Commentary

What Does $40 Billion in Aid to Ukraine Buy?

May 23, 2022

Congress has approved $40 billion in aid for Ukraine and other countries affected by the conflict―the sixth aid package since the war began. A major change is that this package looks ahead months rather than weeks.

The aid package provides $19 billion for immediate military support to Ukraine, continuing the effort that has been vital to sustaining Ukrainian resistance, and $3.9 billion to sustain U.S. forces deployed to Europe. The package also contains about $16 billion for economic support to Ukraine, global humanitarian relief, and a wide variety of international programs as well as $2 billion for long-term support to NATO allies and DOD modernization programs.

Although some elements of the aid package will be available quickly, many will take years to fully implement. This raises questions about why long-term elements could not have gone through the regular congressional authorization and budget processes.

A New Timeline

A key change is that the timeline for this aid package implies the expectation of a long war. Previous aid packages were designed to last a few weeks. No one knew how long the war might go on or whether Ukraine would hold out. Thus, packages were announced on February 25, March 12, March 16, April 5, April 13, April 21, and April 24. This package breaks that pattern. Instead of looking out a few weeks, this package goes to September 30, the end of the fiscal year.

A Higher Level of Aid

For the first five weeks of the conflict, military support to Ukraine averaged about $30 million a day (excluding economic and humanitarian support and the costs of U.S. forces deployed to Europe for the crisis). In April, a series of $800 million aid packages implied a level of $100 million a day. This package increases the aid level to $135 million a day.

Aid from the United States, NATO, and other countries has been vital in allowing Ukraine to maintain its forces in combat for nearly three months. Forces in combat need a constant flow of munitions and supplies. Without them, combat effectiveness declines and eventually collapses. The provision of major weapons, initially Soviet-era and recently NATO-standard weapons, has allowed Ukrainian forces to replace losses and to build additional combat power. Bottom line: without these aid packages, the Russians would be on the Polish and Romanian border.

Near-Term Military Aid to Ukraine

The package contains $19 billion of near-term military aid in three categories, though there is much apparent overlap in what the categories do.

Ukraine Security Assistance Initiative (USAI, $6 billion): This special fund, established in 2016 National Defense Authorization Act (section 1250), provides training, equipment, weapons, logistic support, supplies and services, salaries and stipends, sustainment, and intelligence support to the military and national security forces of Ukraine―i.e., just about anything Ukraine might need. The USAI is a transfer account, which means that DOD will decide later where the money goes. Congress has typically not liked transfer accounts because they look like "slush funds," where Congress has less control over how the money is ultimately spent. The statutory language requires that DOD report to Congress 15 days before any transfers occur. In theory, Congress could block such transfers, but that is difficult to do politically and procedurally.
A problem with USAI is that the capabilities it funds may take a while to deliver to Ukrainian frontline forces. While supplies and services can be acquired quickly, new equipment takes months or years to produce.

Replenishment of U.S. weapons stocks ($9 billion): This provides money for DOD to replace items sent to Ukraine in the past or in the future. The White House press announcement cites artillery, armored vehicles, anti-tank, and antiair capabilities. DOD is not necessarily replacing items like-for-like, but may substitute similar capabilities where the previous items are unavailable or obsolescent. The amount ($9 billion) is nearly three times the stated cost of equipment drawdown provided to date ($3.3 billion) implying that the replacements will be more expensive and that there will be additional drawdown in the future. As with the USAI, the secretary of defense must notify the congressional defense committees of the details of such transfers not less than 15 days before any such transfer.
Note: There is a difference between drawdown authority and funding. With authorization from Congress, the president has the authority to draw down stocks of weapons and send them to friendly countries like Ukraine. However, funding to replace these lost stocks must be provided separately. DOD has been using money from an earlier supplemental to replace equipment sent to Ukraine, but that money is apparently running out. This provides funds to continue backfilling stockpiles. Authority for additional drawdown is provided separately (see below). The administration has not provided a detailed accounting of the drawdown or supplemental funding.

Foreign Military Financing Program ($4 billion): This program, run by the Department of State, allows Ukraine and other countries to buy new military equipment, not just get items from existing stocks. This is a long-term effort, however, since procurement of large weapon systems has a multiyear lead time. Procurement of smaller items is quicker, but it still takes months or years.

Funding the U.S. Military Response ($3.9 billion)

The United States has sent about 10,500 troops to Europe and is now rotating those forces. These forces were sent to reassure eastern NATO allies that the United States stood with them in a crisis and to discourage any Russian adventurism against Eastern Europe. U.S. military forces will likely be there for a while. Deploying forces entails additional costs for operations and personnel benefits, so additional funds are needed, lest other DOD programs be cut to offset the higher costs.

One surprise in this category is the procurement of an additional Patriot missile battery. Since the United States has not lost any such equipment, it would either be an expansion of Army force structure or would replace a system given to an ally (perhaps Poland). In any case, it will take several years to implement. Budget documents indicate that the lead time for such a procurement is 24-36 months.

Military Support to Allies and Partners/Enhancements to U.S. Military Capabilities

Some elements of the aid package support allies and partners affected by the conflict in Ukraine, while others are general enhancements to U.S. military capabilities. However, all these enhancements will take a long time to implement.

Aid to friendly foreign nations ($500 million): Under 10 USC 331, the United States can provide logistical support, equipment, and training to friendly countries. Money in this package likely reimburses allies and partners for equipment that they have sent to Ukraine. Many Eastern European NATO allies had equipment left over from the Soviet era―T-72 tanks, S-300 air defense systems, aircraft, and helicopters. Because the Ukrainians already operate the systems, they do not need special training or logistics pipelines to put the equipment to immediate use. Transferring this equipment has been a win-win-win. Ukraine gets additional equipment to replace losses. The Eastern European allies get rid of old Soviet-era equipment and can buy newer, NATO-standard equipment. The U.S. defense industry can sell more products.

Increases in "critical" munitions stocks ($500 million): The war in Ukraine has shown the value of large munitions inventories, but munitions often don't compete well in the budget process. They are not visible or operational in peacetime like a ship, a tank, or an aircraft, but sit in secure shelters until needed. This funding would procure missiles not directly related to the conflict in Ukraine, but instead to prepare for a wide variety of conflicts, such as against China. However, it will take years for this effort to execute fully. Lead times for most missile programs run 18 to 24 months.

Defense Production Act ($600 million): This will support expansion of the missile production base and, according to the statutory language, "expanded domestic capacity of strategic and critical minerals." The former would ease production constraints, such as currently being experienced in rebuilding stockpiles of the Javelin and Stinger missiles. The latter seems aimed at rare earth minerals, which are needed for a wide variety of technologies, including weapons, but which the United States gets mostly from China. The United States has rare earth deposits in abundance, but these are not mined because of costs and environmental restrictions. Both efforts seem worthwhile but will take years to implement. Indeed, developing new mines could take over a decade.

Research and development (R&D) ($364 million): The purpose of this funding is vaguely described in the statutory language as "to respond to the situation in Ukraine and for related expenses." The congressional description does cite one specific use―making U.S. equipment more export-friendly ($50 million). This seems reasonable given the sensitivity of some technologies and the need for interoperability with comparable systems of allies and partners. However, executing this and all the R&D effort will likely take years. R&D is, by its nature, a long-term effort.

Additional Drawdown Authority

The act raises the statutory cap on drawdown authority (22 USC 2318) by $11 billion, which allows the president to send equipment to friendly countries like Ukraine from existing U.S. stockpiles. By providing such a large amount of authority, the administration will not need to come back to Congress for a long time and thereby speed up the process of providing support. Because this is the authority to do something in the future and not the provision of actual equipment or funding, it does not constitute currently provided military support.

Unclear is how this drawdown authority operates with recently passed lend-lease legislation, which does essentially the same thing. Because lend-lease is based on a fiction―that the equipment will eventually be returned to the United States―the president may rely primarily on drawdown authority.

Humanitarian and Global Assistance

About $16 billion of the package is for humanitarian assistance, general support to the Ukrainian government, and efforts to mitigate the effects of the war globally. As with the military programs, there is some overlap in the categories. (Note: “Statutory language” refers to text in “Additional Ukraine Supplemental Appropriations Act, 2022,” and “congressional explanation” refers to the three-page paper discussing the elements of the supplemental.)

Migration and refugee assistance ($350 million): This seems intended to help the countries of Eastern Europe, particularly Poland, deal with the mass of Ukrainian refugees who fled their homeland because of the war.

International Disaster Assistance ($4.3 billion): according to the statutory language, this will "respond to humanitarian needs in Ukraine and in countries impacted by the situation in Ukraine.” The congressional explanation is that this will provide “emergency food assistance to people around the world suffering from hunger as a result of the conflict in Ukraine and other urgent humanitarian needs of populations and communities inside Ukraine.” Populations in Africa have been particularly affected by the disruption of food shipments from Ukraine and Russia, so much of the assistance will likely go there.

Economic Support ($8.8 billion): The statutory language (Title five) specifies that this provides "assistance for Ukraine and countries impacted by the situation in Ukraine, including for programs to combat human trafficking." The congressional explanation focuses on budget support for the Ukrainian government, where normal revenue collection has likely broken down. The White House fact sheet also includes countering Russian disinformation and support to small- and medium-sized agribusinesses in Ukraine. The statutory language provides that $760 million "may be made available to prevent and respond to food insecurity." According to the White House fact sheet, $500 million of this may go to U.S. farmers.

Humanitarian aid ($900 million): This provision supports Ukrainian refugees in the United States. It has become controversial because some have interpreted the provision as supporting any refugee. However, the statutory language is clear that it only applies to people from Ukraine and does not entitle a person to permanent resident status.

War crimes and human trafficking ($400 million): Title five funds efforts "to document and collect evidence of war crimes and crimes against humanity committed by the Government of the Russian Federation in Ukraine." That seems quite sensible since successful prosecutions require meticulous collection of evidence. It also funds programs to combat human trafficking, as do two other programs in the package.

Diplomatic Programs ($190 million)/International narcotics control and law enforcement ($400 million)/Embassy security ($110 million)/Nonproliferation and demining ($100 million): These provisions fund increases in Department of State diplomatic activities in Ukraine and worldwide, as well as various specialized programs. Although justified by events in Ukraine, the language is flexible enough that the funding could cover a wide variety of projects.

International organizations ($650 million): $500 million is for the European Bank for Reconstruction and Development and $150 million for the Global Agricultural and Food Security Program.

Tracing the property of Russian oligarchs ($52 million): In section 601, the Treasury Department gets money “to trace Russian financial activities including . . . identifying true beneficial ownership.” It looks like the United States is coming after those magnificent oligarch yachts.

Oversight

Despite criticisms about a lack of oversight and control, the package does include increased resources for the Department of State inspector general ($4 million), the U.S. Agency for International Development (USAID) inspector general ($1 million), and directions to DOD to report periodically on activities. These provisions provide some assurance that the funds will be spent as intended. The Ukrainian government, despite many admirable actions in the last few months, was notorious before the war for its corruption.

The "Christmas Tree" Problem

The Office of Management and Budget (OMB) is always wary about supplemental appropriations. By policy, supplemental appropriations are for "emergency and unforeseen" situations. Hurricanes are the classic example, but the early stages of conflicts are also unforeseen. If government is to respond to emergencies quickly and effectively, then sometimes money must be provided outside of the regular cycle. However, OMB is also very aware that supplemental appropriations become "Christmas trees" onto which advocates can hang initiatives that did not get funded through the regular cycle. Many elements described above have the air of “Christmas tree ornaments.”

One manifestation of the “Christmas tree” problem is the long spend out of some items in the package. The Congressional Budget Office estimates that about $5 billion of the $40 billion will spend out in this fiscal year and the next (FY 2022 and FY 2023). However, $14 billion will spend out in FY 2026 and after, while some money will not be spent until FY 2031.

Looking Ahead

There is strong bipartisan support for helping Ukraine. It is on the frontline against aggression, and a successful defense will strengthen NATO and reduce the chances of future conflicts. Further, the war looks like it will continue, so having an aid package that looks out five months makes sense. That obviates the need to provide a new package every few weeks but does not extend so far that it requests money that may never be needed.

One can question whether all this money needs to come through a supplemental appropriation, which gets less review than regular appropriations. For example, there has not been a single hearing on this package, unlike the usual DOD authorization and appropriations processes, which have multiple hearings and extensive discussions. Long-term items might reasonably be left to the regular cycle.

Further, the large amount of money being provided might require more oversight than existing structures can provide. Congress and the administration, to their credit, have included some in the package, but that may not be sufficient. A structure like the Special Inspector General for Afghanistan Reconstruction (SIGAR) might be appropriate.

Mark F. Cancian is a senior adviser with the International Security Program at the Center for Strategic and International Studies in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

Written By

Mark F. Cancian

Senior Adviser, International Security Program