Well, this is awkward.
OK, not really. Because despite the fact that a mooted Ex-Im loan will help my homeland (or, more precisely, a company based in my homeland), it is still not ok.
The Ex-Im bank touts itself as an easy yes, a no-brainer of an institution to which no rational person who likes exports, jobs, and children could ever possibly object. It’s self-funding! It lends only for entirely risk-free purposes! It creates jobs! It is merely correcting a market failure, so even conservatives should support it! (I’ve written before about why those are all myths).
But often when Ex-Im funds a purchase abroad, some other American firm will suffer. Delta Airlines has long been critical of loans supporting Boeing exports that it says enable its competition to offer cheaper flights and hurt its business. And now we have a new example of the unintended consequences of picking winners, whereby Ex-Im is reportedly considering financing the sale of about $520 million worth of Caterpillar earthmoving equipment to an Australian mining firm. That has attracted the ire of Minnesota Senators Franken and Klobuchar, because it could hurt mines in their state. From the Duluth News Tribune:
It’s not that Minnesota’s congressional delegation doesn’t like Australia, mate. But the idea of a U.S. government bank loaning money to an Australian iron ore mine that will compete with Minnesota taconite?
That’s what they don’t like.
U.S. Sens. Al Franken and Amy Klobuchar and U.S. Rep. Rick Nolan, all Minnesota Democrats, are on record opposing a plan in front of the U.S. Export-Import Bank to invest in equipment for the giant Roy Hill iron mine in Australia’s northwestern Outback…
Cleveland-based Cliffs Natural Resources, with four mines in Minnesota and Michigan, has led the charge to stop the loan, saying it threatens U.S. mining jobs and, with new Asian steel produced from Australian ore, eventually threatens U.S. steel industry jobs.
Details of the loan, including the name of the beneficiary U.S. company, are supposed to remain secret to prevent foreign competitors getting a leg up. But the News Tribune has learned that the U.S. manufacturer is Caterpillar Inc. and that the equipment includes giant trucks, bulldozers and shovels made in Illinois and Wisconsin.
And that means the Export-Import Bank now is being squeezed by two titans of U.S. industry.
The bank is conducting an “extensive economic impact study” on the loan, Phil Cogan, vice president of communications for the Washington-based bank, told the News Tribune.
The deal is expected to reach the bank’s board for a vote in the next few weeks, and that’s why lawmakers and some Minnesota mining interests are weighing in as the bank accepts public comments.
Incidentally, the project in question is operated by Australia’s richest person, Gina Reinhart. From everything I’ve heard and read, Ms. Rinehart seems an extremely able businesswoman, more than capable of financing her own purchases if she decides they are viable. This seems like yet another misguided “investment” by the Ex-Im Bank. Mate.