Chairman Menendez Remarks on Senate Ukraine Legislation and IMF Reform
WASHINGTON, DC – U.S. Sen. Robert Menendez (D-NJ), Chairman of the Senate Foreign Relations Committee, delivered the below statement, as prepared for delivery, on the Senate Floor regarding the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 and IMF reform.
“M. President, I rise to express my robust concern about Russia’s actions and the continuing escalation of tensions in Central and Eastern Europe. Even with Ukrainian troops leaving Crimea, Russia continues to extort Ukraine – disavowing an agreement on gas prices that was part of a bilateral agreement allowing Russia to lease the Black Sea port in Crimea for its fleet. Russia is now arguing that it not only no longer has to provide the discounted gas – because it illegally seized the port -- but that it also must be paid back $11 Billion for prior discounts.
“And at the same time, Russia has amassed more than 100,000 troops at Ukraine’s border, in addition to 23,000 troops in Crimea, making clear the threat of an out-right invasion of Ukraine and possible a portion of Moldova.
“Putin is watching to see what we’ll do – to see if we’ll have the resolve to act or if he has a green-light to take the next step.
“I believe we need to act now, this week.
“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 U.S. global leadership, I recognize that us being able to move that package this week is unlikely.
“The House Republican leadership has proven itself intransigent on IMF Reform and we all know why -- trying to link support for IMF reforms on of C-4 political committees that may have violated campaign finance laws -- and may have individuals who illegally use them to influence federal elections is outrageous.
“I cannot believe House Republicans will not put national security interests above their partisan political interest... Politics clearly don’t stop at the water’s edge on this issue.
“So while I'm not happy about it, I believe we need to move forward on a bill today that sends the necessary message of support to Ukraine and resolve to Russia.
“But let us take that step, but realize that it’s the IMF that is leading the effort to stabilize Ukraine’s fragile economy.
“Congressional ratification of the 2010 IMF reforms would increase IMF emergency funding to Ukraine by up to 60%, and provide an additional $6 billion for longer-term support, setting an important marker for other donors such as the EU and World Bank.
“Let’s be clear about what IMF would do.
“The IMF is strengthened at no cost to U.S. finances or influence.
“The United States retains its Executive Board seat and sole veto power at no net cost, since the $63 billion increase in U.S. quota would be fully offset by an equivalent decrease to a separate emergency facility.
“Other countries, however, would put in new money -- increasing IMF lending power.
“The fact is -- it would be a pure win for the United States!
“We would fully have paid for the $315 million budget impact of the bill, with real cuts and from funds that were underperforming or no longer needed.
“Given that the IMF helps to stabilize countries, often precluding future need for military action, the relatively minor cost would have paid back many times over.
“I repeat what I have said before: This should not be a partisan issue: Presidents Reagan, Clinton, and both Presidents Bush backed legislation to increase IMF resources – and Reagan called the IMF “the linchpin of the international financial system.”
“In a letter to House and Senate leadership last week, members of the Bretton Woods Committee wrote that “Implementing the IMF quota reforms…bolsters our leadership in the fund….” and provides the U.S. with “leverage to continue to preserve our national security and economic interests abroad.”
“Let me tell you some of the folks that signed that letter: Madeleine Albright, Former, Secretary James Baker, Zbigniew Brzezinksi, William Cohen, Stephen Hadley, Henry Kissinger, Tom Ridge, Condoleeza Rice, Clayton Yeutter, Robert Zoellick, Lee Hamilton, Brent Scowcroft, Paul O’Neill, Frank Carlucci, Robert Rubin, Larry Summers, John Snow, Henry Paulson
“Let me be very clear: Opponents argue the IMF reforms provide no added relief to Ukraine, so are superfluous to the bill.
“This argument is patently false.
“The 2010 IMF reforms strengthen the IMF – that’s why they were done!
“By increasing Ukraine’s quota, the reforms increase available short-term lending from $1 billion to $1.6 billion, and longer-term resources the IMF can leverage for Ukraine go up by $6 billion.
“It also strengthens our ability to shape an IMF support package for Ukraine.
“Critics say IMF reforms undermine U.S. influence and increase Russia’s influence in the IMF.
“Wrong again.
“We remain the largest IMF shareholder, we are guaranteed our Executive Board seat, and we will continue as the only country with veto power over major IMF decisions.
“Meanwhile the reforms rationalize the voting structure of the IMF to increase buy-in of dynamic emerging economies in a way that ensures continued U.S. leadership in a more relevant international institution. On the other side, the reforms matter little to Russia, which already has a board seat and sees its voting share increase marginally.
“They say IMF reforms cost American taxpayers billions and put taxpayer money at risk.
“Again, wrong!
“There is no cost to American taxpayers – the reforms included in the Senate Ukraine bill preserve U.S. leadership and veto position in the IMF without increasing our financial commitment to the IMF. The IMF is the most solvent financial institution in the world and the risk of IMF default is de minimis.
“We would have fully paid for the $315 million budget impact of the IMF reforms with real cuts and from funds that were underperforming or no longer needed.
“The failure to strengthen the IMF to support Ukraine and other unforeseen crises around the world will endanger this system we have so painstakingly built, and it shouldn’t need arguing that fragmentation of global economic governance is not in our national interest!
“The fact is, M. President, IMF reform combined with the aid package for Ukraine, would send a clear and unambiguous message to the world that the annexation of Crimea will not stand.”
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