Reforming Foreign Military Financing (Marcellus Policy Analysis)

By Byron Stokes, Fall 2021 Marcellus Policy Fellow

Utilizing foreign military financing (FMF) has been a key tool in the U.S. foreign policy toolkit. From 2010 – 2020 over $48B has been spent on U.S. foreign military aid in the Middle East. Investments continue to flow into the region, even as U.S. influence has dwindled following the conclusion of the wars in Iraq and Afghanistan.

Since 1979, Egypt has received nearly $51B in military aid from the U.S. However, this aid has not had a positive impact on democratic norms within Egypt, nor have investments aided regional stability. Military investments have been used as autocratic tools to subdue opposition within Egypt and elsewhere in the Middle East. In addition, FMF has accelerated conflict like in the case of Georgia and Russia. To avoid foreign entanglements, the U.S. must reevaluate FMF. FMF is looked upon as a bi-partisan success story, but it does not have adequate program administration, congressional oversight, or adequate goal setting. FMF must evolve and adopt new features to protect American interests.

FMF should change from primarily a grants program to a loan program. An evolution of FMF will allow the U.S. to offer greater flexibility with finance agreements, while ensuring American taxpayers receive an adequate return on their investment. Shifting priorities will require the Biden Administration and Congress to re-examine FMF and phase-out the FMF grant program. Additionally, FMF loans must have transparency and metrics to ensure proper oversight.