With much of the world’s focus on the conflict in the Ukraine’s Crimea, the United States and Russia are facing off on many other fronts.
The US is the only nation that holds veto power over major decisions at the IMF (International Monetary Fund). Russia is pushing for the IMF to move ahead without US approval of IMF reforms that have been pending since 2010. The reason for that nothing has happened so far – our friends in Congress who have failed to approve IMF funding. The G20 met a couple of weeks ago and there is growing worldwide frustration over the deadlock between Congress and the Administration.
The US has until next month to act. If we miss the deadline, it would be another black eye for the US in foreign policy. This issue does not involve the Treasury spending our money. All that needs to be done is shift some $63 billion from an IMF crisis fund to its general accounts so the IMF can honor its 2010 commitments.
Some nations at the IMF (lead by Russia) are pushing that the US loses its unique veto power if nothing is done. With everything else going on, we don’t want to lose this power.
Now there are discussions in Congress that the funding approval for the IMF be tied to an aid package for the Ukraine. The House is against putting the two measures together, but the Senate is still considering tying the two together. The White House is actually in agreement with the House on this issue.
The US dollar is the major currency in the world. It’s been a hotly debated topic for many years that the dollar be replaced by the Euro. OPEC has been pushing for this change along with Russia at other times. OPEC wants the dollar to be replaced due to the prolonged weakness of our currency and the loss of revenue from its oil sales. Russia seems to be trying to take advantage of every opportunity where the US looks vulnerable on any topic. And sadly, they seem to be winning.
The US spent decades during the Cold War avoiding a direct military confrontation with the Soviet Union. However, a more aggressive Russia under Vladimir Putin’s leadership is a dangerous wildcard to economies around the world. I thought the US won the Cold War twenty something years ago. What the heck happened?
Kevin has been a financial advisor for the past 28 years and can be reached at email@example.com.