US Republicans seek blockage of Russia from exchanging IMF reserves

A number of Republican lawmakers have called on the US Department of Treasury to block Russia from exchanging the $17 billion in International Monetary Fund (IMF) reserves it received last year and oppose any further such IMF allocations.

Some 41 lawmakers claimed in a letter to US Treasury Secretary Janet Yellen on Monday that the $650 billion allocation of Special Drawing Rights to IMF members had undermined US sanctions on Russia even before it launched military actions in Ukraine, according to Reuters.

"The hostile invasion of Ukraine this week demonstrates why the IMF should never have approved its latest $650 billion general allocation of SDRs in August 2021," the lawmakers said in the letter.

All IMF members received SDRs - backed by dollars, euros, yen, sterling and yuan - in proportion to their shareholding in the Fund in the distribution aimed at helping poorer countries fight the COVID-19 pandemic, Reuters reported.  

Russia would need to find a partner country willing to exchange the $17 billion in SDRs it received for underlying currencies in the form of an interest-bearing loan.

Washington and its allies have imposed economic sanctions on Russia's central bank aimed at neutralizing the country’s more than $600 billion reserves. The sanctions would make such a transaction difficult.

But the lawmakers are opposed to the SDR allocation, which also provided SDRs to China and Iran. They asked Yellen to press IMF members to formally agree not to exchange Russia's SDRs.

"We cannot allow these reserve assets to help the regime withstand the latest sanctions announced by the President, let alone offer additional billions through further allocations," wrote the lawmakers, led by Representative French Hill of Arkansas and Senator Bill Hagerty of Tennessee.

Senator Cotton urges US to impose sanctions on 'all Russian financial institutions'

Republican Senator Tom Cotton, a US foreign policy hawk, has urged the United States to impose sanctions on “all Russian financial institutions,” in response to Moscow’s military actions in Ukraine.

They also urged the US and its allies to plan for contingencies to block a bailout if Russia gets weakened and is forced to turn to the IMF for future loans.

"As the largest shareholder of the IMF, the United States has a responsibility to ensure that the Fund is not misused to support Russia's warmongering in Ukraine," the lawmakers wrote.

US cutting off Russia's central bank from US dollar transactions

The US on Monday banned American dollar transactions with the Russian central bank and fully blocked the Russian direct investment fund, according to a senior Biden administration official.

This is an aggressive move by Washington that is aimed at some of Russia's most powerful means of mitigating the effect of sanctions, according to CNN.

"No country is sanction proof," a White House official said. "Putin's war chest of $630 billion in reserves only matters if you can use it to defend his currency, specifically by selling those reserves in exchange for buying the ruble."

"After today's actions that will no longer be possible, and fortress Russia will be exposed as a myth."

A senior Biden administration official said the move was "the culmination of months of planning and preparation across our respective governments across technical, diplomatic and political channels, including at the highest levels."

"We were ready and that's what allowed us to act within days, not weeks or months, of Putin's escalation," the official said.

"Our strategy, to put it simply, is to make sure that the Russian economy goes backward as long as President Putin decides to go forward with his invasion of Ukraine," a second senior Biden administration official said.

Biden claims alternative to huge anti-Russia sanctions is World War III

US President Joe Biden tries to bolster huge but yet ineffective Western sanctions against Russia over its military operation in Ukraine, by claiming the only alternative would be to start a “Third World War.”

The Biden administration has imposed harsh economic and banking sanctions on Russia in response to Russia's military actions in Ukraine.  

Biden said the sanctions would limit Russia's ability to do business in dollars, euros, pounds and yen.

Biden claimed that the only other alternative to the sanctions would be to start a “Third World War.”

"You have two options. Start a Third World War; go to war with Russia, physically, or to make sure that the country that acts so contrary to international law ends up paying a price for having done it," Biden sarcastically claimed in an interview on Saturday.

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