In the face of staunch Republican opposition in the House of Representatives, Senate Majority Leader Harry Reid dropped a provision to reform the International Monetary Fund as part of an urgent rescue package to Ukraine's cash-strapped government.
Dropping the contentious IMF language clears the way for swift passage of legislation giving Kiev $1 billion in loan guarantees and hundreds of millions of dollars in assistance for election monitoring, civil society and security. Beyond the money itself, lawmakers believe the aid influx would provide a morale boost of sorts for Ukraine's beleaguered new leaders in the wake of Russia's conquest and annexation of Crimea.
Reid's decision to strip the IMF language out of the aid package comes just a day after the White House renewed its push for the reforms. Speaking to reporters Tuesday, the Senate leader said the bill would simply have not made it through Congress with the IMF provisions intact.
"As much as I think a majority of the Senate would liked to have gotten that done with IMF in it, I think it was headed to nowhere in the House," Reid said.
The provisions, a longtime goal of the Obama administration, would have sharply increased the lending capacity of the IMF. The U.S. is currently the only major industrialized nation that hasn't approved a 2010 package of reforms that would expand the power of developing countries within the IMF and shift money from its emergency to general account so it can provide more cash to struggling economies.
The White House had for weeks insisted that helping Ukraine and reforming the IMF were part and parcel of each other. "It's only through the IMF, a reformed IMF, that Ukraine is going to get the help it needs to stand on its own two feet," Secretary of State John Kerry said earlier this month.
Many House Republicans, though, opposed the changes because of fears they would undermine Washington's influence within the IMF. Other GOP lawmakers opposed the administration's plan to pay for the reforms by taking money out of Pentagon programs aimed at missile and aircraft procurement.
Until now, the Senate and House have been at loggerheads over the reforms. On Monday, the Senate bill including the IMF language passed a procedural vote by an overwhelming 78-17. On Tuesday, however, the House of Representatives passed its own Ukraine aid bill that did not include IMF reform language.
Speaking with reporters, Reid said he wanted to include IMF reform into the bill, but was stripping it from the legislation at the request of the Obama administration. "As John Kerry said yesterday, he wants both of them. But the main thing is to get the aid now. So I'm following John Kerry's lead," Reid said.