The cabinet reacted to the proposal by saying that such a move would have negative consequences
FILE PHOTO: The IMF logo © Celal Gunes / Anadolu Agency via Getty Images
MPs from Russia’s Communist Party have sponsored a bill that seeks to terminate the nation’s participation in major Western-dominated international financial organizations, including the International Monetary Fund (IMF) and World Bank. The cabinet, however, opposed the proposal, citing the risks that doing so would entail.
Russia joined the IMF and World Bank Group in 1992. Sponsors of the bill, which was introduced in the lower chamber of the Russian parliament on Tuesday, seek to repeal that decision.
The lawmakers, including party head Gennady Zyuganov, argued that the country would be better off outside of such organizations. Voting rights in both are organized in a way that gives the US and its allies a dominant position, while Russia barely has any impact on decision-making, they claimed.
The IMF has failed to oppose economic sanctions on Russia, acting against its stated goals of fostering economic development and international trade, the MPs added. Meanwhile, the World Bank is “directly financing unfriendly states,” they maintained, referring to its projects in Ukraine.
The US is preventing Russia from benefiting from IMF membership through assets known as Special Drawing Rights (SDRs), which nations are allocated depending on their quotas in the fund. Hypothetically, Moscow could borrow from another nation using its SDRs as collateral, but Washington has pledged to block any such deal.
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While the majority of nations belong to the IMF and World Bank, a handful did not join. Taiwan was kicked out in 1980, after Washington switched its diplomatic recognition of China from Taipei to Beijing.
One prominent founding member, Cuba, infamously pulled out of both in the 1960s, following the revolution led by Fidel Castro. The new government nevertheless repaid an IMF loan taken out by the government of ousted dictator Fulgencio Batista.
There is no agreement in Moscow on whether it should follow Havana’s example. The Russian cabinet said it objected to the proposal due to the “significant negative consequences” such a move would entail.
Some of Moscow’s programs of cooperation with friendly nations, such as the members of BRICS, are tied to its membership in the financial institutions. Leaving the IMF would also jeopardize the repayment of loans that Russia had extended through its mechanisms, the government explained.
