Dave Patterson: G-7 Gives $50 Billion to Ukraine but Still No Winning Strategy

Is more money just prolonging the agony?

Last week, the seven most prosperous nations in the world, called the G-7, met in Rome, Italy. It decided to provide $50 billion in new bilateral loans to Ukraine, this time serviced by earnings from Russian assets currently frozen in Western banks and other investment institutions. The allocation breaks down into $20 billion from the United States and $20 billion from the European Union (including France, Germany, and Italy), with the remaining $10 billion provided by Canada, Japan, and the United Kingdom.

The G-7 Nations Supply Loans

While money will be distributed to the embattled Eastern European country starting in December, there is still no strategy for ending the conflict. Ukraine President Volodymyr Zelensky has touted a way to end the fighting, but the unclassified portion of the plan was more a wish list than a road map. Additionally, a key issue preventing Ukraine from using military aid effectively is the refusal by the United States to permit long-range missile systems to be used to attack deeper into Russia. Notably, Ukraine is no closer to NATO membership than it was last year or the year before.

For months, the idea of using revenue generated by Russian assets to support Ukraine has been considered. Why have G-7 countries taken so long to employ this solution? Reuters explained:

“Friday’s [Oct. 25] announcement of the ‘extraordinary revenue acceleration loans’ makes good on an easement reached in June by G7 leaders during their annual summit in southern Italy to harness earnings from frozen Russian assets to aid Ukraine, a deal that left many technical details to be hammered out. Some 260 billion euros ($280.62 billion) in Russian assets such as central bank reserves were frozen under sanctions imposed following Moscow’s invasion of Ukraine in February 2022.”

The $50 billion loan comes after a considerable amount of funding has already been given to the Kyiv government. During a recent surprise visit to Ukraine, US Secretary of Defense Lloyd Austin told his counterpart, Defense Minister Rustem Umerov, that the United States was going to provide Kyiv a military support package worth $400 million, which includes “HIMARS [High Mobility Rocket System] air defense systems and 155 mm artillery ammunition, among other weapons and training equipment,” The Kyiv Independent reported. In the same article, “Umerov mentioned that Ukraine has invested more than $4 billion in its defense production and urged international partners to invest further, recalling the recent successes of Ukrainian specialists in drone manufacturing,” The Independent noted. From a return-on-investment perspective, the country’s ability to turn out its own war materials is the best use of contributions from the United States and other allies.

US taxpayers also benefit when a significant portion of weapons and ammunition designated for Ukraine is manufactured in the United States. As the Council on Foreign Relations reported in September:

“A large share of the money in the aid bills is spent in the United States, paying for American factories and workers to produce the various weapons that are either shipped to Ukraine or that replenish the US weapons stocks the Pentagon has drawn on during the war. One analysis by the American Enterprise Institute found that Ukraine aid is funding defense manufacturing in more than seventy US cities.”

Current Military Support Is Substantial

According to Statista, in total dollars, the United States is by far the most generous donor to the Ukraine cause with humanitarian, financial, and military aid as of June 30, 2024, totaling $81 billion. “As part of that aid, the US transported over 5,700 air defense missiles and over 1,600 air defense systems to Ukraine as of February 2024. Furthermore, the US delivered the most units of M777 howitzer artillery to the country,” Statista verified. The Biden-Harris administration’s ten-year assistance agreement locks in US aid for the near term.

However, the comparison is different in terms of how much the aid indicates a country’s commitment to Ukraine. Denmark is number one, with a contribution of 1.83% of its gross domestic product (GDP), nearly the required NATO amount of 2% for members’ annual defense expenditures. The United States, by comparison, is number 17, with 0.35% of GDP. Without some idea of the US-NATO-Ukraine strategy for an end state, more US investment likely will run into greater congressional resistance.

Dave is a retired U.S. Air Force Pilot with over 180 combat missions in Vietnam. He is the former Principal Deputy Under Secretary of Defense, Comptroller and has served in executive positions in the private sector aerospace and defense industry. This article was first published HERE