A U.S. Treasury Department spokesperson blogged last week about “Why IMF Quota and Governance Reforms are Urgently Needed” and implied that opponents of President Obama’s campaign to demand that Congress link passage of International Monetary Fund (IMF) reforms to any U.S. help for Ukraine are guilty of spreading “myths.” In fact, it is the Obama Administration that is telling the tall tales.
The Treasury blog is full of misleading statements and half-truths. Even The Washington Post is disgusted.
Here are some examples:
- Re: the “myth” that “[t]he 2010 IMF quota reforms don’t help Ukraine,” Treasury fails to note that the IMF currently has over $400 billion in unused funds available for loans today. Ukraine has requested a $15 billion loan, less than 5 percent of the IMF’s available funds. And astonishingly, the IMF reforms the Administration has demanded would increase Russia’s voting power and decrease American and Ukrainian voting power. In fact, increasing its IMF quota and voting power is a key Russian goal. Why should Congress attach to the Ukraine assistance bill something that Vladimir Putin desperately wants?
- Re: the “myth” that “[a]pproving the IMF reforms will cost taxpayers billions of dollars,” the Treasury blog conveniently skips over the fact that the 2010 IMF reform package would literally double the amount of money the U.S. contributes in IMF quota: $63 billion more taxpayer dollars. This is by far the largest proportional quota increase in the history of the IMF. Moreover, the U.S. would lose a significant degree of control over the use of those funds. The $63 billion that would be shifted from special “emergency account” funds were supposed to be temporary and for emergencies only. In fact, in 2009, then-Senator John Kerry stated that the funds should be “only used in emergency if the other funds of the IMF run down.” Not counting these funds, the IMF still has over $166 billion in unused money available for loans.
- Re: the “myth” that “IMF reforms will reduce the United States’ influence in the IMF,” the truth is that the U.S. would lose a significant degree of control over the use of the funds in question. In fact, by demanding the quota increase, the Obama Administration wants to surrender America’s ability to unilaterally prevent the IMF from using these funds if the U.S. disagrees with its decisions.
- Re: the “myth” that “IMF reforms will result in less U.S. control over IMF funds,” the Treasury blog’s claim that “a transfer of resources [from emergency funds to regular quota] does not diminish in any way the amount of U.S. influence at the IMF” is patently false. The fact is that the U.S. would lose its unilateral veto of a decision to activate the $63 billion in question for loan making. Moving the $63 billion to the U.S.’s quota contribution exposes it to use in any loan by a simple majority vote without the need for initial activation.
- Re: the “myth” that “[s]upport for the IMF is a partisan issue,” perhaps the Treasury Department has forgotten that there has been over the years bipartisan support for plenty of bad policies, such as the stimulus bill.
The Obama Administration is holding desperately needed U.S. aid to Ukraine hostage until Congress agrees to send more American taxpayer money to the IMF. Even senior Democrats agree that Congress can just approve the aid to Ukraine now and debate the IMF reforms another day.