Trump budget spotlights Tunisia in pitch to overhaul foreign military aid

The Donald Trump administration is doubling down on its 3-year-old pitch to Congress to overhaul foreign military aid — and it’s using one of Capitol Hill’s favorite countries to do it.

The State Department’s 2021 budget, released Monday, highlights Tunisia’s request to purchase $500 million in US-made light attack aircraft to bolster the administration's request for $8 billion in global loan authority under the foreign military financing (FMF) program.

The budget request says that while the full range of partners interested in foreign military financing for fiscal year 2021 is not yet known, the government of Tunisia is specifically interested in a $500 million loan to procure the aircraft for the Tunisian military. The State Department said that having global loan authority for foreign military financing "would allow the administration to provide financing to support this sale, as well as other future sales to support countries pursuing the divesture of Russian legacy equipment.”

Foreign military financing currently provides US security partners with grants to spend on American defense equipment. President Trump’s 2021 budget frames the $8 billion loan request as a complement to the $5.5 billion in foreign military financing grants it has also asked Congress to fund. The 2021 budget request would allocate $40 million of those grants for Tunisia.

The budget says the United States prioritizes foreign military financing for Tunisia, “which is on the front lines of the fight against [the Islamic State] and other terrorist groups, to ensure that these threats are defeated.”

The Trump administration first proposed replacing the grant program with loans in 2017 as part of its efforts to slash foreign aid. After facing overwhelming bipartisan opposition in Congress, the State Department dropped the idea in 2018 only to tweak it last year by pitching the loan proposal as being complementary to the grant program. 

“It’s certainly plausible that it’s a strategic attempt by the administration to try to persuade Congress to support FMF loan authority, both because Tunisia’s a country they like and Tunisia has explicitly requested loan authority to support the purchase of those light attack aircraft,” said Andrew Miller, the deputy director at the Project on Middle East Democracy. “This is a case where they’ve potentially requested the loan. It’s not being forced on them in lieu of grant replacement.”

Indeed, if last year is any indication, Congress is likely to provide Tunisia with more military grant funding than the State Department has requested, but not the $500 million loan, which Tunisia also sought for fiscal 2020. Although the State Department only requested $40 million in Tunisian foreign military financing grants for fiscal 2020, Congress more than doubled that, appropriating $85 million to Tunis without providing the loans for the fighter aircraft. 

Miller and other skeptics of replacing the grant program argue that loans are a loss for both US taxpayers and the recipient countries.

“When FMF loans were a much more common tool, the preponderance of countries ended up defaulting, in which case the US was responsible for the loans,” Miller told Al-Monitor. “In which case, the US was responsible for the loans, and in many instances the US ended up making the difference for the full value of loans. So we ended up paying it anyway, but it still did damage to the creditworthiness of those countries.”

Miller suggested that the Tunisians could instead seek cash-flow financing — an arrangement that would allow Tunis to finance the aircraft purchase with installation payments over multiple years. Israel is currently the only country with access to cash-flow financing.

Iraq was the last country to receive a foreign military financing loan. Washington provided Iraq with a $250 million, eight-year loan in 2016 to help fight the Islamic State. The State Department has not requested any foreign military financing for Iraq this year.

Conversely, the 2021 budget seeks $500 million in foreign military financing grants for Jordan to “support the acquisition of upgraded fighter aircraft.” This is a $150 million increase from the State Department’s 2020 grant request for Jordanian foreign military financing — and the exact same amount that Tunisia is seeking in loans.