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If History Is Any Guide, Bye-Bye to Money Sent to Ukraine

One Republican thinks Washington is sending loans to Kyiv.

President Joe Biden recently reassured Ukraine and world powers that Washington would continue sending money to Kyiv despite the volatility in the lower chamber, from narrowly averting a government shutdown to ousting House Speaker Kevin McCarthy (R-CA). The public is unsure how much money has been shipped to Eastern Europe over the last 20 months. But they can take solace that the Ukrainian government will eventually repay these funds. Wait a minute. Is this true? Ask Sen. Tim Scott (R-SC).

Tim Scott and Ukraine Funding

During the second Republican primary debate, Scott told Florida Gov. Ron DeSantis (R) that 90% of America’s financial commitments to Ukraine are loans that Kyiv will repay. Here is the entire snippet from the GOP presidential candidate:

“Ninety percent of the resources that we send over to Ukraine is guaranteed as a loan. At the end of the day, 90% of the money that we send over there is actually about Ukraine, [and] is paid by the NATO or NATO allies. Our national vital interest is in defeating the Russian military, by degrading the Russian military, we actually keep our homeland safer. We keep our troops at home. And we all understand Article Five of NATO. So at the end of the day, we reduce, if not eliminate, an attack on NATO territory.”

So, is this accurate? Ukraine’s proponents point to the Lend-Lease Act that Biden signed in May 2022. In other words, the policy means there is no such thing as a free lunch for Ukrainian President Volodymyr Zelensky. Be it military aid or financial assistance, the resources are required to be repaid in two ways: making direct payments to the US government or allowing US contractors to reconstruct the nation.

As of September 2023, Washington has granted $75 billion in wartime funding since Russia’s invasion began, according to data from the Kiel Institute for the World Economy. Thirty-four percent of this has been financial (aid, loans, and other support mechanisms). Another 6% has been allocated to grants and loans extended through the Foreign Military Financing Program. An additional 5% has been in the form of humanitarian aid. But more than half (55%) has been security assistance and weapons and equipment.

Cost accounting has been rare in this battle. It took close to two years for a Lead Inspector General – Robert Storch – to be announced to oversee aid to Ukraine. But while critics contend this is a step in the right direction, whether Ukraine pays Uncle Sam back remains to be seen. The public can comb through the history of US funding foreign governments to determine if the odds are in taxpayers’ favor.

A Brief History of Funding

First, where is the 90% figure even coming from? It remains unclear. Liberty Nation reached out to the Scott campaign for confirmation but has not received a reply at the time of publishing.

GettyImages-904158184 George H.W. Bush

George H.W. Bush (Photo by Howard L. Sachs/CNP/Getty Images)

In 1993, the Congressional Research Service reported that “the U.S. Government has rarely forgiven debts owed to it by foreign governments and individuals,” adding that Washington “has been willing to adjust the repayment schedule, when the borrowers found they were unable to meet the original repayment terms for U.S. loans.” There have been exceptions, such as forgiving 67% of the Marshall Plan loans extended to West Germany. Over the past 30 years, debt forgiveness has become the de facto policy for Republicans and Democrats.

In 1991, then-President George H.W. Bush canceled nearly $3 billion in debts owed by low-income nations. In 2004, then-President George W. Bush advanced plans to wave goodbye to billions of dollars in debt owed by some of the world’s most impecunious countries. The Clinton presidency saw the United States forgive hundreds of millions of dollars of Third World debt. A decade later, former President Barack Obama championed similar policies on the international stage. The current president approved $120 million in debt relief grants for the Sudanese government in 2021. This year, US leaders have also advocated for the International Monetary Fund – an institution to which Biden aims to send more money to diminish Chinese influence – to restructure debts owed by impoverished states worldwide.

A Case of Naivete?

Is it naïve to believe that future presidents or congressional representatives will not endorse initiatives to forgive Ukraine’s debts? It could be argued that the amount of aid shipped to Eastern Europe is a drop in the US government’s overall $7 trillion spending bucket, and any repayments would be a hefty burden for a war-ravaged state. Besides, Kyiv is already doing its part by increasing its Treasury holdings by triple digits over the last 12 months and letting US corporations establish a presence in the country. Critics assert that taxpayers might need to prepare themselves to accept that this money will never return to government coffers, no matter what Scott espouses.

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