April 22, 2024 - 7:00am

After weeks of politicking the Biden White House can breathe a sigh of relief, as an aid package that includes $60 billion in funding for Ukraine passed through the House of Representatives at the weekend. Supporters of the package in DC have had to move heaven and earth to get the aid through.

Republican Speaker of the House Mike Johnson was given the job by his GOP colleagues on the condition that he would push back on further aid for Ukraine. Now it looks like those same colleagues are turning on him, with a growing movement that aims to remove him after only six months in the role.

In fact, the Ukrainian aid package was not originally conceived for the purchase of military equipment. It was envisaged as a supplement to a European package that was aimed at propping up Ukraine’s enormous wartime deficit. Unable to get the package passed in the House as a funding programme for the Ukrainian government, its supporters have started saying that it is to finance bulking up Kyiv’s military.

Ukraine has two problems. The first is economic. The country runs an enormous trade deficit which needs to be financed with foreign capital inflows or else the Ukrainian currency, the hryvnia, will collapse, which could plunge the country into hyperinflation and political instability. The aid package, together with the European equivalent passed a few months ago, staves off this outcome for a few months.

The second problem is a military one. First of all, the Ukrainians are experiencing a personnel crisis. They have already sent much of their male population to be killed or injured on the frontline and they are now having trouble pressing more men into service. Obviously, an aid bill cannot help with this grim reality. Secondly, they have severe weapons and ammunition shortages. American lawmakers say that the aid package will solve this by providing more weapons, but the reality is that these weapons do not exist because the Western powers lack the industrial power to produce them.

This is where the potential for a legitimacy crisis comes in. Supporters of the package have now promised that it will keep the Russian army at bay. Yet it is becoming increasingly clear that Ukrainian defence lines are buckling and there is even chatter that the city of Kharkiv might fall to the Russians in the coming weeks. Some are speculating that Russia might be gearing up for a major offensive either in spring or summer.

If Russia does start to take major amounts of territory — or, worse, if the Ukrainian frontline collapses altogether — then the American public will watch the promises used to justify the aid package collapse in real time.

The aid package also contains $26.4 billion in aid for Israel. Among DC policymakers this aid is less controversial, but the American public is becoming less and less keen on sending Israel military aid. A recent poll showed that 47% of Americans thought that more military aid should be sent to Israel and 48% thought that less should be. But perhaps former chairman of the Joint Chiefs of Staff General Mark Milley summarised it well when he said in an interview last month that: “Americans have kind of had it with wars.”

Given the current political temperature in America right now – with a man setting himself on fire outside Donald Trump’s trial last week — if this aid package fails to yield results, it could have major consequences for Joe Biden’s re-election prospects. Beyond this, it will raise serious questions about the foreign policy expertise in DC which seems to move from blunder to blunder in real time. Do American policymakers and politicians understand that they are playing with matches in a room full of gasoline? Every indication would suggest not.

Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics