Author Archives: Lindsey Bridwell

082914_import_export-sm

Clock Ticking

An El Al plane. The Israeli airline has been among the companies receiving loan guarantees from the United States Export-Import Bank, which faces an uncertain future. (Steve Fitzgerald via Wikimedia Commons)

An El Al plane. The Israeli airline has been among the companies receiving loan guarantees from the United States Export-Import Bank, which faces an uncertain future.
(Steve Fitzgerald via Wikimedia Commons)

For the first time in 80 years, the United States could find itself without an international export credit agency if Congress does not reauthorize the charter of the United States Export-Import Bank, which is set to expire on Sept. 30.

Little controversy surrounded the bank’s reauthorization process before 2012, but the slow recovery from the world’s financial crisis, the rise of Tea Party politicians in Congress and allegations of bribery and corruption within the bank by former employees have led a growing chorus of voices to argue for the bank’s abolition.

House and Senate Democrats want to see the charter extended with a $20 billion increase in the bank’s lending authority requested by President Barack Obama, but many Republicans are opposed, including new House Majority Leader Kevin McCarthy (R-Calif.), Majority Whip Steve Scalise (R-La.) and House Financial Affairs Committee Chairman Rep. Jeb Hensarling (R-Texas).

The list of detractors also includes members of the Senate, including Sen. Ted Cruz (R-Texas), who called it a “corrupt crony-capitalist fiasco” and urged Republicans to “kill it” in an op-ed for USA Today.

There, Cruz argued that even though the Ex-Im Bank claims to serve American interests, its record shows instances where subsidies may interfere with American companies and are in conflict with American principles.

“Contrary to the values that keep America strong, safe and free, the Export-Import Bank has facilitated lending to governments in Congo and Sudan, countries with horrific human-rights records,” Cruz wrote. “It has financed Chinese power plants and backed Russian billionaires buying luxury planes. And, it has provided lots and lots of financing to oil companies in Russia, Brazil, the United Arab Emirates and Saudi Arabia that compete directly with America’s energy companies.”

The bank is what’s known as an export credit agency — international, government-run organizations that makes loans to companies to help them compete in the heavily subsidized global marketplace.

For example, if a foreign airline needs to purchase additional aircraft, an American firm like Boeing can’t compete with foreign manufacturers that can undersell Boeing with the use of subsidies from their own countries’ export banks.

In order to give a company like Boeing a fighting chance in these circumstances, the Ex-Im Bank can do the following: make a loan to the foreign company looking to purchase from Boeing; lend money to Boeing to cover production costs of making its planes if the purchaser is unable to pay up front; or, in another alterative, it can insure loans made by private lenders to facilitate these deals.

The bank’s goal is to increase exports by U.S. companies, especially to markets in rapidly developing regions such as the Middle East, Asia and Sub-Saharan Africa. Supporters of the bank argue that it is an essential tool enabling U.S. exporters to compete with countries such as China, whose outreach in the developing world, using its own export credit agency, has given that country a sizable head start.

According to Ex-Im’s 2013 annual report, cited in this month’s report by the Congressional Research Service, there are an estimated 60 export credit agencies around the world. With the landscape so skewed by international subsidies, critics here have argued that the federal government should actively engage in ending all international lending subsidies and that Ex-Im only exacerbates the economic arms race.

“There’s a very strong case here for unilateral disarmament. Basically what we can do is say that we’re going to eliminate our subsidies, and if other countries then eliminate their subsidies, that’s great,” said Matt Mitchell, senior research fellow at the Mercatus Center at George Mason University. “If they don’t, we can say that instead of bringing our subsidies to [their level], we’ll do something like put a retaliatory tariff for countries that don’t cooperate.”

But would getting rid of Ex-Im be a prudent move by the United States if other nations subsidize their companies’ exports?

“Other export credit agencies throughout the world are supporting their country’s exporters, and those countries are not going to close their export credit agencies if Ex-Im’s charter expires,” said Lawton King, spokesman for the Ex-Im Bank. “Just the opposite. They’re going to move into our market share and back sales that otherwise would have gone to American companies and therefore would have supported American jobs.”

Another GOP complaint is that the bank favors large companies over small businesses, making it harder for smaller businesses to compete and that the federal government begins to choose winners and losers, something they believe should be determined by the free market.

Although the Ex-Im Bank is charged with supporting small businesses, the numbers show that despite a greater number of small businesses working with the bank, most of the money goes to approximately 10 large corporations.

According to data compiled by the Congressional Research Service from Ex-Im reports, 90 percent of the bank’s loans in fiscal year 2013 were made to small businesses. But those loans represented a very small amount of money.

More than 80 percent of the bank’s funds were disbursed last year to corporate giants such as Boeing and Caterpillar.

“The bank is demand driven. Though 90 percent of our transactions are small businesses, those small businesses are not requesting the large amounts of credit that the larger businesses are,” said King.

King said that even though it is easy to brand large corporations as not contributing to the strength of America’s small business environment, the figures exclude the often thousands of small businesses that make up their supply chain, giving Ex-Im a larger footprint.

Mitchell said that despite the bank’s claim of contributing to the growth of jobs and small businesses, the negatives outweigh the positives.

According to Mitchell, subsidized loans to foreign buyers, loan securities and production loans to companies raise prices for American purchasers by increasing demand on the product.

“The problem is that there are losers. The first group of losers are anybody else who tries to buy airplanes, they end up paying higher prices,” said Mitchell. “Every other American carrier also buys airplanes. So Delta, Southwest, United — all of them end up having to pay a higher price because Air India or Air Nauru or whatever foreign buyer” creates greater demand due to the loan those foreign companies received from the Ex-Im Bank.

“So that ends up making airplanes more expensive, and it ends up making air travel more expensive for you and me,” he said, adding that these American air carriers are hurt a second time when they have to compete on shared routes against companies that received loans from the U.S. government to purchase their airplanes.

Diane Katz, research fellow in regulatory policy at the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation, a conservative think tank, believes that the economic benefit from the bank on U.S. foreign trade is highly overrated.

“The vast majority [of U.S.-based] exporters, more than 98 percent, don’t get Ex-Im benefits and rely strictly on other financing” from private lenders, she said.

According to Ex-Im Bank’s annual report, in fiscal year 2013, Israeli companies received $105.5 million in direct loans and $256 million in loan guarantees from Ex-Im. Most of the loan guarantees went to El Al Israeli Airlines for purchasing planes from Boeing — more than $190 million. The rest of the loan guarantees supported the purchase of General Electric turbines by Mashav-Initiation and Development Ltd., an Israeli construction supply manufacturing company.

The direct loans were given to Space Communication Ltd. for the purchase of satellite launch vehicles and launch insurance from SpaceX, a private space exploration company based in California, but with large offices in Washington, D.C.

Meanwhile, Qatar, which sponsors Hamas, received $775 million in loan guarantees within the same period; $4.3 billion in loan guarantees and $883.7 million in direct loans went to Turkey, whose president has threatened Israel and U.S. interests in the Middle East.

Congress’ additional appetite to hinder Ex-Im’s reauthorization is further fed by allegations of corruption — both among employees and borrowers.

The House Committee on Oversight and Government Reform, held a hearing to look into the allegations on July 29, with Katz testifying.

“There has been building opposition to the bank, and this year it has culminated like it hasn’t before,” said Katz. It “represents general public vexation with cronyism and corporate welfare.”

“Anytime you have a policy that benefits a small group but harms a widely dispersed group, then we would predict that it would persist, and the reason is that small, concentrated groups have an advantage in getting organized and lobbying,” said Mitchell, pointing to the strong presence of major company offices in the Washington D.C. area. “Those firms have a very strong incentive to get organized, hire lobbyists, and contribute to the right political action committees and to do expensive campaigns in favor of these.

“There’s no such thing as an effective taxpayers’ alliance,” Mitchell continued, and, he said, it’s the taxpayers who lose.

dshapiro@washingtonjewishweek.com
JNS.org contributed to this story.

082914_amsterdam-sm

Enough’s Enough

082914_amsterdam

Rabbi Binyomin Jacobs and his wife, Bluma, by the glass window of their home damaged in an attack on July 17, 2014.
(Cnaan Liphshiz)

AMERSFOORT, The Netherlands — After the latest attack on his home, Rabbi Binyomin Jacobs sat down on his couch, picked up the phone and made three calls.

A chief rabbi of the Netherlands, Jacobs first phoned police and a Jewish community leader to tell them that late on the night of July 17, just more than a week after the onset of a round of hostilities between Israel and Hamas in Gaza, four bricks were hurled through a window of his home. It was the fifth time in recent years that Jacobs’ residence had been attacked.

Then Jacobs called his friend, Roger van Oordt, director of the Netherlands-based Christians for Israel organization. Within an hour, van Oordt, his wife and two of their children were at the rabbi’s door, with its prominent mezuzah and Hebrew sign bearing the name of the Chabad Hasidic sect to which Jacobs belongs.

“They didn’t allow Bluma, my wife, and me to touch anything, they cleaned up all the mess,” Jacobs said in an interview at his home 25 miles southeast of Amsterdam. “The attacks do not inspire much hope. The response by Christians, Muslims and other friends do.”

To Jacobs, a 65-year-old rabbi who has worked intensively to build bridges between non-Jews and Holland’s Jewish community of 40,000, the latest
attack sharpens the dilemma facing Dutch Jews.

A perceived rise in anti-Semitic incidents this summer has led many Dutch Jews to consider leaving the country, according to Jacobs. Yet, the country’s reputation as a liberal bastion has not entirely dimmed their hopes that the situation can be reversed.

After the latest attack, Jacobs shocked many Dutchmen when he told local media that if not for his obligations to the communities he serves, he would leave, in part because of the anti-Semitism problem. His statement grabbed headlines and generated a passionate response from other religious leaders.

“No one will tell us when to leave Holland,” Jacobs said. “I’m staying here because it’s my shlichut, or mission. But would we stay here if we were private people? I don’t think so.”

Anti-Semitism is only part of the problem, Jacobs says. Along with intermittent threats and violence, much of it sparked by events in the Middle East, he cites the 2011 passage of a law that effectively banned kosher slaughter — a measure later reversed by the Dutch Senate.

“And then there’s assimilation in a liberal society where many people have anti-religious sentiments,” Jacobs said. “It all comes as part of a package.”

Immigration from the Netherlands to Israel has remained relatively stable over the past decade, with an average 63 new arrivals in the Jewish state each year. Still, the growth in anti-Semitism has created significant unease for Jacobs and his family, who now have six police cameras installed outside their home.

In 2010, a stone was hurled at his front window, missing him by a few inches. Jacobs says he tries not to walk near schools in his middle-class neighborhood and elsewhere in Holland because he doesn’t want to be cursed at by children.

“It’s a very uneasy feeling when someone attacks your home like that,” said Bluma Jacobs, the rabbi’s British-born wife. “When I come to the door at night, I switch on the light of my cellphone so people think I may be filming.”

Six of the Jacobs’ eight children live outside the Netherlands.

Jacobs was born and raised there and is the country’s senior Chabad emissary. He also serves as president of the Rabbinical Council of Holland. In 2012, he became an officer of the Order of Orange-Nassau, a civic honor similar to British knighthood, for his interfaith efforts, among other activities.

His comments about leaving the country prompted a passionate response from the Protestant Church in the Netherlands, the country’s second largest church. On July 28, the church’s secretary, Arjan Plaisier, published an open letter in which he vowed to oppose anti-Semitism with other church leaders.

Plaisier concluded with a plea: “Chief Rabbi Jacobs, please stay in the Netherlands.”

Esther Voet, director of CIDI, the Dutch watchdog on anti-Semitism, says she is confident of Dutch Jewry’s ability to weather the storm. Dutch authorities are taking the issue seriously, she says, as are other civic groups.

But Voet acknowledges that Jacobs encounters a different reality.

“I’m not recognizably Jewish and I live in the Jordaan,” she said, referring to her central Amsterdam neighborhood. “But Rabbi Jacobs, in his travels across the country and in his own neighborhood, faces a different set of problems.”

Christian Leaders Travel to Israel to Show Support

A dozen leaders from the National Religious Broadcasters traveled to Israel last week to make public their support of Israel.

The Christians in Solidarity with Israel trip, which was organized through a partnership between NRB, an international organization of Christian media professionals, the Israel Ministry of Tourism and EL AL Israel Airlines, took off from John F. Kennedy International Airport in New York City and the Newark Liberty International Airport on Aug. 17 and returned Aug. 22.

“Countering rising anti-Semitism in the international press and on the streets, this friendship visit will communicate to Israel and to the Palestinians who stand in opposition to Hamas that we, leaders who represent the Christian community, stand with them. It will also show the world that Christians in general support the Jewish people and their right to security,” said NRB President and CEO Jerry Johnson.

“In addition, this visit should serve as an example to all followers of Jesus Christ, specifically encouraging them to pray for the peace of Jerusalem so that the lives of all those living in this region can be secure” Johnson continued. “We are thankful to the Israel Ministry of Tourism for coordinating this trip.”

The NRB has a close relationship with Israel, said EL AL spokeswoman Sheryl Stein. In addition to regular sponsored trips to Israel for NRB leadership and board members, the group also includes a large Israel pavilion at its annual convention and hosts an annual Israel breakfast attended by hundreds of members.

Mumbai Jewish Center Reopens

Almost six years after terrorists stormed the Chabad-Lubavitch center in Mumbai, India, and murdered its directors and four guests, the storied building known as the Nariman House officially reopened Tuesday during a celebration attended by rabbis from across Asia and their guests.

“Today, as we look to the future, our message is one of perseverance and unshakable belief in the power of light over darkness,” Rabbi Yisroel Kozlovksy, the new director of Chabad of Mumbai, announced, according to Chabad.org. “We’re not moving into a new building. … We are returning to our original building, and we will be continuing all of the activities that took place here, and, hopefully, grow even more.”

The website reported that the reopening paves the way for the building of a $2.5 million museum in the apartment where the late Rabbi Gabi and Rivky Holtzberg lived. Having arrived in Mumbai in 2003, they served an eclectic mix of Jewish business travelers and Israeli backpackers from the Nariman House. They and their guests fell victim to gunmen the night of several attacks across Mumbai that claimed 164 lives.

Their 2-year-old son, Moshe, famously escaped in the arms of his nanny, Sandra Samuel.