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Arkansas, Belt and Road, British PM, China, COVID-19, debt, French Hill, IMF, Iran, Japan, Rehman Chishti, rogue regimes, Russia, SDRs, Skripal poisoning, Special Drawing Rights, UK Parliament
UK Member of Parliament Rehman Chishti is one of the many hoping to become British Prime Minister.
“ICYMI: U.S. REP. FRENCH HILL & MEMBER OF PARLIAMENT REHMAN CHISHTI:
“G7 MUSTN’T LET DICTATORSHIPS OFF THE FINANCIAL HOOK”
Washington, May 12, 2021
WASHINGTON, D.C. – U.S. Rep. French Hill (AR-02) joined Member of Parliament for Gillingham & Rainham Rehman Chishti in an opinion piece featured in The Times Redbox on the International Monetary Fund’s plans to issue $650 billion in Special Drawing Rights.
The full op-ed is transcribed below:
G7 mustn’t let dictatorships off the financial hook
By U.S. Congressman French Hill & UK Member of Parliament Rehman Chishti
A policy issue that might be flying under the radar is the International Monetary Fund’s plan to issue $650 billion in Special Drawing Rights (SDRs) to its global membership this summer. But make no mistake: SDRs should not be flying under the radar as they are as significant as they are arcane, since governments can trade them in for hard currency without ever having to repay them.
While the IMF hopes the world will use these funds to beat back Covid-19, SDRs come with no strings attached, so vigilance is essential. Unless the IMF’s top shareholders in the G7 capitals insist on conditions for SDRs, the IMF will aid the richest nations and fuel rogue regimes and terror states rather than helping the neediest.
China is a case in point. Now the largest official creditor in the world, China has saddled dozens of countries in the developing world with unsustainable debts that don’t conform to international lending standards, threatening to drag down weak economies as they emerge from the pandemic.
While G7 countries have done important work to force Beijing into suspending debt service and ensuring its lending terms are more transparent, SDRs from the IMF could well set back those efforts.
In Sub-Saharan Africa, for instance, forcing China to restructure its obligations will only become harder when the continent acquires its $40 billion share of new SDRs. Beijing itself will see little need to comply with G7 calls for credit reform after the IMF has sent China’s borrowers an infusion of no-strings-attached liquidity.
At least some in the G7 recognize these dangers, with the United States treasury secretary Janet Yellen testifying to Congress in March that SDRs shouldn’t go to repay loans from China’s Belt and Road Initiative. Taro Aso, Japan’s finance minister, has understandably said that there’s “no point” in SDRs if they go to pay off Beijing.
This is why the G7 should secure a concrete commitment from China on debt restructuring and Chinese adherence to international standards – including those of the Paris Club creditors’ group and the Organisation for Economic Co-operation and Development’s export subsidy rules – before they sign off on additional SDRs.
Of course, the UK and the United States have previously worked together to challenge human rights abuses in Xinjiang by imposing Magnitsky-style sanctions on Chinese officials.
SDRs would also represent a strategic coup for Russia, which stands to gain more than $17 billion in hard currency. Following the Skripal poisoning in the UK in 2018, the US prohibited dealings in the primary market for Russia’s non-ruble sovereign bonds.
Britain and America also acted swiftly and firmly together to challenge unacceptable Russian behaviour around the world, including expelling its diplomats after the poisoning.
President Biden recently went further by targeting rouble-denominated debt in light of Russia’s international aggression, cyberattacks and targeting of regime critics.
It would be lunacy for the IMF to now hand over billions of dollars in SDRs to Moscow while the US, the UK and other G7 countries are exerting pressure on Russia through financial sanctions.
The same goes for international outcasts such as Iran and Syria, which would benefit from more than $5 billion in SDRs under the IMF’s plan. As with Russia, the G7 democracies can’t afford to reward autocrats in the name of responding to Covid-19. This is especially true as the EU seeks to broker talks between the U.S. and Iran on Tehran’s nuclear ambitions, all while the Iranians have kicked their enrichment of uranium into high gear.
Yet again, the international community has witnessed Iran’s unacceptable behaviour with the continued detention of Nazanin Zaghari-Ratcliffe, despite her having already served an unjustified and deplorable period of detention. Now is the time for negotiations, not premature giveaways.
While the Biden administration has hinted it would refuse to provide dollars to unfriendly governments bearing SDRs, including Iran, it can’t control other major currencies. Although it’s unlikely that America or Britain would exchange Iran’s SDRs into dollars or pounds, there’s nothing stopping Iran from turning to Beijing to exchange its $4.9 billion worth of SDRs into renminbi.
As the UK prepares to host the next G7 summit in June, British and American leaders should mobilize support among allies to turn away any request to redeem SDRs from rogue regimes, depriving them of unconditional access to dollars, euros, sterling, and yen.
Alternatively, the G7 could simply push for the IMF to selectively issue SDRs, thus bypassing countries of concern. This tool, dubbed a “special allocation”, would focus the IMF’s resources on countries with the weakest public health systems, including those in Africa. The IMF carried out a special allocation as recently as 2009 when it last allocated SDRs to its members.
Ending the Covid-19 pandemic means ending it everywhere. The US and the UK need to continue working together in a co-ordinated manner, just as they are providing support to India during their current devastating Covid-19 wave.
Rich countries must do their part to help the poor fight the virus and rejoin the global economy. But that doesn’t excuse lavishing SDRs in ways that will benefit regimes with little regard for international norms and the needs of their citizens.
The IMF seems to believe that SDRs are the easiest option to reassert its relevance as the world overcomes the effects of Covid-19, but failing to target those resources could end up benefiting precisely those countries that are least interested in international values.
The IMF takes its cues from its members, and none more so than large developed economies of the G7. They need to speak out before it’s too late.“ https://hill.house.gov/news/documentsingle.aspx?DocumentID=8471 https://hill.house.gov/biography/
“I’m standing to be the next leader of the Conservative Party and your Prime Minister. For me it’s about aspirational conservatism, fresh ideas, fresh team for a fresh start”: https://www.facebook.com/RehmanChishti/videos/3153590121570163/
He served as an advisor to Benazir Bhutto: https://en.wikipedia.org/wiki/Benazir_Bhutto
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