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Tuesday, December 6, 2022
WASHINGTON, Jul 24 2007 (IPS) - The U.S. House of Representatives extended funding until 2011 for the Overseas Private Investment Corporation (OPIC), a government agency that backs U.S. corporations in developing nations, in an act that prohibits investment in “terrorist nations” and requires more rigorous human rights and environmental standards.
OPIC, which supports U.S. corporations doing business in developing nations, often issues political risk insurance, direct loans and loan guarantees. The Washington-based agency insures U.S. investors against losses due to expropriation, currency inconvertibility, and damages from political violence.
The targets of the prohibition appear to be North Korea, Sudan and Iran.
The act was sponsored by Reps. Brad Sherman and Tom Lantos, both Democrats from California; Donald Payne, a Democrat from New Jersey; and Ileana Ros-Lehtinen, a Republican from Florida. It now moves to the U.S. Senate for final approval.
Among other things, the act was designed to discourage private sector investment “with enemies of the United States by prohibiting the Corporation from supporting applicants of OPIC assistance that have certain ties to state sponsors of terrorism.”
The reauthorisation would bar OPIC funding to individuals who have loans to, or more than 20 million dollars invested in, the energy sector of any “terrorist nation”, those developing nuclear weapons or committing genocide. The current authorisation expires Sep. 30.
Frank Gaffney, president of the Centre for Security Policy, told the subcommittee on May 24 that U.S. companies such as General Electric, which allegedly works in Iran through subsidiaries, should be penalised under the OPIC bill.
Gaffney advised the U.S. Congress to prod European countries to pressure their corporations, such as Total, ENI, Elf, Statoil and Siemens, which do business in Iran.
“(Congress) should consider ways in which to constrict OPIC insurance and other assistance, whether direct or indirect, available to those doing business with such regimes,” he said.
Rep. Sherman said that he hoped that the act would serve as a model for other government programmes that benefit corporations, including especially procurement. He also called for OPIC to take a larger role in combating global warming, and consensus building with indigenous communities.
The act did not enact restrictions only on a political basis, but also asks OPIC to give priority to a variety of other projects, including those in less-developed countries and those that respect workers’ rights.
OPIC will have to fund projects that promote the use of alternative energy sources, and agree to an international standard for transparency for projects that involve extractive industries, like mining and drilling.
The act calls for greater transparency in OPIC projects, including publishing summaries of each project it approves on its web site. It further requires OPIC to strengthen its office of accountability.
OPIC has been involved in some controversial projects, including BP’s Baku-T’Blisi-Ceyhan (BTC) pipeline project, which transects 1,760 kilometres of Azerbaijan, Georgia and Turkey, a project that impacts several environmentally sensitive areas.
The U.S. Congressional Budget Office says that implementing the OPIC authorisation bill would cost 91 million dollars over the 2008-2012 period. OPIC, however, claims that it is funded by its own fee revenue.
Over its 36-year history, it has generated 71 billion dollars in U.S. exports. In fiscal 2006, OPIC projects generated one billion in U.S. exports. In the same period, OPIC has supported 177 billion dollars in assistance in more than 150 developing countries. It has operations in almost every corner of the globe.
For example it has provided more than 4.7 billion dollars in finance and insurance to support over 320 projects in sub-Saharan Africa alone
It works in Asia, North Africa, the Middle East, North Africa, the Middle East and Russia.
OPIC is involved for example in implementing the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA-DR).
The agency is backing new Central American private equity investment funds. It has signed agreements for more than 300 million dollars in finance and insurance for projects in housing, energy, microfinance and small business projects.
It is backing a land records system in Kenya, home buying in Honduras, and Lebanon’s reconstruction, financed in part by Citigroup Corporate and Investment Bank at a total of 150 million dollars.
In Afghanistan, OPIC is financing the construction of a 209-room hotel to be managed by Marriot International in Kabul, to provide “modern accommodation” for visitors.
OPIC’s increased investing banking services has come under fire for not clearly identifying to the public the specific use of these proceeds by these financial institutions.
In 2006 alone, OPIC provided more than one billion dollars in financing to private sector financial institutions, which then use those cash proceeds to lend to other commercial banks or individual projects.
“Based on publicly available information it is unclear how this money has specifically been used or what impacts these investments might have on the environment,” said Jonathan Sohn of the World Resources Institute in his testimony.
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