MADISONVILLE, La. – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, today urged U.S. Treasury Secretary Janet Yellen to stop the International Monetary Fund’s (IMF) from flowing to the Taliban terrorist group.
The Biden administration has been a proponent of the $650 billion allocation of special drawing rights (SDRs), which would send more than $400 million to Afghanistan. The IMF allocation is set for Aug. 23.
“During our meeting last May, I urged you to halt your pursuit of approving Special Drawing Rights under the guise that an allocation would provide foreign aid during the COVID-19 pandemic. As I noted, the bulk of the funds from an SDR allocation would wrongly benefit G20 countries—the wealthiest economies in the world—while millions would go to our adversaries, state sponsors of terrorists, and countries that have perpetrated genocide. It is my understanding that Afghanistan, under the approved allocation, is expected to receive $450 million in SDRs, a portion of which is scheduled to arrive in Afghanistan by next week,” wrote Kennedy.
“As the Taliban has seized power in Afghanistan, just two weeks before the U.S.’s troop withdrawal, it is clear these SDRs will fall into their hands. Not only that, but since the U.S.’s withdrawal in Afghanistan, many adversarial governments are poised to extend economic and diplomatic influence over Afghanistan. This is evident as both China and Russia have indicated they would formally recognize the Taliban as Afghanistan’s legitimate government,” Kennedy continued.
“The Biden Administration must not allow the Taliban to gain legitimacy in economic or diplomatic dealings with the U.S. or abroad. The Taliban never intended to abide by the terms of the peace deal, and this administration should not bend to the false promises of the Taliban,” he explained.
“With this in mind, I urge you to block the nearly half a billion dollars that is headed to Afghanistan under the Taliban’s rule. Furthermore, I ask the Treasury Department and the IMF to end the use of SDRs as a means of foreign aid to countries like China, Iran, and Russia, who continue to support this terrorist regime,” Kennedy concluded.
Text of the letter is available here.
In March, Kennedy questioned Yellen on why the Biden administration is circumventing Congress to burden American taxpayers with SDRs that would go to regimes that oppress their citizens and actively oppose American interests, such as China and Russia.
In June, Kennedy introduced the No Dollars for Dictators Act. The legislation would prohibit allocations of special drawing rights at the IMF from going to perpetrators of genocide and state sponsors of terrorism unless Congress authorizes the allocation.
The IMF distributes special drawing rights according to each country’s economic standing in the global economy. That means the world’s wealthiest countries receive the most special drawing rights of all IMF members.
The president’s justification for supporting the proposed allocation is to allow low-income countries to exchange their special drawing rights for currency to fund efforts to combat the coronavirus pandemic. Under the proposed allocation, however, the countries with the 19 largest economies in the world would receive $426 billion—the bulk of the special drawing rights. The 24 poorest countries would receive only three percent of the allocation, or $21 billion.
China alone would receive $22 billion in special drawing rights, which is more than the total that all of the poor countries combined would receive. Russia would receive $18 billion. In addition to sending billions of dollars to Xi Jinping and Vladimir Putin, the allocation would send billions in aid to Hassan Rouhani, Bashar al-Assad and Nicolas Maduro.
State sponsors of terrorism would also receive aid from the allocation President Biden has approved. Iran would receive $3.5 billion, and Syria would receive $900 million.
While some have claimed that special drawing rights offer the U.S. a no-cost way to assist poor countries, this is demonstrably false. This IMF allocation would require the U.S. to issue debt in order to cover the loans issued through special drawing rights. The U.S. would have to pay interest on that debt, and that interest would exceed any interest that the U.S. may receive on the loans it issues.
There is no requirement that countries that receive loans from the U.S. through special drawing rights ever repay the principal. As a result, the financial burden of these loans will fall on the U.S. taxpayer.