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EXIM signs MoU with Iraq
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EXIM signs MoU with Iraq
by claud39 Mon Oct 21, 2019 8:46 am
EXIM signs MoU with Iraq
20th October 2019
http://www.iraq-businessnews.com/2019/10/20/exim-signs-mou-with-iraq/
20th October 2019
By John Lee.
The Export-Import Bank of the United States (EXIM) has entered into a memorandum of understanding (MOU) with the Ministry of Finance of the government of Iraq aimed at rebuilding Iraq and enhancing trade and economic cooperation between the two countries.
The MOU replaces the previous agreement signed in Kuwait in February 2018 and increases the total amount of EXIM financing potentially available under the MOU from $3 billion up to a total of $5 billion.
At EXIM headquarters in Washington this afternoon, EXIM President and Chairman Kimberly A. Reed signed the MOU with Iraqi Deputy Prime Minister and Minister of Finance Dr. Fuad Hussein. The signing also was witnessed by Iraq Ambassador to the United States Fareed Yasseen.
EXIM President and Chairman Kimberly A. Reed said,
“This MOU signals to the marketplace that U.S. companies and their workers in America want to be a part of the rebuilding effort in Iraq.
“We anticipate that the EXIM-backed financing to follow from this agreement will support exporter and supply-chain jobs in multiple industries across the United States and also foster job creation in Iraq.
“Iraq is an important partner to the United States, and we look forward to working together to strengthen the relationship between our two countries.”
Under the MOU, EXIM and Iraq’s Ministry of Finance agreed to identify potential projects in Iraq for procurement of U.S.-produced goods and services. EXIM agreed to explore options for providing the agency’s medium- and long-term loans, guarantees, and export credit insurance to support U.S. exports to Iraq.
For projects that may be eligible for EXIM support, cooperation between the Ministry of Finance and EXIM would be directed towards qualifying such projects for approval by both institutions.
(Source: EXIM)
http://www.iraq-businessnews.com/2019/10/20/exim-signs-mou-with-iraq/
claud39- Elite Member
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Join date : 2018-11-04
Export–Import Bank of the United States
by claud39 Mon Oct 21, 2019 8:51 am
Export–Import Bank of the United States
The Export–Import Bank of the United States (abbreviated as EXIM or the Bank) is the official export credit agency (ECA) of the United States federal government.[1][2] Operating as a wholly owned federal government corporation,[1] the Bank "assists in financing and facilitating U.S. exports of goods and services".[1] Under its charter, the Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not occur because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal. Its current chairman and president, Kimberly A. Reed, was nominated by President Donald J. Trump on January 16, 2019, and sworn in on May 9, 2019.
The bank was established in 1934 by an executive order. In 1945, it was made an independent agency in the Executive Branch by Congress. It was last chartered for a three-year term in 2012 and in September 2014 was extended through June 30, 2015.[3][4] Congressional authorization for the bank lapsed as of July 1, 2015. As a result, the bank could not engage in new business, but it continued to manage its existing loan portfolio.[5] Five months later, after the successful employment of the rarely used discharge petition procedure in the House of Representatives, the U.S. Congress reauthorized the bank until September 2019 via the Fixing America's Surface Transportation Act signed into law on December 4, 2015, by President Barack Obama.[6]
The cost and effectiveness of the bank are controversial. While the EXIM projects will earn the U.S. government an average of $1.4 billion per year for the next 10 years, an alternative analysis from the Congressional Budget Office found that the program would lose about $2 billion during the same period, partly due to discrepancies in how credit risk is accounted for. Both conservative and liberal groups have been critical of the bank, and some continue to demand its termination.[7][8]
President Donald Trump, who had been dismissive of the ExIm, made an about-face in April and nominated a new head of ExIm breaking a deadlock that had prevented the Bank from operating since 2014.[9] Trump was one of ExIm's harshest critics. Conservatives call it the 'Bank of Boeing' and an 'epicenter of crony capitalism'. Its supporters such as Boeing and General Electric Co, claim that it facilitates trade worth billions of dollars.[10]
The Export–Import Bank of the United States (EXIM) is a government agency that provides a variety of loan, guarantee, and insurance products intended to aid the export of American goods and services. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a three-year term in 2012.[11] The Charter details the Bank's authorities and limitations. Among them is the principle that EXIM does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not occur because commercial lenders are either unable or unwilling to accept the political or commercial risk inherent in the deal.[12]
The EXIM's products are intended to assist export sales for any American export company regardless of size. The bank's charter provides that EXIM makes available "not less than 20%" of its lending authority to small businesses although they have often fallen short of the 20% threshold.[13][14] In fiscal year 2013 however, 76% of the value of loans and guarantees went to the top 10 recipients.[15]
Similar banks, known generally as export credit agencies (ECAs), are operated by 60 foreign countries.[16] As the United States is a member of the Organisation for Economic Co-operation and Development (OECD) they conduct their activities by obeying OECD rules and principles. The goal is to permit exporters in various countries to compete on the basis of the quality of their goods and services, not on preferential financing terms. ECAs of countries, which are not participants of the OECD, such as the China Exim Bank,[17] Ex-Im Bank of Russia, Brazil, and India, are not required by their governments to follow OECD rules.
The bank has offices in Chicago, Detroit, Minneapolis, New York, Miami, Atlanta, Houston, McKinney (Dallas), Orange County (California), San Diego, San Francisco and Seattle.
EXIM was organized originally as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt on February 2, 1934, under the name Export–Import Bank of Washington. The stated goal was "to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof", with the immediate goal of making loans to the USSR and Latin America. Roosevelt created a Second Export–Import Bank of Washington with Executive Order 6638 on March 9, 1934, with the specific goal of aiding trade with Cuba.[20] The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots.[21] The First and Second Export–Import Banks were combined in 1936 when Congress transferred the obligations of the Second Export–Import Bank to the first.[22] Congress continued the bank as a government agency, using a series of laws between 1935 and 1943 to make it subordinate to various government departments.
Congress made the bank an independent agency on July 31, 1945, with the Export–Import Bank Act of 1945.[23] On March 13, 1968, further legislation changed the name to "Export–Import Bank of the United States".[24][25] EXIM became a self-sustaining (self-funding) agency in 2007, though the loans remain backed by the government.[26]
The Government Corporation Control Act of 1945[27] requires the Bank to be reauthorized by Congress every four to five years. Reauthorizations were approved in 1947, 1951, 1957, 1963, 1968, 1971, 1974, 1978, 1983, 1986, 1992, 1997, 2002, 2006, 2012, 2014, and 2015:
The Pan-American Highway runs from Alaska to Chile through 14 countries with important transportation links to nearly all of continental Latin America. The highway was constructed beginning in 1936 with the last phase complete in 1980.[33]
EXIM Bank credits and loans supported construction of the Pan-American Highway in Mexico, Honduras, Guatemala, Nicaragua, El Salvador, Costa Rica, Panama, Colombia, Ecuador, Peru and Chile.[34] In Paraguay, Argentina, and Bolivia EXIM supported construction of highway spurs connected to the Pan-American Highway.[35] EXIM approved twenty credits to U.S. companies including Caterpillar, Koehring Co., Allis-Chalmers Manufacturing, The Galion Iron Works, and Thew Shovel to help build the highway.[36]
Constructed between 1937 and 1938, the 717-mile Burma Road links Lashio in present-day Myanmar (previously Burma) to Kunming in Yunnan Province, China.[37] Construction of the road began in 1937 at the start of the second Sino-Japanese War (1937–1945). With Japan able to control port access in China and most of Southeast Asia, the Chinese built a road that would allow transportation of men and goods from a railhead at Rangoon that had access to Burma's ports. From 1939 to 1942 the Burma Road served as a lifeline for military goods and support in the fight against the Japanese in the Far East.
The $25 million credit approved by EXIM in December 1938 was crucial in ensuring that the supply route remained open by providing the transportation vehicles and support material to operate the new road and by providing China with purchasing power during WWII. An additional $20 million to the Universal Trading Corporation was approved in 1940.[38] A 1939 journal article in Foreign Affairs noted that China used part of the $25 million to purchase 2,000 three-ton trucks from Ford, Chrysler, and General Motors.[39]
EXIM played a critical role during the years between the end of Lend-Lease (September 1945) and the beginning of the Marshall Plan and the World Bank's first authorizations (May 1947 – 1948). At the end of WWII, it was recognized that the U.S. did not have a credit facility capable of handling the demand that would result from the cessation of hostilities. One of the major rationales behind the Export–Import Bank Act of 1945, the basis of EXIM's current charter document, was the necessity to dramatically increase EXIM's lending capacity to adequately respond to Europe's post-war reconstruction needs. The 1945 EXIM Annual Report predicated EXIM's role in the immediate post-WWII period: "the Export–Import Bank was to be the principal source of long-term dollar loans for an extended period of time." This assertion was based on the lack of interest by private capital in lending to foreign government buyers and delays in ratification of the Articles of Agreement for the International Monetary Fund and the International Bank for Reconstruction and Development.[40] The Export–Import Bank Act of 1945 increased lending authority from $750 million to $3.5 billion, almost a fourfold increase to help address these shortfalls.[41]
In 1945 and 1946 credit was offered to France, Denmark, Norway, Belgium, the Netherlands, Turkey, Czechoslovakia, Finland, Italy, Ethiopia, Greece, Poland and Austria to purchase equipment, facilities, and services from the United States. The financing was designed to aid reconstruction of the nations and to repair their import and export capability through the purchase of new machinery, currency exchange, and improvements and repairs to infrastructure and transportation systems.[42]
When the Marshall Plan was initiated in 1948, EXIM concentrated its lending on non-Economic Recovery Act nations in North and South America.[43]
When the Berlin Wall fell in 1989 and the USSR was dissolved in 1991, U.S. companies were able to conduct business freely with Eastern Europe for the first time since the end of WWII. EXIM was one of the first financial institutions to provide financing for exports to the former Soviet Union, Poland, Czechoslovakia and the newly independent nations that emerged after 1991. In 1990, President George H.W. Bush waived the Jackson-Vanik Amendment, which had officially blocked normal trade relations with communist countries since 1975. This waiver permitted all E guarantee and insurance programs to U.S. companies wanting to do business with the USSR and several former communist countries.[44]
EXIM resumed business with Czechoslovakia in March 1990. On January 25, 1991, EXIM approved the first transaction to Czechoslovakia since 1947. Financed by First Interstate Bank of Los Angeles, CA, the guarantee allowed Tonak Hat Company[45] to purchase computers from a U.S. company, Digital Equipment Corporation of Massachusetts. Since 1991, EXIM has supported exports to 25 of the nations that emerged after the fall of the Iron Curtain.[46]
After a visit to India in January 2015, President Obama announced that the EXIM will finance $1 billion of exports of 'Made-in-America' products, the U.S. Overseas Private Investment Corporation will lend $1 billion to small- and medium-sized rural enterprises and the U.S. Trade and Development Agency will commit $2 billion for renewable energy. Obama and Modi agreed on issues that had previously stopped U.S. companies from establishing nuclear reactors in India.[47]
Supporters say that the bank emphasizes trying to help small and medium size businesses expand their exporting capabilities. CEO and President of the National Association of Manufacturers, Jay Timmons stated: "The EXIM plays a critical role in manufacturer's ability to export to new markets and keep up with growing global competition. The Bank assists nearly 290,000 export related jobs and each year is helping more and more small and medium-sized manufacturers grow their businesses and hire new workers. More than 85% of all EXIM transactions directly benefit small business exporters—the economic engine that powers our economy and job creation."[48]
When Obama was campaigning for President in 2008, he stated that the Export–Import Bank had "become little more than a fund for corporate welfare."[49] During the Bank's reauthorization struggle, May 2012, he said that the Export–Import Bank plays a very important role in reaching his goal of doubling exports over 5 years. At the reauthorization ceremony Obama stated: "We're helping thousands of businesses sell more of their products and services overseas, in the process, we're helping them create jobs here at home. And we're doing it at no extra cost to the taxpayer." [50]
The Bank has been criticized for favoring special interests. These interests have included corporations such as Boeing or Enron as well as foreign governments and nationals, such as a 1996 $120 million low-interest loan to the China National Nuclear Power Corporation (CNNP) supporting the export of US-made technology.[51]
More recently the bank authorized 33.6 million dollars in loans to Abengoa, a Spanish Green energy company on which former Governor Bill Richardson is a member of the board of directors. As of May 2014, Richardson was also listed as a member of the advisory committee of the Export Import Bank.[52]
65% of loan guarantees over 2007 and 2008 went to companies purchasing Boeing aircraft.[53] In 2012, the Bank's loan guarantees became even more skewed, with 82 percent of them going to Boeing customers.[54]
However, EXIM supporters note that Boeing is the largest exporter in the United States by dollar value,[55] and must be protected in their capacity as the only remaining comprehensive U.S. commercial aircraft manufacturer. Support of Boeing is seen as particularly critical as Comac, China's state-owned and heavily subsidized commercial aircraft manufacturer, aggressively seeks to leech market share from both Boeing and Airbus. Also important to note, Boeing is not the only US aircraft manufacturer previously supported by EXIM. During the 1930s, 40s, and 50s, EXIM supported other US aviation manufacturers such as the Douglas Aircraft Company, the Consolidated Vultee Aircraft Company (Convair), and the Lockheed Aircraft Corporation,[56] before the firms were driven out of existence by competition or acquisition.
Critics also purport the existence of "unseen" costs created by the Export–Import Bank's subsidies, including artificially raising the price of new airplanes and potentially adding $2 billion to the deficit over the next decade.[57]
Forbes contributor Doug Bandow wrote in 2014, "The agency piously claims not to provide subsidies since it charges fees and interest, but it exists only to offer business a better credit deal than is available in the marketplace. The Bank uses its ability to borrow at government rates to provide loans, loan guarantees, working capital guarantees, and loan insurance."[58]
If the normal principles of economics or finance are applied, then it is seen by critics as unlikely that the bank has profited and most unlikely that it makes the annual profit that it has stated, because the bank's calculations of profit fail to make proper adjustment for risk.[59][60][61][62][63][64] Best practice in finance and economics, as well as in banking, is to adjust the cost of capital or discount rate to reflect risk,[65] or, equivalently, to use a fair-value estimate. On this basis the criticism is that "This simple approach—which is based on a method outlined in a National Bureau of Economic Research paper by Debbie Lucas of the Massachusetts Institute of Technology—suggests that the EXIM's long-term loan guarantee program actually provides guarantees at a loss for taxpayers, not a profit. Moreover, this analysis reveals that the EXIM's loan guarantees are made at sufficiently generous terms that borrowers receive subsidies of about 1% of the amount borrowed. That translates into a $200 million cost for taxpayers on the $21 billion in loans that the bank will make in 2012."[66]
In February 2009, the EXIM settled a seven-year-long legal proceeding brought by Friends of the Earth, Greenpeace together with the cities of Boulder, Arcata and Oakland. The plaintiffs said that the EXIM and the Overseas Private Investment Corporation provided financial assistance to oil and other fossil fuel projects without first evaluating the projects' climate change impacts.[67] In 2005, the plaintiffs were granted legal standing to sue. This is considered a landmark decision because it is the first time that a federal court has specifically granted legal standing for a lawsuit exclusively challenging the federal government's failure to evaluate the impacts of its actions on the Earth's climate and U.S. citizens.[68] In its settlement agreement, the EXIM agrees to evaluate the carbon dioxide emissions as part of its determination for qualification for a project.[69][70][71] However, EXIM fossil fuel financing and associated greenhouse gas emissions grew swiftly after the settlement agreement, coinciding with Chairman Hochberg's tenure. Between 2009 and 2012, EXIM fossil fuel financing grew from $2.56 billion to nearly $10 billion.[72][73]
Environmental groups say that the EXIM is currently on a "fossil fuel binge", which "makes a mockery" of President Obama's stated commitment to phase out fossil fuel subsidies.[74][75] In December 2009, EXIM Directors approved $3 billion in financing for the ExxonMobil-led Papua New Guinea Liquid Gas project in December 2009.[76] The project has reportedly caused violence and in April 2012, the Papua New Guinea government ordered in troops to quell opposition from villagers after a landslide linked to a quarry that had been used by the project killed an estimated 25 people.[77][78]
In 2010, environmental groups criticized the EXIM Directors for approving $917 million worth of financing for the 3,960 megawatt coal-fired Sasan Ultra Mega Power Project in India after initially rejecting the project on climate change grounds. Environmental groups say that in reversing the decision the agency's Chairman, Fred Hochberg and Board of Directors "caved in" to political pressure from Wisconsin politicians.[79][80][81][82][83] In 2011, several environmental groups protested at Export–Import Bank headquarters, unsuccessfully urging Chairman Hochberg and Board of Directors to reject $805 million in financing for the 4,800 megawatt Kusile coal-fired power plant in South Africa,[84] which environmental groups say is the largest carbon emitting project in the agency's history, which will not alleviate poverty but will emit excessive local air pollution, which health experts say causes damage the respiratory, cardiovascular, and nervous systems and deaths resulting from heart disease, cancer, stroke, and chronic lower respiratory diseases.[85][86][87][88]
In December 2012, the Center for Biological Diversity, Pacific Environment, and Turtle Island Restoration Network filed a lawsuit against Chairman Hochberg and the EXIM for the agency's financing of Australia Pacific LNG's liquid natural gas projects inside the Great Barrier Reef World Heritage Area. The lawsuit alleged that EXIM financing for the projects violates U.S. environmental and cultural heritage laws.[89] Their amended lawsuit included EXIM's loan for the Australia Pacific LNG project and a $1.8 billion loan for the Queensland Curtis which together totaled $4.8 billion. In March 2016, a California federal judge ruled against the environmentalists arguing that the EXIM financing represented only 10% of the project which is backed by ConocoPhillips, Origin Energy Ltd. and Sinopec and rejecting the loan would not stop the project. The environmentalists appealed the decision.[90]
Conversely the EXIM has also faced scrutiny for pursuing green energy projects. The EXIM provided 10 million dollars of loan guarantees in 2011 to Solyndra, a company that ultimately became bankrupt.[91] However, as any other governmental institution with lending authority, EXIM reserves a portion of fees collected in expectation that a percentage of loans will result in claims.
https://en.wikipedia.org/wiki/Export%E2%80%93Import_Bank_of_the_United_States
The Export–Import Bank of the United States (abbreviated as EXIM or the Bank) is the official export credit agency (ECA) of the United States federal government.[1][2] Operating as a wholly owned federal government corporation,[1] the Bank "assists in financing and facilitating U.S. exports of goods and services".[1] Under its charter, the Bank does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not occur because commercial lenders are either unable or unwilling to accept the political or commercial risks inherent in the deal. Its current chairman and president, Kimberly A. Reed, was nominated by President Donald J. Trump on January 16, 2019, and sworn in on May 9, 2019.
The bank was established in 1934 by an executive order. In 1945, it was made an independent agency in the Executive Branch by Congress. It was last chartered for a three-year term in 2012 and in September 2014 was extended through June 30, 2015.[3][4] Congressional authorization for the bank lapsed as of July 1, 2015. As a result, the bank could not engage in new business, but it continued to manage its existing loan portfolio.[5] Five months later, after the successful employment of the rarely used discharge petition procedure in the House of Representatives, the U.S. Congress reauthorized the bank until September 2019 via the Fixing America's Surface Transportation Act signed into law on December 4, 2015, by President Barack Obama.[6]
The cost and effectiveness of the bank are controversial. While the EXIM projects will earn the U.S. government an average of $1.4 billion per year for the next 10 years, an alternative analysis from the Congressional Budget Office found that the program would lose about $2 billion during the same period, partly due to discrepancies in how credit risk is accounted for. Both conservative and liberal groups have been critical of the bank, and some continue to demand its termination.[7][8]
President Donald Trump, who had been dismissive of the ExIm, made an about-face in April and nominated a new head of ExIm breaking a deadlock that had prevented the Bank from operating since 2014.[9] Trump was one of ExIm's harshest critics. Conservatives call it the 'Bank of Boeing' and an 'epicenter of crony capitalism'. Its supporters such as Boeing and General Electric Co, claim that it facilitates trade worth billions of dollars.[10]
Overview
The Export–Import Bank of the United States (EXIM) is a government agency that provides a variety of loan, guarantee, and insurance products intended to aid the export of American goods and services. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a three-year term in 2012.[11] The Charter details the Bank's authorities and limitations. Among them is the principle that EXIM does not compete with private sector lenders, but rather provides financing for transactions that would otherwise not occur because commercial lenders are either unable or unwilling to accept the political or commercial risk inherent in the deal.[12]
The EXIM's products are intended to assist export sales for any American export company regardless of size. The bank's charter provides that EXIM makes available "not less than 20%" of its lending authority to small businesses although they have often fallen short of the 20% threshold.[13][14] In fiscal year 2013 however, 76% of the value of loans and guarantees went to the top 10 recipients.[15]
Similar banks, known generally as export credit agencies (ECAs), are operated by 60 foreign countries.[16] As the United States is a member of the Organisation for Economic Co-operation and Development (OECD) they conduct their activities by obeying OECD rules and principles. The goal is to permit exporters in various countries to compete on the basis of the quality of their goods and services, not on preferential financing terms. ECAs of countries, which are not participants of the OECD, such as the China Exim Bank,[17] Ex-Im Bank of Russia, Brazil, and India, are not required by their governments to follow OECD rules.
Offices[edit]
The bank has offices in Chicago, Detroit, Minneapolis, New York, Miami, Atlanta, Houston, McKinney (Dallas), Orange County (California), San Diego, San Francisco and Seattle.
History[edit]
Early history (1934–1944)[edit]
EXIM was organized originally as a District of Columbia banking corporation by Executive Order 6581 from Franklin D. Roosevelt on February 2, 1934, under the name Export–Import Bank of Washington. The stated goal was "to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof", with the immediate goal of making loans to the USSR and Latin America. Roosevelt created a Second Export–Import Bank of Washington with Executive Order 6638 on March 9, 1934, with the specific goal of aiding trade with Cuba.[20] The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots.[21] The First and Second Export–Import Banks were combined in 1936 when Congress transferred the obligations of the Second Export–Import Bank to the first.[22] Congress continued the bank as a government agency, using a series of laws between 1935 and 1943 to make it subordinate to various government departments.
Independent agency (1945–present)[edit]
Congress made the bank an independent agency on July 31, 1945, with the Export–Import Bank Act of 1945.[23] On March 13, 1968, further legislation changed the name to "Export–Import Bank of the United States".[24][25] EXIM became a self-sustaining (self-funding) agency in 2007, though the loans remain backed by the government.[26]
The Government Corporation Control Act of 1945[27] requires the Bank to be reauthorized by Congress every four to five years. Reauthorizations were approved in 1947, 1951, 1957, 1963, 1968, 1971, 1974, 1978, 1983, 1986, 1992, 1997, 2002, 2006, 2012, 2014, and 2015:
| S. 3938 | 20 Dec 2006 | 30 May 2012[28] |
| H.R. 2072 | 30 May 2012[28] | 30 Sep 2014[28] |
| H.J.Res. 124 | 19 Sep 2014[29][30] | 30 Jun 2015[29] |
| Highway Bill | 04 Dec 2015[31] | 30 Sep 2019[32] |
Projects assisted[edit]
Pan-American Highway[edit]
The Pan-American Highway runs from Alaska to Chile through 14 countries with important transportation links to nearly all of continental Latin America. The highway was constructed beginning in 1936 with the last phase complete in 1980.[33]
EXIM Bank credits and loans supported construction of the Pan-American Highway in Mexico, Honduras, Guatemala, Nicaragua, El Salvador, Costa Rica, Panama, Colombia, Ecuador, Peru and Chile.[34] In Paraguay, Argentina, and Bolivia EXIM supported construction of highway spurs connected to the Pan-American Highway.[35] EXIM approved twenty credits to U.S. companies including Caterpillar, Koehring Co., Allis-Chalmers Manufacturing, The Galion Iron Works, and Thew Shovel to help build the highway.[36]
Burma Road[edit]
Constructed between 1937 and 1938, the 717-mile Burma Road links Lashio in present-day Myanmar (previously Burma) to Kunming in Yunnan Province, China.[37] Construction of the road began in 1937 at the start of the second Sino-Japanese War (1937–1945). With Japan able to control port access in China and most of Southeast Asia, the Chinese built a road that would allow transportation of men and goods from a railhead at Rangoon that had access to Burma's ports. From 1939 to 1942 the Burma Road served as a lifeline for military goods and support in the fight against the Japanese in the Far East.
The $25 million credit approved by EXIM in December 1938 was crucial in ensuring that the supply route remained open by providing the transportation vehicles and support material to operate the new road and by providing China with purchasing power during WWII. An additional $20 million to the Universal Trading Corporation was approved in 1940.[38] A 1939 journal article in Foreign Affairs noted that China used part of the $25 million to purchase 2,000 three-ton trucks from Ford, Chrysler, and General Motors.[39]
Post-WWII reconstruction and the Marshall Plan[edit]
EXIM played a critical role during the years between the end of Lend-Lease (September 1945) and the beginning of the Marshall Plan and the World Bank's first authorizations (May 1947 – 1948). At the end of WWII, it was recognized that the U.S. did not have a credit facility capable of handling the demand that would result from the cessation of hostilities. One of the major rationales behind the Export–Import Bank Act of 1945, the basis of EXIM's current charter document, was the necessity to dramatically increase EXIM's lending capacity to adequately respond to Europe's post-war reconstruction needs. The 1945 EXIM Annual Report predicated EXIM's role in the immediate post-WWII period: "the Export–Import Bank was to be the principal source of long-term dollar loans for an extended period of time." This assertion was based on the lack of interest by private capital in lending to foreign government buyers and delays in ratification of the Articles of Agreement for the International Monetary Fund and the International Bank for Reconstruction and Development.[40] The Export–Import Bank Act of 1945 increased lending authority from $750 million to $3.5 billion, almost a fourfold increase to help address these shortfalls.[41]
In 1945 and 1946 credit was offered to France, Denmark, Norway, Belgium, the Netherlands, Turkey, Czechoslovakia, Finland, Italy, Ethiopia, Greece, Poland and Austria to purchase equipment, facilities, and services from the United States. The financing was designed to aid reconstruction of the nations and to repair their import and export capability through the purchase of new machinery, currency exchange, and improvements and repairs to infrastructure and transportation systems.[42]
When the Marshall Plan was initiated in 1948, EXIM concentrated its lending on non-Economic Recovery Act nations in North and South America.[43]
First credits to post-Soviet nations[edit]
When the Berlin Wall fell in 1989 and the USSR was dissolved in 1991, U.S. companies were able to conduct business freely with Eastern Europe for the first time since the end of WWII. EXIM was one of the first financial institutions to provide financing for exports to the former Soviet Union, Poland, Czechoslovakia and the newly independent nations that emerged after 1991. In 1990, President George H.W. Bush waived the Jackson-Vanik Amendment, which had officially blocked normal trade relations with communist countries since 1975. This waiver permitted all E guarantee and insurance programs to U.S. companies wanting to do business with the USSR and several former communist countries.[44]
EXIM resumed business with Czechoslovakia in March 1990. On January 25, 1991, EXIM approved the first transaction to Czechoslovakia since 1947. Financed by First Interstate Bank of Los Angeles, CA, the guarantee allowed Tonak Hat Company[45] to purchase computers from a U.S. company, Digital Equipment Corporation of Massachusetts. Since 1991, EXIM has supported exports to 25 of the nations that emerged after the fall of the Iron Curtain.[46]
First credit to India[edit]
After a visit to India in January 2015, President Obama announced that the EXIM will finance $1 billion of exports of 'Made-in-America' products, the U.S. Overseas Private Investment Corporation will lend $1 billion to small- and medium-sized rural enterprises and the U.S. Trade and Development Agency will commit $2 billion for renewable energy. Obama and Modi agreed on issues that had previously stopped U.S. companies from establishing nuclear reactors in India.[47]
Support[edit]
Supporters say that the bank emphasizes trying to help small and medium size businesses expand their exporting capabilities. CEO and President of the National Association of Manufacturers, Jay Timmons stated: "The EXIM plays a critical role in manufacturer's ability to export to new markets and keep up with growing global competition. The Bank assists nearly 290,000 export related jobs and each year is helping more and more small and medium-sized manufacturers grow their businesses and hire new workers. More than 85% of all EXIM transactions directly benefit small business exporters—the economic engine that powers our economy and job creation."[48]
When Obama was campaigning for President in 2008, he stated that the Export–Import Bank had "become little more than a fund for corporate welfare."[49] During the Bank's reauthorization struggle, May 2012, he said that the Export–Import Bank plays a very important role in reaching his goal of doubling exports over 5 years. At the reauthorization ceremony Obama stated: "We're helping thousands of businesses sell more of their products and services overseas, in the process, we're helping them create jobs here at home. And we're doing it at no extra cost to the taxpayer." [50]
Criticism[edit]
Special Interests-Based Criticism[edit]
The Bank has been criticized for favoring special interests. These interests have included corporations such as Boeing or Enron as well as foreign governments and nationals, such as a 1996 $120 million low-interest loan to the China National Nuclear Power Corporation (CNNP) supporting the export of US-made technology.[51]
More recently the bank authorized 33.6 million dollars in loans to Abengoa, a Spanish Green energy company on which former Governor Bill Richardson is a member of the board of directors. As of May 2014, Richardson was also listed as a member of the advisory committee of the Export Import Bank.[52]
Boeing[edit]
65% of loan guarantees over 2007 and 2008 went to companies purchasing Boeing aircraft.[53] In 2012, the Bank's loan guarantees became even more skewed, with 82 percent of them going to Boeing customers.[54]
However, EXIM supporters note that Boeing is the largest exporter in the United States by dollar value,[55] and must be protected in their capacity as the only remaining comprehensive U.S. commercial aircraft manufacturer. Support of Boeing is seen as particularly critical as Comac, China's state-owned and heavily subsidized commercial aircraft manufacturer, aggressively seeks to leech market share from both Boeing and Airbus. Also important to note, Boeing is not the only US aircraft manufacturer previously supported by EXIM. During the 1930s, 40s, and 50s, EXIM supported other US aviation manufacturers such as the Douglas Aircraft Company, the Consolidated Vultee Aircraft Company (Convair), and the Lockheed Aircraft Corporation,[56] before the firms were driven out of existence by competition or acquisition.
Budget-based Criticism[edit]
Critics also purport the existence of "unseen" costs created by the Export–Import Bank's subsidies, including artificially raising the price of new airplanes and potentially adding $2 billion to the deficit over the next decade.[57]
Forbes contributor Doug Bandow wrote in 2014, "The agency piously claims not to provide subsidies since it charges fees and interest, but it exists only to offer business a better credit deal than is available in the marketplace. The Bank uses its ability to borrow at government rates to provide loans, loan guarantees, working capital guarantees, and loan insurance."[58]
If the normal principles of economics or finance are applied, then it is seen by critics as unlikely that the bank has profited and most unlikely that it makes the annual profit that it has stated, because the bank's calculations of profit fail to make proper adjustment for risk.[59][60][61][62][63][64] Best practice in finance and economics, as well as in banking, is to adjust the cost of capital or discount rate to reflect risk,[65] or, equivalently, to use a fair-value estimate. On this basis the criticism is that "This simple approach—which is based on a method outlined in a National Bureau of Economic Research paper by Debbie Lucas of the Massachusetts Institute of Technology—suggests that the EXIM's long-term loan guarantee program actually provides guarantees at a loss for taxpayers, not a profit. Moreover, this analysis reveals that the EXIM's loan guarantees are made at sufficiently generous terms that borrowers receive subsidies of about 1% of the amount borrowed. That translates into a $200 million cost for taxpayers on the $21 billion in loans that the bank will make in 2012."[66]
Environment-based Criticism[edit]
In February 2009, the EXIM settled a seven-year-long legal proceeding brought by Friends of the Earth, Greenpeace together with the cities of Boulder, Arcata and Oakland. The plaintiffs said that the EXIM and the Overseas Private Investment Corporation provided financial assistance to oil and other fossil fuel projects without first evaluating the projects' climate change impacts.[67] In 2005, the plaintiffs were granted legal standing to sue. This is considered a landmark decision because it is the first time that a federal court has specifically granted legal standing for a lawsuit exclusively challenging the federal government's failure to evaluate the impacts of its actions on the Earth's climate and U.S. citizens.[68] In its settlement agreement, the EXIM agrees to evaluate the carbon dioxide emissions as part of its determination for qualification for a project.[69][70][71] However, EXIM fossil fuel financing and associated greenhouse gas emissions grew swiftly after the settlement agreement, coinciding with Chairman Hochberg's tenure. Between 2009 and 2012, EXIM fossil fuel financing grew from $2.56 billion to nearly $10 billion.[72][73]
Environmental groups say that the EXIM is currently on a "fossil fuel binge", which "makes a mockery" of President Obama's stated commitment to phase out fossil fuel subsidies.[74][75] In December 2009, EXIM Directors approved $3 billion in financing for the ExxonMobil-led Papua New Guinea Liquid Gas project in December 2009.[76] The project has reportedly caused violence and in April 2012, the Papua New Guinea government ordered in troops to quell opposition from villagers after a landslide linked to a quarry that had been used by the project killed an estimated 25 people.[77][78]
In 2010, environmental groups criticized the EXIM Directors for approving $917 million worth of financing for the 3,960 megawatt coal-fired Sasan Ultra Mega Power Project in India after initially rejecting the project on climate change grounds. Environmental groups say that in reversing the decision the agency's Chairman, Fred Hochberg and Board of Directors "caved in" to political pressure from Wisconsin politicians.[79][80][81][82][83] In 2011, several environmental groups protested at Export–Import Bank headquarters, unsuccessfully urging Chairman Hochberg and Board of Directors to reject $805 million in financing for the 4,800 megawatt Kusile coal-fired power plant in South Africa,[84] which environmental groups say is the largest carbon emitting project in the agency's history, which will not alleviate poverty but will emit excessive local air pollution, which health experts say causes damage the respiratory, cardiovascular, and nervous systems and deaths resulting from heart disease, cancer, stroke, and chronic lower respiratory diseases.[85][86][87][88]
In December 2012, the Center for Biological Diversity, Pacific Environment, and Turtle Island Restoration Network filed a lawsuit against Chairman Hochberg and the EXIM for the agency's financing of Australia Pacific LNG's liquid natural gas projects inside the Great Barrier Reef World Heritage Area. The lawsuit alleged that EXIM financing for the projects violates U.S. environmental and cultural heritage laws.[89] Their amended lawsuit included EXIM's loan for the Australia Pacific LNG project and a $1.8 billion loan for the Queensland Curtis which together totaled $4.8 billion. In March 2016, a California federal judge ruled against the environmentalists arguing that the EXIM financing represented only 10% of the project which is backed by ConocoPhillips, Origin Energy Ltd. and Sinopec and rejecting the loan would not stop the project. The environmentalists appealed the decision.[90]
Criticism of Green energy-based Financings[edit]
Conversely the EXIM has also faced scrutiny for pursuing green energy projects. The EXIM provided 10 million dollars of loan guarantees in 2011 to Solyndra, a company that ultimately became bankrupt.[91] However, as any other governmental institution with lending authority, EXIM reserves a portion of fees collected in expectation that a percentage of loans will result in claims.
https://en.wikipedia.org/wiki/Export%E2%80%93Import_Bank_of_the_United_States
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