this post was submitted on 26 Jul 2024
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I think the US is effectively spending far more on Ukrainian military aid than the official numbers say. Possibly like 2-3x.
Take this package for example. $225 million for a patriot battery and a bunch of other stuff? Not likely, since a patriot battery alone costs $1b.
Then there are other things like Stinger missiles which used to cost $100k each, but now cost $500k to make replacements.
I think the key point here is depreciation, the dollar amount of aid they’re sending is based on the current book value of equipment. I was able to find some documentation listing the depreciation method the DoD uses and the useful lives of various asset classes here: https://comptroller.defense.gov/Portals/45/documents/fmr/archive/04arch/04_06_Jun08.pdf
They use straight line depreciation or a special “activity based” method for some specific equipment so the useful life of say, a stinger missile, would be either 5 or 10 years based on the tables there. That $100k missile could be listed on the books as only $40k three years after purchase or even $0 if it’s older than five years. I can only assume the military uses such an aggressive depreciation method to justify constant funding to feed the MIC by replacing “outdated” tech and selling it off/giving it to allies. I don’t think anyone could reasonably argue that a rifle is suddenly obsolete and worth nothing after sitting in an armory for 5 years but that’s how they put it on the books 🤷♂️
And on top of that, they can always write down the value further due to “impairment” like obsolescence. For example, maybe a specific missile costs $1 million and it is straight-line depreciated for 5 years. After 3 years the book value is $400k. However, they can just say “we have a new missile that’s better so this old missile is obsolete, the value should only be $100k” then they can write down the book value even further.
Also, if they use FIFO inventory accounting, only the oldest stuff on record is used EVEN IF IT ISN’T physically the oldest stock. So if the costs of the equipment get more expensive every year then what’s counted as being given to Ukraine has the lowest value, even if in real terms they are giving them the newest stock.