How this little known government agency helps put America first
By Rob Mosbacher | MARCH 31, 2017
Here is a simple question for those working on next year’s federal budget: what sense does it make to eliminate a U.S. government agency that costs just $70 million a year to run, but returns an average of $350 million each year in revenue to the U.S. Treasury to reduce the federal deficit? The answer: none.
And yet, there are some in Washington who want to do precisely that. They want to eliminate the Overseas Private Investment Corporation (OPIC), an independent agency of the U.S. government, because they believe it has a distortive impact on markets, and is unnecessary.
Here’s what OPIC actually does: the agency uses direct loans, loan guarantees, and political risk insurance to help U.S. companies — primarily small and medium-sized — compete in parts of the world where the rule of law is uncertain, at best. It has been in business for 46 years and operates on a self-sustaining basis at no net cost to American taxpayers.
Virtually all of the economies in which OPIC operates are heavily influenced, if not highly regulated, by central governments, so it is hard to see how enabling more private capital investment “distorts” those markets. Indeed, private sector investment helps create more open, competitive, and sustainable markets and societies.
Its critics claim if OPIC goes away, that private sector banks and insurance companies will step right in to fill the void. Try telling that to a Tulsa, Oklahoma oil and gas company that borrowed $3.8 million from OPIC to pursue a deal in the oil fields of Colombia after private sector banks refused lend them the money. As a matter of policy, OPIC does not compete with the private sector and will not finance or insure a deal unless private sector players have turned it down first.
OPIC has helped finance thousands of American companies that could not and would not compete overseas without its support. Nearly 95 percent of the world's customers are outside our borders, and 75 percent of the world's purchasing power. To eliminate one of the key U.S. government programs that facilitates American businesses selling products and services in emerging markets, is to wave the white flag of surrender to our competitors around the world, particularly to China.
In addition to the damage eliminating OPIC would do to U.S. businesses, it would also do great damage to our foreign policy. The Trump administration is rightly focused on fighting terrorism, but our country shouldn’t be taking any of the tools off the table. One of the best ways to reduce the draw of extremism is to create opportunity and reduce hopelessness by driving job creation and economic growth.
Some 30 percent of people in the Arab world are unemployed and an even higher percentage are underemployed, particularly young men and women. Regardless of seemingly insurmountable differences in culture, religion, and lifestyle, people around the world share the same aspirations to put food on the table, a roof over their heads, and provide for their families. That comes from having a job.
The United States leads the world in entrepreneurship and innovation. With the help of OPIC, we are able to use that competitive advantage effectively as a “smart power” tool in support of American foreign policy. We should be ramping up our economic diplomacy toolbox to expand our influence in the developing world, rather than retreating from those markets. This is particularly important if we are to counter the rapid increase of Chinese influence in critical parts of the world.
House Freedom Caucus member Ted Yoho of Florida said recently, “OPIC shows a responsible way for the United States of America to spend the American taxpayers money working with countries on investments and helping the private sector invest in areas they couldn't get financing for.” OPIC is a huge asset for our nation — not a liability — and I urge congressional appropriators to fully support its budget. To do otherwise would dramatically hinder our nation’s competitiveness and, in fact, not put America first.
Robert Mosbacher Jr. is chairman of Mosbacher Energy Company. He served as president and CEO of the Overseas Private Investment Corporation under President George W. Bush from 2005 to 2009.