[Cadsby]

Much of those funds come with stipulations on how they must be spent; namely, on military hardware from US Defense manufacturers. So the aid ends up back in the US ultimately and effectively acts as a subsidy to the Defense industry.

[yodsanklai]

This may be a dumb question, but how are subsidies compatible with trade agreements? It doesn't seem fair from a free market point of view. Or are foreign competitors allowed to subsidize their industries to similar levels as part of trade agreements?