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Ukraine bill with sanctions, IMF reforms clears hurdle in U.S. Senate

By Patricia Zengerle

WASHINGTON (Reuters) - A U.S. Senate panel on Wednesday approved legislation that would impose strict sanctions on Russians involved in Moscow's intervention in Ukraine, provide aid to the new government in Kiev, and implement reforms of the International Monetary Fund.

The Senate Foreign Relations Committee voted 14-3 for the measure, with several committee Republicans joining the Democratic majority in favor. The bill next goes to the full Senate for a vote. If it passes there, it would have to win approval in the House of Representatives to become law.

The panel acted on the same day President Barack Obama met with Ukrainian Prime Minister Arseny Yatseniuk at the White House in a high-profile show of support. Obama warned Russia that the West would be forced to apply a cost to Moscow if it fails to change course in the dispute with Ukraine.

Among other things, the legislation would impose sanctions on Russians and Ukrainians judged to be involved in violence or human rights violations during anti-government protests in Ukraine that began late last year, as well as against anyone involved in undermining Ukraine's security and stability.

The legislation also directs U.S. authorities to help Ukraine's new government investigate acts of corruption and return assets to Kiev. It did not target Russian corporations or banks, as some lawmakers had suggested after Russian President Vladimir Putin sent troops into Ukraine's Crimea region.

Committee members said the bill was a strong one.

"In my view, President Putin has miscalculated by starting a game of Russian roulette with the international community, and we will never accept this violation of international law," said Democratic Senator Robert Menendez of New Jersey, the committee's chairman.

The sanctions would include freezing assets held in the United States, travel bans and denying visas.

The measure also provides $50 million in democracy, governance and civil society assistance for Ukraine and $100 million for enhanced security cooperation for Ukraine and other countries in Central and Eastern Europe.

It authorizes $1 billion in loan guarantees, in addition to millions of dollars in aid.

IMF REFORMS POTENTIAL STICKING POINT

One of the most controversial aspects of the legislation are reforms of the International Monetary Fund, which were requested by the Obama administration but left out of a Ukraine loan guarantee package passed last week by the House.

The Obama administration has been pushing Congress for a year to approve a shift of $63 billion from an IMF crisis fund to its general accounts to maintain U.S. influence at the lender and make good on a commitment from 2010.

Treasury Secretary Jack Lew called the vote an important step and said it was "imperative" that the measure become law.

Some Republicans worry about the IMF's lending to richer European nations and possible losses on loans by the fund. Before passing the full bill, the committee voted down an amendment that would have removed the IMF provision from the bill.

John Boehner, the Republican Speaker of the House, said earlier on Wednesday that he did not think the Ukraine bill should include the IMF reforms. "This IMF money isn't necessary for dealing with this Ukraine crisis that we see today," he said.

The three "no" votes in the committee for the overall bill were all cast by Republican senators: James Risch of Idaho, Rand Paul of Kentucky and John Barrasso of Wyoming. They questioned how Washington would pay for the loan guarantees and expressed concern about the IMF reform.

Barrasso had offered an amendment authorizing exports of liquefied natural gas to Ukraine and NATO members, but Menendez ruled that the proposal fell outside the committee's jurisdiction.

Separately, a group of eight senators, six of them foreign relations committee members, are leaving on Thursday on a visit to Ukraine to meet with leaders of its interim government and other groups.

(Additional reporting by Susan Cornwell; Editing by Bill Trott and Jonathan Oatis)

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