Senate to vote on $1 billion Ukraine aid package on Thursday

The Senate will vote on a $1 billion aid package for Ukraine on Thursday, although the final bill will leave out IMF reforms in light of House Republican objections. 

The bill S. 2124 “Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014” will provide about $1 billion to help Ukraine’s ailing economy, which is on the verge of default following months of political instability that resulted in the ouster of pro-Russia President Viktor Yanukovych.

Read more: S&P downgrades Ukraine’s credit rating, warns country may default due to political turmoil

Ukraine needs to pay at least $13 billion in foreign debt this year. In addition, Russia has demanded that Ukraine pay back $11 billion in past discounts for natural gas and threatened to hike the price of gas on which Ukraine relies.

“I think everyone in this body understands the tremendous economic problems Ukraine is experiencing. I think we all understand the first thing that has to happen in Ukraine is it has to be stabilized economically,” said Sen. Bob Corker (R-Tennessee), Ranking Member of the Senate Foreign Relations Committee.

However, the Senate aid package will leave out ratification of the IMF reforms reached with Ukraine in 2010. Approval of the IMF reforms would allow the IMF to increase its emergency funding to Ukraine by “up to 60%” – from $1 billion to $1.6 billion – and provide “an additional $6 billion for longer-term support”, which would have opened the door for more assistance from the European Union and World Bank.

Sen. Bob Menendez (D-New Jersey), Chairman of the Senate Foreign Relations Committee, conceded that it is “unlikely” that the IMF reforms will be approved by House Republicans, who are “trying to link support for IMF reforms to C-4 political committees that may have violated campaign finance laws.”

“I cannot believe the House leadership will not put national security interests above their partisan political interest but, obviously, politics clearly don’t stop at the water’s edge on this issue,” said Menendez.

Responding to Republican claims that ratifying the IMF reforms would cost taxpayers money, Menendez pointed out that the IMF reforms in the legislation would “preserve U.S. leadership, the veto position in the IMF, without increasing–without increasing–our financial commitment to the IMF.”

“While I am not happy about it, I believe we need to move forward on a bill today that sends the necessary message of support to Ukraine and resolve to Russia,” said Menendez.

The bill also includes sanctions against individuals in Russia that are deemed “responsible for violence or undermining the peace, security, sovereignty, or territorial integrity of Ukraine.”

Read more: Putin: “Crimea has always been an inseparable part of Russia”

Since Yanukovych’s ouster in February, Russia has mobilized 23,000 troops in Crimea and last week annexed the strategic Black Sea Peninsula where Russia stations its naval fleet. There are also reports that Russia has amassed 100,000 troops near the Russian-Ukrainian border, suggesting that Kremlin may be gearing up for more land grab of Ukraine’s eastern regions.

Corker has urged the Obama administration to impose “sectoral sanctions” if Russia continues its aggression against Ukraine.

“What I hope will happen, and what we have pressed for out of our office, is they will implement some of those sectoral sanctions to send a shock wave through the Russian economy that in the event they do anything to come into Ukraine while they are amassing troops on the border–if they do anything in that regard–this is just the beginning,” said Corker.

At the G-7 conference in Hague yesterday, President Barack Obama said the U.S. and EU are willing to consider expanding sanctions to Russia’s gas and finance sector.

“So far what we’ve done is we’ve put in place sanctions that impact individuals, restricts visas being issued to them, freezes their assets.  We have identified one bank in particular in Russia that was well known to be the bank of choice for many of the persons who support and facilitate Russian officials from carrying out some of these activities.  But what we’ve held off on are more broad-based sanctions that would impact entire sectors of the Russian economy,” said Obama. “It has not just been my suggestion but it has also been the European Council’s suggestion that should Russia go further, such sectoral sanctions would be appropriate.  And that would include areas potentially like energy, or finance, or arm sales, or trade that exists between Europe and the United States and Russia.”


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