U.S. to Block Iran's Request to IMF for $5 Billion Loan to Fight Coronavirus -- Update
April 07 2020 - 8:16PM
Dow Jones News
By Ian Talley in Washington and Benoit Faucon in London
The U.S. plans to block Iran's requested $5 billion emergency
loan from the International Monetary Fund for funding Tehran says
it needs to fight its coronavirus crisis.
Senior officials in the Trump administration said Iran's
government has billion-dollar accounts still at its disposal. If
allowed to tap IMF financing, the officials said, Tehran would then
be able to divert those or other funds to help its economy, which
has been weakened by U.S. sanctions, or finance militants in the
Middle East, rather than on containing the pandemic.
Iranian "officials have a long history of diverting funds
allocated for humanitarian goods into their own pockets and to
their terrorist proxies, " one of the administration officials
said.
The IMF, which is facing urgent funding requests from scores of
governments, said it is in talks with Tehran to determine its
eligibility for an emergency loan.
The pandemic has torn through Iran, one of the worst-affected
countries, and jolted an Iranian economy already reeling from the
Trump administration sanctions under its "maximum pressure
campaign." Despite calls from some humanitarian groups and other
nations to ease the sanctions, the administration has instead said
it won't relent in putting pressure on Tehran.
Iran's representative at the United Nations didn't respond to a
request for comment on the U.S. decision on IMF funding. Iranian
officials have called the U.S. sanctions amid the pandemic "medical
terrorism" and said U.S. offers of humanitarian assistance to help
fight the coronavirus are "deceptions and lies."
As the IMF's largest shareholder, the U.S. largely determines
the fate of bailout requests, though technically IMF member
countries could amass a majority of votes to approve Iran's loan
even with U.S. opposition.
An Iranian official said Tehran would like to entice the U.S.
not to block the IMF request. The official cited Michael White, a
U.S. Navy veteran who was released from an Iranian prison on
medical furlough last month to the Swiss Embassy amid the worsening
coronavirus outbreak. He must stay in Iran under his bail
conditions.
Instead of exchanging prisoners as in the past, the Iranian
official said, this time Iran would prefer access to funds, such as
the IMF loan or the release of blocked Iranian funds in the
U.S.
The State Department says Tehran has sufficient funds to battle
the pandemic, including billions of dollars in its National
Development Fund, a sovereign-wealth fund drawn from oil and gas
revenues, as well as funds controlled by Iranian Supreme Leader Ali
Khamenei.
Brian Hook, the State Department's special representative on
Iran, said in an earlier interview that Tehran should redirect
funds for military operations in Syria and attacks in Iraq toward
fighting the health crisis at home.
Beyond denying an IMF loan, the U.S. is also opposed to Tehran
tapping the roughly $5 billion in reserves held in its account at
the IMF due to the likelihood the funds would be diverted, one of
the officials said.
For the IMF, Iran's request is the first Tehran has made to the
fund in over six decades, and many nations have stepped up
criticism of U.S. sanctions during the pandemic. Still, the U.S.
recently approved a sizable increase in the IMF's lending
reserves.
The U.S. government is required by law to vote against IMF aid
to countries designated as state sponsors of terror, as Iran is,
though some experts believe humanitarian exceptions would allow for
abstentions or even approval of bailouts.
As it has tightened sanctions, the Trump administration has also
pointed to humanitarian exemptions and to financing channels, like
the one set up by the U.S. and Switzerland, to allow for such
humanitarian trade.
Brian O'Toole, a former senior Treasury Department official in
the Obama administration, said that the U.S. should promise not to
veto an Iranian loan from the IMF "to purchase humanitarian goods,
assuming sufficient oversight to prevent diversion."
Still, banks and companies, fearful of U.S. penalties for
circumventing sanctions, have shunned transactions, even those
permitted for humanitarian purposes. Industry officials and
analysts have said that is in part because during the Obama
administration Iran was caught using false invoices for exempted
humanitarian trade to evade sanctions.
Write to Ian Talley at ian.talley@wsj.com and Benoit Faucon at
benoit.faucon@wsj.com
(END) Dow Jones Newswires
April 07, 2020 20:01 ET (00:01 GMT)
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