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Ukrainian war revitalises US defence industries

by Adrian David

WASHINGTON, 26 APR – The US$113 billion appropriated by the United States Congress, following the Russia-Ukraine conflict, has boosted the American defence industrial base (DIB).

Of that whopping budget, as much as US$68 billion is destined to be invested within the US, revealed a study by five researchers at the Washington-based Centre for Strategic and International Studies.

They found that Congress was facing the most significant and transformational opportunity to strengthen the US DIB, since the end of World War II.

“The heritage equipment that the United States has provided to Ukraine for its self-defence in the face of the invasion by Russian forces in 2022 needs to be replenished to ensure the United States is postured to continue to deter its adversaries.

“The new hardware will be produced at factories across the nation.

“US support for Ukraine, thus, offers a once-in-a-generation opportunity to sustain a demand signal to address long-standing weaknesses in US DIB systems generally, and ordnance and missile production specifically,” said the report by Elizabeth Hoffman, Audrey Aldisert, Cynthia R. Cook, . Gregory Sanders and Shivani Vakharia.

Hoffman is CSIS director of congressional and government affairs and fellow while Vakharia is its associate director; with Aldisert as its research assistant in the International Security Programme (ISP); Cook as the director of the Defence-Industrial Initiatives Group (DIIG) and senior fellow in ISP; and Sanders as deputy director and fellow with DIIG.

The researchers examined how US military assistance to Ukraine was being spent, and where funds for their industrial base relevant to Ukraine and future US needs were being invested.

They felt that it could help demonstrate how Russia’s war could establish a long-term incentive structure to revitalise the DIB.

“Prior to the war in Ukraine, policymakers recognised the need to shift away from a defence posture focused on counter-terrorism and counter-insurgency, to one prepared to confront rising great-power competition.

“This was articulated in the National Security Strategy adopted by former US President Donald Trump’s administration in December 2017.

“The strategy specifically highlighted the need for a robust and innovative DIB and noted supply chain vulnerabilities.

“Recognition of the challenges did not result in rectification, as the attention of policymakers pivoted to crises including the Covid-19 pandemic, domestic political unrest and the end of the US presence in Afghanistan,” they wrote.

In the face of the continuing supply chain vulnerabilities, the researchers found those policies were sustained in the current US President Joe Biden’s administration’s 2022 National Security Strategy, which noted the “criticality of a vibrant DIB.

“The catalyst for change began in February 2022, when Russian president Vladimir Putin’s invasion of Ukraine ignited the largest ground war in Europe since World War II, internally displacing 3.7 million Ukrainians as of February 2024 and creating a refugee crisis of over 6.5 million people.

“Almost immediately following the full-scale invasion, Congress appropriated nearly US$14 billion in emergency funding to assist with the response.

“Since then, three additional aid packages have been approved,” they said.

They added that public scepticism of continued assistance had increased with each vote.

“Almost half of Americans are concerned that US taxpayer dollars are going to fund Ukraine’s war while domestic issues continue to fester; other analysts have highlighted the impact of weapons transfers on the ability of the United States to deter and defend adversaries should other conflicts occur in the near term, such as a Chinese invasion of Taiwan.

“These concerns miss the point,” they opined.

The US$113 billion, they said spanned agencies and bureaus, and provided for much-needed support in areas including military equipment, migration and refugee assistance, energy, and countering disinformation.

“The majority of the assistance has gone to support the military response to the invasion, with nearly US$62 billion allocated to the Department of Defence.

“Additionally, nearly half of the US$9.9 billion allocated to the Department of State has gone to the Foreign Military Financing programme, which enables partner countries to purchase military equipment or services from the United States,” they said.

The two primary mechanisms through which the United States is sending military support to Ukraine include presidential drawdown authority (PDA) and the Ukraine Security Assistance Initiative (USAI).

PDA allows for the rapid transfer of weapons and defence services directly from US stocks in the face of unprecedented crises.

“The value of equipment transferred to Ukraine under PDA is not a part of the US$113 billion appropriated by Congress. “Since PDA uses existing weapons stockpiles, this equipment has long been paid for, and in some cases has been sitting in US warehouses for decades.

“As such, the value of the defence articles is assessed using what is called the ‘net book values’, or the historical cost of the equipment, minus depreciation based on use life,” they said.

The researchers discovered that as of December 2023, nearly US$24 billion worth of equipment had been transferred to Ukraine from stockpiles under PDA.

They said that the benefit of PDA transfers to the United States had been the ability to clear out old stock and replace it with newer, more modern equipment.

“As old equipment leaves the warehouses, substantial sums have been appropriated to replenish US stockpiles that have been drawn down.

“As of November last year, US$25.9 billion had been appropriated, of which US$16.8 billion had been obligated to replace equipment taken directly from US inventories. “Typically, and according to statutory authority, these items are not replaced with exactly the same systems; they frequently include older models that may no longer be in production and may no longer represent leading-edge capabilities.

“However, replacement and replenishment strategies are critical to ensuring that U. stockpiles are prepared for future conflict,” they divulged.

The second mechanism, they added, through which the United States had provided military assistance to Ukraine was through USAI, which allowed the Ukrainian government to contract directly with US industry, such as Lockheed Martin or RTX, for weapons procurement.

“The challenge for Ukraine with this approach is the timeline, as weapons manufacturing takes months or years.

“Ukraine is expending systems such as 155mm ammunition at a very high rate, and current production rates and the long time required to ramp up production will mean that they do not have the requisite capabilities for self-defence.

“USAI will likely be most useful in refreshing Ukraine’s stocks postwar.

“Congress has obligated US$10.5 billion for USAI, bringing total obligations, including PDA, to over US$27 billion.

“Regardless of the funding mechanism – whether replenishment for PDA or for USAI – this money flows into the United States’ DIB.

“This has direct, and substantial, impacts on what the DOD has identified as ‘prime vendors and critical suppliers in 37 states’,” they summarised.

The researchers spoke on the massive influx of funds into the DIB since January 2022, shortly before the inception of the war, by identifying parts of the DIB relevant to restocking or future manufacturing for transfers to Ukraine.

They discussed on the contract funding for relevant systems and munitions, not just those destined for Ukraine, and thus showed the extent of the full demand signal bolstering the US DIB.

The funding by congressional district, they said, was not to draw attention to specific members of Congress, but made in DOD contracting documents and allowed for greater specificity than showing investment by state.

They pointed out that several districts that received substantial contract spending between 2022 and 2023: Texas-33, Arizona-7, Michigan-10, Pennsylvania-10, Massacheusetts-6, Florida-10, Alabama-5, and Missouri-1.

“These specific states have received a significant influx of cash into their factories that not only provides jobs for Americans but also creates opportunities for local suppliers, shops, restaurants and other businesses that support the factories rolling out weapons.

“These benefits overflow to surrounding areas as workers will sometimes cross state borders, let alone congressional district lines, to meet the specialised workforce needs of these facilities,” they stated.

Analysis, they added, showed that the DIBs of China and Russia had significantly scaled up production and were on wartime footing.

“If the United States fails to respond to this strategic reality and fails to scale up and sustain production across a range of capabilities, it may find itself unable to deter and defend against the current threat environment for the first time in decades.

“A supplemental spending bill focused on providing Ukraine with the arms it needs to fend off Russia’s illegal aggression could start to move the needle in the right direction.

“As Congress considers another supplemental spending bill for Ukraine, this analysis reveals that this infusion of cash is just as valuable, if not more so, to US readiness and deterrence as it is to sustaining Ukraine on the battlefield.

“Walking away from Ukraine will not only put NATO and the United States at risk but also undermine bipartisan efforts to make the necessary investments in the DIB, creating further challenges for any future fight,” they concluded. – airtimes.my

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