European debt crisis, Republicans saying they don't want American funds involved.
By Susan Cornwell
WASHINGTON | Thu Dec 8, 2011 4:29pm EST
(Reuters) - Congressional Republicans are taking aim at any International Monetary Fund move to bailout European countries in their debt crisis, saying they don't want American funds involved. The lawmakers are trying to snatch back a $100 billion line of credit the United States approved for an IMF crisis fund, the New Arrangements to Borrow, in 2009 at the height of the global financial crisis. The U.S. is the IMF's largest member country and its share of the $550 billion fund is about 18.7 percent.
Republican Representative Kay Granger told Reuters the matter was one of the unresolved issues in congressional negotiations between the Republican-majority House and Democratic-majority Senate over fiscal 2012 spending.
Another House Republican, Representative Cathy McMorris-Rodgers, has gathered 58 co-sponsors on her legislation to pull back the U.S. line of credit. She also supports Granger's effort.
An early opponent of U.S. involvement in rescuing indebted European countries, McMorris-Rodgers complains the Obama administration has not told Congress details of how much of the credit line approved two years ago has been used, or for what. She says she wants transparency over how the money is used by the IMF.
"Congress should be involved in making this decision as to what the role of America will be in a potential European bailout," she told Reuters.
The IMF has so far stepped in with rescue loans for euro zone members Greece, Portugal and Ireland. Now, there is growing concern that rising borrowing costs for Spain and Italy may also force them to seek IMF financing.
Congress approved the IMF funding in 2009 after it was attached to a bill financing the Iraq and Afghan wars. Secretary of State Hillary Clinton and Defense Secretary Robert Gates, along with National Security Adviser Jim Jones, wrote Congress saying the IMF needed the money to confront the global financial crisis.
The measure provided a $100 billion credit line to the IMF, increased the U.S. member contribution to the IMF by another $8 billion and authorized the United States to back the IMF's plan to sell 400 tonnes (12.97 million ounces) of gold. Both the House and Senate had Democratic majorities at the time the measure was approved.
President Barack Obama had pledged the IMF funds at a 2009 meeting of G20 leaders, who committed to a $500 billion boost as more countries hit by the global financial crisis turn to the IMF for emergency loans. The United States is the IMF's largest contributor.
The Obama administration says that retracting the money authorized in 2009 "could put the United States out of compliance with its international obligations and jeopardize the ability of the IMF to play its critical role in maintaining global financial stability."
There is also considerable sentiment for getting the IMF funds back among Republicans in the Senate, although they do not have the majority there. The Senate voted 55-44 in June against a proposal by Republican Senator Jim DeMint to repeal IMF loan authority.
In July, the House foreign aid appropriations subcommittee headed by Granger recommended rescinding the $108 billion from the IMF. This is the provision now being discussed by House and Senate appropriators as they try to agree by the end of this month on fiscal 2012 spending.
Senate Democrats are resisting. "We do not believe the President would sign a bill with the House language included," said an aide to Democratic Senator Patrick Leahy, who heads the Senate foreign aid subcommittee.