WASHINGTON-The House last week zeroed out a little known government agency that in recent years has played a key role supporting wireless ventures by American firms in countries experimenting with capitalism and democracy for the first time .
By a vote of 260-157, the House declined to reauthorize funds for the Overseas Private Investment Corp. OPIC, whose five-year authorization expires Sept. 30, provides financing and political risk insurance for U.S. business projects in Russia, Central Europe, South Africa, the Middle East and elsewhere.
Critics of the 25-year-old program, led by an alliance of Republicans, including House Budget Committee Chairman John Kasich (R-Ohio), Democrats, including Jesse Jackson Jr. (D-Ill.), and independent Bernard Sanders (I-Vt.), say OPIC amounts to corporate welfare for Motorola Inc., U S West Inc. and other corporate giants.
Furthermore, they say such aid-government subsidies-puts taxpayers at risk and unfairly competes with private-sector underwriters. Opponents also reject OPIC’s claim that it returned a record $189 million in profits to the U.S. treasury in fiscal 1995. OPIC also says it has $2.6 billion in reserves.
Motorola secured $37 million of insurance for a partnership that won a license to provide paging in Bombay, the largest city of India, and in Bangalore, the country’s high-tech hub. Based in Schaumburg, Ill., the world’s largest mobile communications supplier also got $65 million in OPIC insurance for a telecom project in St. Petersburg.
A small telecom firm in Alexandria, Va., known as MCT of Russia L.P., received $10.3 million in assistance from OPIC to provide cellular phone service in Chita, located in southeastern Siberia.
U S West last month announced it received a $200 million loan from OPIC to finance wireless telecom projects in Russia, representing the largest backing by the government agency in that country.
“This OPIC loan is a great endorsement of our operations in Russia,” said Gary Ames, president of U S West International, at the time.
“It also continues our successful partnership with OPIC,” added Ames. “With its support in Hungary, we have built the biggest and fastest growing cellular network in Central Europe and we would hope to see similar success in Russia.”
OPIC hopes so, too. “Unfortunately, OPIC was not successful today on the reauthorization proposal considered under expedited procedures,” said Ruth Harkin, president of OPIC. “However, we will continue to work with Congress on a measure that will preserve OPIC’s ability to create American jobs and U.S. exports.”
As such, OPIC is counting on receiving a less hostile reception in the more moderate Senate where countless other House bills-some from the Contract with America-have died or been diluted.
OPIC and its proponents-reportedly businesses and some unions-make the case the program offers assistance in some of the poorest nations of the world, areas that private sector insurers wouldn’t dare take a chance on. The U.S. is a winner, too, claims OPIC by virtue of the $43 billion in exports and the 200,000 American jobs created since its inception in 1971. Foreign policy objectives are furthered as well, it is argued, as a result of bringing economic development to emerging democracies.
Taking the operation private, according to a government study cited by OPIC, would cost taxpayers between $500 million and $700 million and eliminate services it now offers.
Vice President Gore pressed for OPIC’s survival. “As vice president, I have personally witnessed what OPIC and the other programs can accomplish in countries like Russia to open opportunities for American companies and support jobs for American workers,” said Gore in a letter seeking House Minority Leader Richard Gephardt’s (D-Mo.) support earlier this month.
