Sen. John Kennedy (R-La.) today introduced the No Dollars for Dictators Act. The legislation would prohibit allocations of special drawing rights at the International Monetary Fund (IMF) from going to perpetrators of genocide and state sponsors of terrorism unless Congress authorizes the allocation.
“The Biden administration shouldn’t be forcing U.S. taxpayers to line the pockets of Xi Jinping, Vladimir Putin and Hassan Rouhani. It’s astonishing that President Biden and Secretary Yellen have green-lit a deal that sends $40 billion to China and Russia while all the world’s poor countries combined would receive half that.
“Congress is responsible for stewarding taxpayer money, and this bill would stop the Biden administration from making an end run around the Constitution on behalf of the world’s worst dictators. Oppressive, hostile regimes work to undermine America’s safety and success every day, but the White House shouldn’t be helping them,” said Kennedy.
President Biden has agreed to a general allocation of special drawing rights at the IMF totaling $650 billion without consent from Congress. Large portions of that allocation will flow to dictators and countries that actively oppose American interests and violate human rights.
The IMF distributes special drawing rights according to each country’s economic standing in the global economy. That means the world’s wealthiest countries receive the most special drawing rights of all IMF members.
The president’s justification for supporting the proposed allocation is to allow low-income countries to exchange their special drawing rights for currency to fund efforts to combat the coronavirus pandemic. Under the proposed allocation, however, the countries with the 19 largest economies in the world would receive $426 billion—the bulk of the special drawing rights. The 24 poorest countries would receive only three percent of the allocation, or $21 billion.
China alone would receive $22 billion in special drawing rights, which is more than the total that all of the poor countries combined would receive. Russia would receive $18 billion. In addition to sending billions of dollars to Xi Jinping and Vladimir Putin, the allocation would send billions in aid to Hassan Rouhani, Bashar al-Assad and Nicolas Maduro.
State sponsors of terrorism would also receive aid from the allocation President Biden has approved. Iran would receive $3.5 billion, and Syria would receive $900 million.
While some have claimed that special drawing rights offer the U.S. a no-cost way to assist poor countries, this is demonstrably false. This IMF allocation would require the U.S. to issue debt in order to cover the loans issued through special drawing rights. The U.S. would have to pay interest on that debt, and that interest would exceed any interest that the U.S. may receive on the loans it issues.
There is no requirement that countries that receive loans from the U.S. through special drawing rights ever repay the principal. As a result, the financial burden of these loans will fall on the U.S. taxpayer.