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Fight Over Pentagon Funds Slows Ukraine Rescue

Fight Over Pentagon Funds Slows Ukraine Rescue

An effort by the Obama administration to attach additional funds for the International Monetary Fund to a Ukraine aid package is now slowing down the approval of the entire rescue package for Kiev’s badly cash-strapped government.

On Wednesday, the Senate Foreign Relations Committee voted 14-3 to support a $1 billion loan guarantee to Ukraine, $50 million for democratic governance in the country, and $100 million for enhanced security cooperation. The bill also includes reforms to the IMF that would reconfigure the amount of money the United States gives to the organization — a provision not included in the House’s Ukraine bill passed last week. Linking the Ukraine rescue bill to a broader package of IMF reforms had already angered some Republican lawmakers. Funding the IMF provisions with money previously earmarked for the Pentagon sent them over the moon. 

"Senator [Bob] Menendez’ bill to fund reforms at the IMF on the backs of our troops is just looney and I will strongly oppose it if it comes to the House," said Rep. Buck McKeon (R-CA), chairman of the powerful House Armed Services Committee. "Senate Democrats want to further raid the very accounts that make our military ready to meet a crisis."

McKeon and other Republicans are upset that money allocated to the IMF is being taken from the Pentagon, including $41.5 million from Army procurement, $80 million from aircraft procurement and $36 million from the Air Force’s missile procurement.

"I’m deeply disappointed that we’ve included [the IMF] in this," said Sen. James Risch, during the markup of the bill. The Idaho Republican said he initially intended to support the bill.

But Menendez, the Senate panel’s chairman, stressed that the money was being taken from "underperforming programs," and Dick Durbin (D-IL), chairman of the Defense Appropriations Subcommittee, added that the Pentagon has no objections to transferring the money to the IMF. Other Republicans on the committee who supported the bill, such as Sen. John McCain, said lawmakers shouldn’t let opposition to IMF reform get in the way of support for the bill. "If we allow the Ukrainian economy to collapse, all kinds of bad things happen," he said.

The U.S. government and the European Union would like to guide Ukraine’s fledgling government away from Moscow’s sphere of influence. Last month, Ukraine’s acting President Oleksander Turchinov warned that Ukraine was close to default, and requested $35 billion in international assistance in the next two years. Earlier this month, the EU offered Ukraine $15 billion in aid.

In a separate hearing on Wednesday, Secretary of State John Kerry told a House Appropriations subcommittee that funding the IMF was necessary to help support Ukraine in the long haul. "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. 

But those arguments fell on deaf ears in the GOP-controlled House. "This IMF money isn’t necessary for dealing with this Ukraine crisis that we see today," House Speaker John Boehner said Wednesday. The esoteric reforms would allow Washington to move billions of dollars from IMF crisis accounts to a general fund — a move strongly supported by the administration and IMF chief Christine Lagarde. But some Republicans say it could diminish U.S. influence in the IMF and increase the influence of developing countries.

Republicans don’t just have the Democrats to blame. According to a Senate aide, the IMF funding measure was also supported by Senator Bob Corker (R-TN), the most senior Republican on the committee. The only other Republicans to oppose the bill besides Risch were Sens. Rand Paul (R-KT) and John Barrasso (R-WY). 

Either way, that dispute remains unsettled for Republicans on the House. Lower chamber aides tell The Cable that the only way the House GOP leadership might accept the committee’s bill is if major changes are made to it. But time is of the essence. The inclusion of the IMF language, and the ensuing debate, makes it unlikely that Congress will pass the Ukraine aide bill this week. Next week, the Senate is out of session, meaning the bill might not pass until late March.

"This legislation is supposed to be about assisting Ukraine and punishing Russia, and the IMF measure completely undercuts both of these goals by giving Putin’s Russia something it wants," said Marco Rubio (R-FL) in a statement. "I won’t support flawed legislation that is divisive and actually undermines our efforts to provide quick support to the Ukrainian people in their hour of need."

Rubio, however, was absent for the vote because he had to serve jury duty.