Lend Lease For Ukraine: It was not a Good Deal for US Taxpayers in WWII.

On May 9, 2022, President Biden signed the Ukraine Democracy Defense Lend-Lease Act, a revival of the World War II lend-lease program that will enable a quicker turnover of weapons and equipment to Ukraine to help them defend against the Russian assault in Donbas, where Russia looks to completely “liberate” Donbas.

According to the newly signed law, President Biden can authorize the US Government to lend or lease defense articles to the Government of Ukraine and the governments of Eastern European countries that were affected by Russia’s invasion of Ukraine for the fiscal years 2022 and 2023. This was done in order to make the process of transferring weapons to Ukraine faster.

Let’s do this together once again, President Biden! pic.twitter.com/u7UzlKgNPo

— Defense of Ukraine (@DefenceU) May 10, 2022

However, as all deals have, there are conditions. Any loan or lease of “defense articles” to Ukraine is subject to return, reimbursement, and repayment for any weapons or military equipment. President Biden holds power to establish the expedited procedures for the delivery of these weapons that were loaned or leased.

A Brief Summarized History of the Lend-Lease Act

While it is of tremendous importance that all allies of Ukraine do their part in providing assistance to their country, the Lend-Lease Act is not new to the US, especially for those familiar with its history. The first Lend-Lease Act was enacted on March 11th, 1941, which enabled the United States to supply its allies with much-needed weapons, food, oil, and other war-related necessities between 1941 and 1945.

The Lend-Lease Act ended the United States’ neutrality that was enacted by law in the Neutrality Acts of the 1930s, largely because of the Great Depression as World War I was notably very expensive to undertake. But how did we get to the Lend-Lease Act?

When WWII began the United States was decidedly isolationist. They did not want the US involved in yet another European war. The Neutrality Acts would prohibit US weapons manufacturers from selling and/or transporting arms to aggressors and defenders. However, the Roosevelt administration wanted to help contain the Axis. So they created a way to skirt the law to allow countries to purchase military equipment from the US, provided that they were transported on non-American ships and that countries would pay in cash. This would later help Britain and France on a “cash and carry” basis.

The British would pay with their gold reserves but were increasingly becoming broke because of the war. So Former UK Prime Minister Winston Churchill wrote to President Roosevelt on December 7, 1940, with a 15-page letter, asking the Americans for help. The “cash and carry” basis could no longer benefit Britain as it could not afford the weapons anymore, and sales paid for in credit were forbidden under the Neutrality Acts. Roosevelt came up with a solution: “Lend-Lease.”

The proposal for the Lend-Lead Act was not easy as there were still a large number of isolationists in the country at that time. However, the bill would pass into law with 79% support from the Democrats and 63% support from the Republicans in the Senate. The law would pass on March 11, 1941, which enabled Roosevelt to lend, lease, sell, transfer the title to, and dispose of any defense article to any government, provided that the President deemed the country vital to the security and defense of the US.

“What do I do in such a crisis?” the former President Roosevelt asked reporters. “I don’t say… ‘Neighbor, my garden hose cost me $15; you have to pay me $15 for it’ – I don’t want $15 — I want my garden hose back after the fire is over.”

This would effectively end US neutrality as the public saw Germany, Japan, and Italy becoming increasingly aggressive and it appeared that with France’s surrender it was only a matter of time before Great Brittain fell.

How Much Defense Articles and Equipment Would the US Give to Its Allies?

It was determined that the total amount of defense articles and equipment sent to allied forces totaled $50.1 billion or $608 billion in 2020). The country we helped out the most was the British Empire, where military equipment and aid worth $31.4 billion, or $365 billion in today’s value, would be given to Britain for the war effort. The Soviet Union would receive $11.3 million or $131 billion today, $3.2 billion ($37.1 billion today) to France, $1.6 billion ($18.6 billion) to China, and $2.6 billion to the rest of the allies. The lend-lease would account for 15% of all war expenditures up until June 1944.

The US would provide the Soviet Union with some 13,000 tanks, 400,000 vehicles, 8,000 tractors and vehicles for construction, and 18,200 aircraft. The US would provide 1/3 of the explosives used by the Soviet Union. According to Radio Free Europe/Radio Liberty, the Lend-Lease Program would also give the Soviet Union 32% of all the Soviet Union Army’s vehicles. Interestingly, they pointed out that some 20,000 Katyusha mobile multiple-rocket launchers were mounted on American Studebaker truck chassis. The act would also be responsible for the country’s railway system as the US sent 2,000 locomotives and half a million railcars to the Soviet Union.

Remember, allied countries were supposed to pay for the equipment and weapons under the law. However, the majority of the weapons and equipment loaned to these countries would never see American soil again as a large number of them were destroyed in battle. The main agreement was that these defense articles could be used until they were returned or destroyed – with the latter one being the more frequent case. As a result, not many of the weapons we leased to the other countries would ever come back.

The British Government would simply just buy the equipment after they had used them, albeit at a lower price, while a large majority of the weapons and equipment would never be returned to the US. The final payment from the British Government would be in December 2006, worth $83.3 million.

Balances for the Soviet Union were solved through a payment scheme in 1972, where they pledged to make three initial payments. The US accepted the offer for the USSR to repay $722 million linked to grain shipments to the US, with the remainder of the debt being written off (the US originally asked for $1.3 billion to settle the debt). The USSR would also give the US rare minerals as cashless repayments, with some of them being intercepted by the Germans. In reality, the US never expected the USSR to repay them. A document noted that “Other countries have paid their debts in full.”

In the end, the countries simply took the weapons and the gear, except for a few transport ships. Some say that the lend-lease did not provide repayment in terms of money or returned gear but would be repaid when “enemies” would join the liberalized international economic order after the war.

Did the US Do The World A Favor With The Lend-Lease Act?

Many world leaders and analysts alike have praised the US’ kindness and generosity during the time of war as the lend-lease program was reportedly one of the policies that have tremendously helped the war effort. In fact, many would say that it was integral to the allied victory.

Russian historian Boris Sokolov would say that without Lend-Lease, the Soviet Union’s railway would have been paralyzed and could have cost the allies the war.

“Without Lend-Lease, the Red Army would not have had about one-third of its ammunition, half of its aircraft, or half of its tanks. In addition, there would have been constant shortages of transportation and fuel. The railroads would have periodically come to a halt. And Soviet forces would have been much more poorly coordinated by a lack of radio equipment. And they would have been perpetually hungry without American canned meat and fats.”

Even First Secretary of the Communist Party of the Soviet Union Nikita Khrushchev said that they could not have stood against the Germans one on one without the lend-lease.

“He stated bluntly that if the United States had not helped us, we would not have won the war. If we had had to fight Nazi Germany one on one, we could not have stood up against Germany’s pressure, and we would have lost the war.”

Even Joseph Stalin himself would say that the lend-lease was important in the war effort, stating that “Without American machines, the United Nations could never have won the war.”

Currently, the US is Ukraine’s top financial supporter and has given military aid and economic support to Ukraine upwards of $4 billion ever since the war started on February 24th, with an additional $40 billion pending being passed by US legislation.