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Russia: U.S. Congress Reluctant To Loan More

Washington, 2 September 1998 (RFE/RL) -- The Russian economic crisis has made some leading U.S. Congress members nervous about providing unqualified support to President Bill Clinton's request for almost $18 billion for the International Monetary Fund (IMF).

The 100-member Senate returned to Washington this week from its summer holiday recess and the full Senate is expected to begin debate today (after 1700 CEST) on the Clinton Administration's foreign aid request. The foreign aid legislation not only includes money for direct U.S. economic assistance, but the IMF funding request as well.

In his weekly press briefing Monday, Senate Majority Leader Trent Lott (R-Mississippi) indicated that support for the IMF money is tied to Administration agreement to seek more control over IMF policy.

Said Lott: "I expect if the administration ... agrees to some of the conditions and the policy changes that we've been advocating, that those funds will be provided, or some funds."

Lott's Republican Party controls the Senate. However, the Senate Minority Leader, Thomas Daschle, (D-South Dakota), promised to fight for passage of the IMF funding, saying it is a top priority.

The White House has asked for $14.5 billion for the U.S. share of the general IMF quota. In addition, it has asked for $3.4 billion for U.S. participation in a special arrangement among the richer nations that makes short-term loans available to the IMF when its own resources run short, as during the current financial crises.

While the Congress was on holiday, the IMF, the World Bank and other international institutions worked out an emergency $22 billion assistance package for Russia. Economic analysts say the first portion of the aid, nearly $5 billion dollars, was spent by the Russian Central Bank in an unsuccessful attempt to keep the ruble from losing value.

IMF Managing Director Michel Camdessus said last week that the scheduled disbursement in September of the second portion of the aid package, more than $4 billion, could be delayed if the government has not taken action to stabilize the Russian economy.

Senator Lott is skeptical about the wisdom of further aid for Russia during the current crisis, contending that the government in Moscow has done little to advance the cause of reform.

He said: "They're not doing what needs to be done in Russia. We put $22 billion through the IMF and other world trade operations, I suppose, into that -- to their problems, and to what avail? They have not complied with the rule of law. The Duma has not passed the reforms that have been asked for, even by the IMF."

Even if the IMF funding passes the Senate, it still faces an even more uncertain future in the House of Representatives. The 435-member House must also approve the foreign aid legislation. The House returns from its summer recess next week, and in an interview with the Washington newsletter, "Congressional Quarterly Daily Monitor," an influential House member said he is rethinking his support for the Administration's request.

Congressman Robert Livingston (R-Louisiana), the chairman of the Appropriations Committee, told the newsletter that the Russian crisis has made him "sit up and notice," the possible "waste of taxpayers' dollars." The Republican Party also dominates the House. Clinton is a Democrat.

House Republican Leader Richard Armey (R-Texas) and the third-ranking House Republican, Tom DeLay of Texas, also oppose full funding for the IMF. Delay recently told reporters that he believes the IMF has shown itself to be incompetent. IMF critics plan hearings to review the IMF's role in Russia. The House Banking Oversight Subcommittee said it would call Karin Lissakers, U.S. executive director of the IMF, and David Lipton, Treasury undersecretary for international affairs, to testify next week.

As far as bilateral U.S. economic aid is concerned, the Administration's request for foreign aid is expected to pass the Senate. The president has asked for about $14 billion for foreign operations, but the Senate is expected to approve only about $12.6 billion.

The Senate bill provides $740 million for former Soviet states, including $210 million for Ukraine, $90 million for Armenia and $95 million for Georgia. The Senate bill also maintains a ban on all but humanitarian U.S. aid for Azerbaijan because of its economic blockade of Armenia. Aid to Eastern Europe and the Baltics is set at $433 million.

After the Senate and House have approved their foreign aid bills, the two measures must be reconciled into one bill and then approved again by the House and Senate before the measure is sent to Clinton for his signature.