Poland is signing up for a national defense IOU.
On Monday, the US State Department announced a low-interest $2 billion direct loan agreement to help Poland modernize its defense program. It’s the first time the US has offered a direct defense loan in years.
Pass the Baton
Call it the continued cost of Vladimir Putin’s invasion of Ukraine. Poland has served as a key hub for shuffling Western weapons, vehicles, and other war equipment into Ukraine, and has even passed along a decent amount of its own military supplies. According to NATO projections, Poland has pushed nearly 3.9% of its GDP into military goals, or roughly double NATO’s current spending targets.
Now, the central European country wants to restock and modernize its military stock — which, ironically, was mostly based on old Soviet tech and equipment:
- In addition to the $2 billion loan, the US government is sending up to $60 million in grant funds as a loan subsidy. The US government typically awards foreign military financing in the form of grants, not loans.
- In fact, the last time the US offered a direct loan for foreign military defense, it was to the Iraqi government in 2016 and 2017.
Revolving Door: Surprise, surprise: Much of the $2 billion loan is already set to flow back into the US. Poland has already placed orders for weapons and other systems with US defense companies, according to the State Department, as well as orders with some South Korean defense companies, the AP reported.
Tall Talk: Despite the military support, bilateral relations may be beginning to fray due in part to a trade dispute surrounding Ukrainian grain flowing into the Polish market, decreasing the value of Poland’s own supply. That prompted Polish Prime Minister Mateusz Morawiecki to cut off Ukraine from its supplies of weapons. But analysts say Poland has already handed over just about all the guns and ammo it can offer anyhow, and that the declaration is likely political in nature given a looming election. Politicians, to be sure, all seem to speak the same language.