By Ian Talley
WASHINGTON — The International Monetary Fund on Wednesday approved a $ 17 billion emergency rescue package to prevent a collapse of Ukraine’s economy, marking a rare moment of consensus between Russia and Western nations battling over the former Soviet state.
The sign-off lets the new government in Kiev tap more than $ 3 billion in IMF aid within days. It also unlocks an additional $ 15 billion in international financing, including loans and other funding from the U.S., Europe and the World Bank.
The bailout from the world’s emergency lender represents far more than financial aid for a failing economy. The high-risk emergency loan was whipped together in a matter of weeks and approved unanimously by the fund’s top shareholders despite an escalating sanctions fight that has the West–particularly the U.S. and Europe–pitted against Russia over Moscow’s attempts to annex the eastern regions of the country.
“You’re seeing a mutual agreement on creating a financial safety net to ensure that whatever the political outcome, the county’s economic prospects are not so horrifically damaged that whoever wins ends up with a poisoned chalice, a failed state,” said Douglas Rediker, a visiting fellow at the Peterson Institute for International Economics and former U.S. representative to the IMF’s executive board.
Still, the unified backing masks mixed motives.
For the U.S. and Europe, the agreement serves as a political lifeline for the fledgling government in Kiev, which is caught in the middle of a standoff between Russia and the West in one of the region’s tensest standoffs since the end of the Cold War.
For Russia, the IMF loan will help prevent the failure of one of its most important trading partners and ensure that billions of dollars in past-due energy bills are paid to Russian companies.
At the same time, Moscow plans to invest around $ 4 billion in eastern Ukraine and promote it as a contrast to the IMF-run program that requires austerity. That would help the Kremlin continue to cultivate pro-Russia politics in Ukraine.
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