While no one was looking, Cruz helped scuttle a critically important international initiative.
Sen. Ted Cruz has been keeping a lower profile than he did last year, but he’s been busy. Take the last couple weeks. In the background of the brawl over what to do about Russia’s transgressions in Ukraine, Cruz quietly helped mobilize congressional Republicans against an agreement, years in the making and exhaustively negotiated, which would have reformed the International Monetary Fund. He threatened to try to block a critically important aid package to Ukraine’s new government if the reforms weren’t stripped out of the bill. Slowly, Cruz’s position became the position of the Republican caucus. And Democrats blinked.
It’s a major setback for the White House, whose ability to get these reforms passed at all is now in doubt. And it’s an interesting look at how Cruz can play the inside game when the cameras are off him.
For years, advocates of the International Monetary Fund—a sort of international bank, funded by wealthy states, to provide loans to countries in financial turmoil with the goal of promoting international economic stability—have sought to make changes to the way the fund is governed. Founded in 1945, the fund and its sister organization, the World Bank, have tended to reflect the post-war balance of power, when America and Europe had enormous economic influence.
But in the last two decades, the nature of the world economy has changed. The increased economic power of countries like China, South Korea and Brazil, which are providing much of the fund’s new capital, hasn’t been reflected in the IMF’s governing structure. The current structure privileges European states like Belgium and Germany. In 2010, the fund’s board—and all of the fund’s members, including the United States—agreed to shift more control to emerging economies. Dominique Strauss-Kahn, former head of the IMF, described it as a historic agreement that would allow the fund to “catch up with reality.”
The problem: the move needs to be ratified by Congress, where the idea of slightly reducing America’s power over the organization and increasing China’s has gone over like a lead balloon. That’s where Ted Cruz comes in.
Cruz has been talking really, really tough on Ukraine. Since last month, he’s issued strong statements condemning America’s inaction while “liberty-seeking Ukrainians are brutalized by their own government.” At times, he’s gone even further than that. “President Obama has done nothing to help the people of Georgia reclaim the some 20 percent of their sovereign territory that was violated by the 2008 Russian invasion,” he cried. (It’s hard to know what the United States could do about that without strategic bombing.)
But when it came time to offer practical help to Ukraine—the country is broke, and Russia is hoping the new government dissolves before it can get its financial house in order—Cruz didn’t have much to offer.
“More important than aid is expanding economic trade,” he told Politico earlier this month. Pass a free trade treaty, and sell them gas and oil some years down the road, he seemed to say, and that’ll take care of it. That’s not a view shared by Ukranian Prime Minister Arseniy Yatsenyuk, who recently told his countrymen that the nation was “on the brink of economic and financial bankruptcy” and facing imminent “financial disaster”—which would, in turn, bring the Russians.
To help Yatsenyuk, Democrats in the Senate started putting together a bill that would enable the International Monetary Fund to loan Ukraine a substantial amount of money. Attached to that bill: the IMF reforms that had been on Congress’ to-do list for years. Why attach the reforms to a bill that needed to pass quickly? Two reasons: One, the structure of the reforms would allow Ukraine to borrow more money. Two, there seemed to be little real opposition, at first. It passed the Senate Committee on Foreign Relations by a 14-3 margin.
The reforms were supported by GOP foreign policy experts. Daniel Runde, a Republican aid specialist who worked for years in the Bush administration’s foreign policy establishment and advised Mitt Romney on aid issues, urged Congress to speedily adopt both the aid package and the IMF reforms.
“For the United States to lead, we need IMF quota reform,” Runde wrote in Foreign Policy. To the doubters who worried about American influence lessening, he reassured: “The United States gives away less than 0.3 percent of its votes (a 0.4 percentage point drop from 17.7 percent to 17.3 percent); it remains the largest shareholder; it retains its veto.”
The day after, on March 13, Cruz released an open letter to Senate Majority Leader Harry Reid announcing his intention “to object to any floor consideration of Ukraine aid legislation that contains these IMF provisions.” It’s been reported that Cruz asked all Senate Republicans to co-sign the letter. In the end, only five did (stalwart Cruz ally Mike Lee and the idiosyncratic Rand Paul among them.) The letter is full of blank lines for signatures that were not provided. Nevertheless, the bill started to have problems.
House Republicans began announcing their intent to oppose the Senate language. A growing number of GOP Senators began to express disquiet. That left longtime Cruz nemesis John McCain sputtering with fury. Those who were hoping to slow or strip the bill were “on a fool’s errand,” just like the government shutdown. They had left him “embarrassed” by his party.
But the opposition to the bill grew. The aid bill slipped into the next week—then the next. What had begun as an uncontroversial provision had become a poison pill. Marco Rubio joined the crusade, though he didn’t go as far as Cruz. (He’d previously characterized the reforms as “Russian-backed.”) It became apparent that many were willing to kill the Ukraine aid bill rather than accept the IMF reforms. Early last week, Reid conceded defeat—he’d strip the bill.
The IMF reforms aren’t dead, but it’s now clear that many in Congress don’t accept the reform package at all. They may want to make changes—and that could require the whole thing to be renegotiated. Ultimately, they may not want to pass it at all. This is, after all, the legislative body that refuses to ratify the United Nations Convention on the Rights of the Child, which is about as milquetoast as international relations gets.
To add insult to injury, the Ukraine aid package took another six days to pass Congress, weeks after it was first circulated. The House of Representatives decided to vote on the bill after a weekend recess, meaning it didn’t get a final vote until Monday. Meanwhile, discontented Ukrainian fascists are pounding on Yatsenyuk’s door, he’s had difficulty getting his Parliament to follow him, and the Russian army gathered to his east and west.
The conservative Heritage Foundation, meanwhile, is celebrating the great victory over IMF quota reform. Deeming the reforms “extremely controversial,” the fight—in which Cruz was the “spearhead“—provided a fine framework for “how conservatives can win.”
Cruz’s 2016 presidential prospects may be oversold, but we’re in the process of seeing what kind of senator he’ll become. In the past, he’s cited the late North Carolina Senator Jesse Helms as his great inspiration. Helms, a peerless model of reactionary intransigence, hung around the Senate for decades, a great boulder and “master obstructionist” who loved nothing better than gumming up the works. If that’s what Cruz aspires to, he’s learning quickly.