Brussels, Europe Brief News – European Union Officials are planning to restrain Russia from having any sort of influence or access to finance in International Monetary Fund (IMF) on the back of its invasion of Ukraine.
The European Union is examining this scenario to put extra pressure on Russia’s economy and financial system. This is just another Western effort to put Russia in total isolation.
One option that is highly under consideration is to eliminate Russia from the institution that acts as a lender of last resort. European Union officials believe that removing Russia from the IMF is an extremely difficult task if not impossible.
Senior Eurozone official said, “There is a discussion, but kicking Russia out entirely is probably unrealistic because of required quora”.
He further said that other options that are under observation include the suspension of Russia’s voting rights as well as blocking its access to a special IMF currency, the special drawing rights.
USA and Western allies have imposed certain sanctions on Russia to completely isolate it economically from the World after its assault on Ukraine. Putin calls its assault a ‘Special military operation’.
Russia has already been hit by a freeze on its Central bank assets, a ban from European Union, Canadian and US airspace, the removal of a number of its banks from the SWIFT international payment system.
Russia’s IMF Reserves Are $17 billion:
The United States and Western allies are now worried that even after cutting Russia off from accessing IMF reserves of $630; it may still be able to have access to $17 billion which it received last year when the IMF boosted them to fight the COVID-19 Pandemic.
The SDR is an IMF currency based on a basket of dollars, euros, sterling, yen and yuan. To spend the $17 billion in SDRs, Russia would have to find countries ready to exchange them for the underlying currencies which seem very unlikely.
A US treasury confirmed that they are making all the possible efforts to stop Russia from benefiting from its holding of IMF reserves assets.
The Officials said that while restraining Russian membership rights in the IMF and blocking its access to the SDRs were discussed, the discussion was even broader, concerning Moscow’s membership.
Senior Eurozone official said “ There is an ongoing discussion to kick Russia out of all international financial institutions” but some officials believe that removing Russia may not be legally possible.
