European Union officials are reportedly looking at how to curb Russia’s influence within the International Monetary Fund (IMF), even to the extent of exploring the possibility of kicking the country out of the global organisation entirely.
The EU, seeking to up the economic pressure on Moscow following President Vladimir Putin’s invasion of Ukraine, is considering scenarios on how to isolate Russia from the IMF, the international financial organisation which serves as a lender of last resort for countries facing possible default.
One of the scenarios being considered is to suspend or remove Russia from the institution, but some EU officials believe this could prove to be impossible, given that it would require wide support among the IMF’s members, including China.
“There is a discussion, but kicking Russia out entirely is probably unrealistic because of required quora”, a senior eurozone official told Reuters. Another option could be to suspend Moscow’s voting rights, and to block its access to Special Drawing Rights (SDRs), a special currency used by the IMF.
The EU and the US are reportedly worried that Moscow, currently cut off from its 630 billion dollars in currency reserves due to western sanctions over its invasion of Ukraine, could draw upon the 17 billion dollars worth of SDRs, which were allocated to Russia last year as an aid for managing the coronavirus pandemic.
Despite western fears, it is likely that Russia would face serious challenges in turning SDRs into fungible currency, since it would have to find countries willing to exchange the Russian SDRs into some of the currencies it is based on – dollars, euros, sterling, yen, and yuan.
In parallel with discussions to weaken Moscow’s presence in the IMF, EU officials are also discussing a wider strategy. “There is on ongoing discussion to kick Russia out of all international financial institutions”, an official said, even though the current focus remains on preventing Russia from using its SDRs.