POLITICS
03/25/2014 07:44 am ET | Updated Mar 25, 2014

Ukraine Aid Stalls As Congress Spars Over IMF Reform

WASHINGTON -- U.S. lawmakers agree on the need for swift response to Russia's annexation of Crimea, but their debate over reforms to the International Monetary Fund threatens to delay more than $1 billion in American aid to Ukraine.

Senate legislation that includes Ukraine aid and sanctions against Russia cleared a procedural vote Monday by a vote of 78-17. But the bill also would boost the U.S. contribution to the IMF. That provision faces stiff opposition from Republicans -- a factor that could derail the bill's chance of passing the House of Representatives and reaching President Barack Obama's desk.

The White House has argued that boosting the U.S. contribution to the IMF, called a quota, is critical to stabilizing Ukraine's economy. But House Speaker John Boehner (R-Ohio) told reporters recently that the IMF provision has "nothing to do with Ukraine." Boehner has called on the Senate to take up a House-passed bill that provides Ukraine with up to $1 billion in loan guarantees, but excludes the IMF reforms.

The Senate bill heeds the Obama administration's call to add roughly $63 billion to the U.S. quota at the IMF. The legislation achieves this by taking that amount from an IMF supplementary fund, thus leaving the U.S. financial commitment to the IMF unchanged.

The IMF, an organization of 188 countries that promotes economic cooperation, collects contributions from members and provides temporary loans to nations facing imbalances. The push for changes dates to 2010, when the G20 agreed to governance and lending reforms in the aftermath of the global financial crisis. Under that accord, each IMF member nation was to double its financial commitment, making the total IMF quota $720 billion. The reforms were designed to expand the institution's lending capabilities and give emerging markets more influence.

The Russian aggression lends a new urgency to the reforms, according to backers of the legislation. The U.S. is the biggest and most powerful member of the IMF -- and the only major IMF member that has not ratified the 2010 reforms. Because it holds the only controlling share of IMF votes, none of the reforms would be implemented without U.S. support.

Ukrainian leaders have called on the U.S. to ratify the reforms, which affect Ukraine by increasing its quota and borrowing capabilities. According to the Treasury Department, congressional approval of the reforms would allow the IMF to provide Ukraine with an additional $6 billion in assistance under standard loan practices.

New Ukrainian Prime Minister Arseniy Yatsenyuk urged President Barack Obama to usher the IMF reforms through Congress during a visit to Washington earlier this month. Yatsenyuk also discussed the quota reform with Treasury Secretary Jack Lew. The White House said Yatsenyuk and Lew "agreed that securing passage of IMF quota legislation is needed to maximize the international community’s support to Ukraine."

But GOP lawmakers in the House and Senate remain unconvinced. While a handful of Senate Republicans said they would support the Senate bill with its current IMF language, most want something in return: Namely, blocking a Treasury rule that would permit the Internal Revenue Service to curb political activities by tax-exempt nonprofit groups, known as 501(c)(4)s.

Senate Majority Leader Harry Reid (D-Nev.) said Monday that the GOP demand was "absurd" and contradicted Republicans' insistence that providing Ukraine with economic aid was of utmost importance. An administration official told The Huffington Post Republicans were essentially trying to protect free-flowing campaign contributions from special interest groups.

Even if the aid package clears the upper chamber, House GOP leaders have shown no indication they'd be willing to approve the Senate bill in its current form.

"The IMF changes the administration has long sought are completely unrelated to the ongoing situation in the Ukraine," Boehner spokesman Michael Steel told HuffPost in an email. "Frankly, the best course of action would be for the Senate to act as soon as possible on the House-passed bill."

Even some House Democrats agreed with their Republican colleagues on Monday that the White House was slowing aid to Ukraine by insisting on the IMF reform. But most Democrats favor the reform and would likely vote for the Senate bill if comes up for a vote in the House.

House Republicans mostly oppose the IMF overhaul, citing its potential to weaken U.S. influence in the institution. Others have taken issue with the Senate bill's use of military accounts to offset some of the cost of the IMF changes.

Rep. John Campbell (R-Calif.), chairman of the House Monetary Policy and Trade subcommittee, penned a March 14 blog post arguing that the administration's IMF request would only provide one month's worth of assistance to Ukraine and "does nothing to correct the serious structural challenges that will continue to face the Ukrainian economy."

The bill's authors, Sen. Bob Menendez (D-N.J.) and Sen. Bob Corker (R-Tenn.), refuted many of those claims, pointing out that the offsets draw funds from Defense Department accounts that were underperforming or no longer needed. Proponents of the legislation also noted that the U.S. continues to be the largest shareholder at the IMF and the only country with veto power over major decisions. That won't change with the 2010 reforms.

If anything threatens to reduce U.S. influence at the IMF, backers of the Senate bill said, it's stalling on a global commitment from 2010. Corker said the crisis in Ukraine represents "the poster child for why you want the IMF functioning fully and for us to be able to continue as the only country in the world that has the veto right."

Secretary of State John Kerry recently told a Senate panel that the delay has put U.S. leadership at the IMF in doubt. "We’re inadvertently hurting ourselves by sending a message that we’re not prepared to lead," Kerry said.

And while another chorus of Republicans argues that reforming the IMF would in some way help Russia, Vladimir Putin apparently feels otherwise. According to a Reuters report earlier this month, Russian officials have privately been pushing the IMF to move forward with reforms without the U.S., stripping the U.S. of its veto authority. Though unlikely, frustration over U.S. inaction is reportedly shared by several member countries.

IMF chief Christine Lagarde seemed troubled by the matter on Sunday, telling a group of students in Beijing that it was up to the U.S. to give a voice to other emerging markets within the institution. "This is not something I can do much about," she said.

Lagarde pressed the issue further in a Wall Street Journal op-ed Monday, noting that recent years had shown the "need an international 'first responder' backed by significant resources."

"But to meet tomorrow's challenges, the IMF needs to adapt," Lagarde wrote. "A large majority of the member countries have approved reforms to strengthen the resources and governance of the IMF. These reforms await approval by the U.S. Congress. The IMF's continued ability to fight economic and financial crises rests on its approval."

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03/25/2014 6:18 PM EDT

Senate To Vote Thursday On Ukraine Aid

Senate Majority Leader Harry Reid (D-Nev.) set up a final vote Thursday on a bill that would provide Ukraine with up to $1 billion in loan guarantees and impose targeted sanctions against Russian officials.

Reid made the announcement Tuesday after dropping a controversial provision from the Senate bill that would have boosted the U.S. quota at the International Monetary Fund. Republicans in both chambers of Congress opposed the IMF reforms, which were specifically requested by the White House to increase Ukraine's borrowing capabilities at the institution.

Senate Minority Leader Mitch McConnell (R-Ky.) said earlier Tuesday that Republicans would still want to vote on a number of amendments, but the IMF language was the major sticking point. Without it, the Ukraine aid package is expected to pass both the Senate and the House without much drama or delay.

--Sabrina Siddiqui

03/25/2014 5:24 PM EDT

Moldovan Separatists Claim They Downed Ukrainian Drone

From the Associated Press:

Authorities in a pro-Russian separatist region of Moldova claim to have brought down a Ukrainian drone on a reconnaissance mission.

NovostiPMR, the news agency of Trans-Dniester says Tuesday that the region's intelligence agency downed the drone on March 23.

The region broke away from Moldova in 1990. There are 1,500 Russian troops stationed there guarding hundreds of tons of weapons.

According to the agency, the drone was "launched from Ukrainian territory by people close to the Ukrainian Security Service and the Defense Ministry."

It said the plane illegally crossed into Trans-Dniester violating its air space. It added that the authorities in the region reserved the right to use "all available methods" to defend the territory which is not internationally recognized but is supported by Russia.

03/25/2014 4:18 PM EDT

Russians Take Over Last Ukrainian Ship In Crimea

Reuters reports:

Russian forces appeared to be attempting to take over the last military ship controlled by Ukraine in Crimea on Tuesday after a Ukrainian military spokesman reported explosions in its vicinity and helicopters approaching the vessel.

Russian forces armed with stun grenades and automatic weapons have seized ships and military bases from the last remaining Ukrainian troops in Crimea in recent days as part of Russia's largely bloodless annexation of the region.

Kiev, which calls Russia's annexation of Crimea illegal, ordered its remaining forces to withdraw for their own safety on Monday, but not all troops have yet left the Black Sea peninsula and some ships have been prevented from leaving.

"Around 1900 (1600 GMT) there were several explosions from the direction of the minesweeper Cherkasy in the Donuzlav bay," Ukrainian military spokesman Vladislav Seleznyov told Reuters.

"Some Mi-35 helicopter gunships were observed hovering in the area. Speedboats and a tug were seen approaching Cherkasy," he said.

On Monday Cherkasy attempted without success to break to the open sea through a blockade at the entrance to the inlet. The Russian navy blocked the route earlier this month by scuttling three hulks in the channel.

Seleznyov said he was unable to confirm whether Russian troops had boarded the ship.

03/25/2014 3:02 PM EDT

Russian Military Holds Exercises In Moldova

From Reuters:

Russia's military staged training exercises on Tuesday in Transdniestria, a breakaway sliver of Moldova that is a focus of tension following Russia's annexation of Ukraine's Crimea region.

NATO's top military commander said on Sunday he was worried that Russia might have its eye on Transdniestria, a largely Russian-speaking region that borders western Ukraine, after seizing Crimea, which has a narrow ethnic Russian majority.

The Interfax news agency quoted a spokesman for Russia's Western Military District, Colonel Oleg Kochetkov, as saying that Russian forces stationed in Transdniestria had "conducted an anti-terrorism drill and practiced operations to rebuff an attack on their military base".

Transdniestria, with a population of half a million, has run its own affairs since 1992 after fighting a brief war against the Moldovan government over fears that it might join Romania after the collapse of the Soviet Union, and Russia has a permanent garrison of peacekeepers there.

03/25/2014 1:02 PM EDT

No, Ukraine Will Not Have Nukes: Ministry Of Foreign Affairs

Ukraine's Ministry of Foreign Affairs confirmed, in something of a Shermanesque statement, that the country will not develop nuclear weapons, one day after the Russian Minister of Foreign Affairs seized on a proposal by some Ukrainian MPs to leave the Nuclear Nonproliferation Treaty.

"Ukraine has not planned, is not planning and is not going to plan to resume its nuclear status," a spokesman for the agency said at a press briefing.

Earlier this month, several opposition MPs introduced a draft bill to withdraw Ukraine from the NPT. Russia's Foreign Ministry seized on it, saying "the dysfunctional new Kiev authorities may pose a threat to the security of Ukrainian nuclear sites under the current Ukrainian circumstances," in a statement.

"We do not trust attempts of the Ukrainian delegate to dissociate from this position. The NPT is in serious danger."

Ukraine, which suddenly became the world's third-largest nuclear state after the collapse of the Soviet Union, gave its nuclear arsenal back to Russia for disposal under the 1994 Budapest Memorandum in exchange for security assurances from Russia that it would respect Ukraine's territorial integrity.

--Luke Johnson

03/25/2014 12:34 PM EDT

Five Scenarios For Russia's Relations With China, Moldova And Nato

The world's industrialized nations have turned their back on Russia, following Moscow's annexation of Crimea.

Though the G8 cannot expel its members, countries can refuse a member permission to attend, effectively expelling them.

With jitters in the east of Europe about further Russian incursion, and wariness in China, the state of world diplomacy could look very different by 2015.

HuffPost UK has asked military and international relations experts on five scenarios that could occur now Russia looks increasingly isolated, and as the West looks impotent.

Read here what they predict.

03/25/2014 12:27 PM EDT

Senate Democrats Consider Dropping IMF Provision

Senate Majority Leader Harry Reid (D-Nev.) may drop a controversial reform to the U.S. share at the International Monetary Fund from the Ukraine aid package, according to Senate leadership aides.

The provision was requested by President Barack Obama and Ukrainian leaders, but faces widespread opposition from Republicans. Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday that his members would not support the aid bill unless the IMF language was dropped.

A Senate leadership aide said removing the provision is now "under consideration in order to move the bill." In exchange, Republicans would drop their demand to delay a Treasury Department rule that cracks down on the political activities of nonprofits, known as 501(c)(4)s.

The House of Representatives passed its own legislation providing aid to Ukraine earlier this month without the IMF reforms, and planned to move on a sanctions bill that also left the issue untouched. House Speaker John Boehner (R-Ohio) has said boosting U.S. funds at the IMF has "nothing to do with Ukraine," and his aides indicated they would not have enough votes to move the Senate bill through the lower chamber in its current form.

The Obama administration and Senate Democrats have been making the case that ratifying the IMF reforms, which were agreed upon in 2010, is critical to Ukraine's borrowing capabilities in a time of crisis. Still, some House Democrats acknowledged that the White House was complicating the process by renewing debate over a contentious issue when providing aid expeditiously is of the utmost importance.

--Sabrina Siddiqui

03/25/2014 11:46 AM EDT

Obama Dismisses Romney's 'Geopolitical Foe' Comment

President Barack Obama dismissed the notion that former GOP presidential candidate Mitt Romney was correct in saying that Russia was "our number one geopolitical foe" Tuesday, in a response to a question from Jonathan Karl of ABC News. He said that Russia was merely a "regional power" that was acting out of "weakness."

"Russia is a regional power that is threatening some of its immediate neighbors, not out of strength, but out of weakness. Ukraine has been a country in which Russia had enormous influence for decades, since the breakup of the Soviet Union, and we have considerable influence on our neighbors," he said. "We generally don't need to invade them in order to have a strong cooperative relationship with them."

--Luke Johnson

03/25/2014 11:26 AM EDT

Obama Says He's Not Interested In Putin's Motivation

At a press conference in Europe, U.S. President Barack Obama sidestepped a question on whether he "misread" Russian President Vladimir Putin, saying he wasn't so interested in his motivations.

"With respect to President Putin's motivation, I think there has been a lot of speculation. I am less interested in motivation and more interested in the facts and the principles that not only the United States but the entire international community are looking to uphold."

He added that the United States is "concerned" about further encroachment by Russia into Ukraine.

--Luke Johnson

03/25/2014 10:39 AM EDT

Will Russia Annex Moldova Next?

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