A draft bill amending the Homeland Defence Act and certain other acts has been submitted to the Government Legislation Centre, with its adoption by the Council of Ministers planned for the first quarter of this year. Among the proposed changes is the opening of an account at the U.S. Federal Reserve Bank dedicated to handling contracts related to the acquisition of weapons and services under the Foreign Military Sales (FMS) program.
Boeing AH-64E Apache Guardian / Illustrative photo: US Army
As stated in the publicly released draft amending the Homeland Defence Act, item 5) of the proposal provides for the addition of a new Article 38a to the Act. Its aim is to enable the opening of an account at the central bank of a country fulfilling orders for the purchase of military equipment or related services under intergovernmental programs in which the Polish side is a participant. This provision is specifically intended to allow the opening of an account at the U.S. Federal Reserve Bank (FRB) dedicated to handling contracts related to the acquisition of weapons and services under the Foreign Military Sales (FMS) program.
Currently, under FMS procedures, the Polish side transfers funds to a bank account designated by the U.S. side, which is managed by the U.S. government agency DSCA (Defense Security Cooperation Agency) responsible for FMS contracts. This account is owned by the U.S. government, and all costs associated with its operation are borne by the American side. Funds deposited in the account do not generate any interest-based returns for Poland.
At the same time, in connection with the war in Ukraine, the U.S. has introduced an assistance program for allies supporting Ukraine, in the form of direct loans and guarantees (Foreign Military Financing – FMF Direct Loan and FMF Loan Guarantee).
Due to the significant value of contracts concluded under the FMF Direct Loan and FMF Loan Guarantee programs, the U.S. side has proposed that Poland open a bank account at the U.S. Federal Reserve Bank. Poland would be the owner of this account, into which deposited and temporarily unused funds (e.g., due to delays in contracting) would be transferred.
Such a solution would allow for the generation of additional financial resources from interest earned on temporarily unused funds held in the account. These funds could be used to cover the account’s operational costs and could also be redirected, via contributions to the Armed Forces Support Fund (FWSZ), to finance other modernization programs.
https://twitter.com/wpawluszko/status/1908074659469250677