ISRAEL

• About $61 billion of this aid package will be spent on Ukraine, while $26 billion will go to Israel.
• The new legislation means that U.S. military supplies could be moved to Ukraine in a matter of days.
• Pressure increased on lawmakers to pass the aid package after Iran’s drone missile attack on Israel on April 14, 2024.
• The U.S. has been the largest single donor backing Ukraine since Russian troops invaded the country in February 2022.
• As a scholar of Eastern Europe, I think there are a few important reasons why the U.S. has a lot at stake in supporting Ukraine.

Republicans divided over Ukraine aid

• Since February 2024, Johnson had delayed initiating a vote on the Ukraine foreign aid bill in the House of Representatives for a few reasons.
• One major factor was fighting between Republicans, who hold a slim majority in the House.
• While some centrist Republican politicians supported Ukraine funding and pushed for a vote on the foreign aid package, others – hard-right Republicans – wanted a bill that prioritized what they said are American interests, meaning more of a focus on domestic U.S. problems.

Delays on Ukraine benefit Putin

• As the House was stalling on a vote, Ukraine was rationing ammunition and supplies.
• Delays with foreign aid to Ukraine give Putin time to move forward with plans to purchase ballistic missiles from Iran.
• Without foreign aid from the U.S., Ukraine faces a strategic disadvantage that could lead to Russia winning the war.

The US needs Europe to compete with China

• One factor is U.S. global power competition with China.
• Russian and Chinese leaders declared a military and political partnership days before Russia’s invasion of Ukraine in February 2022.
• They announced on April 9, 2024, that they want to find ways to strengthen their joint security work across Asia and Europe.
• U.S. political and military leaders have noted that supporting Ukraine and pushing back against Russia is one clear way to deter China from strengthening its global political power and military reach.
• The U.S. needs its long-standing allies in Europe to help push back against China – and deterrence is only as effective as the size of the force doing the deterring.

Foreign aid benefits US arms industry

• Most of America’s military aid to Ukraine consists of arms and ammunition from existing U.S. stockpiles.
• More than one-third of the $61 billion spending includes $23 billion dedicated to replenishing weapons and ammunition systems for the U.S. military.
• In December 2023, Biden signed a U.S. defense policy bill that authorizes a record-high $886 billion in spending from July 2023 through June 2024.
• But it also allows for the purchasing of new ships, aircraft and other types of ammunition.

Americans continue to support Ukraine aid

A majority of Americans still favor U.S. support of Ukraine, though about half of Republicans said in December 2023 that the U.S. is giving too much money to the country. Even though politicians do not always follow public opinion, there are clear reasons why it is in the U.S.’s best interests to keep funding Ukraine. This story is an update of an earlier article published on April 10, 2023.
Tatsiana Kulakevich does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

• Abstract
  We analyze, for the first time, how firms choose the currency in which they price transactions
  in international trade of services and investigate, using direct evidence, whether the US dollar
  (USD) plays a dominant role in services trade.
• JEL: F14, F31, F41
  Keywords: dominant currency paradigm, international trade, services.
• Related research has
  shown that the US dollar (USD) exchange rate is a major source of swings in
  global trade in goods?a ?dominant currency pricing? (DCP) phenomenon?since
  most goods traded internationally are invoiced and sticky in USD.
• Yet it is also key to look at dominant currency pricing in international trade
  in services for several reasons.
• First, global trade in services is big?accounting for
  about a quarter of global gross trade flows and for around 40% in terms of valueadded trade.
• Third, and relatedly, the
  future of globalisation might be in trade in intermediate services?as progress with
  digitech lowers technological barriers to such trade across borders.
• But perhaps the main reason is that trade in services is conceptually different
  from trade in goods.
• Our paper is the first, to our best knowledge, that analyzes how firms choose
  the currency in which they price transactions in international trade of services and
  that examines whether dominant currency pricing differs between trade in goods
  and services using direct evidence? hitherto unavailable?on patterns of currency
  choices in international transactions in services compared to goods.
• Work on dominant currency pricing has
  almost exclusively focused on trade in goods.
• One reason is that data on patterns
  in invoicing currency for trade in services are ?virtually nonexistent? (Adler et al.
• Yet it is important to look at dominant currency pricing in international trade
  in services for several reasons.
• Using the exporter?s (or producer) currency in exports is known in the literature as producer
  currency pricing (PCP), while using the importer?s currency is known as local currency pricing (LCP)
  and using a third currency is known as vehicle currency pricing (VCP).
• Our paper is the first, to our best knowledge, that analyzes how firms choose the
  currency in which they price transactions in international trade of services and that
  examines whether dominant currency pricing differs between international trade in
  goods and services using direct evidence ? hitherto unavailable ? on patterns of
  currency choices in international transactions in services compared to goods.
• First,
  we rule out compositional effects, that is that differences in the use of currencies
  reflect differences in trade partners in services vs. goods trade.
• Both in extra-EU and intra-EU trade, the EUR is the
  most widely used currency, be it on the export or import side.
• Based
  on the framework, we stress which factors should determine currency choices in
  international trade, and to what extent one should expect differences between
  services trade and goods trade.
• Second, it can price in the importer?s currency
  (local currency pricing, LCP).4 Third, it can use a third currency, say currency
  v (vehicle currency pricing, VCP).
• That is,
  the currency choice problem is equivalent to determining the currency in which the
  desired price is least volatile.
• (2022)
  provide systematic empirical evidence ? firm size and exposure to foreign currencies
  in imported inputs ? should also shape currency choices in services trade.
• Dominant currency pricing in USD ? services vs. goods trade
  Having established that currency choice in international trade of services is an
  active firm-level decision as well as the determinants of this decision, we now

  8.

• Services and goods exports: prevalence of different pricing strategies (percent)
  Notes: The table shows the shares (in value terms) of different pricing strategies: producer currency
  pricing (PCP), local currency pricing (LCP) and vehicle currency pricing (VCP).
• To make comparisons with goods trade, we rely on Eurostat?s
  macro data on international trade in goods by invoivcing currency.
• If intra-EU trade is more important in services than
  in goods trade, this could hence be an explanation for the lower prevalence of the
  USD in services trade.
• We showed
  that while the USD is also extensively used as a vehicle currency in services trade, its
  prevalence is systematically lower than in goods trade.
• Hence for all travel services exports
  the invoicing currency is the EUR; for travel imports it is the currency of the
  destination of travel (i.e.
• Also for these

  ECB Working Paper Series No 2932

  33

  services it seems plausible that trade does not take place vis-?-vis all counterparts
  in each currency.

• Figure B.2: Share of international trade in services in global GDP broken down by type (%)
  Notes: Authors? calculations using World Bank and World Trade Organization data.
• An earlier version of this paper circulated under the title ?Currency choices and the role of the
  U.S. dollar in international services trade?.

• The bill is still subject to Senate approval and then needs to be signed into law by the US president, Joe Biden.
• But given the Senate’s previous approval of a similar measure and Biden’s vehemence of the need to support Ukraine, this should be a formality.
• Together with the morale boost for troops, this means that improvements in the situation on the front are likely – even before new US supplies will arrive.

Political will

• It is above all one of political will.
• The months-long delay in the US Congress was primarily an issue of domestic political posturing in a presidential election year.
• While their influence on funding decisions is much more limited, they could certainly create significant problems in Ukraine’s EU accession negotiations.

Economic capacity

• There is some confidence that production capacity in the US and Europe, as well as in Ukraine, will significantly increase as of 2025.
• But even in an optimistic scenario of sustained investments in the defence industrial base of the collective west and increasing Russian economic and logistical difficulties to sustain its defence sector, a gamechanging shift in the balance of power is unlikely in the near future.

Russia holds the initiative, for now

• It also enjoys air superiority in light of depleted Ukrainian air defence systems, and has the operational momentum on the battlefield.
• If anything, Russia will now double down on its current offensive pushes.
• Given the continuing rhetoric of victory in Moscow and Kyiv, another forever-war might just have become more sustainable – for now.

Stefan Wolff is a past recipient of grant funding from the Natural Environment Research Council of the UK, the United States Institute of Peace, the Economic and Social Research Council of the UK, the British Academy, the NATO Science for Peace Programme, the EU Framework Programmes 6 and 7 and Horizon 2020, as well as the EU's Jean Monnet Programme. He is a Trustee and Honorary Treasurer of the Political Studies Association of the UK and a Senior Research Fellow at the Foreign Policy Centre in London.

• The Jewish holiday cycle is, to a large extent, an exploration and commemoration of the experience of exile.
• The fall festival of Sukkot, for example, is celebrated in small booths, temporary shelters that recall the Israelites’ experience sheltering in tents while wandering in the desert for 40 years after fleeing slavery in Egypt.
• The story of Purim, a springtime festival, takes place when ancient Jews lived in exile in the Persian Empire – and illustrates the precariousness of life as a minority.

Into the unknown

• In her 1983 novella “The Miracle Hater,” the late Israeli novelist Shulamit Hareven depicts the Hebrews in their passage from Egypt and their first taste of freedom.
• Writing a modern “midrash” – a rabbinic genre that elaborates on a biblical text – she reimagines the story of Exodus.

• They have fled oppression, but that means leaving everything familiar to wander, seemingly endlessly, in the great unknown of the desert.
• Israeli writer Orly Castel-Bloom weaves family lore, history and some alternative history into “An Egyptian Novel,” published in 2015.
• Those who remained in Babylon became the root of the diaspora and established the oldest continuous Jewish community in the world.

‘Out of Egypt’

• While those in Iraq could claim a history of hundreds of years, those in Egypt were more likely to have moved there within the last few generations.
• The Egypt of the Exodus story seemed far from the Egypt of Aciman’s childhood, the one he loved.

• “The fault lines of exile and diaspora always run deep, and we are always from elsewhere, and from elsewhere before that,” he noted.
• In “Out of Egypt,” the irony of the family preparing to leave on Passover is not lost on the author, the reader or, one suspects, the characters themselves.
• After a rather dismal attempt at a Seder, the narrator wandered through the streets of Alexandria, mourning a place that had become home.

It is a poignant account of the very personal nature of exile. And yet it is an experience potentially shared by everyone in the Jewish community. Exile is a place unknown, over the edge of the precipice.

Into Iraq

• The Passover holiday is also at the center of British journalist Tim Judah’s visit to Iraq to cover the 2003 American invasion.
• His father’s family had left Iraq in the 19th century for India in the wake of persecutions during Dawud Pasha’s reign.

• By 2003, the few Jews Judah found lived in trepidation and ramshackle homes.
• “I tried to picture my forebears, in the fields or perhaps in the shops or the market, but I couldn’t,” Judah wrote in Granta magazine.
• I will never need to do it again.” Judah’s pilgrimage leads not to a renewed sense of belonging but a break.
• Yet at the same time, families around the Seder table can remember those who are not yet free, and those still suffering from being uprooted.

Nancy E. Berg does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.