The Congressional Research Service has proven that the Iran deal will enable loans guaranteed by the American taxpayer to Iran. This is through the Export-Import bank, itself a target of accusations of corruption by Republican Senators such as Ted Cruz. As Senator Cruz himself points out, most Americans have never heard of the Ex-Im bank. He gave a speech recently in which he lays out the fundamentals of why it is a standout example of corporate welfare and political corruption in Washington.
The Ex-Im bank provides government loan guarantees to a handful of major corporations — coincidentally, major political donors — that allow them to sell goods to foreign countries without worrying about whether or not they’ll actually get paid. If a country should fail in its obligations, Uncle Sam will make the debts good. The American taxpayer ends up on the hook for the cost of expanding corporate business in suspect nations with wobbly economies. Yet the small number of corporations who benefit from the Ex-Im bank are all quite wealthy, and capable of obtaining loan guarantees privately through insurance. The taxpayer is made to do what the market is ready to do just because it saves these corporations money.
One country where the Ex-Im bank has not operated in recent years is Iran. This is because of the American sanctions that will be rejected as a part of approving the Iran Deal. The Congressional Research Service has recently published a document detailing the ways in which the Ex-Im bank will be freed to undertake loan guarantees with Iran. The CRS piece was written by one of their research specialists in foreign policy legislation, Dianne Rennack. The complete report can be viewed at the end of this post.
The Congressional Research Service is a non-partisan arm of the Congress, whose job is to provide clear answers to questions of fact that can serve as a foundation for the Congressional debate. It is well respected as an organization, but its reports are not made available to the American public nor to the press. This is true even though it costs the American taxpayer $100 million a year, and the reports are not classified.
According to the report, restrictions on the Ex-Im bank working with Iran are going to be released by the repeal of a number of executive orders (E.O.). E.O. 13590 prohibits the Ex-Im bank from entering into relationships with individuals named personally in the sanctions, such as Qassem Suleimani, the head of Iran’s unconventional warfare program. The Iran deal will repeal this order.
E.O. 13622 authorizes sanctions on foreign financial organizations associated with Iran’s state sponsorship of terrorism. That will also be repealed under the deal.
E.O. 13628 freezes money and property owned by named human rights violators. Under the deal, their property will be returned to them, and loan guarantees from the Ex-Im bank will also become available to them.
Finally, the repeal of E.O. 13645 will allow loan guarantees related to Iran’s oil industry. Petroleum companies will be able to fund their operations in Iran without worrying about whether Iran will pay them, because the American taxpayer will.
These loan guarantees are suspect in their own right. Even where the loan guarantees relate to nations that are not state sponsors of terrorism, it is unclear that the bank represents a proper use of American taxpayer funds. The extension of these loan guarantees to Iran, its financial institutions and even named violators of human rights, would seem to be matters of even less obvious propriety. The Senate will doubtless question this move, as it was already deeply divided on this issue even before it became a source of American funding for Iran’s government.
UPDATE: Iran has announced that is planning to buy 80 to 90 Boeing and Airbus aircraft every year. Boeing is one of the corporations that benefits from the Ex-Im bank, and it has held the threat of moving its business offshore over the head of the Congress during debates about the bank. Humanitarian safety concerns about Iran’s aging aircraft have already impelled the United States to waive restrictions on sales of repair parts for older aircraft. The Senate might permit Iran being allowed to buy new commercial aircraft on the same basis. Having those aircraft financed not by Iran but by the American taxpayer, however, will remain controversial.