“Companies from Saudi Arabia and the United Arab Emirates together pulled in about $12 billion in trade financing over the past five years — 8.5% of the $141 billion global total — to help pay for nuclear reactors, industrial power generators and new fleets of Boeing jets. That includes a record-setting $5 billion loan to help Saudi Arabia build one of the world’s largest petrochemical complexes.”
The US subsidizes purchases made by the oil monarchies of the Persian Gulf? Big surprise, that is not a popular idea:
“The companies keep the profits if sales go well; taxpayers bear the risk of loss if not,” House Financial Services Committee Chairman Jeb Hensarling, R-Texas, wrote in The Wall Street Journal last week. “The bank is a small-scale example of a larger and more dangerous threat: the shrinking of the free-market economy and the rise of a progressive welfare state — with its attendant cronyism, public-private partnerships and spreading government economic controls.”
The rational however, is that by providing loans and guarantees, the ‘ExIm’ Bank is supposed to facilitate trade, increase US exports and support the US economy. It is also argued that the bank provides a necessary service because other states intervene in similar ways to boost the sales of their own products on foreign markets.
Nevertheless, there are still questions about which industries get support and how much of the profits remain in the US. ExIm claims the biggest category of US companies it works with is “small businesses”: http://www.exim.gov/about/facts-about-ex-im-bank
Hensarling and other critics on Capitol Hill, remain unconvinced.
The ExIm bank also provides an interesting example of the role that states play in promoting trade. To the extent that institutions like ExIm provide a strategic advantage of one country over another, trade is still being pursued on mercantilist terms, a zero-sum competition between states.