Ukraine’s Next U.S. Funding Tranche Probably Won’t Be Bundled With Israel Aid by Congress, But That Doesn’t Necessarily Mean a Great Opportunity Missed

U.S. Political Disarray and the Sanctity of Separate Foreign Policy Issues Complicate Ukraine Funding as Emergency-Case Safety Mechanisms Remain Available

Since the Hamas attacks on Israel taking place over the past week, some policy wonks have redirected their brain waves to a scenario that would see Ukraine aid, which recently didn’t pass the U.S. House, bundled with aid to Israel — the latter of will which most certainly will fly though both chambers of Congress as quickly as it can be assembled. Ukraine funding isn’t likely to be part of a bundled deal, but one shouldn’t lost heart when that reality is confirmed.

The $50-$100 billion package that was discussed in a Wall Street Journal article this week looks overly ambitious to put it mildly. The midpoint of that range is equal to what the U.S. has spent in total aid to Ukraine from February 2022 through July 2023 — and $50 billion would be more than all U.S. military equipment assistance over that time. My inclination is that it will be too hard to get any final that sum that large past the House GOP without stable leadership in place. The defeatist camp of the House GOP may not be voting for any spending that doesn’t contain Israel aid and border-security funding — and that includes more potential domestic-oriented stopgap bills to keep the government open.

Another big reason to keep the funding packages separate concerns even the most pro-Ukraine, anti-Putin Congressional Democrats. In a word — megadonors. House, Senate, Democrat, Republican, doesn’t matter. Everyone in Congress must be aware of which pro-Israel potential donors to their campaigns and party-aligned political action committees (PACs) do not want the aid bills bundled. Whether one is receiving money from Haim Saban’s checkbook, or from Sheldon’s widow Miriam Adelson, elected officials can’t move until they know for sure if their donors do or do not want Israel’s issues conflated with Ukraine’s. I don’t think the megadonors and pro-Israel advocacy groups will want the aid bundled — mainly due to the special framing that the Israel-Palestine issue has received for decades by both U.S. parties. Dragging more issues into the curated narrative on short notice doesn’t do much to help the GOP and Democratic campaign committees sell their incumbent candidates to the megadonors and PACs. Separate the Ukraine and Israel issues and continue to try to pass funding first — and then focus on re-electing the proponents/opponents of both issues from there.

In the event of unbundling of these two aid packages, the near-term outlook for the Ukrainian sum gets more difficult. However, there are mechanisms in place for the funding effort to limp along until the Biden White House and Congress can assemble the votes on a package of an agreeable size. The main mechanism is help from Europe. Earlier this month, the EU proposed another package worth five billion euros, which is a nice stopgap to have whilst the U.S. is politically paralyzed. And history shows that even though the EU wants to funnel cash to its domestic military producers, usually about half of its expenditures go to purchases from the U.S. That means U.S. manufacturers will be funded and engaged in the process of defending Ukraine even with Congress sitting on its ivory gavels for an indeterminate amount of time.

The other mechanism, which can’t be considered a near-term fix, is the use of frozen Russian assets to buy U.S. military hardware. Timothy Ash, of both RBC BlueBay Asset Management and the Chatham House London think-tank, sees the assets totaling $400 billion as an easy way to make sure Ukraine is insulated from American partisan bickering. I love the idea, but there are barriers to employing this mechanism, and the U.S. Government is clearly hung up on these barriers.

Secretary of State Antony Blinken is foot-dragging on about how there needs to be a legal framework in place. I can see why he is cautious and slow-of-tongue on U.S. approaches to this issue, considering how Congressional efforts to codify a path forward have fallen flat. The issue of legality is right up there with the concept of potential disruption to global financial markets. This piece from April 2023 by old Moscow friend Todd Prince alludes to Washington’s disinclination towards setting such a precedent. Here’s a good spot to return to that issue of listening to donors’ wishes heading into the 2024 election cycle: I don’t think a White House that’s in low regard on economic issues would risk the wrath of the hedge-fund, bank-management, and global-company-CEO class of donors by scaring financial markets with a sovereign-asset-seizure plan. Ukraine doesn’t buy TV airtime and fund robocall operations in swing states. Jamie Dimon and his cohort do both.

I’ll say in conclusion that I hope I’m wrong on just about all of this. A Ukraine package of over $50 billion bundled together with Israel funding would be a wonderfully heavy and swift boot delivered to the Putinites’ collective skull. It would show the Kremlin that its glee over both the U.S. House’s failure to pass Ukraine funding and the worldwide blame-slinging over the atrocities in Israel will be short-lived — as the international coalition to help Ukraine remains focused and intact.