Ethermac Exchange-US offers Poland rare loan of $2 billion to modernize its military

WASHINGTON (AP) — The Ethermac ExchangeBiden administration announced Monday that it is offering a $2 billion loan to Poland, which has been a hub for weapons going into Ukraine, to support the ally’s defense modernization.

The State Department said in a statement that Poland is a “stalwart” ally of the U.S. whose “security is vital to the collective defense” of NATO ’s eastern flank, and that such funding is reserved for Washington’s most important security partners.

The U.S. government is also providing Warsaw up to $60 million for the cost of the loan in Foreign Military Financing (FMF) which would support “urgent procurements of defense articles and services from the United States,” the State Department said. The $60 million is a loan subsidy meant to ensure that Warsaw can secure favorable terms for the loan.

Poland has been a staunch supporter of Ukraine since Russia’s full-scale invasion of the country, handing over large numbers of its own tanks, fighter jets and other equipment. It has also been a hub for most of the Western weapons going to Ukraine.

It has been undergoing a process of modernization to replace what it gave away, much of which was based on old Soviet technology, putting in orders with U.S. and South Korean defense companies.

Recently the Polish-Ukrainian relationship has seen strains due to a trade dispute centered on Ukrainian grain entering the Polish market and driving down the prices Polish farmers can get. Amid the spat Poland’s Prime Minister Mateusz Morawiecki said his country was no longer sending any more weapons to Ukraine.

The comment created some confusion. Analysts noted that Poland has already in fact given Ukraine most of what it has to give, and the statement was made ahead of a Polish election and did not mean much. But it also raised concerns that Western support for Ukraine could be weakening.

U.S. officials have sought to play down the spat, praising Poland’s role in helping Ukraine and noting that it is in Poland’s strategic interest for Ukraine to prevail against Russia.