US "Funds Flowing to Iran"... Conflict Extends from Military to Economy

IMF Reviews Iran's Emergency Funding Request for Over a Month... Mnuchin Says "SDR Expansion Benefits Only G20"
Iran Revolutionary Guard "Will Immediately Attack If US Warship Threatens," Responds to Trump

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] From the Persian Gulf to the International Monetary Fund (IMF), the United States and Iran are clashing in various arenas. Amid the tensions between the U.S. and Iran, controversy is intensifying within the United States over whether to provide humanitarian aid to Iran, the Middle East's hardest-hit country by the novel coronavirus disease (COVID-19).

According to the Associated Press and others, on the 23rd (local time), Hossein Salami, Commander-in-Chief of the Islamic Revolutionary Guard Corps (IRGC), appeared on Iranian state television and warned, "If U.S. warships or naval forces endanger the safety of our warships or merchant vessels in the Persian Gulf, we will immediately attack." This was a direct response to U.S. President Donald Trump's tweet the previous day, which stated, "If Iran's armed fast boats harass our ships, shoot them all down and destroy them." The ongoing standoff over the Persian Gulf began after the IRGC's fast boats approached U.S. warships operating in international waters in the Persian Gulf on the 15th and conducted threatening maneuvers.

The U.S. government also reacted sensitively to the IRGC's announcement the previous day that it had successfully launched a military satellite, viewing it as part of the development of an intercontinental ballistic missile (ICBM). U.S. Secretary of State Mike Pompeo warned at a press conference immediately after Iran's satellite launch announcement that "this is considered a violation of United Nations Security Council (UNSC) resolutions." The UNSC resolution Pompeo referred to was adopted in 2015, which prohibits Iran from pursuing ballistic missile development capable of carrying nuclear warheads for eight years.

[Image source=AP Yonhap News]

The confrontation between the U.S. and Iran is also unfolding at the IMF. According to Forbes, the Iranian government requested $5 billion in emergency financial assistance (RFI) from the IMF last month to respond to COVID-19. However, the IMF has only stated that it is currently reviewing the funding request. Since the COVID-19 outbreak, over 90 countries worldwide have applied for RFI from the IMF, and most received immediate support, but Iran has not received any aid for over a month. An IMF official explained, "Iran's funding request is taking a long time to evaluate because exchanges are restricted due to U.S. sanctions, making it difficult to obtain the necessary information." The Iranian government criticizes the U.S. for pressuring the IMF to block the emergency funding request.

There is also analysis that the U.S. opposes the IMF's plan to expand the issuance of Special Drawing Rights (SDR) because of Iran. Last week, U.S. Treasury Secretary Steven Mnuchin clearly opposed the IMF's SDR expansion plan, stating, "SDRs are not an effective tool to respond to urgent needs, and 70% of the funds will mostly flow to the Group of 20 (G20) countries that do not require liquidity." CNBC analyzed that the U.S. government opposes the expansion because if the IMF issues more SDRs to supply liquidity to member countries, Iran, an IMF member, could also receive funding. To expand SDR issuance, 85% of the voting shares held by the IMF's 189 member countries are required, and without the approval of the U.S., which holds the largest share of 16.51%, it is impossible.

[Image source=Reuters Yonhap News]

The U.S. is also reportedly opposing the exchange of Iran's SDR balance held by the Central Bank of Iran as IMF allocations. IMF member countries can, in principle, freely exchange SDRs held according to their allocation ratios with other countries' central banks for currencies such as the dollar or euro. However, Al Jazeera reported that due to U.S. pressure, other countries are unable to conduct such transactions. Iran's allocation ratio within the IMF is about 0.75%, and when converted to dollars, the SDR holdings are estimated at approximately $2.1 billion.

Controversy continues within the U.S. over providing financial aid to Iran, the Middle East's hardest-hit country by COVID-19. The Trump administration maintains its principled opposition to financial aid while continuing sanctions against Iran. In contrast, the Democratic Party argues that humanitarian aid is necessary. According to CNN, Democratic presidential candidate and former Vice President Joe Biden stated, "Our sanctions are preventing medical supplies and equipment for COVID-19 from reaching Iran," and asserted, "Humanitarian aid to Iran must be provided to overcome the pandemic."

This content was produced with the assistance of AI translation services.