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Opposing an IMF Loan to Iran

(Washington Institute for Near East Policy) Patrick Clawson - The U.S. apparently plans to "veto" a loan to Iran under a new IMF facility intended to help countries deal with the Covid-19 crisis. Yet Iran already has immediate access to $2.8 billion in existing funds from the IMF without drawing up any new loans: $700 million in its "reserve tranche" and $2.1 billion in Special Drawing Rights. This money is available without condition, yet Tehran has made no effort to use it during its ongoing health and economic crises. More important, the regime holds at least $90 billion in foreign exchange reserves, a large portion of which are now accessible. These factors raise questions about Tehran's motivations in applying for the loan. In fact, there is no realistic way for Washington to block any such loan brought before the IMF Executive Board. The U.S. has a long history of unsuccessfully objecting to IMF loans. At the same time, even if the Trump administration wanted to support the loan, it could not do so. According to Section 1621 of the International Financial Institutions Act (22 U.S.C. 262p-4q), "The Secretary of the Treasury shall instruct the United States executive director of each international financial institution to use the voice and vote of the United States to oppose any loan or other use of funds" for countries that the secretary of state has determined are state sponsors of terrorism. The writer is director of research at The Washington Institute.
2020-04-20 00:00:00
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