Special Dollars for Dictators – WSJ

More than 250 people have been killed by government security forces in Myanmar since a Feb. 1 military coup. The Biden Administration has imposed sanctions, but then why is the U.S. Treasury moving to hand the Burmese generals a fresh $785 million in foreign aid?

The answer is the International Monetary Fund’s plan to issue a new allocation of “special drawing rights.” These SDRs are printed at the fund, distributed to member countries—including Myanmar—and are exchangeable for dollars that the U.S. is obliged to provide.

The IMF wants to issue $1 trillion of this new funny money, and Treasury is so gung-ho that it’s scrambling to duck U.S. law requiring congressional approval. Treasury Secretary Janet Yellen is paying lip service to “greater transparency and accountability in how SDRs are exchanged and used.” But if she were serious, she’d let Congress play its proper role in approving this IMF booty—of which the U.S. will shoulder the largest burden.

U.S. law mandates that Congress approve a general SDR allocation in a set five-year period in which the U.S. gets more than $120 billion. That $120 billion is the U.S. equity stake in the IMF. The need for approval would be tripped in a $1 trillion new SDR allocation because the U.S. SDR share would be $173 billion.

To help the Administration skirt the law, the IMF plans to break the new allocation into two batches. The first, scheduled for this year, will be a $650 billion SDR allocation. That works out to be near the highest amount (in round numbers) that Team Biden can rubber stamp without Congress. The Administration can then push through the remaining $350 billion allocation—or more—next year using the same trick. The back-to-back years will fall in two different five-year periods.