WASHINGTON: The International Monetary Fund is facing pressure to reevaluate how it imposes fees on loans it disperses to needy countries like war-torn Ukraine — which is one of the fund’s biggest borrowers.
The move comes as more countries will need to turn to the IMF, as food prices and inflation internationally continues to rise.
Surcharges are added fees on loans imposed on countries that are heavily indebted to the IMF.
Treasury Deputy Secretary Wally Adeyemo said in Aspen last month that finance ministers of several countries realize they have to pay a price for Russia’s war in Ukraine, especially with food prices going up.
“They’re going to have to go to the IMF, they’re going to need to find assistance,” Adeyemo said.
However, the IMF fee system could change through USlegislation. An amendment to the National Defense Authorization Act, otherwise known as the defense spending bill, would suspend IMF surcharges while their effectiveness and burden on indebted countries is studied.
That was passed by the US House in July. The Senate is expected to vote on its defense bill in September. A representative of the Senate Armed Services Committee said an amendment may be offered in the next few weeks or even on the Senate floor.
As the largest IMF shareholder and member of the Fund’s executive board, the US can push for policy decisions and unilaterally veto some board decisions.
Citing worsening financial crises in Sri Lanka and Pakistan as examples, some accuse China of engaging in debt trap diplomacy — or having countries falls so deeply in debt to that they are beholden to it on international issues.
Advocates and civil rights organizations lodge the same complaint against the Fund, who claim the organization undercuts its core lender-of-last-resort role with countries in vulnerable positions to pay back debt.
With an ever-worsening risk of a global debt crisis and rising interest rates, the issue has become more pressing for countries looking to reduce their deficits.
However, some economists and representatives of the fund say the surcharges amount to responsible lending behavior, as they provide an incentive for members with large outstanding balances to repay their loans promptly. This applies especially for countries that may otherwise may not be able to obtain financing from private lenders.
Maurice Obstfeld, a Berkeley economics professor and former IMF research department director said as a lender of last resort, the Fund’s ability to lend is important as low and middle income countries face rising interest rates.
“The Fund’s staff is small and in a crisis, its efforts are better deployed serving member countries’ needs,” he said in an email to The Associated Press. “Surcharges could be relaxed temporarily in the face of intense pressures on borrowing countries, but at the expense of the Fund’s ability to serve its membership in the longer term.”
Illinois Congressman Jesús “Chuy” García, who offered the defense spending amendment, told The Associated Press “it is unfair for the IMF to require countries like Ukraine that are already deep in debt to pay surcharge fees. These surcharges increase poverty and hold back our global economic recovery.”
Ukraine’s projected real GDP is expected to decline by 35 percent, due in large part to Russia’s invasion of Ukraine, according to IMF data.
The country, engaged in a war with no projected end, has an outstanding balance of 7.5 billion SDRs — an IMF accounting unit valued at around $9.8 billion according to Ukrainian central bankers. The latest figures estimate that Ukraine will owe the IMF $360 million in surcharges between 2021 and 2023.
Economists Joseph Stiglitz at Columbia University and Kevin P. Gallagher at Boston University wrote earlier this year that “forcing excessive repayments lowers the productive potential of the borrowing country, but also harms creditors” and requires borrowers “to pay more at exactly the moment when they are most squeezed from market access in any other form.”
Serhiy Nikolaychuk, Deputy Chairman of the National Bank of Ukraine, said Ukraine is continuing to pay its debts “despite Russia’s full-scale war against Ukraine.”
“Our country will pay its debt and surcharges under previous programs and fulfill its obligations to the IMF,” Nikolaychuk said. “It will be difficult, but we will pay.”
For years, lawmakers, economists and civil rights organizations have called on the IMF, which has for decades loaned billions to low-income countries, to end its surcharge policy.
In January, 18 left-leaning lawmakers wrote to Treasury calling for the surcharge policy to be eliminated. And in April, a group of 150 civil society groups and individuals signed an open letter to the IMF, asking for the same, calling surcharges “regressive.”
A spokesperson for the fund says the surcharges are designed to discourage large and prolonged use of IMF resources.
“They only apply to countries with particularly large outstanding loans,” Mayada Ghazala said in an emailed statement, adding that poorest countries are exempt from the surcharges.
The fund’s executive board met in December 2021 and discussed the role of surcharges — it ultimately decided not to make a change to the fees, but said they would review them again in the future.
The IMF was created in 1944 at the United Nations Bretton Woods Conference — one of its missions is lending to maintain the financial stability of countries. Among its 190 countries, it lends around $1 trillion, according to the organization’s website.
An April review of the fund’s financial health for fiscal year 2022 and 2023 states that lending income excluding surcharges “remain strong and are expected to exceed expenses in FY 2023–2024.”
Andrés Arauz, a senior research fellow at the liberal Center for Economic and Policy Research says the IMF’s financial position shows “the surcharges are not necessary for sound finances.”
“There is no excuse for the IMF to be punishing countries under debt stress with surcharges,” he said. “There is also no logic to it, the amount of money that the IMF raises from surcharges is trivial relative to its income and capacity.”
Garcia said “I’m proud the House passed my amendment to support a pause and review of surcharges at the IMF, and I will keep up the fight until the President signs it into law.”
Separately, the US has sent roughly $7.3 billion in aid to Ukraine since the war began in late February, including a new $775 million defense aid package announced Friday.
IMF fees on war-torn countries closer to elimination
https://arab.news/c67bd
IMF fees on war-torn countries closer to elimination
- Citing worsening financial crises in Sri Lanka and Pakistan as examples, some accuse China of engaging in debt trap diplomacy
- A spokesperson for the fund says the surcharges are designed to discourage large and prolonged use of IMF resources
How Latin American Muslims observe Ramadan amid sadness and solidarity with Gaza
- Mosques throughout the region have launched charity efforts and awareness campaigns for Palestinians
- Community leaders say the holy month has been more subdued than usual owing to the suffering in Gaza
SAO PAULO: Throughout Latin America, Muslim communities are observing Ramadan this year without the atmosphere of festivity that is common during the iftar meal owing to the suffering in Gaza, where more than 32,000 Palestinians have been killed since the war began on Oct. 7.
“This will be one of the worst Ramadan celebrations for us,” said Bashar Shakerat, a community leader in an area on the border between Uruguay and Brazil called Little Palestine due to the relatively high concentration of Palestinian immigrants.
“We’re praying at the mosque and there’s no festivity later. Everybody is sad.”
On Sundays during Ramadan, women traditionally cook large meals and people gather at the social club to celebrate. On weeknights, groups usually gather at home for iftar. Shakerat said nothing like that is happening this year.
“We just want to pray and stay quiet at home,” he told Arab News. “We just want this war to be over. We’re tired. We want peace.”
Born in the Palestinian city of Jenin, Shakerat said he has family in the Israeli-occupied West Bank, as do many of the residents of Little Palestine.
“We traditionally collect food kits and distribute them among needy families in our city. We know that our brothers and sisters in Palestine are also starving,” he added.
Muslim communities in Latin America do not have a high number of Palestinians. Even so, the feeling of closeness to Gazans is omnipresent.
“Our mosque was founded decades ago by Palestinian immigrants. They moved to other cities or died over the years, and now most of our community are Africans or Brazilians,” Turkish-born Sheikh Adil Pechliye, spiritual leader of Palestine Mosque in the Brazilian city of Criciuma, told Arab News.
Despite the demographic change in the community, the mosque’s members still have a deep connection to Palestine, said Pechliye, who graduated in Madinah in 2001.
“We’ve joined Criciuma’s pro-Palestine committee, and have been active in protests and marches against the genocide in Gaza,” he added.
Pechliye has been giving lectures on Palestine, and gave a Friday sermon in a public square a few weeks ago in order to disseminate information on Gaza.
A couple of months ago, the Muslim community promoted a relief campaign and sent aid to the Palestinian enclave.
Pechliye believes that most Brazilians support the Palestinians despite the pro-Israel stance of the Brazilian press.
He praised President Luiz Inacio Lula da Silva, who has been fiercely critical of Israel and even compared what is happening in Gaza to the Holocaust.
“The Holocaust was undeniably terrible, but I don’t think Lula tried to downplay its seriousness. He wanted to emphasize the horror of what’s happening now,” Pechliye said.
In the city of Santa Ana in El Salvador, the Muslim community also gathers to pray at a mosque named Palestine.
Mezquita Palestina Tierra Santa was founded in 2011 by a community that is almost completely made up of converted Salvadorans.
“We wished to honor Armando Bukele, who introduced Islam to El Salvador and whose family came from Palestine,” Sheikh Guillermo Sanchez told Arab News.
Bukele was born in El Salvador to Christian parents from Palestine, but he converted to Islam and was an imam for several years. His son Nayib is the current president of El Salvador.
Sanchez said his community “has strong ties with Palestine, and has been struggling to support Gazans in every way possible. A few weeks ago, we promoted a campaign to collect donations and sent it to Gaza.”
In the Colombian city of Cali, the Muslim community is in constant sorrow for the Palestinians, said Egyptian-born Sheikh Amr Nabil.
“At night we’ll have something to eat with our brothers here, but Gazans won’t have anything,” he told Arab News. “That’s very painful, and at the same time it helps us understand the injustices of our world.”
Since the beginning of Ramadan, the community in Cali has been praying for the Palestinians, and leaders such as Nabil have been giving lectures about Palestine and the roots of the conflict.
“I believe that only somebody who is completely uninformed about the Palestinian struggle is capable of supporting the ongoing genocide, or it’s a person who has completely lost humanity,” he said.
Colombian President Gustavo Petro has criticized on several occasions Israel’s attacks on Gaza. Many Muslims in the South American nation support his stance.
“His declarations are those of a human being who expressed solidarity to a people that’s being massacred. We appreciate it very much,” Nabil said.
Sheikh Abu Yahya, a Mexican-born community leader who converted to Islam 12 years ago, told Arab News this is “the most difficult Ramadan. Our community in (the city of) Leon is formed by Mexican converts and by Muslims from Arab countries. We’re all equally sad.”
He said the community has been focusing on “developing empathy and suffering together with those who are suffering, so prayers for the Palestinians have been constant.”
Abu Yahya added: “We decided to take part in the local pro-Palestinian committee. We’ve been taking part in several activities and sharing information about Palestine.”
He said amid pro-Israel campaigns in the Mexican media, many Mexicans do not have adequate information about what is happening in Gaza.
“That’s noticeable during our lectures, but when people discover the reality, they express their solidarity with the Palestinians,” he added.
Many Latin Americans have been receiving information and images of the victims in Gaza via social media, which has been impacting the perceptions of a growing number of people in the region.
“The war doesn’t spare anyone, and hunger is undoubtedly the worst way of dying. That’s why it’s impossible not to think about Gazans during Ramadan,” said Shakerat.
Zelensky tells US House speaker: quick passage of military aid is vital
- Republican Speaker Mike Johnson has held up a bill for months that would supply $60 billion in military and financial aid for Ukraine
- “We recognize that there are differing views in the House of Representatives on how to proceed, but the key is to keep the issue of aid to Ukraine as a unifying factor,” Zelensky said
KYIV: President Volodymyr Zelensky told the speaker of the US House of Representatives during a phone call on Thursday that it was vital that Congress passes a new military aid package for Kyiv rapidly.
Republican Speaker Mike Johnson has held up a bill for months that would supply $60 billion in military and financial aid for Ukraine.
“Quick passage of US aid to Ukraine by Congress is vital. We recognize that there are differing views in the House of Representatives on how to proceed, but the key is to keep the issue of aid to Ukraine as a unifying factor,” Zelensky said on X.
Ukrainian troops are on the back foot on the battlefield, facing shortages of artillery supplies with the US assistance held up in Congress and the European Union failing to deliver on time munitions that it had promised earlier.
In a statement, Zelensky said he briefed Johnson about the situation on the battlefield and also spoke about “the dramatic increase in Russia’s air terror.”
Last Friday, Russia conducted its largest air strike on Ukraine’s energy system since invading in February 2022, damaging power units at a major dam and causing blackouts for more than a million people.
Moscow has described its recent attacks as part of a series of “revenge” strikes in response to Ukrainian attacks on Russian regions. Russia has increased its use of harder-to-stop ballistic missiles. It denies targeting civilians, though many have been killed in its strikes.
Poland raids Russian spy network targeting EU
- The services said their operations were linked to charges filed earlier this year against a Polish citizen suspected of spying for Russia
- The Internal Security Agency is conducting activities as part of an investigation into espionage activities for Russia directed against European Union countries and institutions
WARSAW: Polish security services said Thursday they had raided a Russian spy network in cooperation with Czech intelligence, which a day earlier had busted a major Russian propaganda network.
The services said their operations were linked to charges filed earlier this year against a Polish citizen suspected of spying for Russia.
“The Internal Security Agency is conducting activities as part of an investigation into espionage activities for Russia directed against European Union countries and institutions,” agency spokesman Jacek Dobrzynski said on social media.
He added in a statement that the agency had carried out raids in the capital Warsaw and the southern city of Tychy and interrogations in connection with the case.
He said the spy network’s “goal was to implement the Kremlin’s foreign policy objectives, including weakening Poland’s position on the world stage, discrediting Ukraine as well as the image of EU organs.”
“The operations carried out are the result of the agency’s international cooperation with a number of European services, coordinated in particular with Czech partners.”
Dobrzynski added that the security agency’s operations began from an investigation that in January resulted in charges against a Polish citizen suspected of Russian espionage.
“The man, embedded in Polish and EU parliament circles, carried out tasks commissioned and financed by colleagues from Russian intelligence,” he said in the statement.
These tasks notably included “propaganda activity, disinformation as well as political provocation. Their objective was to build Russian spheres of influence in Europe.”
The security agency has not revealed the man’s identity.
The Czech Republic announced on Wednesday that it had busted a Moscow-financed network that spread Russian propaganda and wielded influence across Europe, including in the European Parliament.
Prague said the group used the Prague-based Voice of Europe news site to spread information seeking to discourage the European Union from sending aid to Ukraine, which has been battling a Russian invasion since February 2022.
The Czech government has added the Voice of Europe and two pro-Kremlin Ukrainian politicians — Viktor Medvedchuk and Artem Marchevsky — to its sanctions list in relation to the network’s activities.
The Denik N daily said the news site had published statements by politicians demanding the EU halt aid to Ukraine.
Some European politicians cooperating with the news site were paid from Russian funds that in some cases also covered their 2024 EU election campaign, the daily adds.
The payments targeted politicians from Belgium, France, Germany, Hungary, the Netherlands and Poland, Denik N said, citing a Czech foreign ministry source.
Asked about the network, a spokeswoman for the German interior ministry said “this case is another example of Russia’s extensive and wide-ranging influence activities.”
“The Federal Republic of Germany also remains an important target of Russian influence operations,” she told AFP.
“The German security authorities will continue to use all available means and in cooperation with their foreign partners to investigate such influence operations and take measures to prevent them.”
Moscow attack death toll rises to 143: authorities
- By Wednesday afternoon, 80 people injured in the attack, including six children, remained in hospital
- The previous day that many people in shock had initially not returned to the hospital for treatment
MOSCOW: The death toll from the attack on a Moscow concert hall claimed by Islamic extremists rose on Wednesday to 143, Russian authorities said.
Authorities listed the names of the dead on the Russian ministry for civil defense and emergency situations five days after last Friday’s attack, the deadliest claimed to date by Daesh on European soil and the worst in Russia in two decades.
By Wednesday afternoon, 80 people injured in the attack, including six children, remained in hospital, TASS news agency quoted Russian Health Minister Mikhail Murashko as saying.
An anonymous medical source told TASS 205 people had received outpatient care.
Russian Deputy Prime Minister Tatiana Golikova told reporters the previous day that many people in shock had initially not returned to the hospital for treatment.
On Friday, gunmen opened fire at the Crocus City concert hall near Moscow, also setting fire to the venue.
Four attack suspects — all from Tajikistan according to Russian state media — are under arrest along with several suspected accomplices.
A Moscow court has ordered the men be held in pre-trial detention until May 22 — a date likely to be extended until a full trial.
Russia said Saturday it had arrested 11 people in connection with the attack. There has been no information on the other seven.
The attack was swiftly claimed by Daesh although Moscow has repeated its initial line of a link to Ukraine.
Kyiv rejects any involvement.
Russia has for some years been a target of Daesh owing to its role in suppressing unrest in regions with a substantial Muslim majority as well as its support for the regime in Syria’s civil war.
On Monday, three days after the attack, President Vladimir Putin admitted for the first time that the presumed gunmen were radical Islamists but continued to insist on a link to Ukraine, saying the perpetrators were headed there when they were caught some 150 kilometers (93 miles) from the border.
French parliament condemns 1961 Paris massacre of Algerians
- In recent years France has made a series of efforts to come to terms with its colonial past in Algeria
- The text of the resolution, which is largely symbolic, stressed the crackdown took place “under the authority of police prefect Maurice Papon”
PARIS: The French parliament’s lower house on Thursday approved a resolution condemning as “bloody and murderous repression” the killing by Paris police of dozens of Algerians in a crackdown on a 1961 protest to support Algerian independence.
In recent years France has made a series of efforts to come to terms with its colonial past in Algeria.
Dozens of peaceful demonstrators died during a crackdown by Paris police on a protest by Algerians in 1961. The scale of the massacre was covered up for decades by French authorities before President Emmanuel Macron condemned it as “inexcusable” in 2021.
The text of the resolution, which is largely symbolic, stressed the crackdown took place “under the authority of police prefect Maurice Papon” and also called for the official commemoration of the massacre.
The bill, put forward by Greens lawmaker Sabrina Sebaihi and ruling Renaissance party MP Julie Delpech, was approved by 67 lawmakers, mainly representatives of the left and Macron’s party.
Eleven voted against, all members of the far-right National Rally party.
Sebaihi said the vote represented the “first step” toward the “recognition of this colonial crime, the recognition of this state crime.”
The term “state crime” however does not appear in the text of the resolution, which was jointly drafted by Macron’s party and the Elysee Palace. The subject remains highly sensitive both in France and Algeria.
The Paris police chief at the time, Papon, was in the 1980s revealed to have been a collaborator with the occupying Nazis in World War II and complicit in the deportation of Jews. He was convicted of crimes against humanity but later released.
On the 60th anniversary of the bloodshed in 2021, Macron acknowledged that several dozen protesters had been killed, “their bodies thrown into the River Seine.”
The precise number of victims has never been made clear and some activists fear several hundred could have been killed.
“Let us spare a thought here today for these victims and their families, who have been hit hard by the spiral of violence,” Dominique Faure, the minister for local and regional authorities, said on Thursday.
She noted that efforts had been made in the past to recognize the massacre.
In 2012, then president Francois Hollande paid “tribute to the victims” of a “bloody crackdown” on the men and women demonstrating for “the right to independence.”
The rally was called in the final year of France’s increasingly violent attempt to retain Algeria as a north African colony, and in the middle of a bombing campaign targeting mainland France by pro-independence militants.
However, Faure expressed reservations about establishing a special day to commemorate the massacre, pointing out that three dates already existed to “commemorate what happened during the Algerian war.”
“Much remains to be done to write this history, but in my opinion this is the only way to build a sincere and lasting reconciliation,” she said.
“I think it is important to let history do the work before considering a new day of commemoration specifically for the victims of October 17, 1961.”
Algerian President Abdelmadjid Tebboune is set to travel to France for a state visit, scheduled for late September or early October, according to the Elysee.
However, National Rally lawmaker Frank Giletti criticized “excessive repentance” based on “lies.”
“By proposing this resolution, you are following in the footsteps of Emmanuel Macron, who has never stopped kneeling before the Algerian government, and who is working to mortify his own country through continuous repentance that has become unbearable,” he said.
France has made several attempts over the years to heal the wounds with Algeria, but it refuses to “apologize or repent” for the 132 years of often brutal rule that ended in 1962 after a devastating eight-year war.
French historians say half a million civilians and combatants died during the war for independence, 400,000 of them Algerian. The Algerian authorities say 1.5 million were killed.