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Week Ending July 27, 2006

H.R.2798 To reauthorize the programs of the Overseas Private Investment Corporation, and for other purposes.

The Overseas Private Investment Corporation is a US agency created in 1971 to facilitate private capital and other private resources to improve economic and social development in less developed countries in a fashion that compliments US foreign policy in those countries. Provided by OPIC is political risk insurance, project financing and economic financing in general. The funds are dispersed as direct loans and loan guarantees. Minimal US tax dollars are invested in the effort.

The bill report notes that OPIC has supported $177 billion in assistance to 150 developing countries since it was created. Host governments benefit from job creation and other revenues equaling about ten percent of the investment.

Such investments come with conditions and this bill affirms and expands those requirements.

The bill requires preferential treatment of investment projects in less developed countries that have governments receptive to private enterprise and are willing to maintain conditions supporting private enterprise including protection of human rights, rule of law and democratic governing. The host country must have had made or is making significant progress toward the recognition, adoption, and implementation of laws that substantially provide international worker rights based on the International Labor Organization standards along with acceptable working conditions. In countries not up to those standards OPIC may support an effort to provide humanitarian assistance. Investors, too, must recognize and embrace those rights and may not have violated those rights in previous investments.

A project that could have significant adverse environmental impact must be audited before OPIC consideration. Generally, projects must have strong environmental safeguards in place. Such potentially damaging projects must have broad community support as well. The support must take the form of mutual agreements giving indigenous people enough leverage to negotiate a project. Greenhouse emissions would be assessed.

A new section in OPIC’s rules requires OPIC to institute a climate change mitigation action plan that establishes a goal of substantially increasing support of projects that use, develop or otherwise promote the use of clean energy technologies and give preferential treatment to projects using those technologies. OPIC is required to implement a comprehensive climate change mitigation plan that substantially reduces Its’ greenhouse gas footprint, globally.

Regarding extractive industry projects such as mining Congress has the final say on any such project that receives over $10 million from OPIC. To avoid corruption in the host country, those countries taking on an extractive project must commit to transparency principle and criteria. The requirement applies in particular to projects where OPIC pays royalties to the host government. Specifically, the host government must publish all payments received from gas, oil and mining extractions with international auditing standards applied. OPIC, too, must disclose publicly in the US the investments it is making

OPIC is prohibited from supporting or promoting any railway connection that does not traverse or connect with Armenia or does connect  Azerbaijan and Turkey.

Persons doing business with state sponsors of terrorism would be ineligible for OPIC assistance particularly if the person has an investment in the energy sector of such a country in excess of $20 million. Or has an outstanding loan or extension of credit to the government of such a country. Because investments in southern Sudan are seen as benefiting peace, investments in that country are not prohibited. OPIC is essentially authorized to support projects OPIC should provide assistance for projects in certain areas of Sudan, including Southern Sudan, Southern Kordofan/Nuba Mountains State, Blue Nile State, and Abei, Darfur.

OPIC is authorized to support projects in Iraq with the agreement of the Iraqi government. OPIC may not support a project in any part of Gaza or the West Bank unless the Secretary of State determines that the location for the project is not under the effective control of Hamas or any other foreign terrorist organization.

The President of OPIC must report suspected fraud or abuse or material breaches of contracts to the Justice Department. OPIC must allow for open competition for management of its’ investment funds.

Sponsor:  Rep. Brad Sherman (D-CA-27^th)

Vote: Passed House by voice vote July 23, 2007

Cost to the taxpayers: “CBO estimates that implementing H.R. 2798 would cost $6 million in 2008 and $74 million over the 2008-2012 period”

Earmark Certification:   H.R. 2798 does not contain any congressional earmarks, limited tax benefits, or limited tariff benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

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MORE INFORMATION

The Congress finds the following:

(1) Since its founding in 1971, the Overseas Private Investment Corporation (in this section referred to as `OPIC') has helped to mobilize and facilitate private capital by United States investors in developing and emerging market countries in support of United States foreign policy and development goals.

(2) OPIC assistance should not, in any way, support projects in countries that reject their obligations to support international peace, security, and basic human rights.

(3) OPIC assistance should not be provided to those who support enemies of the United States.

(4) OPIC assistance is a privilege and should be granted to persons that, along with their affiliated companies, demonstrate responsible and sustainable business practices, particularly with regard to the environment, international worker rights, and efforts against genocide and nuclear proliferation. Denial of OPIC assistance is not a penalty or sanction.

(5) Over OPIC's 35-year history, OPIC has supported $177,000,000,000 in operating investments in more than 150 developing countries, helping to create more than 800,000 jobs and some $13,000,000,000 in host-government revenues.

(6) OPIC projects have generated $71,000,000,000 in United States exports and supported more than 271,000 United States jobs.

(7) Projects assisted by OPIC in fiscal year 2006 are projected to generate $1,000,000,000 in United States exports, support more than 2,700 United States jobs, and have a positive impact on the United States balance of payments.

(8) In fiscal year 2006, 87 percent of all OPIC-supported projects supported small-and-medium-sized businesses in the United States.

(9) In an era of limited Federal budgetary resources, OPIC has consistently demonstrated an ability to operate on a self-sustaining basis to support United States companies, all at a net cost of zero to the United States taxpayer.

(10) OPIC has reserves totaling approximately $5,300,000,000 and will make an estimated net budget contribution to the international affairs account of $159,000,000 in fiscal year 2008.

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