Trump wants to convert military grants to loans

The Trump administration’s budget proposal would convert some of the United States’ foreign military grants to loans, part of a larger effort to slash spending on diplomacy, aid and programmes abroad by more than 29 per cent, the White House said yesterday.

The cuts to programmes under the State Department are in part meant to fund an increase in military spending.

Under President Donald Trump’s proposal, the United States would spend 29.1 per cent less on the State Department and “other international programs” in the 2018 fiscal year compared to 2017, a decrease of $11.5 billion.

That decrease includes a re-shaping of the way some countries receive military aid from the United States. Foreign military financing gives countries loans or grants to buy US military equipment.

The State Department decides which countries are given the financing while the Pentagon executes the decisions. Under the Trump proposal, many current grants would instead be converted to loans.

“We do change a couple of the foreign military programmes from direct grants to loans,” said Mick Mulvaney, the director of the White House Office of Management and Budget, in a briefing with reporters yesterday

“Our argument was instead of … giving somebody $100 million, we could give them a smaller number worth of loan guarantees and they could actually buy more stuff.”

Military aid to Israel and Egypt, two close US allies in the Middle East and the biggest recipients of US military assistance, will remain unchanged, Mulvaney said.

The Wall Street Journal, which first reported the proposal, said the foreign military grants could affect Pakistan, Tunisia, Lebanon, Ukraine, Colombia, the Philippines and Vietnam.

The White House budget documents showed total defence spending for the 2018 fiscal year at $603 billion, about three per cent higher than President Barack Obama’s proposed 2018 fiscal year defence budget.

The $603 billion includes funding for nuclear weapons programmes at the Department of Energy and other national defence programmes as well as the Department of Defence.