by Elliott Morss, Morss Global Finance
Introduction
In recent months, Ukraine has been in the news and mostly for the wrong reasons. Specifically, we hear that US President Trump withheld $400 million in aid to Ukraine. Of that amount, $214 million of that went to the purchase of Javelin anti-tank weapons. The Javelin aid is a sub-set of a much larger US effort to support Ukraine. The purpose here is to provide an overview of US aid to Ukraine and highlight the significant features of this assistance.
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I quote from a US Department of Defense (DoD) media response to my question:
Overall, the US has provided more than $1.6 billion in security assistance since 2014 to Ukraine to help it defend its territorial integrity, deter further Russian aggression, and progress toward NATO interoperability. This assistance includes enhanced defensive capabilities, including Javelin anti-tank weapons and sniper rifles.
Congress appropriated $250 million for security assistance in the fiscal year (FY) 2019 (Sept.2018 – Oct.2019). But the Trump-induced “delays” meant that $35.2 million of that had not been obligated by the end of the year. In FY 2020, DoD has financially implemented $26.7 million of the $35.2 million and plans to implement the remaining $8.5 million as quickly as possible in accordance with contracting procedures and applicable law.
But this is the important point here:
US assistance to Ukraine is far greater than the DoD outlays.
The Overall Effort
Table 1 provides data on US Government 2018 obligated funds for Ukraine. It is notable that the US AID total exceeds the Defense Department number. In all countries getting US assistance, this sort of broad program is typical. In fact military assistance is almost never given without a wide complement of other “institution-building” activities. True, this was not done in Iraq: after the dramatic Bush “Mission Accomplished” announcement, there was no plan for next steps. And look at what happened: among other things, the Iraqi Army was disbanded resulting in unemployed ex-soldiers on the streets with guns.
Table 1. – US Assistance to Ukraine – FY 2018
Source: US AID Database
Who Has Been Getting US Assistance?
Table 2 provides information on the leading recipients of US assistance. Notably, Israel and Egypt are high on the lists in all three years. This is the result of the Camp David accords whereby the US agreed to provide both countries with billions in annual subsidies, including military aid. Under the terms negotiated, Egypt receives $1.3 billion annually while Israel receives $3 billion. In subsequent years, this financial assistance has been given on top of other aid packages and investments involving both countries. The subsidies as earmarked in the Israel-Egypt Peace Treaty have continued to the present day.
Table 2. – Top Recipients of Foreign Aid, All Sources(mil. US$)
Source: Congressional Research Service
How Much Foreign Aid Do Other Countries Give?
The Organisation for Economic Co-operation and Development attempts to collect and standardize foreign aid given by member nations. And this data appears in Table 3.The Organization does not cover China. But according to an AidData 2017 study, between 2000 and 2014 China gave about $75 billion, and lent about $275 billion – compared to US grants and loans of $424 billion over the same period.
Table 3. Foreign Aid by Country, 2017(mil. US$)
Source: OECD
One Final Note
Table 4 provides data on the Department of Defense budget as a share of the US GDP. The US remains at war, but the costs of wars that result in large numbers being killed and injured is becoming less and less important. They have become short snippets on the nightly news.
Table 4. – DoD Budget Share, Different Times
National Defense Budget Estimates
To prevent ill-considered future wars, the US should bring back the draft. Why? Because only then will people with power and influence weigh in and say “wait a minute, if my kid is going to war, there better be a damn good reason for it.” Right now, US wars are a side show for most Americans with solders drawn from low income families doing “the work”.
This quote by Robert Borosage on the US is relevant:
The country finds itself constantly at war. New presidents inherit the wars of their predecessors. They are faced not with deciding to go to war, but whether to accept defeat in one already in progress….And slowly, the great power declines from the inside out. The wars are costly, running up national debts. Vital investments are put off. Schools decline. Sewers leak. For a long time, circuses distract from the spreading ruin….Other societies become productive centers, capturing the new industries. Some begin providing better education for their citizens, better support for their citizens. Their taxes, not drained by the cost of wars past and present, can be devoted to what we used to call ‘domestic improvements.’
This is a very rich country…. But even wealthy countries must choose. We can afford to police the world – to sustain 800 bases across the globe, to station troops in Korea, in Japan, in Bosnia, in Europe, fight wars in Iraq and Afghanistan, sustain fleets to police the seas….South Waziristan, Yemen, Somalia, Kosovo, the Taiwan straits, the North Korean border, the seven seas – we can do this. But the result is that we are continually at war. And the wars cost – in money, in lives, in attention. And inevitably, domestic priorities, as well as emerging security threats that have no military answers, get ignored. A rich country, Adam Smith wrote, has a lot of ruin in it. We seem intent on testing the limits of that proposition.”
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