Report

Big Business Hopes to Inoculate Ex-Im Bank From GOP Opposition

Chamber, manufacturers leaning on reluctant lawmakers to keep export credit flowing.

Jim Stouch came to Washington last month on behalf of his York, Pennsylvania, manufacturing company to meet with five congressmen and his state's Republican senator, Pat Toomey. He had a simple message for lawmakers who want to dismantle the government-backed Export-Import Bank that has financed his firm's deal to sell containers for spent nuclear fuel to Japan: Find another target. 

"There is plenty of waste going on in Washington that doesn't magnify jobs the way the Export-Import Bank does," Stouch said. 

While the rest of the country is focused on beaches and barbecue, business groups around the country are pushing lawmakers to renew the bank's charter, which will expire Sept. 30 unless Congress acts.

The Export-Import, or Ex-Im, Bank backs export deals for U.S. companies to make it easier for them to sell products overseas. The bank was created to help rebuild industry and spur job growth during the Great Depression; its charter has since been renewed 16 times. But now the agency's future is in question after House Republican leaders, who have accused the bank of providing corporate welfare, said they'd like to shutter it.

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said at a hearing last week that the main beneficiaries of the bank are "the largest, richest, most politically connected corporations in the world -- like Boeing, General Electric, Bechtel and Caterpillar." As head of the committee overseeing the bank, Hensarling can block House legislation that would keep the bank alive. Critics dub the bank "Boeing's Bank" because it provides more financing for the giant airplane maker than for any other company.

Supporters argue that every mega-deal the bank guarantees for Westinghouse Electric Co., Boeing Co., and General Electric Co. helps those companies support suppliers that provide U.S.-based jobs. Companies that tap the agency's credit say eliminating the bank would put them at a disadvantage against foreign competitors that are often backed by their own governments and would jeopardize hundreds of thousands of American jobs. The bank authorized $27.3 billion worth of loans that enabled $37.4 billion in exports and supported 250,000 U.S. jobs in 2013, according to the bank and the U.S. Chamber of Commerce.

With time running short for arm-twisting, the U.S. Chamber of Commerce and the National Association of Manufacturers are urging member companies and local chapters to track down their congressional members while the lawmakers are in their districts over the July Fourth weekend and the upcoming August recess. The chamber represents some 3 million companies and spent more than $74 million on lobbying in 2013, according to the Center for Responsive Politics. NAM spent more than $7 million trying to influence government policies last year.

"Members, as they're home this week, are going to hear from local business," said Christopher Wenk, the chamber's senior director for international policy. Wenk is spearheading the group's mobilization effort, which is especially focused on members of the authorizing committees: House Financial Services and Senate Banking.

Democrats are pushing for a Senate bill, hoping it will spur corresponding House action. Sen. Chuck Schumer (D-N.Y.) said in a conference call Tuesday that his Republican colleagues are skittish because many Tea Party-leaning members oppose the bank.

"I think if we can pass it in the Senate, and particularly with a good bipartisan majority, there is more friendliness among Republicans for this bill, that it will put pressure on the House," Schumer said, according to Roll Call.

For some companies, the campaign is in full swing. The nuclear industry relies on backing from the trade bank to compete against state-owned and government-backed companies in bidding multibillion-dollar, multiyear contracts in other countries. Officials from Pittsburgh-based Westinghouse have met with lawmakers while CEO Danny Roderick has even gotten employees in on the effort.

"He urged employees to make their voices known and to reach out to members of Congress," said Jeanne Lopatto, vice president of government and international affairs.

Precision Custom Components was started in 1876 to make patented water wheels for grinding grain. It went on to make the original turbines for the Hoover Dam. Now the company employs 250 people in York, Pennsylvania, making large components and custom parts for nuclear reactors and submarines in a 275,000-square-foot shop that uses machines as big as houses. Stouch, vice president for business development, said his firm not only seeks export financing from the Export-Import Bank itself but is also bolstered when the agency helps Westinghouse -- which Precision supplies -- get contracts in China and the United Arab Emirates.

"It enabled them to bid it; it enabled them to win it; and it enabled businesses like ours to participate in the supply chain," Stouch said.

Alex Halper, with the Pennsylvania Chamber of Business and Industry, said closing the Export-Import Bank now would be poor timing as companies are trying to ramp up sales to other countries post-recession.

"Back in 2007 and 2008, when we really got hit, it would have been nice if we had a more diverse customer base and could rely on exports," Halper said. "Some companies that never even considered exporting are now making a go of it."

Despite the all-hands-on-deck effort, keeping the bank in business is an uphill battle. Toomey, for instance, sits on the Senate Banking Committee, where renewal legislation would originate, and has advocated ending the bank. Officials from the Chamber of Commerce, Westinghouse, and Precision Custom Components have met with the former Club for Growth president, but to no avail. (Under the current president, former Indiana Rep. Chris Chocola, the influential, conservative Club for Growth opposes renewing the bank's charter.)

"He has a point of view and, on balance, he doesn't agree with us," Stouch said.

Win McNamee/Getty Images

Report

Water Wars in the Land of Two Rivers

Insurgents may threaten Iraq's dams as much as its oil -- with potentially dire consequences.

NOTE: This story was updated Wednesday afternoon.

 

The turmoil in Iraq already has the world worried about the safety of the country's mammoth oil fields. Now Iraqis must imagine massive waves of water crashing downriver from the country's shaky dams, which are smack in the terrorists' crosshairs.

On Monday, Islamist insurgents in the Islamic State, formerly known as the Islamic State of Iraq and al-Sham, renewed their offensive in Iraq's Anbar province, moving toward the key hydroelectric dam of Haditha. The dam's security has concerned U.S. officials for years and protecting the country's second-biggest dam was a priority objective during the 2003 invasion.

Meanwhile, Iraq's biggest dam, the Mosul dam, is right next to a hotbed of Islamic State activity and poses catastrophic risk even if the terrorists don't open the floodgates or blow it up. If the dam fails, scientists say Mosul could be completely flooded within hours and a 15-foot wall of water could crash into Baghdad.

ISIS fighters first moved toward the Haditha Dam, located in western Iraq on the Euphrates River, last week. On Monday, the insurgents and other tribal Sunni troops resumed the advance, according to the Institute for the Study of War.

On Wednesday, Sunni connivance around Haditha increased, with reports that disparate militant groups and tribal leaders were negotiating the surrender of the town of Haditha, which would open the whole of Anbar province to ISIS.

The latest advances come as the beleaguered Iraqi government, led by a recalcitrant Shiite, continues to refuse to discuss political reconciliation among Iraq's Sunni, Shia, and Kurdish sects, which have found themselves increasingly at loggerheads with each other.

The Obama administration and its allies have been pressing Iraqi Prime Minister Nouri al-Maliki to either make a serious effort to reconcile with the country's embittered Sunni and Kurdish minorities or step aside so a new leader could take the fight to ISIS. In remarks Wednesday, however, the embattled Iraqi prime minister dismissed those demands and said fighting ISIS on the battlefield was more important than striking the political deals necessary to keep his country's warring factions from pulling further apart. 

"The battle today is the security battle for the unity of Iraq," he said on state television. "I don't believe there is anything more important than mobilizing people to support the security situation. Other things are important, but this is the priority."

Maliki's remarks came as insurgents kept Iraqi soldiers from reclaiming Tikrit, the birthplace of former Iraqi leader Saddam Hussein; the United Nations released new figures showing at least 2,400 Iraqis died last month, making it one of the bloodiest periods since the 2003 U.S. invasion.

Iraq's government has tried to push back against the rebels with increased airpower, including the first installment of fighter jets from Russia--and, by some accounts, from Iran. U.S. air assets, especially armed drones, have also been thrown into the fight against the Islamist insurgents.  

Iraq's hydroelectric facilities represent a soft underbelly in the fight against ISIS. A compromised Haditha Dam would be a serious threat to western and southern Iraq: It provides power for the capital and controls water supplies for irrigation downstream. Using Haditha, ISIS could flood farmland and disrupt drinking water supplies like it did with a smaller dam near Fallujah this spring. By threatening Karbala and Najaf, holy cities for Shiites, the Sunni insurgents hoped to pressure the Shiite-led government in Baghdad. (On Tuesday, ISIS apparently attacked an iconic Shiite mosque north of Baghdad; when al Qaeda attacked that mosque in 2006, it sparked massive sectarian violence.)

The Haditha Dam is a crucial chunk of Iraqi infrastructure. And its massive reservoir--Lake Qadisiyah--is a potential weapon of mass destruction. During the 2003 invasion of Iraq, a small unit of U.S. Army Rangers seized Haditha Dam to prevent Saddam Hussein's forces from destroying it and causing a massive flood. In 2005, insurgents twice attacked Haditha with explosive devices but did not major damage.

As U.S. troops withdrew from Iraq, Haditha's security became more troublesome. A 2009 assessment by the Special Inspector General for Iraq Reconstruction, or SIGIR, found that a $1 million U.S.-funded effort to boost Iraqi government security at the site was inadequate; a chain-link perimeter fence, for example, was poorly built and sections were already falling down when Americans inspected the site.

"Destruction of the dam would greatly affect the functioning of the country's electrical grid and would cause major flooding downstream," the report warned.

Dams are vulnerable in other countries, too. For decades, the United States has tried to help Afghanistan complete the Kajaki Dam in the troubled Helmand province in the southern part of the country. The partially finished dam has become a source of intermittent electricity for the impoverished region--but also a source of revenues for Taliban officials who have at different times been a de-facto government in the area.

Kajaki, too, has a history as a potential tool of terrorists. Before the 2001 U.S. invasion of Afghanistan, Taliban officials toyed with the dam's water flow to put pressure on Iran, which is downstream. In 2007, NATO troops repelled a Taliban attack on the dam. After the final U.S. withdrawal from Afghanistan, Kajaki and its massive reservoir could represent another potential weapon in the hands of insurgents.

In Iraq, if the Haditha headache weren't enough, a compromised Mosul Dam is a migraine. It lies just north of a new ISIS stronghold. What's worse, it could unleash a torrent of destruction even without sabotage.

Built in the late 1980s, it has owned the title of "most dangerous dam in the world" for years, according to a 2006 assessment by the U.S. Army Corps of Engineers. It was built on an unstable foundation of water-soluble rock in an area prone to sinkholes. As a result, it is injected with grout around-the-clock to maintain structural integrity. Gen. David Petraeus, the former U.S. commander in Iraq, urged Iraqi Prime Minister Nouri al-Maliki to prioritize bolstering the dam in 2007. A U.S.-funded, $27 million plan to address the most glaring problems was found wanting by SIGIR that same year.

Although apparently unmolested by ISIS so far, a worst-case scenario could unfold even if it becomes just collateral damage.

If the ISIS offensive disrupts the dam's intensive maintenance, it could further deteriorate or even be breached. Researchers say it could send as much as 50 million gallons of water per second crashing toward Mosul that would cover more than half the city under 25 meters of water within hours. Further down the Tigris River, Baghdad itself could be under 4 meters of water within three days. It would also wipe out more than 250 square kilometers of prime farmland.

"The only measure which can reasonably be taken to reduce the risk to downstream populations" is building another dam downstream, researchers concluded earlier this year. Construction started on the Badush Dam in the 1990s but never completed.

Mosul Dam's regular maintenance appears to continue uninterrupted by ISIS, said researchers at Lulea University of Technology in Sweden, who have studied the dam. The dam's manager declined to discuss the facility's state or the risks posed by ISIS.

Photo by Jaime Razuri - AFP - Getty