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The
41 lawmakers said in a letter to Yellen that the $650 billion
allocation of Special Drawing Rights to IMF members that she
backed was a mistake that had undermined sanctions on Russia
even before it invaded Ukraine.
"The hostile invasion of Ukraine this week demonstrates why the
IMF should never have approved its latest $650 billion general
allocation of SDRs in August 2021," the lawmakers said in the
letter dated Feb. 28.
All IMF members received SDRs - backed by dollars, euros, yen,
sterling and yuan - in proportion to their shareholding in the
Fund in the distribution aimed at helping poorer countries fight
the COVID-19 pandemic. But to spend the $17 billion in SDRs it
received, Russia would need to find a partner country willing to
exchange them for the underlying currencies in the form of an
interest-bearing loan.
The United States and Western allies have imposed sanctions on
Russia's central bank aimed at neutralizing Moscow's $640
billion reserves, which would make such a transaction difficult
and subject the counterparty to sanctions as well.
But the lawmakers used the invasion to repeat their longstanding
criticism of the SDR allocation, which also provided SDRs to
China and Iran. They said Yellen should press IMF members to
formally agree not to exchange Russia's SDRs, and should oppose
further allocations because they would grant more assets to
Moscow.
"We cannot allow these reserve assets to help the regime
withstand the latest sanctions announced by the President, let
alone offer additional billions through further allocations,"
wrote the lawmakers, led by Representative French Hill of
Arkansas and Senator Bill Hagerty of Tennessee.
The lawmakers also said that Yellen and U.S. allies must plan
for contingencies to block a bailout if an economically weakened
Russia is forced to turn to the IMF for future loans.
"As the largest shareholder of the IMF, the United States has a
responsibility to ensure that the Fund is not misused to support
Russia's warmongering in Ukraine," the lawmakers wrote.
A U.S. Treasury spokesperson could not immediately be reached
for comment.
(Reporting by David Lawder; Editing by Shri Navaratnam)
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