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DSCA: Foreign Military Financing

The Foreign Assistance Act authorizes the President to furnish military assistance for the procurement of defense articles, defense services, and design and construction services to partner countries and international organizations using Foreign Military Financing (FMF) when that assistance will strengthen the security of the United States and when the assistance will promote global stability. FMF funds are a powerful funding option available to eligible partner nations to purchase U.S. defense articles, services, and training, either through the FMS infrastructure or, for a limited number of countries, Direct Commercial Contracts (DCC), as outlined in the Arms Export Control Act (AECA) and annual appropriations acts.

FMF funds are appropriated by Congress as part of the international affairs budget, based on the President’s annual budget request for security assistance (SA).

While under the AECA, FMF can be provided as either grants or a loan. Recurring provisions in annual appropriations acts have for many years limited FMF to grants. The Secretary of State determines which nations are eligible and the Secretary of Defense, through the Defense Security Cooperation Agency (DSCA), executes the program. FMF is designated a vital tool in U.S. foreign and military policy, especially in supporting coalition partners in combat operations since 9/11 and providing future capability to defend their own interests and contribute to regional and global stability.

FMF funds are appropriated by Congress as part of the international affairs budget, based on the President’s annual budget request for security assistance (SA). The State Department, working with DSCA and other agencies, prepares a Congressional Budget Justification (CBJ) report to Congress, which supplements the budget request and outlines past and future U.S. assistance to each foreign recipient. After reviewing the administration’s request, Congress appropriates funds for a range of international assistance programs, including FMF.

According to the State Department, the objectives of FMF are to:

  • improve the military capabilities of key friendly countries to contribute to international crisis response operations, including peacekeeping and humanitarian crises
  • promote bilateral, regional, and multilateral coalition efforts, notably in the global war on terrorism
  • maintain support for democratically elected governments that share values similar to the United States for democracy, human rights, and regional stability
  • enhance rationalization, standardization, and interoperability of military forces of friendly countries and allies
  • assist the militaries of friendly countries and allies to procure U.S. defense articles and services that strengthen legitimate self-defense capabilities and security needs
  • support the U.S. industrial base by promoting the export of U.S. defense-related goods and services
  • support Department of Defense (DoD) costs for the administration of global grant military assistance programs

Principal Deputy Assistant Secretary of State – Bureau of Political-Military Affairs Tom Kelly calls FMF “central to our capacity building efforts … [and an] efficient and cost-effective way to achieve shared security objectives with our international partners.” In a speech to the Institute of Strategic and International Studies in December 2013, he cited examples of how those funds have been used effectively in America’s Asia-Pacific “rebalance” zone.

“Malaysia has received FMF for training of the Malaysian Maritime Enforcement Agency. And elsewhere in the region, FMF helped Indonesia support and expand a maritime domain awareness radar system to help counter the illicit transit and trafficking of goods and people,” he said. “In the Philippines and Bangladesh, FMF upgraded coast guard patrol vessels that will increase those countries’ ability to combat transnational threats, respond to natural disasters and increase the government’s presence in isolated areas.”

A member of the Jordanian SOF descends down a rope from a Jordanian UH-60 Black Hawk helicopter during Exercise Eager Lion at the Jordanian SOF compound near Zarqa, Jordan, June 13, 2013. Exercise Eager Lion 2013 is a U.S. Central Command-directed annual multinational exercise designed to strengthen to military-to-military relationships and enhance security and stability by responding to modern-day security scenarios. Jordan is one of the major FMF recipients. U.S. Army photo by Staff Sgt. Scott Griffin

A member of the Jordanian SOF descends down a rope from a Jordanian UH-60 Black Hawk helicopter during Exercise Eager Lion at the Jordanian SOF compound near Zarqa, Jordan, June 13, 2013. Exercise Eager Lion 2013 is a U.S. Central Command-directed annual multinational exercise designed to strengthen military-to-military relationships and enhance security and stability by responding to modern-day security scenarios. Jordan is one of the major FMF recipients. U.S. Army photo by Staff Sgt. Scott Griffin

For Fiscal Year 2014, the total FMF appropriation was $5.919 billion. At $3.1 billion and $1.3 billion, Israel and Egypt are the leading recipients on the FMF budget. Other major FMF recipients are Jordan at $300 million, and a $530 million set-aside for overseas contingency operations (OCO).

However, FMF overall has taken a hit from ever-tighter U.S. budgets, especially sequestration, which Kidd Manville, Deputy for Strategic Planning and Integration in DSCA’s Strategic Planning Directorate, said reduced the funds available for FMF. The majority of FMF money is allocated to priorities in certain countries, such as Israel and Egypt. These priorities are met before the remainder can be applied to requests for other nations. And allocation of those remaining funds must account for requirements and priorities put forth by the State Department and DoD combatant commands.

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J.R. Wilson has been a full-time freelance writer, focusing primarily on aerospace, defense and high...