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As new US aid for the Ukrainian war effort remains stuck in congressional gridlock, focus is shifting to the EU, which has now surpassed the US in commitments to Kyiv. Though perpetually disjointed, European arms and military manufacturing could be supercharged by a new multi-billion Euro aid package that will compensate EU member states for their contributions to Ukraine’s defense against Russia. Those funds will undoubtedly be used to re-fill drained stockpiles of ammunition and vehicles, compounding efforts to expand and unify the European defense industry around common goals. Artillery supplies will be a key component to generating a coherent defense against the Russian military and some contractors like Germany’s Rheinmetall are already spending billions to significantly expand their output of shells. 

Related ETF: SPDR S&P Aerospace & Defense ETF (XAR)

New US defense aid for Ukraine’s military effort remains snarled in Congressional negotiations. Though lawmakers have already passed the National Defense Authorization Act (NDAA) for fiscal 2024, worth a record $886 billion in US defense spending, it only authorizes $300 million in new annual funding for the Ukraine Security Assistance Initiative. As MRP has previously noted, the bulk of new aid will need to be provided through a $110 billion supplemental spending measure proposed by President Biden, with about $61 billion of that sum cut out for Ukraine. It’s unlikely that this level of funding will carry Republican support, but something is better than nothing for the Ukrainians at this point. Data from the Kiel Institute for the World Economy showed newly-committed aid for Ukraine’s war effort fell by almost -90% between August and October from the same period a year ago, totaling just over €2.1 billion (or $2.3 billion). That was the smallest amount of new support provided to Ukraine since the start of Russia’s formal invasion of the country in February 2022.

US funding from previous appropriations has been almost totally expended. Per NBC News, White House officials are privately warning lawmakers that a failure to authorize additional military aid for Ukraine in a timely fashion could result in a Russian victory in a matter of weeks or maybe months, at best. That timetable could be a bit of an exaggeration, meant to create a sense of urgency, but it is undeniable that Russia is totally in control of the battlefield initiative at this point and a drought of new US shipments is beginning to take a toll on the Ukrainian Armed Forces’ ability to defend a sprawling 1,200km frontline. Ukrainian President Volodymyr Zelenskyy has made statements to this effect in recent days, telling Channel 4 News that Ukraine “couldn’t really survive without US help… I count on them today, it’s true.” Per the Congressional Research Service, the…

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