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Boehner Rejects IMF Link to Ukraine Aid Endorsed by Obama

March 12 (Bloomberg) -- U.S. House Speaker John Boehner rejected attempts by Democrats and the Obama administration to tie additional funds for the International Monetary Fund to a Ukraine aid package.

“This IMF money isn’t necessary for dealing with this Ukraine crisis that we see today,” Boehner told reporters today in Washington. House Republicans have resisted proposals to increase funds for the IMF for years.

House Republicans are resisting calls from the White House, congressional Democrats, chief executives of major U.S. companies and former secretaries of state Henry Kissinger and Condoleezza Rice, who have said funding the IMF would help Ukraine.

Secretary of State John Kerry told a House Appropriations subcommittee today that the IMF funds are a necessary part of aid to Ukraine.

“It’s only through the IMF, a reformed IMF, that Ukraine is going to get the help it needs to stand on its own two feet,” Kerry said.

Senate lawmakers are crafting legislation for Ukraine that they say should be tough enough to cause Russian President Vladimir Putin to rethink keeping troops in Crimea, while stopping short of military action.

Boehner, Pelosi

Ukraine’s Prime Minister Arseniy Yatsenyuk is scheduled to meet with President Barack Obama in Washington today, then later at the Capitol with Boehner, Minority Leader Nancy Pelosi, and also with members of the Senate Foreign Relations Committee.

The House passed a Ukraine aid plan March 6 that would allow about $1 billion in loan guarantees to the fledgling Ukraine government. The measure, H.R 4152, didn’t include the IMF funding.

The Senate Foreign Relations panel will consider a Ukraine aid bill today.

Committee Chairman Bob Menendez’s bill would permit $1 billion in U.S.-backed loan guarantees for Ukraine, according to a draft obtained by Bloomberg News.

The measure would impose sanctions on Ukrainians and Russians deemed responsible for corruption and violence in Ukraine, as well as those threatening the territorial integrity of the country. The measure from Menendez, a New Jersey Democrat, includes the IMF funding.

Asset Blocking

Sanctions against former and current Ukrainian officials as well as Russian individuals would take the form of asset blocking in the U.S.; exclusion from the U.S. and revocations of U.S. visas, and penalties under the U.S. International Emergency Economic Powers Act.

The draft bill 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 legislation includes recissions of $315 million in unexpended State Department and Defense Department money as a way to offset the money that would go to the IMF.

Senator Bob Corker of Tennessee, the panel’s top Republican, told reporters he expects the committee to approve the Ukraine aid bill with the IMF funding today. Negotiators agreed on ways to pay for the aid, IMF funds and loan guarantees, he said.

‘Dealt With’

Corker said the bill won’t include language sought by Republicans to block a proposed U.S. tax rule curbing political activity by tax-exempt groups. “There is some other way that issue will be dealt with,” he said.

Asked yesterday whether the full Senate could consider the Ukraine plan this week, Majority Leader Harry Reid told reporters, “of course we can, unless there’s some hold-up by the Republicans.” The Senate is scheduled to take a break the week of March 17.

Obama’s fiscal 2015 budget plan, sent to Congress March 4, would boost the U.S. share, or quota, at the Washington-based IMF by shifting about $63 billion from an existing credit line.

Treasury Secretary Jacob J. Lew told the Senate Budget Committee today that an international aid package for Ukraine may be $15 billion or larger and that the International Monetary Fund needs to be the “first responder.”

Support Letter

A group of 32 former senior U.S. officials, including Kissinger, Rice, former Federal Reserve Chairman Alan Greenspan, former World Bank President Robert Zoellick and former Treasury Secretaries Hank Paulson, Paul O’Neill and Timothy Geithner wrote a joint letter to congressional leaders supporting the IMF quota legislation.

“The immediate importance of a strong IMF role for countries in crisis is apparent now in Ukraine, which seeks help from the U.S. and IMF to maintain its independence and economic health, and to reduce its energy dependence on Russia,” they wrote in the letter dated today and organized by the Bretton Woods Committee.

An organization of company chief executive officers also urged the Senate to back the IMF provision, in a letter to leaders of the Senate Foreign Relations Committee.

“If Congress fails to act, it will cede U.S. influence and leverage in the IMF and international financial system to China, India, Brazil, and other countries, as well as, ironically, Russia,” John Engler, president of the Business Roundtable, wrote on behalf of more than 200 members in a March 10 letter. Engler is the former Republican governor of Michigan.

House Republicans in January rejected White House requests to include the IMF quota changes in a government spending measure.

Boehner said the Senate should “take up the House-passed loan guarantee package and they could move that today.”

To contact the reporters on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net; Roxana Tiron in Washington at rtiron@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Laurie Asseo

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