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WASHINGTON-A group of politically odd bedfellows is again targeting the Overseas Private Investment Corp. for extinction.

Nine representatives of the "Stop Corporate Welfare Coalition" last week spoke out against OPIC as one of 12 programs that coalition members believe represent unjustified government subsidies to private corporations. OPIC, among other things, underwrites political risk insurance on 20-year terms for U.S. companies doing business in selected developing countries.

"When we give a subsidy, the benefit to the public ought to exceed the benefit to the company," said House Budget Committee Chairman John Kasich, R-Ohio. If it doesn't, he said, then the subsidy is "corporate welfare."

Another speaker, David Keating, executive vp of the National Taxpayers Union in Washington, said the "terrible 12" had been chosen in part because they were the "most politically vulnerable."

The speakers ranged from political conservatives, such as Rep. Kasich and Mr. Keating, to liberals, such as Ralph Nader and Joan Claybrook, president of Public Citizen.

Although OPIC was only one of 12 government programs in the coalition's self-described "hit list," it got the most hits from coalition members last week.

The House voted to cut off funding for OPIC last September by an overwhelming margin after the agency sought to be reauthorized for five years rather than one and proposed a near doubling of its political risk capacity (BI, Sept. 16, 1996). A few weeks later, House and Senate conferees agreed to reauthorize the agency for one year at its current insurance capacity of $13.5 billion (BI, Oct. 7, 1996).

Two of the speakers at last week's press conference, Reps. Ed Royce, R-Calif. and Rob Andrews, D-N.J., have introduced a bill that would abolish OPIC. No hearings on the measure, H.R. 387, have been held yet.

Rep. Kasich promised that closing down the 12 programs targeted by the coalition would be a priority for the 105th Congress.

In the case of OPIC, a shutdown would mean its existing political risk coverage would stay in force, but the agency could not issue new policies. According to OPIC's 1996 annual report, the agency sold $16.5 billion in political risk insurance during the fiscal year that ended last Sept. 30, nearly double the $8.6 billion sold the previous fiscal year.

OPIC issues three types of political risk coverage, all with limits of up to $200 million and all with policy lengths of up to 20 years. The policies cover currency incontrovertibility, expropriation and political violence, including land-based war risk.

By contrast, the longest coverage term available in the private market for such risks is seven years, offered by American International Group Inc.

"I don't think the major players in the private market will ever be able to offer 15-year policy terms," said John Minor, assistant vp-global for Aon Risk Services Cos. Inc. in Chicago. While some small niche underwriters might be able to offer longer terms of coverage, their capacity would not equal that of the industry's dominant underwriters, he added.

But, private insurers have moved to offer more attractive policies, said Mr. Minor.

"The private market has stepped up and offered, for example, the seven-year policy in response to clients' needs for longer terms of coverage," Mr. Minor said.

He added that Lloyd's of London, which recently approved a land war risk policy, likely will gradually offer longer periods of coverage. Some Lloyd's underwriters are now offering five-year policies for political risks, he said.

Those shorter policy periods may be adequate for most of the market's needs, Mr. Minor said. How many infrastructure loans, such as the ones covered by OPIC's long-term political risk policies, extend 15 years? he asked rhetorically.

The Washington-based National Assn. of Manufacturers wasted little time in urging that attempts to eliminate OPIC be reconsidered.

"In the quest to balance the budget, we must ensure that we don't cut off our nose to spite our face by slashing programs that create high-paying jobs and increase economic growth," said NAM President Jerry Jasinowski.

All federal programs should be fully scrutinized "and subjected to a cost-benefit analysis," he said. "If you weighed the costs and benefits of the Overseas Private Investment Corp., a target of Rep. Kasich's, it would pass with flying colors."

Defenders of OPIC have pointed out that it is one of only a handful of federal programs that actually add revenue to the U.S. Treasury, generating nearly $209 million in fiscal year 1996.

The pro-free market Competitive Enterprise Institute in Washington, however, disagreed with that rationale for retaining OPIC.

"Socializing the risk of private investment" undermines the nature of capitalism, said Fred Smith, president of the Institute. He predicted OPIC will have to be bailed out eventually and cause suffering to poor people in the countries in which it insures U.S. projects.

Separately, last week a bipartisan group of senators led by Sen. John McCain, R-Ariz., called for the creation of nine-member independent commission to "comprehensively review, reform and terminate inequitable federal subsidies to profit-making industries."

Although Sen. McCain did not list which programs he believed would catch the commission's attention, another sponsor, Sen. Edward M. Kennedy, D-Mass., said the commission would look closely at the tax code. The tax code is "rife with loopholes, through which the country's major corporations jump with ease," Rep. Kennedy said.