Not-so-quick fix. U.S.-approved $60 billion can plug the hole in the Ukrainian budget for now, but Russia still has more money for the war

RU

Long-awaited approval

After nearly six months of seemingly inexplicable delays, the U.S. Congress has finally approved a $60.8 billion aid bill for Ukraine by a vote of 311-112. President Joe Biden signed it on Apr. 24 and announced that deliveries of critical weapons to the Armed Forces of Ukraine (AFU) would resume within hours. Despite the fact that the overwhelming majority of U.S. Congressional representatives have supported extending aid to Ukraine since October, when a similar bill was passed by the Senate, Republican leadership in the House of Representatives prevented the proposal from coming up for a vote. Initially, aid to Ukraine was included in the same document as support for Israel, Taiwan, and a few other U.S. national security initiatives. But the Republican majority in the House has long made it a condition of the vote to include measures to protect the southern border from an influx of illegal immigrants.

In early April, the single bill was split into four, and on Apr. 20, the House approved the Ukraine aid bill. On Apr. 23, the Senate voted in its favor. The Pentagon announced the first $1 billion military aid package for Ukraine on Apr. 24.

How much military aid will Ukraine receive?

Overall, the funds allocated for Ukraine are impressive. The total amount earmarked for the purchase and delivery of arms exceeds both the European Peace Fund (which is intended for the period up to 2027) and the share of arms purchases in the Ukrainian budget. These estimates are valid even considering that, as independent military analyst Colby Badhwar explained to The Insider, military aid as such accounts for less than half of the allocated $60.8 billion. Still, the full effect of the aid package will not be felt immediately.

First, $7.8 billion will be allocated for the supply of arms and military equipment from the stockpiles of the U.S. armed forces under the PDA mechanism. Together with $3.9 billion unspent in prior periods, the total for operational supplies amounts to $11.7 billion.

Second, $13.8 billion is set aside for the USAI program, which provides for long-term procurement of military products. This means that USAI-announced deliveries take months — if not years — to end up on the battlefield.

Third, $1.6 billion has been allocated for the FMF (Foreign Military Financing) loan program focused on long-term military construction projects.

This gives us a total of $27.1 billion, but only $11.7 billion from this amount can be spent on operational supplies consequential for the combat situation in the short to medium term. In reality, the available PDA funds will be smaller because the U.S. Department of Defense has already demonstrated a reluctance to reach the approved limits without financial assurances of reimbursement for transferred military equipment. With some strain, the category of military aid can also include preferential budget loans for $8 billion, bringing the total to $35.1 billion at best.

The adopted law also contains a clause allocating $13.4 billion to compensate the U.S. Department of Defense for equipment and weapons already delivered to Ukraine or set aside for future deliveries. Badhwar considers this amount disproportionately small compared to the actual cost of replacements.

How big a difference can U.S. support make for Ukraine?

From February 2022 to December 2023, the U.S. Congress approved the allocation of $113.4 billion to cover various costs connected with American efforts to assist Ukraine in its defensive efforts against the full-scale Russian invasion. Support is provided through multiple programs, primarily implemented by the Department of State, the Department of Defense, and the United States Agency for International Development (USAID).

Direct military assistance (security assistance) is administered by the Department of Defense under the USAI, PDA, FMF, and European Deterrence Initiative (EDI) programs. Importantly, the total amount of military aid for Ukraine also includes the costs of the war-related U.S. military presence and operations in Europe.

Of the $113.4 billion, the U.S. Department of Defense accounted for $62.3 billion:

• $18 billion under USAI
• $25.9 billion under PDA
• $18.4 billion for U.S. operations in Europe.

Aid for Ukraine has so far been formalized by four acts:

• The Ukraine Supplemental Appropriations Act 2022 passed in March 2022 for $13.6 billion
• The Additional Ukraine Supplemental Appropriations Act 2022 passed in May 2022 for $40.1 billion
• The Ukraine Supplemental Appropriations Act 2023 passed in September 2022 for $12.3 billion
• The Additional Ukraine Supplemental Appropriations Act 2023 passed in December 2022 for $47.3 billion.

However, as Badhwar estimates, the military equipment and weapons transferred to Ukraine account for only $20 billion of the total of $113.4 billion. According to official figures, the aggregate value of all PDA packages from August 2021 through December 2023 reached $23.9 billion, with $9.2 billion allocated in 2022 and $14.6 billion provided in 2023. The total value of USAI contracts since the beginning of the war is estimated at $18.6 billion, and of course, not all of them have been fulfilled.

According to the data of the Ukraine Support Tracker, as of Jan. 15, 2024, the U.S. ranks second below the European Union in total aid (including financial and humanitarian aid) but tops the list in terms of military aid: $42.2 billion, compared to $17.7 billion for runner-up Germany.

Why did Republicans support aid to Ukraine in the end?

Some say that the turning point for a group of Republicans led by House Speaker Mike Johnson in reaching a compromise with Democrats on the Ukraine aid package approval was a briefing by CIA Director William Burns, who warned that the Armed Forces of Ukraine could face defeat without American support.

Others say it was the efforts of Michael McCaul, the Republican chair of the House Foreign Affairs Committee, that did the trick. Finally, some also mention the personal influence of his Ukrainian co-religionists on House Speaker Johnson, who is a devout Baptist.

The Insider's sources in Washington claim that Mike Johnson supported the bill from day one, but it took him a while to get the entire Republican Party to back it. The accomplished compromise accommodates the demands of Donald Trump's supporters to include a mechanism for repayment of soft loans while ensuring Democratic support for Johnson against pressure from radical Trumpists, who have threatened to remove him from his post as leader of the House.

In addition, military aid for Ukraine is an important source of investment in the U.S. defense industry. According to calculations by the Washington-based Center for Strategic and International Studies, more than half of the $113 billion in costs related to the war in Ukraine approved by Congress as of Apr. 18, 2024 — $68 billion — will be spent inside the United States.

How much is the war costing Russia and Ukraine?

Of the approved $60.8 billion, the Armed Forces of Ukraine will get at best $35 billion in direct military aid. However, the sustainability of the Ukraine state depends on other budgetary expenditures as well. As Ukrainian officials have admitted, external aid pays the salaries and pensions of 500,000 Ukrainian teachers, 1.4 million civil servants, and 10 million senior citizens.

In a November 2023 interview with the Italian publication Corriere della Sera, Ukraine’s Minister of Finance Serhiy Marchenko estimated Ukraine's foreign aid needs for 2024 at $41 billion — and put the shortfall it faced at $29 billion. Over the course of 2023, Ukraine received $42.5 billion from its international partners.

Ukraine's domestically funded defense spending for 2024 is set to be approximately 1.2 trillion hryvnias, i.e. about $30 billion. Together with U.S. aid of $35 billion and assistance from all other partners, Kyiv’s total military spending is likely to reach $100 billion.

Meanwhile, Russia spent 13 trillion rubles — roughly $141.3 billion — in broader war-related expenses in 2023, including on security-related and classified expenditures. In 2024, it plans to allocate even more — 15 trillion rubles, or $163 billion. However, the most reliable outside estimates for Russia's likely direct military expenditures for 2024 are lower, ranging from $121 billion to $132 billion.

In other words, even with American aid, Ukraine's military budget will not reach parity with Russia's. Furthermore, equipment and weapons supplied to the Armed Forces of Ukraine are significantly more expensive than their Russian analogs, as they are produced by American and European enterprises at a higher unit cost for labor, raw materials, and electricity. Therefore, the gap between the two warring parties in ammunition, equipment, and other resources for frontline personnel is likely even greater than simple monetary value calculations suggest.

Most importantly, the Ukraine aid law passed by the U.S. does not establish a long-term funding mechanism for the Armed Forces of Ukraine. Given the potential for a policy change to follow from the American presidential election this November, it is possible that Washington has already approved its last major aid package to Ukraine for the foreseeable future. This is why NATO Secretary General Jens Stoltenberg is promoting the idea of setting up a €100 billion aid fund for Ukraine for five years under the broader auspices of the trans-Atlantic alliance.

And even that might not be enough to deliver a Ukrainian victory on the battlefield. Some experts argue the Ukrainian army requires even greater investment. Sir Richard Barrons, former UK Commander Joint Forces Command, said in November 2023 that the Armed Forces of Ukraine needed €75 billion a year for two or three years to win the war. So far, this level of funding is not expected in even the boldest projections.

What can we expect at the front?

According to the Pentagon's published nomenclature of the recently announced military aid for the Armed Forces of Ukraine, the package will include:

• RIM-7 and AIM-9M surface-to-air missiles
• Surface-to-air missiles for Stinger man-portable air-defense systems
• Small arms and ammunition, including 12.7 mm (50 cal) anti-drone ammunition
• Additional ammunition for HIMARS multiple rocket launchers
• 155mm and 105mm artillery ammunition
• 60mm mortar shells
• Bradley infantry fighting vehicles
• MRAP and HMMWV armored vehicles
• Logistics support vehicles
• Tactical tractors for weapons transportation
• Missiles for TOW anti-tank systems
• Javelin and AT-4 anti-tank systems
• High-precision airborne weapons
• Airfield equipment
• Anti-tank and anti-personnel mines
• Explosives for debris clearance
• Night vision devices
• Spare parts, field equipment, training arms, and other auxiliary equipment.

Many of these weapons are believed to be critical to improving the current combat situation, especially given the precarious position of Ukrainian forces around Ocheretyne, north of Avdiivka, where the likelihood of further Russian territorial advances remains high. As for artillery ammunition, an area in which U.S. European Command head Chris Cavoli warned that Russia’s superiority was poised to reach a ratio of ten to one before the U.S. aid package was approved, new supplies are needed for fending off the advancing Russian columns and for counter-battery fire. As a Ukrainian aerial reconnaissance specialist points out, in the latter capacity, artillery shells cannot be replaced with the now-ubiquitous FPV (first-person view) “suicide drones.” In his opinion, artillery, anti-tank weapons, and armored fighting vehicles also play an indispensable role in repelling Russian armored attacks.

Importantly, all of the categories of weaponry listed above are part of the new package. M2 Bradley infantry fighting vehicles, which have performed admirably against both enemy infantry and modern Russian tanks in defensive operations near Avdiivka, deserve special mention. Bradley IFVs are equipped with BGM-71 TOW anti-tank weapons, and ammunition for them is also set to be delivered to Ukraine.

In addition, lighter vehicles such as HMMWVs (High Mobility Multipurpose Wheeled Vehicles) and MRAP (Mine-Resistant Ambush Protected) armored vehicles are just as important for the safety of frontline infantry, who are constantly exposed to Russian artillery, FPV drones, and munitions drops from UAVs that complicate standard operations such as troop rotation, evacuation of casualties, and ammunition resupply.

Munitions for air defense systems are also crucial. The missiles for the Stinger MANPADS will be of use against Russian close air support aircraft, which currently operate rather comfortably on the front lines. At the same time, Ukraine urgently needs additional Patriot air defense systems and PAC-3 missiles to counter Russia's regular ballistic missile strikes on rear areas and cities. It remains to be seen whether the United States will be willing to supply Ukraine with these weapons (which most European partners are still holding on to).

As Colby Badhwar points out in his commentary for The Insider, a clause in the package about the transfer of long-range (300-kilometer) versions of ATACMS missiles (M39A1, M48, M57) features vague, non-binding language, but political pressure on President Joe Biden to deliver this type of weaponry may secure a breakthrough on this issue. Moreover, as Reuters reminds us, such missiles were included in a previous package formed in March, before the additional funding was allocated, and have already been used against Russian targets in Crimea.

Still, some have voiced pessimistic assessments of the adopted law. Many Ukrainian military analysts fear that the act is the last package of such magnitude and that the approved funding is insufficient for Ukraine to rival the Russian army's capabilities, let alone to conduct army-level offensive operations. The most pessimistic analysts believe that the allocated aid will be barely enough to keep the front from “crumbling” and may place Ukraine in a dire situation in 2025.