Two of the Russian companies targeted by new economic sanctions that President Obama announced this week have been major recipients of financing from the U.S. taxpayer-backed Export-Import Bank. (RELATED: Ayotte: U.S. Must Shame Europe Into Stronger Sanctions Against Russia)
Vnesheconombank (VEB) and Gazprombank, two of Russia’s largest financial institutions, have together received more than $500 million in Ex-Im financing since 2003. Both banks are state-owned, and both provide capital financing to Russian companies.
Matt Bevens, a spokesman for Ex-Im, told The Daily Caller News Foundation, “As we do with any and all entities sanctioned by the U.S. government, Ex-Im Bank has worked quickly and diligently to ensure full compliance with each round of sanctions placed on Russian individuals and companies.”
The sanctions prohibit transacting in new debt or equity with targeted individuals and companies, but do not apply to existing arrangements, meaning Ex-Im is under no obligation to cancel any previous deals it has with either company. In a statement on its website, Gazprombank confirmed that, “such restrictions do not affect the operations of Gazprombank.”
In 2003, Gazprombank received a five-year loan guarantee worth $22,627,540 from Ex-Im to purchase mining equipment from an American company. More recently, in 2012, Ex-Im awarded a 12-year, $496,934,008 loan guarantee to VEB for the purchase of Boeing aircraft.
Both deals will likely come under scrutiny as Congress debates whether to extend Ex-Im’s charter, which is currently set to expire on September 30, amidst rising tensions between the U.S. and Russia. (RELATED: Democrats Rally Support for Export-Import Bank)
Critics of the bank charge that it is nothing more than corporate welfare, pointing out that 82 percent of the loan guarantees it made in FY 2013 went to customers of Boeing, many of which were either state-controlled or had state backing.
The Air Line Pilots Association, in a letter to members of Congress last week, claimed that Ex-Im subsidies put domestic airlines at a competitive disadvantage, and urged Congress to ban the bank from further dealings with state-owned companies. (RELATED: Is the Export-Import Bank Crony Capitalism)
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