Last week, the Senate banking committee approved President Trump’s four nominees to the Export-Import Bank of the United States (Ex-Im Bank). This is a vital step toward restoring the bank to full functionality and boosting the competitiveness of U.S. exports—particularly in the global market for nuclear energy hardware and services.
Why Is the Ex-Im Bank Important?
As the official export credit agency of the United States, the Ex-Im Bank provides loans, loan guarantees and other forms of financial assistance to the foreign customers of U.S. exporters to help the sale of American goods and services. A competitive credit agency is absolutely necessary for U.S. companies to win bids for international nuclear power plant contracts.
In 2015, the United States inflicted massive harm on its own industry by failing to confirm new directors to the Ex-Im Bank’s board and thus bringing its operations nearly to a halt. Since then, the Ex-Im Bank has lacked a quorum on its board of directors, preventing it from approving transactions valued over $10 million—all but closing the bank for U.S. nuclear energy exports.
As a senior U.S. diplomat reminded last week, the interests at stake are not just commercial.
Christopher Ford, assistant secretary of state for international security and nonproliferation, told an audience at the Hudson Institute that when “U.S. industry and American workers have the chance to spread their wings in the international marketplace … global nonproliferation standards improve in direct proportion to our suppliers’ commercial success.”
U.S. nuclear exports come with the most stringent trade controls and enable the United States to promote foreign policy interests. “Nonproliferation and a competitive U.S. civil nuclear export sector,” Ford concluded, “are thus mutually dependent and mutually reinforcing goals for the United States.”
Strategic Use of Export Finance
In the years that Ex-Im Bank has been neglected, other nations have wisely used export finance to advance their national interests—particularly in strategically important industrial sectors such as nuclear energy. The model—first used by China, Japan and South Korea and now widely adopted—integrates export finance into national strategies, maximizes the involvement of national companies in supplying the reactor, and promotes the commercial relationship through a coordinated, whole-of-government approach.
“Predatory Financing” by Russia and China
Russia and China, meanwhile, have exploited export financing in new ways that undermine the regulatory independence, energy security and political autonomy of U.S. partners.
As Ford put it, Russia and China “use reactor sales by their heavily state-supported nuclear industries as a geopolitical tool to deepen political relationships with partner countries, to foster energy dependence by foreign partners, and sometimes even to use predatory financing to lure foreign political leaderships into ‘debt traps’ that give Beijing or Moscow leverage that it can exploit later for geopolitical advantage.”
Ford added, “the leverage resulting from such civil-nuclear relationships with Russia and China is designed—and often used—to advance the strategic goals of these adversaries to the detriment of U.S. interests and those of our allies.”
Leveling the Playing Field
The private-sector U.S. nuclear industry does not seek, or need, the state support received by its Russian and Chinese rivals. What it requires to level the playing field in export finance is a functioning and competitive export credit agency.
The U.S. Senate should hold a floor vote without delay to confirm the president’s nominees to the Ex-Im Bank board of directors. Without Ex-Im Bank, the United States will never maintain its beneficial influence on global nuclear safety, security and nonproliferation, let alone reach President Trump’s stated goal of “energy dominance.”
As the Ex-Im Bank charter comes up for reauthorization later this year, the Trump administration and Congress urgently need to reassess the bank’s policies that hinder U.S. competitiveness with international rivals—particularly Russia and China.
The shutdown of the Ex-Im Bank has had grave consequences for U.S. competitiveness in nuclear energy markets, where official export financing is a universal requirement to bid on tenders. A fully functional and competitive Ex-Im Bank is critical to U.S. success on multireactor deals now under discussion in India, for example. U.S. national security interests, many billions of dollars in U.S. exports and tens of thousands of American jobs hang in the balance.
Top Image: U.S. Energy Secretary Rick Perry speaks with Ukrainian President Poroshenko at the U.S-Ukraine Strategic Energy Dialogue in 2018. Credit: U.S. Embassy, Kyiv, Ukraine.
