Leasing air defense: historical and modern perspective

Defense Express writes about it.

Ukraine is discreetly renting air defense equipment, as confirmed by Yuriy Ihnat, spokesperson for the Ukrainian Air Force. Specifics about the equipment type, quantity, and countries involved are kept under wraps.

What's intriguing here is the leasing mechanism itself. In theory, nations can temporarily lend their air defense gear, possibly just for a season. This benefits the donor nation, allowing them to provide support without the obligation of replacing the equipment.

Historical leases

Historically, large-scale arms leasing isn't new. Lend-lease during World War II, often associated with the USSR, began with Great Britain in 1941, followed by China and then the USSR several months later.

Britain was the largest recipient, receiving $31.3 billion (around $600 billion adjusted for inflation), while the USSR received $10.9 billion (around $200 billion adjusted). The terms involved repayment over five years after the war, either in cash or by returning equipment.

The myth that lend-lease required payment only for surviving equipment is false. In 1945, the USA declared they wouldn't charge for any transferred weapons, whether destroyed or intact. And the reason for the myth is quite simple: the USSR did not want to pay for the lend-lease at all, although Washington only asked for payment for civilian products worth $2.6 billion. The USSR eventually paid $722 million of its $2.6 billion bill, 27 years later.

Regarding Ukraine, even though the land-lease law has not been enacted, the US has already provided over $44 billion worth of weapons free of charge without any conditions.

Modern leases

A prominent example of modern arms leasing is the Swedish Gripen fighter jet. In 2003, the Czech Republic and Hungary leased 14 Gripens for 10 years, paying $800 and $700 million. The lease payments were divided into annual installments, factoring in exchange rate variations and inflation, and these agreements were extended multiple times.

Sweden's surplus aircraft, due to halving its air force, led to these favorable terms. Thailand also rented Gripens.

However, recent deals might not offer such attractive conditions. In 2021, Malaysia chose 18 Korean FA-50 fighter jets for $920 million over Saab's offer of 25 Gripens and two GlobalEye aircraft. Bulgaria is also exploring fighter jet leasing options, considering the French Mirage 2000 and Rafale.

The practice of arms leasing, whether for fighters or air defense systems, remains consistent: temporary use with an obligation to return or compensate for lost equipment.