The importance of lend-lease for Ukraine

What is a lend-lease – in short

This policy is devised to speed up the transfer of weapons and other goods needed to win the war, including medicines, materiel, oil, etc. The Soviet Union had previously benefited from Lend-lease: it helped defeat the previous fascist leader, Hitler.

Among the deliveries were: tanks and artillery, fuel for military equipment, and products for people in need during the war. The United States supplied needed goods to the Allies from 1941 to 1945. The USSR was one of the recipient countries.

In total, the Americans supplied weapons worth, in today’s currency, 690 billion dollars.

How the USSR once paid for land leases

In fact, the Union has not yet paid: the last installment is scheduled for 2030. But, given the current relationship between Russia and the United States, the fate of these payments is unclear. But it is known that the United States initially billed the Union 2.6 billion dollars – but after almost thirty years of negotiations, the parties agreed on 722 million dollars.

Land lease: payment and other conditions

The program will be in force until October 1, 2022 (although 2023 has also been mentioned), but it implies a financial, not a calendar time period).

Legislature, Congress schedule several committee hearings pertaining to CUs  - The New York Minute

The land lease will authorize the United States to lend or lease military equipment to Ukraine. The loan will have to be repaid after the official end of hostilities. At the same time, used equipment can be written off, and no payment is required for destroyed equipment. And the remaining goods/materials must either be returned or paid for (but then they will permanently remain the property of Ukraine). That is why many experts call the lease “virtually gratuitous aid.”

What land lease equipment can Ukraine count on

Proposals have already been made to send the Ukrainian army S-300 systems (we are talking about Soviet-era air defense systems), used by several NATO countries and unmanned and anti-aircraft aircraft, and much more.

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Why does the US need it?

Experts say that such a program could significantly simplify bureaucratic delays in US assistance to Ukraine. After all, now, any arms delivery requires numerous approvals from US officials, which slows down the process. Once the program is launched, the aid will come much faster because separate approvals for deliveries will not be necessary.

In addition, it would have a positive impact on both the US economy and the current US president’s approval rating.

I think Lend-Lease is a status action by the American establishment, aimed primarily at the domestic voter, showing its citizens that evil, and this is Russia, must be punished. And that the United States is determined to punish it,” says economist Daniil Monin.

At the same time, the expert points out that the Joe Biden administration has refused to supply Ukraine with air defense systems and aircraft so far.

They supply Ukraine with exclusively defense weapons. They show the world that our country cannot lose. But I have never heard about the supply of offensive weapons. It is unlikely this will change in Lend-Lease; I think it will be the same,” Daniil Monin says.

Experts note that this program, above all, will be beneficial for the American industry. “Thus, the United States will greatly boost its military industry, which in turn helps theeconomy “move.” This is not just charity; the countries that provide weapons and equipment have the opportunity to earn money from military operations,” says Maksym Oryshchak.

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What does this mean for Ukraine?

On the one hand, the new program should help Ukraine in the war against Russia, which has a tech superiority. On the other hand, this may indicate that the United States expects a long war of attrition.

With the fact that there still needs to be a vote in the House of Representatives of Congress, it is clear that the US is set up for a long war in which it can make good money. Ukraine, of course, could use American weapons but probably won’t be able to deliver them in time for the battle of Donbas,” Danilo Monin continues.”, – continues Daniil Monin.

Therefore, Ukraine will be able to use this channel in the future when the hostilities enter into a “positional war” phase. In addition, Ukraine will be able to receive from the United States not only weapons but also fuel, medical supplies, and even food. And this may be important not only for Ukraine but also for Europe, which is teetering on the brink of food shortages.

It is unlikely that Europe will be able to provide Ukraine with food now because it faces a severe risk of shortages of goods in the future. Due to the war in Ukraine, which exported food products around the world, a severe food shortage may arise already in 2022-2023. Europe has ruined the agricultural development of many countries in its time.

Suppose the farming sector does not resume growth. In that case, we are looming total starvation, especially if the military operations will last much longer,” says Maksym Oryshchak. Therefore, according to him, the program of assistance to Ukraine most likely will be limited to weapons, machinery, and military equipment. Now almost all countries are facing a sharp increase in inflation and shortages of some food products in one way or another. And the longer this all drags on, the larger the scale will be.

Who is going to pay for everything

Experts say it will be extremely difficult to pay for the military aid after the war ruined Ukraine. So many hope that it will be forgiven after the victory over Russia, as it was during World War II. But there are other options – the Land-Lease costs could be forced on Moscow as reparations or at the expense of frozen Russian reserves.

The question of how Ukraine will pay Washington back after the war remains open. Although it should not be ruled out that the United States may use frozen Russian assets frozen to compensate. One thing is sure that since the US decided to approve this project, it means that both sides are preparing for protracted ‘military action, and the aid to Ukraine itself should be compensated in full in the future“.