superiority was established over Afghanistan in three days, whereas in Kosovo it took weeks of bombing to seize control of the skies.

The US defence industry had been entertaining modest hopes for expansion before the attacks. Congress planned to increase defence spending by 5 per cent next year, despite President George W. Bush's goal of an expensive new missile defence system.

Funds for military procurement will now inevitably rise as the US plunges into its new war. The 2001 defence budget of $302 billion (€331 billion) could increase by a quarter, analysts said.

Much of the $40 billion in emergency aid approved by Congress in the wake of the September 11th attacks is expected to go to defence spending and the Pentagon has already produced a $4.6 billion shopping list for conventional hardware. It includes precision-guided weapons like Raytheon's Tomahawk missile, 50 of which were fired at Afghanistan on Sunday, and the laser-guided Hellfire helicopter-launched missile produced jointly by Lockheed Martin and Northrop.

But it is "too early to tell what the true impact of September 11th will be", said Mr Fetig. "Our assumption before September 11th was that defence spending or procurement would increase modestly. Equipment in the force today is ageing. The same aeroplanes that were flying strikes in Desert Storm are now flying strikes in Afghanistan."

Modernisation would proceed but "the question is what the government's priorities will be and we certainly don't know what those are. Clearly, in the short term, there is support for increased defence spending and for modernising and updating forces across the spectrum of conflict, from high intensity to low intensity. It remains to be seen what specific priorities will develop because, to this point, we've not been given any and so we are as much in the dark about what the government may chose to do as anybody else.

"Everyone from British Prime Minister Tony Blair to the President of the United States has indicated that the military is the lesser of the response options, that the military role in addressing these kinds of organisations has very defined limits. Diplomacy, the financial community and others will play very prominent roles in this."

Analyst Mr Christopher Mecray of Deutsche Bank Alex Brown considers that, in the medium term, the quickened tempo of military activity could ultimately mean new spending on armaments. But most of the emergency funds might not be directed towards equipment procurement, he predicted. Anti-terrorist campaigns are more "manpower-intensive than equipment-intensive and most of the planned emergency anti-terrorist funds will not be directed towards equipment procurement", he said.

In a just-published review, the Pentagon said that defending the "homeland" and countering surprise attacks are to become the top priorities of the nation's military strategy, and this inevitably requires more personnel.

Up to now just under a third of every US defence dollar has gone on procurement and this could be even less in future if a build-up in armed forces personnel receives priority. The number of men and women on active military duty in the US has fallen steeply in the past decade, from two million at the time of the Gulf War to 1.4 million today.

"Certainly since the fall of the Soviet Union, there has been no real threat to our homeland of the United States," said Rear Admiral Craig Quigley of the US Defense Department. In the wake of the attacks, "that is now very, very different".

The defence of US territory had become the primary mission when deciding the overall size of the military, where troops would be deployed and what weapons they will use in combat, he said.

For now, investors in weapon-makers are gambling on the need to replenish the US military's stockpiles of weapons and spare parts if there is a protracted military campaign against terrorism. Defence stocks are hot.

Lockheed Martin, which had to lay off 10,000 of its 140,000 workforce since April because of the economic downturn, saw its share values soar by 25 per cent after September 11th. The company is the number one defence contractor in the US, producing Fleet Ballistic Missiles and F-16 fighter jets.

Raytheon, the third-largest supplier of arms and maker of the Tomahawk missiles used over Afghanistan - which has multiple contracts with various US defence agencies and foreign governments for missile-guidance and electronic-tracking systems - also recorded big gains.

The Maryland-based company has seen its stocks surge almost 50 per cent from their level before the attacks. Shares in L-3 Communications Holdings, a New York-based defence technology company, rose by 38 per cent since mid-September. It is conventional wisdom that such military contractors as L-3, which makes electronic and surveillance equipment, will grow the most in the long term as the government tries to combat the enemy within.

Lockheed Martin and Raytheon along with weapon suppliers Northrop (up 31 per cent) and General Dynamics (up 25 per cent), have posted four of the nine largest gains in the Standard & Poor's 500 Index since trading resumed after September 11th.

The exception has been Chicago-based Boeing, the second-largest US defence contractor, which makes missiles, bomb kits, satellites and aircraft. The company is suffering from a downturn in orders for its civil aircraft.

The rush to buy into the military sector may be short-lived. "Typically during a conflict, defence stocks outperform the market and then tend to trade back down when the excitement is over," said Mr Joseph Nadol, defence and aerospace analyst at JP Morgan.

For now, the managers of the large investment funds, which own much of the US defence industry, have been enthusiastic. "Before this began I don't think defence stocks were going up at all," said Mr Robert Torray, manager of the Torray Fund.

"The events on September 11th really steered the American public to higher defence spending," remarked Mr Scott Kuensell of Brandywine Asset Management, which owns shares in General Dynamics and Northrop. Mr Adam Friedman, co-manager of the $700 million Armada Large Cap Value Fund, which owns shares in General Dynamics and Northrop, said the air strikes were "what we have been waiting for".