EU supports Iran, Venezuela bids for IMF support in fight against coronavirus

An Iranian woman health inspector checks a temporary established emergency hospital in a part of the world's largest shopping mall complex called 'Iran Mall', to treat patients infected with the COVID-19 disease, caused by the SARS-CoV-2 coronavirus, in northwest of the capital of Tehran, Iran, 21 March 2020. [Abedin Taherkenareh/EPA/EFE]

The EU backs Iran and Venezuela in their requests for emergency funding from the International Monetary Fund (IMF) to help them fight the coronavirus outbreak, EU foreign affairs chief Josep Borrell said on Monday (23 March).

Borrell spoke to a virtual press conference following a teleconference with EU foreign affairs ministers. Both countries are under US sanctions and have recently asked the IMF for emergency funding of $5 billion each.

“We are going to support this request because these countries are in a very difficult situation mainly due to the US sanctions that prevent them from having income by selling their oil,” Borrell said.

The escalating outbreak in Iran – the worst-affected country in the Middle East – has killed more than 400 people and infected more than 10,000. The outbreak has damaged Iranian businesses and is bound to hit its non-oil exports after many neighbouring countries and trade partners shut their borders.

Last week the IMF said it had allocated $50 billion for countries struggling with the outbreak.

The IMF managing director, Kristalina Georgieva, has stated that “countries affected by #COVID19 (coronavirus) will be supported via Rapid Financial Instrument. Our Central Bank requested access to this facility immediately”, Foreign Minister Mohammad Javad Zarif said in a tweet on 12 March.

Iranian Central Bank chief Abdolnaser Hemmati wrote on his Instagram page that “in a letter addressed to the head of IMF, I have requested five billion US dollars from the RFI emergency fund to help our fight against the coronavirus”.

Similarly, Venezuela’s government has made a formal request to the IMF for $5 billion in financing to strengthen the country’s health system to tackle the coronavirus, according to a letter by its foreign ministry. The letter, published on Twitter and dated 15 March was addressed to Georgieva.

But the IMF was quick to reject Venezuela’s bid, on the grounds that “there is no clarity” on international recognition of the country’s government.

There are less than 100 confirmed cases of the coronavirus in Venezuela and no deaths to date, according to official statistics. The government has declared a state of alarm, imposing a full month-long quarantine in the country.

Unlike the General Assembly of the United Nations, where each country has one vote, decision making at the IMF was designed to reflect the relative positions of its member countries in the global economy. The votes of the EU countries carry weigh, but the US is the largest shareholder and holds veto power.

It is widely believed that the US will veto the requested IMF assistance by Iran.

US Secretary of State Mike Pompeo last month said the United States had offered to help Tehran face the coronavirus outbreak. Iran dismissed the offer as ridiculous.

The EU is preparing to send €20 million worth of humanitarian aid to Iran. Borrell said that such support was not in breach of the US sanctions.

(Edited by Benjamin Fox)

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