US Senate panel backs Ukraine aid, hurdles remain

Posted at 03/13/14 7:33 AM

WASHINGTON - A US Senate panel approved a closely-watched aid package for Ukraine on Wednesday, but a battle over IMF reforms crucial to expanding loans to the country might torpedo the legislation.

The package would greenlight $1 billion in US loan guarantees to Kiev and imposes sanctions on figures involved in the crackdown on anti-government protesters and in Russia's seizure of Crimea.

It easily passed the Senate Foreign Relations Committee with a majority of 14 members to three .

It also commits $50 million for democracy-building efforts and $100 million to enhance US security cooperation with Ukraine.

But the bill faces a tough journey in the full Senate, where it could be slowed by Republicans concerned with how expanding the International Monetary Fund's lending framework would be paid for.

"This is going to be a little bit more difficult on our side of the aisle," said Republican Bob Corker, who backed the measure and urged his party to support democracy and economic stability in Europe.

And the speaker of the House of Representatives, John Boehner, said any Ukraine package containing IMF reforms would face a fight in his chamber.

"This IMF money isn't necessary for dealing with this Ukraine crisis that we see today," Boehner said.

Delay would mean Congress does not pass Ukraine aid or Russian sanctions legislation before Secretary of State John Kerry meets Russian Foreign Minister Sergei Lavrov Friday in London.

It would also lessen Washington's ability to pressure Moscow ahead of Sunday's controversial referendum on whether Ukraine's Crimean peninsula should revert to Russia.

Committee chairman Senator Robert Menendez nevertheless insisted the panel's vote "absolutely" strengthens Kerry's hand going into Friday's head-to-head.

As for the measure stalling in Congress, Menendez said "the Republican leadership will have to decide, what message do they want us to send to Ukraine and the world?"

Republican Robert Risch, who opposed the measure, accused Democrats of sinking the aid package by including the IMF reforms.

"Only the US Senate could bungle this like it has," he said.

"Everybody wants to see this done, but why you would strap in this poison pill... It's a foregone conclusion it's not going to go through the House."

The House last week passed a loan-guarantee bill, with no IMF element. Some lawmakers are suggesting the Senate might simply pass that measure to get at least something on the books this week.

The IMF reforms agreed in 2010 would increase the IMF's permanent financial holdings and provide a greater voice to emerging-market economies.

The United States is by far the IMF's largest stakeholder and its refusal to approve the reforms have essentially blocked them.

The reforms would dramatically boost the US quota by shifting $63 billion from an existing credit line.

But moving that money comes with a price tag of $315 million, according to the Congressional Budget Office.

Supporters of the measure said there were offsets that would cover the cost, including minor cuts to some military programs.