Defense Department Sets Record $80B in Sales Amidst Ukraine Conflict

The Defense Department set a record for sales of military equipment and hardware in fiscal year 2023, with the U.S. doing more than $80 billion in business, driven by Russia’s invasion of Ukraine.

"We've had a huge increase in demand from our European allies and partners over the last few years since the invasion by the Russians in Ukraine," said James Hursch yesterday during the 2024 Sea-Air-Space maritime exposition just outside of Washington.

European nations — including Sweden, Poland, and the Netherlands, among others — have become "huge customers" for U.S. military hardware, he said.

In fiscal year 2023, the U.S. did more than $80 billion in business through the foreign military sales system, including grant assistance. "That is a record," Hursch said.

The total authorized value of implemented arms transfers and Security Cooperation programs for FY2023 was $80.9 billion. This included $62.25 billion in arms sales funded by U.S. allies and partner nations and $3.97 billion under the Title 22 Foreign Military Financing program.

An additional $14.68 billion was used for the Ukraine Security Assistance Initiative and Building Partner Capacity programs conducted by the Defense Department, as well as for programs under the Foreign Assistance Act.

The Foreign Assistance Act has funded programs such as international narcotics control and law enforcement, nonproliferation, anti-terrorism, demining, and related programs.

In both fiscal years 2022 and 2023, Hursch noted that a substantial portion of sales came from NATO allies, totaling $20 billion in fiscal 2022 and $24 billion in fiscal 2023.

"This is a huge increase," he said. "That's representative of the increased investment that our allies in Europe are making every day, which is a story that may not be as widely reported as it needs to be."

Hursch highlighted Poland's significant involvement in increasing its defense through foreign military purchases. Foreign military sales to Poland in fiscal year 2023 included AH-64E Apache helicopters, High Mobility Artillery Rocket System (HIMARS), the Integrated Air and Missile Defense Battle Command System, and M1A1 Abrams Main Battle tanks.

Hursch also mentioned Poland's engagement in a different kind of defense-related cooperation involving defense production.

"We've recently undertaken some new cooperation with Poland in the joint co-production of defense systems," he said. "We're looking at how to do that with other allies and partners as well."

While the U.S. achieved record sales of defense articles in fiscal year 2023, the co-production of defense systems, such as what Hursch described with Poland, has become an increasingly important strategy for the U.S., allies, and partners in Europe and around the globe to strengthen their own defense industrial bases. Since Russia invaded Ukraine, this has become even more critical, Hursch noted.

"One of the principal lessons we have learned from the Ukraine crisis and our self-assessment is the importance of the health of our defense industrial base," he said. "I think we've discovered domestically that we need to pay more attention to that. We have a new National Defense Industrial Base Strategy published by [DOD's] acquisition and sustainment office. Additionally, we're seeing an increased focus on the strength of the industrial base in Europe, and we're exploring ways to cooperate across those bases."