What is the Export-Import Bank of the US and why is it important?
If you have not heard of the Export-Import Bank of the United States Federal Government, you are not alone. However, this institution provides credit to foreign countries and companies that are looking to purchase American made and operated products. They extend credit to customers that do not qualify for loans from commercial lenders.
The interesting aspect of the US Export-Import bank is the companies that benefit the most from their loans. As I mentioned in this related article 75% of Ex-Im bank’s loans benefit the Boeing Company, Bechtel Corporation, or the Chevron and Phillips Corporation.
According to the annual financial report for fiscal year 2009 the Ex-Im bank gave out $21 billion in loans, a sharp increase from a total of $15.3 in 2008, guarantees and export-credit insurance, which will support an estimated $26.4 billion of U.S. exports to markets worldwide.
In order to justify their existence the Ex-Im bank heavily publicizes, to the extent that they publicize at all, the fact that $4.4 billion went to small businesses, which made up 21% of their loans. However barried in the data is that the other 79% is made up of four enormous US corporations, and 77% goes to the aircraft(namely Boeing, a company who is flush with US military contracts), and the energy sector.
Now it is clear that these loans are primarily going to support three of the largest corporations in the United States. And the things that they are primarily exporting are not directly benefitial to the citizens of the countries on the receiving end. A large majority of the loans are going to countries that are looking to purchase aircraft. These purchases directly fund the military industrial complex that is so often referenced. One of the primary players in the military industrial complex is Boeing, a corporation who has the majority ofUS military contracts when it comes to airpower.
Now I cannot say that it is all bad, these contracts do provide jobs to employees at the Boeing Corporation, but at what cost? And is it fair to any potential compitetors that might one day like to challenge Boeing?
It could also be said that the Export Import bank funds the endgame goals of many of the US military’s foreign adventures. Recently in the Financial Times of London, a columnist was urging President Obama to allow the Export-Import bank to finance a natural gas pipeline through Afghanistan to India as a winning strategy for the Afghanistan/Pakistan war.
This line of thinking takes very little into consideration but the bottom line of the large corporations that benefit from such a pipeline financed by the Ex-Im bank. The stakes of the countries involved would see little of the revenue trickle down past the country’s leadership.
Some things they've been involved with.
The [Turkmenistan-Afghanistan-Pakistan-India natural gas] pipeline is projected to cost $7.6 billion and would likely be backed by credit extended to the stakeholders in the various countries by the Export-Import Bank of the Federal US government.
Apparently, they're lending out billions to ever-so-friendly countries like Colombia.
Ecopetrol SA received $1 billion in preliminary financing from the U.S. Export-Import Bank as Colombia’s state oil producer seeks to almost double output.
Ecopetrol will use the loans to buy goods and services from U.S. businesses to develop oil and gas reserves and upgrade refineries, the Export-Import Bank said today in a statement.
Oil output at Bogota-based Ecopetrol will almost double to 1 million barrels daily by 2015 as the company drills more wells in Colombia and neighboring South American nations. The company will boost spending by 11 percent to $6.9 billion this year by tapping funds from banks, bonds and possible asset sales.
Amazing. It looks like it really is just to prop up companies like Boeing.
Hindu Business Line:
Air India has signed a $1.1-billion financing agreement with the US Export Import bank (EXIM) for financing the purchase of 11 Boeing aircraft. J.P. Morgan is the disbursing bank for the finance agreement.
Official sources told Business Line that the deal is for purchase of four Boeing 737-800 aircraft and seven Boeing 777 aircraft. “The aircraft have been delivered to Air India. The agreement has signed at very competitive rates,” airline officials said.
The President apparently has a lot of authority over the Export-Import bank.
Pursuant to the statute which created and regulates the U.S. Export-Import Bank, the President of the U.S. (who, by a 1979 Executive Order, delegated such authority to the Secretary of State) may, after consultation with the House and Senate Committees on Banking, determine that an application for credit should be denied by the Bank if the extension of credit "clearly and importantly" impacts U.S. "policy in such areas as international terrorism, nuclear proliferation, environmental protection and human rights." 12 U.S.C. Sec. 635(2)(b)(1)(B).
Hmmm, sounds like a scam to me.