Reid Pulling IMF Provision Paves Way for Ukraine Aid Bill

Photographer: Andrew Harrer/Bloomberg

Senate Majority Leader Harry Reid said, “The main thing is to get the aid now.” Close

Senate Majority Leader Harry Reid said, “The main thing is to get the aid now.”

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Photographer: Andrew Harrer/Bloomberg

Senate Majority Leader Harry Reid said, “The main thing is to get the aid now.”

U.S. Senate legislation providing aid for Ukraine moved closer to completion as Majority Leader Harry Reid abandoned a provision opposed by Republicans that would have boosted the International Monetary Fund.

Faced with the objections from Senate and House Republican leaders, Reid said yesterday he would drop language that would have increased the U.S. share -- or quota -- for the IMF, as well as implemented a 2010 international agreement giving rising economies more clout at the global organization.

“The main thing is to get the aid now,” said Reid, a Nevada Democrat. His move paved the way for senators to agree to a vote tomorrow on final passage of the Ukraine measure.

Full coverage of the Ukraine Crisis:

Reid said today the measure the Senate is considering this week is a first step in congressional aid to Ukraine.

“I hope we can move beyond what we are going to do tomorrow for the Ukrainian people,” Reid said on the Senate floor, urging senators to work on a bipartisan basis to come up with a “package of things” the chamber could consider “in the next few weeks.”

Republican opposition to the IMF provision sought by the Obama administration has slowed Senate consideration of legislation that would combine aid to Ukraine with sanctions for Russian officials. The measure calls for about $1 billion in loan guarantees and authorizes $150 million in direct assistance to Ukraine following Russia’s annexation of Crimea and massing of troops on the Ukrainian border.

‘Right Direction’

The Senate’s top Republican, Mitch McConnell of Kentucky, told reporters yesterday that dropping the IMF provision was “a step in the right direction.” McConnell warned that Democrats’ insistence on the language would keep the measure from reaching President Barack Obama’s desk, even with bipartisan support.

“No legislation could have passed with those provisions included,” McConnell said today.

The White House took aim at Republicans in Congress for holding the IMF overhaul measure “hostage.”

“Supporting these reforms would have meant Ukraine could access additional assistance, and it’s unfortunate that Republicans stood in the way,” White House senior adviser Dan Pfeiffer said in Belgium today during Obama’s European tour.

IMF Changes

The Treasury Department, which had pressed for the IMF funding changes, also lamented Senate Democrats’ decision. Treasury spokeswoman Holly Shulman said the changes “are critical to preserving the United States’ leadership and influence at the IMF.”

IMF Managing Director Christine Lagarde had urged Congress to complete work on legislation that would boost the U.S. commitment to the fund. In a statement yesterday, she said she was “deeply disappointed that the necessary legislative steps have not been taken by the U.S. Congress to allow these important reforms to be implemented without further delay.”

Senate Democrats, who control 55 seats in the 100-member chamber, have enough votes to preserve the IMF language, yet doing so would set up a showdown with the Republican-led House.

“All it’s going to do is slow the political process down,” House Speaker John Boehner, an Ohio Republican, told reporters yesterday.

Boehner spokesman Michael Steel said House Republican leaders welcomed the news that Democrats would abandon the IMF funding push.

‘Only Way’

“As the speaker has said all along, that is the only way to get Ukraine the help it needs as quickly as possible,” Steel said in an e-mailed statement.

The Senate today will resume consideration of the Ukraine aid measure. McConnell said Republicans may seek amendments aimed at updating sanctions language to reflect developments in Crimea since the legislation was introduced in early March.

Residents of the Black Sea peninsula voted on March 16 to join the Russian Federation, and Russian President Vladimir Putin completed the annexation last week.

Republicans also have said they may seek to boost U.S. natural gas exports to countries that are members of the North Atlantic Treaty Organization. The aim is to reduce those nations’ reliance on natural gas exports from Russia.

Committee Hearings

Three congressional committees are holding hearings this week on whether the U.S. should sell more of its growing oil and gas resources overseas, in part to reduce the European energy dependence on Russia. Europe imports about 30 percent of its natural gas from Russia, partly through pipelines that cross Ukraine.

The changes to sanctions provisions contemplated by Senate Republicans may mimic legislation set for a full House vote this week that would impose additional asset freezes and visa bans on senior Russian officials and corporations.

The House Foreign Affairs Committee approved the measure yesterday by a voice vote.

“This bill ramps up pressure on Putin and his accomplices who have played key roles in Russia’s aggression,” said Representative Ed Royce, a California Republican and the panel’s chairman.

The House on March 6 passed legislation, H.R. 4152, that would provide about $1 billion in loan guarantees to Ukraine and leaves out the IMF language opposed by Republicans. The Senate plans to take up this measure and add the direct-assistance provision, Reid said on the chamber floor last night as he announced the deal on Ukraine aid.

Pressuring Putin

“The House has acted once already, we’re going to act again this week to help the Ukrainians and to put pressure on President Putin,” Boehner told reporters yesterday.

The new House measure would codify sanctions already announced by Obama. It would encourage imposing more penalties on Russians with “significant influence over the formation and implementation of Russian foreign policy” involving Ukraine, according to the bill’s text.

The bill, H.R. 4278, includes additional economic assistance for Ukraine and would signal U.S. plans to increase natural gas exports. Republicans have said such a move eventually would reduce Russia’s leverage over other European nations that depend on its gas exports.

The Senate Democrats’ bill, S. 2124, would require Obama to impose sanctions against Ukrainians and Russians deemed responsible for corruption and violence. Russian officials, as well as their close associates or family members, also could be subject to sanctions, which could include blocking access to assets held in the U.S. and prohibiting travel to the U.S.

The legislation would require the U.S. government to assist the Ukrainian government in the recovery of assets secured through acts of corruption by former president Viktor Yanukovych, his family and other government officials.

The Senate Foreign Relations Committee approved the measure on March 12 by a bipartisan vote of 14-3 with Republicans John Barrasso of Wyoming, Rand Paul of Kentucky and James Risch of Idaho voting against it in part to protest the IMF language.

To contact the reporter on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Michael Shepard, Mark McQuillan

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