It is hard to imagine why Thaksin Shinawatra, a billionaire who is Thailand's prime minister, would need a helping hand from the US government for his family business, an Asian telecommunications giant called the Shin Corp.
The Shin business empire, which Shinawatra founded and is still majority owned by his family, spreads from India to Indochina. It is Thailand's largest telecommunications company. But last May, to the consternation of competitors, Shin Satellite, a subsidiary, won a US$160 million loan guarantee from the Export-Import Bank of the US to buy a new telecommunications satellite and strengthen its grip in Southeast Asia.
For the bank, a Depression-era agency founded to promote exports, the rationale was simple. Loral Space and Communications, an American manufacturer run by Bernard Schwartz, a longtime Democratic Party donor, was Shin's supplier, and commercial banks, according to the bank, would not finance the deal without the loan guarantee.
Crying foul, Shin Satellite's competitors tried to block the deal in Congress. "How is it that billionaires like Shinawatra and Bernie Schwartz can get the US taxpayers to subsidize their deals?" asked Franklin Polk, a lobbyist for New Skies Satellites, a rival based in the Netherlands that, like other companies, was able to get private financing, but not at rates as low as Shin's government-backed loans.
How indeed?
At a time when the George W. Bush administration says it wants to cut back on corporate welfare, the Export-Import bank, often called a "reverse Robin Hood" for taking money from American taxpayers and giving it to wealthy corporations, is growing. In June, while the public was focused on corporate scandals, President Bush quietly signed legislation to double the scope of the bank's operations and allow it to provide up to US$100 billion in international trade assistance at any one time.
Even before this increase, Export-Import was already by far the largest federal agency providing international credit aid, outpacing international food and disaster aid programs. The bank has long expanded beyond its initial mission of aiding American exporters when times were tough. And a growing chorus of critics -- from free traders on the right to trade unionists on the left -- say the bank has become a tool for an elite group of politically well-connected corporations to get sweetheart deals and cheap financing courtesy of American taxpayers.
Poster boy
"We already regard Ex-Im as the poster boy for the anti-corporate-welfare movement," said Stephen Moore, an analyst at the Cato Institute, a Washington research group that promotes free trade. "It's a huge amount of money that goes to the wealthiest corporations. There is no rationale for the government to be involved in this."
In fact, Export-Import policies in recent years have had the perverse effect of sending American jobs, rather than goods and services, overseas. There was, for example, the case of a Chinese steel mill, the Benxi Iron and Steel Group, that received an US$18 million Export-Import backed loan in December 2000 to buy American-made equipment only to be found a year later to be dumping steel into American markets and slapped with a 90 percent antidumping tariff. In that year, steel companies in the US laid off 30,000 workers and more than 20 of the companies filed for bankruptcy.
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