WASHINGTON, D.C.: United States (US) Senate Democrats bowed to Republican demands on Tuesday (Wednesday in Manila) that reforms sought by the International Monetary Fund (IMF) be removed from a Ukraine aid package, acknowledging it could not pass with such measures intact.
Lawmakers have spent weeks debating assistance to Kiev’s new government and sanctions on Moscow over its Crimea aggression.
While there was broad agreement on offering $1 billion in loan guarantees to Ukraine and imposing some sanctions on Russia, it became clear that a bill, which also included the IMF changes that are strongly opposed by many Republicans would stall in the Republican-led House of Representatives.
“I believe we need to act now, this week,” Senate Democrat Robert Menendez, who spearheaded legislation that included Ukraine aid, Russian sanctions and IMF reforms, said on the floor of the chamber.
“So although I also believe that our response to Russia’s annexation of Crimea should include IMF reforms—to strengthen the assistance package for Ukraine and strengthen US global leadership—I recognize that us being able to move that package this week is unlikely,” he said.
IMF chief Christine Lagarde said she was “deeply disappointed” that the measures she wanted had not won support.
“These reforms would both strengthen the IMF’s capacity to respond to our members’ needs and help to make its governance more representative of our dynamic membership,” she said.
“I will personally continue to work together with my management colleagues and staff to support completion of the reforms by the membership and hope that the US authorities will give it the high priority that it deserves,” Lagarde added.
While several Republicans joined a united Democratic front Monday to advance the Senate bill with the reforms included, many congressional Republicans, including House Speaker John Boehner, argued that IMF reforms should be left out of the bill because they are not directly connected to the aid.
Many in Congress had complained the gridlock threatened to split a united US voice as events galloped ahead in Eastern Europe, particularly with Russian President Vladimir Putin seizing Crimea.
With pressure building, Republican Senator John McCain said the chamber’s top Democrat, Majority Leader Harry Reid, told him he would drop the IMF changes in order to get the bill through Congress.
“The problem was the House, and Harry realized—and I’m very happy that he did—that the best thing is to get this thing done immediately,” he said.
A compromise measure without the IMF reforms is set for a vote Thursday, Reid said.
The shift marks a blow for the White House, which backed the Senate legislation including the IMF reforms.
The Treasury Department said it was “deeply disappointed . . . that Republican opposition has forced the Senate to remove the International Monetary Fund quota and governance reforms” from the Ukraine package.
“These reforms, which require no new US financial commitment to the IMF, are critical to preserving the United States’ leadership and influence at the IMF, and to strengthening the IMF’s financial and governance structures in which the United States has the largest share and veto power,” Treasury spokeswoman Holly Shulman said.
The House has already passed a measure securing the loan guarantees, and it is considering a new bill with economic aid to Ukraine as well as expanded sanctions on Russian officials.
“What the Senate ought to be doing is taking up our bills and just moving them” without any IMF provision, Boehner told reporters.