Your Tax Dollars at Work at the Ex-Im Bank
By William Shughart • Tuesday July 22, 2014 1:08 PM PST •
Following up on my nationally syndicated column on the pending re-authorization of the Export-Import Bank (“Let the Ex-Im Bank Fail”), the Financial Services Committee of the U.S. House of Representatives issued a press release on July 21, 2014, stating that
“Two of the four Russian firms targeted with new sanctions announced last week by the Obama administration have received more than $1 billion in U.S. taxpayer-financed subsidies from the Export-Import Bank.Vnesheconombank (VEB) and Gazprombank—two state-owned Russian banks—have together received more than $1 billion in Ex-Im financing since 2003.
“Here are the deal details: In 2003, Gazprombank received a five-year loan guarantee worth $22.6 million from Ex-Im. VEB alone has received over $1 billion in Ex-Im backed loan guarantees. This includes a $496 million loan guarantee in 2012 and a $703 million loan guarantee in 2014.
“The sanctions do not apply to these existing arrangements, ‘meaning Ex-Im is under no obligation to cancel previous deals it has with either company’, according to one report.”
So, in addition to financing the exports of Boeing, Merck, Caterpillar and other very large domestic corporations, which hardly need taxpayer subsidies to sell overseas, the Ex-Im Bank also is financing purchases of U.S. goods by buyers located in countries increasingly hostile to American interests.
Free and unfettered international trade is the path to peaceable relations with the rest of the world. (Can anyone think of a benefit from the longstanding embargo of Cuba that possibly offsets the harm suffered by U.S. cigar smokers?) But, the Ex-Im Bank should not be a subsidizer of Vladimir Putin’s Russian-centric geopolitical strategy to bring the Ukraine under his hegemony.
The Kremlin, it turns out, is funneling money to environmental activist groups in Europe to stop or delay the introduction of hydraulic fracturing (“fracking” is a U.S. technology) in order to keep Europeans dependent on Russian natural gas. In that respect, at least, the Ex-Im Bank and the KGB’s successors seem to be on the same page (see my column in Forbes here).
If a better reason exists for ending the crony capitalism of the Ex-Im Bank on or before the current fiscal year expires on September 30, I cannot think of one.