By Alexander Bolton and Russell Berman - 03/25/14 07:11 PM EDT
Senate Democrats on Tuesday dropped their demand for changes to the International Monetary Fund in Ukraine legislation, likely clearing the way for passage later this week.
Senate Majority Leader Harry Reid (D-Nev.) announced the reversal, saying he wanted to ensure that Congress could pass an aid bill quickly.
A fight over the IMF language prevented Congress from taking action before Russia annexed Crimea, which just two weeks ago was part of Ukraine.
The White House backed the IMF changes, but Republicans in the House were staunchly opposed to them.
“We have to get IMF reformed but we can’t hold up the other [parts of the legislation],” Reid said.
A Treasury Department spokeswoman said the administration was “deeply disappointed by the news.”
“Despite this setback, we remain committed to providing the IMF with the resources it needs as well as updating the Fund’s governance to reflect the global economy,” said Holly Shulman, the Treasury official.
Secretary of State John Kerry gave Reid some cover earlier Tuesday when he said a dispute over the IMF should not be allowed to torpedo the effort to help Ukraine.
“I want both and I want them both now,” he said. “But if I can’t have one, we have got to have aid. We’ve just got to get the aid immediately.”
A spokesman for Speaker John Boehner (R-Ohio) said the aid package had no chance of passing the House with language on IMF funding.
“As the Speaker has said all along, that is the only way to get Ukraine the help it needs as quickly as possible,” said Michael Steel, Boehner’s aide.
President Obama asked Senate Democrats to include language that would have shifted $63 billion in IMF funding from a special crisis fund to the general loan pool.
The bill crafted by Senate Foreign Relations Committee Chairman Bob Menendez (D-N.J.) would have also approved a reform giving developing nations more influence over the Fund’s operation while retaining U.S. veto power over major decisions. Conservative critics claimed it would weaken U.S. influence by moving $63 billion in funds from a tightly controlled crisis fund to a general loan pool subject to majority rule.
The core Senate bills provides about $1 billion in loan guarantees and imposes sanctions on Russian officials responsible for human rights abuses in the Ukraine or connected to the invasion of Crimea. It authorizes $50 million for democracy, governance and civil society assistance and $100 million for enhanced security cooperation.
A senior Senate Democratic aide said Reid dropped the IMF language after Sen. John McCain (Ariz.), a leading Republican voice on international affairs, and Sen. Bob Corker (Tenn.), the ranking Republican on Foreign Relations, warned the legislation would not otherwise clear a 60-vote hurdle.
“They said it needed to come out to maintain support among their colleagues to move the bill forward. It would not have gotten 60 votes,” said the aide.
McCain, however, disputed that version of events.
“I never told them that,” he said Tuesday. “What I asked them was, maybe that we take it out so we get this thing done quickly.
“We had 78 votes on cloture. We’re not going to lose 18, 19 votes the next time around,” he said.
McCain said Reid dropped the language because “Harry was looking at getting it done quickly and the House would have resisted” the IMF reforms.
“I’m supremely confident that we had well over 60 votes,” McCain said of the likely outcome had Reid advanced the bill with the IMF language.
The Senate voted 78-17 Monday evening to advance the bill, but Reid was doubtful it could overcome other 60-vote obstacles without a compromise.
“I guess Sen. McCain should talk to the rest of his caucus,” he said.
Senate Republicans late Tuesday dropped their push for amendments to the Ukraine bill, setting up a final vote on Thursday.
Heritage Action, which had led the fight against the IMF provision, declared victory.
"By refusing to give into Reid’s bullying tactics, conservatives in the House and Senate were able to prevent yet another foreign policy mistake by the Obama administration," Heritage Action CEO Michael Needham said.
Reid has tasked Menendez and Corker to craft a new bill that can pass the Senate this week. It will mirror the legislation passed in a 14-to-3 vote by the Foreign Relations panel earlier this month but without the IMF language.
Menendez expressed dismay over dropping the IMF language but said it was a necessary step.
“While I'm not happy about it, I believe we need to move forward on a bill today that sends the necessary message of support to Ukraine and resolve to Russia,” he said.
House Foreign Affairs Chairman Rep. Ed Royce (R-Calif.) said the decision by Reid “strengthens our hand in sending a message quickly to Moscow and especially to President Putin that we’re united.”
Still, it was not immediately clear whether the House would simply accept the Senate-passed bill or try to attach a second measure bolstering Ukraine and sanctioning Russia that the Foreign Affairs Committee approved earlier Tuesday. Aides voiced confidence that with the IMF issue separated, any differences would be resolved quickly.
Rep. Eliot Engel (N.Y.), the top Democrat on the House Foreign Affairs Committee, said he supported the move.
“I’m glad that it clears an impediment in getting the money out quickly,” he said.
Erik Wasson contributed.
This story was first published at 2:54 p.m. and last updated at 7:11 p.m.