The IMF v. Ukraine

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

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NEW YORK SUN CONTRIBUTOR

It looks like the Senate is going to vote on Monday on a sanctions bill to support Ukraine. The measure is called the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014. It’s going to tap the American taxpayer a fast $1 billion and authorize potentially crippling sanctions against the Soviet Un . . pardon us, Russians if they interfere with Ukraine. It gives tremendous discretion in this to President Obama and his camarilla, particularly Secretaries Lew and Kerry. One would think the president would be for it without conditions. It turns out, though, that he wants to use the crisis to get through a “reform” package for the International Monetary Fund. By our lights it would be preferable just to let Ukraine go — it would do better on its own.

If this sounds harsh, let us just say we’ve been on the IMF story for decades. We have come to view the Fund not as part of any solution to the world’s ills but as part of the problem. If it once had a logic — dubious in hindsight; it was set up along with the “World Bank” at the end of World War II — that has long since gone by the boards with the collapse of the whole Bretton Woods system and the abandonment of the gold exchange standard. Since then the IMF has served as a kind of pretender to soundness. In the current crisis it is advising Ukraine to float its currency. President Obama wants to use the crisis to maneuver the Congress into yet another quota increase for the IMF, and reduce America’s voting power at the same time.

That’s what “reform” means to the Obama administration — it means America giving more money and reducing the weight of its vote. By that logic, Willie “The Actor” Sutton was a reformer. The Wall Street Journal last week published a particularly good column on the subject by Judy Shelton, who is an economist and no radical. She opposes the IMF’s idea of Ukraine floating its currency, that is, setting out on the seas of democracy with neither a centerboard nor a rudder. She favors a currency board linking the hryvnia and the dollar. She points out that the IMF already approved, in July 2010, a loan to Ukraine of $15.1 billion loan. So, she notes, there was never a question of access to generous financial assistance. What it needs is a stable currency under the rule of law.

To burden the Ukraine rescue with a new funding and “reform” measure for the IMF is cynical even for this administration, and it deserves a fight, even if Secretary Lew wants to get the “reform” package rammed through before the IMF meeting in April. If there were ever a job on which the Ted Cruz, Marco Rubio, Rand Paul wing of the party could unite with the Mitch McConnell, John McCain wing of the party, this ought to be it. Ronald Reagan, whom they all praise, fought the IMF, and the Wall Street Journal has been opposing quota increases at the IMF since the invention of the rotary press. This is a moment to send the message. Decoupling IMF “reform” from Ukraine would also send a heartening signal to Kiev — you’re not going to be exploited by either President Putin or European dirigistes.

NY Sun
NEW YORK SUN CONTRIBUTOR

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.


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