US preps unusual $2B loan for Polish military
Poland has bought billions worth of U.S. military goods, in addition to Korean-made armaments.
The U.S. will loan $2 billion to Poland’s military, using a little-used funding mechanism to support Poland’s push to rearm in light of the war in Ukraine.
The loan, announced Monday, will come via the State Department’s Foreign Military Financing program. The program typically funds foreign military acquisition through grants, but also allows the U.S. to provide countries with loans. The last such loan was given to Iraq in 2017, following ISIS’s rise to power, a State Department spokesperson said.
The State Department requested just over six billion dollars for foreign military financing grants in the 2023 budget, similar to requests made in 2021 and 2022.
However, with billions already distributed in response to Ukraine, there’s little left over to send to allies as grants. By structuring the support as a loan, the U.S. can continue to support Poland, the State Department spokesperson said.
The U.S. will also give Poland up to $60 million to reduce the loan financing rate, according to the State Department’s announcement.
Poland, already a top spender in NATO, has embarked on a massive re-armament campaign since Russia’s February 2022 full-scale invasion of Ukraine.
Shortly after Russia invaded, Warsaw said it would seek to double the Polish Army’s size—to 300,000 soldiers over five years. This year, the Polish government has said it will raise its defense budget to 4 percent of gross domestic product, more than double NATO’s 2-percent target.
A large portion of this spending is tied to equipment purchases, including buying 980 K2 Black Panther tanks, 648 self-propelled howitzers, and 48 FA-50 fighter jets from South Korea last year. Poland also intends to buy 366 U.S.-made Abrams tanks, as well as 96 U.S. Apache helicopters valued at $12 billion.
The loan will support “urgent procurements of defense articles and services from the United States,” according to a State Department press release that did not specify which equipment will be paid for with the loan.
Poland is ramping up military spending amid rising inflation and a slowing economy. The country will hold parliamentary elections Oct. 15, with the reigning Law and Justice party facing off against the Civic Platform party.