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Home Uncategorized Coronavirus: Key US senator urges Trump to approve Iran's IMF loan request

Coronavirus: Key US senator urges Trump to approve Iran's IMF loan request

A senior Democratic senator has urged President Donald Trump to approve Iran’s request for a $5bn loan from the International Monetary Fund (IMF), saying that it is “in the interest of international security” to help Iran contain the spread of the coronavirus. 

Dianne Feinstein of California, a member of the Senate’s intelligence and appropriations committees, said she was “disappointed” that the White House intends to block Tehran’s request for funds.

“Providing these funds to Iran would help it respond more effectively to the disease and mitigate the risk of further destabilisation in the region,” Feinstein said in a letter to the president late on Thursday.

Iran is now a regional epicentre for the disease with more than 65,000 reported cases and 4,200 deaths. Amid the continuation of choking US sanctions, the Islamic Republic turned to the IMF for the first time in decades for funds.

But earlier this week, the Trump administration signalled that it will not allow the IMF loan to go through.

“The world’s leading state sponsor of terrorism is seeking cash to fund its adventurism abroad, not to buy medicine for Iranians,” a Trump administration official told Middle East Eye on Wednesday.

“The regime’s corrupt officials have a long history of diverting funds allocated for humanitarian goods into their own pockets and to their terrorist proxies.”

‘It is in our national interest and in the interest of international security, to help Iran contain this disease’

– Senator Dianne Feinstein

Feinstein’s letter follows numerous pleas by rights groups, world leaders and US lawmakers for Washington to ease sanctions against Iran.

But Trump and his top aides insist that sanctions are not affecting Iran’s response to the pandemic because they do not apply to food, medicine and humanitarian assistance. 

Advocates of lifting the sanctions argue that Iranians need funds to buy medical supplies and abide by economically painful social distancing measures to curb the spread of the disease. 

How it works

Iran had applied for an emergency loan from the IMF known as Rapid Financing Instrument (RFI), which covers countries’ urgent needs and does not require a fully-fledged reform programme.

Established in 1945, the IMF provides low interest loans to countries in financial crises. The lending is often accompanied by reform policies that the recipients must agree to in order to balance their finances.

RFI loan requests are approved by the IMF executive board – a 24-member body that represents 189 countries. Voting quotas on the board are based on the countries’ economic size and contributions to the organisation. 

The United States has by far the largest voting quota, amounting to 16.52 percent of the votes. As the biggest shareholder, Washington has huge sway over IMF policies. But even with Trump’s objections, other countries can still approve Iran’s plea for funds.

US to block Iran’s request for $5bn IMF loan to fight coronavirus

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IMF managing director Kristalina Georgieva said on Thursday that the organisation has increased funds for urgent requests and is working around the clock to meet demand for financial aid during the Covid-19 crisis.

“We are responding to an unprecedented number of calls for emergency financing – from over 90 countries so far,” Georgieva said in a video message

“Our executive board has just agreed to double access to our emergency facilities, which will allow us to meet the expected demand of about $100bn in financing.”

Earlier in the week, Iranian President Hassan Rouhani warned the IMF that global public opinion will be unforgiving against the organisation if it does not meet Tehran’s request.

“We are paying the International Monetary Fund and the World Bank our share, and part of our reserves are at their disposal,” he said

“It is not and will not be acceptable to us if they discriminate against us when considering our application for the loan. It will not be acceptable to the world public opinion either.”

Maximum pressure

The Trump’s administration’s intention to block the loan request comes after several rounds of new sanctions against the Islamic Republic since the Covid-19 outbreak started earlier this year. 

In 2018, Trump nixed the multilateral deal that saw Iran scale back its nuclear programme in exchange for lifting sanctions against its economy.

Coronavirus: Are US sanctions hurting Iran’s response to the pandemic?

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Since leaving the deal, known formally as the Joint Comprehensive Plan of Action (JCPOA), the US administration has been piling on damaging sanctions against various Iranian individuals, companies and economic sectors. 

But with the coronavirus spreading in and from Iran, critics of Trump’s “maximum pressure” campaign have called for suspending the sanctions – not only for the sake of Iranians but the entire region, including US troops and allies – who may suffer if the virus is not contained.

“To assuage concerns that Iran could divert the aid for other purposes, we should make our support contingent upon IMF oversight on how Iran spends the funds,” Senator Feinstein wrote in her letter to Trump on Thursday. 

“It is in our national interest and in the interest of international security, to help Iran contain this disease.”

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