Benzinga - by Chris Katje, Benzinga Staff Writer.
The U.S. has been a key financial backer for Ukraine during its ongoing conflict with Russia.
However, Congress is currently split over approving an additional $100 billion in aid for Ukraine and Israel, aimed at assisting them in their respective global conflicts. This situation raises concerns about potential future repercussions for the U.S. in international accountability.
What Happened: Many members of Congress and the American public have been against signing further aid for Ukraine and Israel after spending billions to help both nations on multiple previous occasions.
Treasury Secretary Janet Yellen has been outspoken about providing financial support to Ukraine and recently said it was necessary to sign additional funding for the country, as reported by Reuters.
"I've talked to members of Congress, my colleagues have. I think they understand this, that this is a dire situation and we can hold ourselves responsible for Ukraine's defeat if we don't manage to get this funding to Ukraine that's needed, and I'm including direct budget support here because that's utterly essential," Yellen said.
The Treasury Secretary went on to say that it's essential to help U.S. allies in Europe, who are also providing aid to help Ukraine.
"Ukraine is just running out of money. They're spending every penny they're taking in, in tax revenue, on military salaries and defense, and they wouldn't have any schools or hospital or first responders if not for the money we're sending to them to support them."
Ukraine's President Volodymyr Zelenskyy was scheduled to address members of Congress this week with a direct plea for additional funds, but the appearance was later cancelled.
On Tuesday, Zelenskyy's chief of staff said postponing aid from the U.S. to Ukraine could create a "big risk" that Russia would win the war against the country.
In November, Yellen cautioned that support for Ukraine was important to America's safety and a Russian victory in Ukraine could lead to further invasions.
"If Putin were to win this brutal war… next, we might see him attacking a NATO ally of ours."
On Wednesday, Zelenskyy shared a message on Twitter on working together.
"I invite all American defense companies to work with Ukraine. Together, we can create a new and powerful arsenal of freedom that will provide dependable support to all of the world's free nations," he tweeted.
Zelenskyy asked for American companies and Ukraine to work together "for the greater power of freedom."
Related Link: Zelenskyy’s Top Aide Criticizes West For ‘War Fatigue’ Amid Ongoing Conflict With Russia: ‘Don’t Want To Wake Up In A World…Where There Will Be Less Freedom’
Why It's Important: Congress has been battling over the signing of more than $100 billion to support Israel and Ukraine in their respective wars.
Members of the Republican Party have been linking the funding to reevaluate U.S. immigration and border policies, which has not been well received by all members of Congress.
The Biden administration has been supportive of helping both Israel and Ukraine. In separate interviews on "60 Minutes," both Vice President Kamala Harris and President Joe Biden said the funding for Israel would not impact the aide for Ukraine.
"We are as committed to Ukraine as we've always been to authorize additional aid to defend itself against Russia's unprovoked aggression. That is not gonna waver," Harris said.
Biden said that the U.S. can help support both countries at the same time.
"We're the United States of America for God's sake, the most powerful nation in the history, not in the world, in the history of the world. The history of the world. We can take care of both of these and still maintain our overall international defense," the president said.
Similar to Yellen's comments, Biden questioned what would happen if Vladimir Putin were successful in his efforts in Ukraine.
"Imagine what happens now if he were able to succeed. Have you ever known a major war in Europe we didn't get sucked into? We don't want that to happen," Biden said.
If Congress does approve the $100 billion bill for Ukraine and Israel, defense stocks could get a lift from investors. The sector, which saw a jump in interest and share prices after Russia invaded Ukraine, has fallen out of favor in recent months.
Defense stocks like RTX Corp (NYSE:RTX), Northrop Grumman Corp (NYSE:NOC), Lockheed Martin Corp (NYSE:LMT), General Dynamics Corporation (NYSE:GD) and L3Harris Technologies (NYSE:LHX) are all trading down year-to-date while the broader market is up double digits in 2023.
Defense ETFs could gain interest if the funding were to get approved, which comes as many defense and aerospace ETFs remain up on the year.
iShares U.S. Aerospace & Defense ETF (BATS:ITA): +9.2%
Invesco Aerospace & Defense ETF (NYSE:PPA): +13.5%
SPDR S&P Aerospace & Defense ETF (NYSE:XAR): +18.0%
While the three ETFs have fared better than the individual defense names mentioned above, they all still trail the current 20% gains seen by the SPDR S&P 500 ETF (NYSE:SPY).
Read Next: Members Of Congress Buy Energy, Defense Stocks Prior To Russian Invasion Of Ukraine: Who They Are, What They Bought
Photo: International Monetary Fund via flickr
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