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I am referring to the episode regarding the Ukraine conflict, where there was security assistance supposed to be paid by the United States to Ukraine.

How does this "release of aid" actually play out? Is actual money being transferred from one bank account to another? If so, which accounts are involved? What about the purpose of this aid? I could image that much of the arms that should be paid for with that money would have already been produced, at the point of time of an aid delivery? Possibly by American companies?

I would like to get more insight about the intricacies of the economic aspects of such a delivery. To put it bluntly, I get the idea that such a deal presents a way to funnel tax payer money to arms companies, which is quite different from giving it to another country.

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  • I don't have a full answer, so just commenting. To the best of my knowledge, an element of the aid is physical goods, IE weaponry like missiles, tanks, anti-aircraft guns, etc. It is physically shipped from one location to the other, though I'm not certain who officially receives it or how it is distributed; I imagine that varies on a case-by-case basis. There is obviously still a monetary side, which I am not knowledgeable of. – NegativeFriction Jan 22 at 13:19
  • I would like to have more insight about the economic side of it, specifically the notion that the U.S. is paying money in their own pockets, or rather, tax-payer money is being paid to companies, possibly. Coincidentally, few hours after I posted this question, I learned that holding up the aid impacting American companies was in fact a reason that Republican senators eventually got involved towards releasing it. – Thomas Hirsch Jan 22 at 21:42
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    Hey Thomas, glad you found my answer useful. It's fine to accept answers right away if you so choose, but often it's suggested to wait some time, at least 24-48 hours, to let other answers come in that might be better. Having an already-accepted answer somewhat discourages other people from adding their own answers. That said, please do come back eventually to accept if an answer settles your question. :) – Bryan Krause Jan 22 at 23:59
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Short answer:

These are internal US budget allocations, to spend money on US equipment and services for the intended benefit of another country (Ukraine). Money moves between accounts the same way as for any other US government expenditures.

Longer answer:

The US DoD has a Foreign Military Sales program. It's basically a procurement office that operates between US defense contractors and foreign governments who pay for weaponry and equipment.

For military aid, the Foreign Military Financing program provides funds to be used through FMS as either loans or grants. The money itself never goes to the country receiving aid, it's more of a gift card for FMS. In FY2019, $115 million in FMF aid was budgeted for Ukraine.

The other big chunk of Ukraine money is through a separate initiative, the "Ukraine Security Assistance Initiative", created in 2016:

SEC. 9014. For the ‘‘Ukraine Security Assistance Initiative’’, $250,000,000 is hereby appropriated, to remain available until September 30, 2016: Provided, That such funds shall be available to the Secretary of Defense, in coordination with the Secretary of State, to provide assistance, including training; equipment; lethal weapons of a defensive nature; logistics support, supplies and services; sustainment; and intelligence support to the military and national security forces of Ukraine, and for replacement of any weapons or defensive articles provided to the Government of Ukraine from the inventory of the United States

See also Public Law 114-92:

APPROPRIATE SECURITY ASSISTANCE AND INTELLIGENCE SUPPORT.—For purposes of subsection (a), appropriate security assistance and intelligence support includes the following:

(1) Real time or near real time actionable intelligence, including by lease of such capabilities from United States commercial entities.

(2) Lethal assistance such as anti-armor weapon systems, mortars, crew-served weapons and ammunition, grenade launchers and ammunition, and small arms and ammunition.

(3) Counter-artillery radars, including medium-range and long-range counter-artillery radars that can detect and locate long-range artillery.

(4) Unmanned aerial tactical surveillance systems.

(5) Cyber capabilities.

(6) Counter-electronic warfare capabilities such as secure communications equipment and other electronic protection systems.

(7) Other electronic warfare capabilities.

(8) Training required to maintain and employ systems and capabilities described in paragraphs (1) through (7).

(9) Training for critical combat operations such as planning, command and control, small unit tactics, counter-artillery tactics, logistics, countering improvised explosive devices, battlefield first aid, post-combat treatment, and medical evacuation.

So, again, this gives the DoD and State Department a fair amount of leeway to spend this money, including spending on support personnel, and on transfer of used US military equipment as well as new equipment. The initiative has been renewed each year.

The DoD is to inform Congress on the way this money is spent. I don't see anything in the law that would forbid transfer of some of this money as cash (for example, as part of intelligence operations), but that is certainly not the main intent.

These are just internal budget allocations, so the allocated amount is not necessarily spent as allocated (for example, it seems that only $223 million of the total $250 was spent in FY2016).

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