Congress has decided to prop up the U.S.-Export Bank for nine more months, after threatening to cut its cord and saying it typified corporate welfare. In "preserving" the 80-year-old institution, U.S. lawmakers have given American exporters -- both big and small -- a chance to regroup, especially the nuclear energy industry.
No other industrial sector has been knocked down -- and gotten back up -- more than nuclear companies. But the latest fight over whether to continue funding the "Ex-Im Bank," has been a blow delivered by its "backers," or conservative lawmakers who generally support such development. Now, though, those congressional members have momentarily caved to a broad swath of the bank’s friends, consisting mostly of members who are pro-business and who want to see U.S. companies expand their franchises internationally. The ultimate question is whether that concession is temporary or permanent.
“If the bank it not (permanently) reauthorized, it would be purely because some people are playing partisan politics,” says former U.S. Trade Representative Ron Kirk, in an interview. “You would see an immediate blow to exports.” In 2013, the bank authorized more than $27 billion to enable about $37 billion in U.S. exports, which supported roughly 205,000 jobs.
It’s a controversy that extends well beyond the safety and efficiency record of nuclear power plants. It’s mostly about one that delves deeply into how foreign projects would be financed -- and whether a U.S. public agency ought to bankroll construction at favorable rates. Like it or not, nuclear facilities are getting built around the world. And the bidders are global, ranging from suppliers in the United States to those in Canada, France and Russia and South Korea, all of which have government-backed credit agencies that ensure project financing.
The bank received the emergency funding just before the September 30, 2014 deadline -- an institution that has been providing loans to both the Fortune 500 and to small operators. Regardless of size, those ventures are not only building projects in foreign lands but also ones that are creating jobs in the United States.
Altogether, the nuclear energy industry says that 72 such facilities are getting erected around the world, with 173 more in the licensing phase -- a $740 billion market over the next decade, says Kirk. The goal, he adds, is to capture a share of that pie, which can be facilitated through the Ex-Im Bank. That’s because large infrastructure projects have long construction periods before they begin to generate revenue, which makes private lenders hesitant.
Meantime, many nuclear energy opportunities are in developing countries that do not provide financing for multinational corporations: China, India and the Czech Republic. Other nations vying for that business have such public-backing.
Consider Barakah One Co. of the United Arab Emirates, which will buy U.S. nuclear equipment and construction services, mostly from
“One of the key things is to get financing,” says Jay Ireland, president of
“As the developing world begins to build their economies, they need the opportunity to do this in an environmentally responsible way,” adds Kirk, also a former mayor of Dallas and a co-chair for CASEnergy Coalition, a nuclear-backed group. “Many of those countries will look to us for best available technologies. Many will look to nuclear technologies, which is one of the best sources of non-carbon electricity.”
Despite the short-term “victory,” supporters of the Ex-Im Bank realize that complacency is the enemy. While the bank has gotten a nine-month reprieve, the battle over whether to continue it after that will resume early next year -- just after a new Congress is sworn in. The outcome of the upcoming November elections is unknown. But if Republicans take it over, they may get dominated by the Tea Party, which calls the Ex-Im Bank unnecessary, saying that private institutions could make the same loans if they were so inclined.
And more traditional conservatives such as those from the Heritage Foundation argue that the bank creates an uneven playing field. That makes it more difficult for those manufacturers that do not get special financing to compete with foreign products that may have been subsidized.
Proponents of keeping the bank alive counter those points by saying that 90 percent of the financing goes to smaller operations whose expansion is tantamount to more local jobs. In the energy realm, the recipients are those supplying or building modern technologies -- devices that could be purchased from those whose countries are offering public financing.
Moreover, supporters add that last year, the bank’s default rate was less than a quarter of one percent while it returned $1 billion in revenues to the U.S. Treasury.
What happens now? A Tea Party-led Congress could take the bank off life support after the expiration of the nine-month extension, similar to what has happened with the wind energy industry's production tax credit. Or, U.S. lawmakers could reason that the 2014 election is behind them and defer to the wishes of the corporate community and their pro-business backers on Capitol Hill.
“I have not given up hope that wiser heads will prevail” in the long term, says Obama’s former Trade Representative Kirk.
In the current rough-and-tumble political environment, however, it’s less about “wiser heads” and more about “one-upping” the opposition, leaving the nuclear energy industry to dangle even longer and all in the midst of a tenuous future in the United States.
