(Bloomberg) -- The International Monetary Fund hit the brakes on its first consultations with Russia since the start of President Vladimir Putin’s invasion of Ukraine after several European Union states slammed the decision as misguided.
The economic talks with Russia “have been postponed while we gather all the necessary data and analysis for a rigorous consultation,” the Washington-based lender said in a statement Wednesday.
The renewed engagement with Russia, which took several Ukraine allies by surprise, as well as the sudden pause spotlights Managing Director Kristalina Georgieva’s struggle to maintain the fund’s technocratic and multilateral embrace of its 190 members against the political realties of its alignment with the US-led effort to support Ukraine.
Several EU members challenged Georgieva over the decision, which they criticized as legitimizing Kremlin efforts to evade sanctions imposed since the February 2022 war began. Some also warned that Russia would use the visit, part of what’s officially known as an Article IV consultation, as propaganda to show its international isolation was easing.
“The Fund decision to conduct an Article IV of Russia at this time was a colossal blunder,” said Mark Sobel, a former US Treasury official who served as the US representative to the IMF board from 2015 to 2018.
The US, the fund’s most-powerful member, has kept a low-profile over the issue, putting it publicly slightly at odds with EU states critical of the move. The Treasury Department, which manages Washington’s relationship with the IMF, has declined to comment. Treasury Secretary Janet Yellen said earlier this month that she would oppose lending to Moscow, but not consultations.
Georgieva has sought to place IMF at the center of the $120 billion international aid rallied since the invasion to prop up Kyiv’s wartime budget. That includes changing the funds rules to allows lending to a nation at war for the first time in its history, which was necessary to unlock its own roughly $15 billion aid program for the country.
Russia, meanwhile, had been essentially sidelined by the fund after the invasion. IMF has explained the restart of annual reviews are a “mutual obligation” of the fund and its members, and that they’re being restarted because the regional situation is “more settled” than before.
The IMF had been due to hold online talks with Russian counterparts on Monday as part of the so-called Article IV review ahead of a planned visit to Moscow from Oct. 1 to meet with government and central bank officials. The last IMF mission to Russia was in 2019.
The move came shortly after Ksenia Yudaeva, a former first deputy governor at Russia’s central bank, was appointed as Moscow’s representative on the executive board, replacing Alexey Mozhin, who had held the position since the 1990s.
Russia’s Tass news service reported earlier that fund officials had notified Russia and the IMF’s board that the mission was being delayed for “technical” reasons, citing Mozhin.
Russian officials are well aware that European states opposed the resumption of cooperation between the IMF and Moscow, Tass cited Mozhin as saying.
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