EU studies curbing Russia’s rights in the IMF after invasion

Officials of the European Union (EU) are examining the possibility of curbing Russia’s influence and its access to financing in the International Monetary Fund (IMF) after its invasion of Ukraine, six officials have told Reuters.

This scenario now being discussed would increase pressure on Russia’s economy and financial system and would also mark an important symbolic step, deepening Moscow’s international isolation.

Pulling Russia out of the institution altogether is one option being considered, the officials said, though some said that would be difficult, if not impossible.

“It’s being debated, but expelling Russia entirely is probably unrealistic due to the quorum requiredsaid a senior euro zone official, referring to the broad support needed among countries including China.

Other options being examined include suspending Russia’s voting rights, as well as blocking its access to a special IMF currency, Special Drawing Rights, the officials said.

An IMF spokesman did not immediately comment.

Russia has been left economically isolated after its forces invaded Ukraine in the biggest assault on a European state since World War II. Moscow calls the assault “special operation”.

The IMF restrictions could form part of another round of sanctions, as the war in Ukraine enters its second week.

Russia has already been affected by the freezing of the assets of its central bank, the prohibition of access to the airspace of the EU, Canada and the United States, the withdrawal of several of its from the Swift international payment system and the sanctions on a group of tycoons

The United States and the EU are now concerned that Moscow, deprived of much of its $630 billion in reserves, could access the $17 billion in IMF reserves it received last year when the IMF increased them to fight the COVID-19 pandemic.

Special Drawing Rights (SDRs) are an IMF currency based on a basket of dollars, euros, British pounds, yen and yuan. To spend the $17 billion in SDRs, Russia would have to find countries willing to redeem them, a prospect seen as unlikely.