US giving Poland another $2B loan to buy American-made weapons (Exclusive)

WASHINGTON — The US is supplying Poland with a new $2 billion loan for Poland to help them buy American-made weapons, Breaking Defense has learned.

The loan is the second such loan made to the NATO ally in the last calendar year — a sign, a State Department official said, of how dedicated Poland is to strengthening its defense.

“It’s impressive that it hasn’t even been a year and they [Poland] are moving out pretty quickly,” the official told Breaking Defense on background.

“We’re happy with the process. We see it as a success. We’re happy that they’ve been able to move out quickly — not only does it help NATO, it helps the US defense industry as well, the US economy. So, we’re definitely happy with the process.”

The money is allocated through the Foreign Military Financing (FMF) program, which stipulates the dollars have to be spent on US-made weapons. But unlike traditional FMF dollars, which work as grants handed to nations to fund the purchases, this loan comes with interest that will have to be paid back to the US government. Washington put up $60 million to cover fees and guarantee the loan.

While declining to share exactly how the first loan has been allocated, the official said the money has either been spent or is earmarked for purchases. However, they said roughly half of that total is funding the purchase, announced in late May, of four aerostat-based early warning radar systems.

The official added not to expect major details of how Poland will spend the new loan during this week’s NATO summit, but said Warsaw “has a list of things they want to achieve” with it and that announcements should be forthcoming.

In a statement, the State Department emphasized Warsaw’s contributions to American security interests, noting “Poland is a leader in NATO, currently spending four percent of GDP on defense, the highest in the Alliance. Poland hosts thousands of U.S. and Allied forces, including U.S. V Corps Headquarters (Forward) in Poznan.”

A loan-based FMF structure is new, at least in recent decades, and gives flexibility for the interagency to get FMF funding to foreign allies without needing to wait on the appropriations process. Congress recently extended the authority to do this kind of loan through the end of fiscal 2025, which raises the obvious question: Are other countries going to get similar loans going forward?

“We are looking at it, and there are other countries that remain competitive,” the official said. “The reason you’re seeing Poland is, of course, the situation with the ongoing war in Ukraine. They’re ready to move out, and their government is set up in a way [where] they’re prioritizing defense spending.

“So we are in conversations with multiple countries, but there are of course bureaucratic process of moving things out. Poland is sort of the tip of the spear on this for us right now.”

Asked about a third such loan, the official ruled nothing out, saying that there is constant communication with Warsaw and that Poland “remains competitive” for future loans.

Since Russia’s February 2022 invasion of Ukraine, Poland has been spending heavily on defense investments. From the US, Warsaw has announced plans to buy Abrams tanks, Apache and Black Hawk helicopters, and HIMARS rocket launchers, and has sought further Patriot batteries. It had already agreed to purchase the F-35 Joint Strike Fighter before the conflict began.

Outside the US, Poland has invested heavily in South Korean-made K2 tanks, Chunmoo rocket launchers, K9 self-propelled howitzers and FA-50 combat aircraft, and at least two Swedish early warning aircraft.