The Folly Of American Isolationism, Revisited

The International Monetary Fund could be crucial providing aid in Ukraine and elsewhere, but much is on hold as the U.S. Congress blocks much needed IMF reforms.

IMF chief Christine Lagarde
IMF chief Christine Lagarde


SAO PAULO — It’s been a sad spectacle in the U.S. Congress, as the body has refused to ratify the statutes of the International Monetary Fund (IMF), which the country’s own government proposed three years ago.

All other IMF member states have already ratified the reforms, which give more power to emerging countries and double the contributions paid by the 188 member states, increasing the fund’s ability to extend credits to countries facing problems.

The IMF’s financing capacity is significant. The fund is, after all, considering a $15 billion loan to Ukraine, which would strengthen the country economically and help it fend off Russian President Vladimir Putin’s imperialist harrassment. The IMF loan is seven times bigger than the one from Europe and 15 times more than the $1 billion the United States has earmarked for the embattled Eastern European nation.

And during the financial crisis of 2008-9, the IMF practically reached its lending ceiling with the credit lines it extended to several developing countries.

Since its creation 70 years ago, the IMF has been the world’s greatest source of massive emergency funds and of rapid payments to countries facing economic or financial crisis. The IMF has allowed these countries to recover growth while returning to fiscal equilibrium, ordering their finances and curbing inflation with cautious monetary policies — everything the U.S. asks them to do. It is no coincidence that the IMF is based in Washington, DC.

In this context, the refusal by the U.S. Congress to approve IMF reforms is all the more shortsighted. The effect is that Washington’s natural allies are increasingly disinclined to back its foreign policy initiatives.

Isolationist rhetoric by the Tea Party movement, whose arguments are ignorant at best, has unfortunately taken the Republican Party hostage, while the Democrats and the Obama Administration have failed to take the issue seriously enough.

One Republican argument for opposing the IMF reforms is that the United States would lose its veto power. A 6% increase in voting power for emerging nations would come at the expense of the relative weight of European states, which would lose two seats on the fund’s board of directors. The United States would maintain its current veto right after reforms.

Another argument against the reforms is that they would increase the financial burden on U.S. taxpayers. False again: Congress allocated these funds to the IMF five years ago. They would merely go from being a temporary fund to becoming permanent resources of the IMF.

IMF chief Christine Lagarde has explained the absolute need for the reforms, even as the United States’ own allies echo the calls. Britian’s Chancellor of the Exchequer George Osborne most recently urged the American Congress to approve the reform as soon as possible.

And the time to do that is now. IMF members walked away disappointed and frustrated from last week’s annual meeting, by which point Congress still had not acted. The U.S. is abdicating its leadership role and revealing an isolationist streak. Another sign that this will not be a great American century.

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Iran-Saudi Arabia Rivalry May Be Set To Ease, Or Get Much Worse

The Saudis may be awaiting the outcome of Iran's nuclear talks with the West, to see whether Tehran will moderate its regional policies, or lash out like never before.

Military parade in Tehran, Iran, on Oct. 3


LONDON — The Iranian Foreign Ministry spokesman Saeed Khatibzadeh said earlier this month that Iranian and Saudi negotiators had so far had four rounds of "continuous" talks, though both sides had agreed to keep them private. The talks are to ease fraught relations between Iran's radical Shia regime and the Saudi kingdom, a key Western ally in the Middle East.

Iran's Foreign Minister Hossein Amirabdollahian has said that the talks were going in the right direction, while an Iranian trade official was recently hopeful these might even allow trade opportunities for Iranian businessmen in Saudi Arabia. As the broadcaster France 24 observed separately, it will take more than positive signals to heal a five-year-rift and decades of mutual suspicions.

Agence France-Presse news agency, meanwhile, has cited an unnamed French diplomat as saying that Saudi Arabia wants to end its costly discord with Tehran. The sides may already have agreed to reopen consular offices. For Saudi Arabia, the costs include its war on Iran-backed Houthis rebels fighting an UN-recognized government in next-door Yemen.

The role of the nuclear pact

Bilateral relations were severed in January 2016, after regime militiamen stormed the Saudi embassy in Tehran. Amirabdollahian was then the deputy foreign minister for Arab affairs. In 2019, he told the website Iranian Diplomacy that Saudi Arabia had taken measures vis-a-vis Iran's nuclear pact with the world powers.

It's unlikely Ali Khamenei will tolerate the Saudi kingdom's rising power in the region.

He said "the Saudis' insane conduct toward [the pact] led them to conclude that they must prevent [its implementation] in a peaceful environment ... I think the Saudis are quite deluded, and their delusion consists in thinking that Trump is an opportunity for them to place themselves on the path of conflict with the Islamic Republic while relying on Trump." He meant the administration led by the U.S. President Donald J.Trump, which was hostile to Iran's regime. This, he said, "is not how we view Saudi Arabia. I think Yemen should have been a big lesson for the Saudis."

The minister was effectively admitting the Houthis were the Islamic Republic's tool for getting back at Saudi Arabia.

Yet in the past two years, both sides have taken steps to improve relations, without firm results as yet. Nor is the situation likely to change this time.

Photo of Iranian Supreme Leader Ali Khamenei in 2020

Iranian Supreme Leader Ali Khamenei in 2020

Riyadh's warming relations with Israel

Iran's former ambassador in Lebanon, Ahmad Dastmalchian, told the ILNA news agency in Tehran that Saudi Arabia is doing Israel's bidding in the region, and has "entrusted its national security, and life and death to Tel Aviv." Riyadh, he said, had been financing a good many "security and political projects in the region," or acting as a "logistical supplier."

The United States, said Dastmalchian, has "in turn tried to provide intelligence and security backing, while Israel has simply followed its own interests in all this."

Furthermore, it seems unlikely Iran's Supreme Leader Ali Khamenei will tolerate, even in this weak period of his leadership, the kingdom's rising power in the region and beyond, and especially its financial clout. He is usually disparaging when he speaks of Riyadh's princely rulers. In 2017, he compared them to "dairy cows," saying, "the idiots think that by giving money and aid, they can attract the goodwill of Islam's enemies."

Iranian regime officials are hopeful of moving toward better diplomatic ties and a reopening of embassies. Yet the balance of power between the sides began to change in Riyadh's favor years ago. For the kingdom's power has shifted from relying mostly on arms, to economic and political clout. The countries might have had peaceful relations before in considerably quieter, and more equitable, conditions than today's acute clash of interests.

If nuclear talks break down, Iran's regime may become more aggressive.

Beyond this, the Abraham Accord or reconciliation of Arab states and Israel has been possible thanks to the green light that the Saudis gave their regional partners, and it is a considerable political and ideological defeat for the Islamic Republic.

Assuming all Houthis follow Tehran's instructions — and they may not — improved ties may curb attacks on Saudi interests and aid its economy. Tehran will also benefit from no longer having to support them. Unlike Iran's regime, the Saudis are not pressed for cash or resources and could even offer the Houthis a better deal. Presently, they may consider it more convenient to keep the softer approach toward Tehran.

For if nuclear talks with the West break down, Iran's regime may become more aggressive, and as experience has shown, tensions often prompt a renewal of missile or drone attacks on the Saudis, on tankers and on foreign shipping. Riyadh must have a way of keeping the Tehran regime quiet, in a distinctly unquiet time.

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