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WASHINGTON-The Clinton administration wants to reauthorize the Overseas Private Investment Corp. for three years, despite charges by critics that the federal political risk insurer is nothing more than corporate welfare run amok.

OPIC President and Chief Executive Officer Ruth Harkin presented the administration's proposal last week during an appearance before the House International Affairs Committee's Subcommittee on International Economic Policy and Trade. It was Ms. Harkin's final scheduled Congressional appearance before she steps down from OPIC at the end of this month. No successor has been nominated yet.

OPIC offers limits of up to $200 million on 20-year political risk policies for U.S. companies seeking to do business in selected developing countries. During fiscal year 1996, it provided $16.5 billion in political risk insurance to U.S. companies, nearly double the premium it wrote the previous year. The 26-year-old federal agency came under serious political pressure last year when the House of Representatives not only refused to grant OPIC's request for a five-year reauthorization and a near-doubling of its insurance capacity but refused reauthorization completely (BI, Sept. 16, 1996).

Although the Senate did not follow suit, lawmakers agreed to reauthorize OPIC for only one year, which runs through Sept. 30.

OPIC came under renewed fire earlier this year from an unusual alliance of deficit hawks, consumer groups, environmentalists and economic libertarians called the Stop Corporate Welfare Coalition (BI, Feb. 3). The group, which includes such politically diverse figures as consumer advocate Ralph Nader and House Budget Committee Chairman John Kasich, R-Ohio, views OPIC as a prime example of unnecessary government spending.

But Ms. Harkin received a generally warm reception at last week's hearing when she presented the administration's case for a three-year extension and an additional $9 billion in OPIC's contingent liability cap. OPIC currently has a cap of $23 billion to divide as it chooses between political risk insurance and development financing. The additional funding would raise that capacity to $32 billion over the next three years.

Ms. Harkin went on to call those who criticize OPIC as corporate welfare "ill-informed." She added that "no corporation, big or small, receives any subsidy or grant or handout of any kind from OPIC."

"If anything, OPIC is a corporate welfare reform," she said. The agency generates money for the U.S. Treasury, subjects applications for loans and insurance to close analysis and does not help companies that could not otherwise compete in the marketplace, she said.

In the questioning that followed Ms. Harkin's testimony, Rep. Sam Gejedson, D-Conn., went so far as to liken the debate over OPIC's future to that which preceded the Louisiana Purchase in 1803. Some lawmakers fought spending money for that immense tract of land just as fiercely as OPIC's opponents are fighting against reauthorization, even though both have been proven to be in the nation's best interest, he said.

Rep. Donald Manzullo, R-Ill., asked Ms. Harkin about concerns that OPIC was performing functions that private insurers could do. Ms. Harkin replied that there is "a definite gap in countries in which we do business" in the sense that private insurers are unwilling to underwrite political risk insurance, at least initially. OPIC is "serving as a catalyst" until private insurers feel comfortable to underwrite business in a given country.

She added that she thinks the private political risk insurance market is expanding and noted that "there's no reason for us to exist" if the private sector could fill the gap.

Rep. Doug Bereuter, R-Neb., said that while he does not consider OPIC to be corporate welfare, he wanted Ms. Harkin to be "candid" in discussing any instance where any private business has approached OPIC and said it could do what OPIC is doing.

Ms. Harkin replied that there were no such instances, although OPIC has entered into cooperative agreements with some political risk insurers.

One of two congressmen to speak against OPIC acknowledged that he thinks the agency has done a "great job" and that his opposition is "philosophically driven." OPIC is the "wrong thing for the government to be doing," said Rep. Lindsey Graham, R-S.C.

During an impromptu news conference in the hallway outside the hearing room after testifying, Ms. Harkin commented on the impact of recent announcements by underwriters that they would offer political risk policies with terms of up to 10 years under some circumstances (BI, March 10).

American International Group Inc.'s AIG Global Trade & Political Risk Insurance Co. raised its policy term to 10 years from the seven-year term first adopted last year.

In addition, ACE Insurance Co., X.L. Insurance Co. and Risk Capital Reinsurance Co. are creating a Bermuda-based managing general agency called Sovereign Risk Insurance Ltd., scheduled to begin operations May 1. Although the new policies generally will carry a seven-year term, some will be written for up to 10 years.

Ms. Harkin replied that OPIC already works "very closely" with AIG and other political risk underwriters. But private insurers still do not always offer coverage for every country in which OPIC is willing to underwrite political risk insurance for U.S. projects, she said.

Nevertheless, "I think there are ways we can work together," she said.