WASHINGTON, DC -- Senate Democrats, bowing to united House Republican opposition, dropped reforms of International Monetary Fund governance from a Ukraine aid package on Tuesday, handing President Obama an embarrassing defeat as he huddled in Europe with allies who have already ratified the changes.
The monetary fund language would have enlarged the Ukraine loan package while finally ratifying changes dating to 2010 that only the United States has opposed.
Mr. Obama himself negotiated those changes, and European allies conferring with him on Ukraine have been pressing for American action.
But the need for speed on loans and direct assistance to Ukraine overcame the White House’s willingness for a fight.
Senator Harry Reid of Nevada, the majority leader, said he was taking his lead from Secretary of State John Kerry, who had signaled that the administration would push for the monetary fund language separately.
Mr. Reid said the package should pass the Senate by Thursday.
The governance changes would raise the borrowing limit of countries like Ukraine at the multilateral lending institution, while giving more authority to emerging economic heavyweights like China, Brazil — and Russia.
The Obama administration painted them as vital to a Ukraine aid package, but Republicans were never convinced.
Some conservatives oppose the changes as a lessening of American authority at the fund, although Washington would retain veto power.
But Republican leaders saw them more as a bargaining chip and were pressing to swap the changes for an agreement from the administration to delay final Internal Revenue Service regulations on political groups that conceal the name of their donors by incorporating as tax-exempt “social welfare” organizations.
The White House position was undercut this week by two New York Democrats, Representatives Eliot L. Engel, the ranking member of the House Foreign Affairs Committee, and Nita M. Lowey, the ranking member of the House Appropriations Committee, both of whom said the Senate should drop the matter and pass the other parts of the package.
“I would hope that we would find a common ground, pass it, so that we can help our friends,” Speaker John A. Boehner said of Ukraine aid and Russia sanctions measure.
The Senate legislation would guarantee $1 billion in loans to the fledgling government in Kiev and offer an additional $100 million in direct aid.
It would codify sanctions against Ukrainians and Russians already affected by sanctions ordered by Mr. Obama, but at the same time, it would expand the list of targets who would be denied United States visas and subject to civil or criminal penalties.
Similar legislation is expected to pass the House this week.
“I feel strongly about I.M.F. reform, and we need to get that done,” Mr. Reid said.
“But this bill is important.”
The decision was another setback for Mr. Obama; the administration also tried and failed in December to attach the monetary fund language to a trillion-dollar spending measure.
“It’s simply irresponsible that the Republican leadership insisted on holding I.M.F. reforms hostage in an effort to protect their special-interest campaign contributors’ ability to pour money into the system unchecked,” said Dan Pfeiffer, Mr. Obama’s chief communications strategist.
“Supporting these reforms would have meant Ukraine could access additional assistance, and it’s unfortunate that Republicans stood in the way.”
But Republicans are eager to exploit Democratic divisions.
“I can only quote Nita Lowey, the ranking Democrat on the House Appropriations Committee, and also the ranking member of the Foreign Affairs Committee, who said it was more important to do this quickly than to deal with the I.M.F., which is a much more controversial issue,” said Senator Mitch McConnell of Kentucky, the Republican leader.
“I agree with these two important House Democrats.”
Source: The New York Times