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Weapons of Mass Destruction (WMD)

Washington File

20 June 2003

Ex-Im Bank Begins Supporting Exports to Iraq

(No legal prohibition on certain transactions, it says) (560)
The Export-Import Bank of the United States (Ex-Im Bank) has announced
it is ready to process applications for transactions supported by a
letter of credit from buyers or banks located in third countries.
In addition, Ex-Im Bank financial backing may be available for U.S.
subcontractors exporting goods and services to Iraq under U.S. Agency
for International Development (USAID) contracts, the bank said in a
June 19 news release.
While Ex-Im Bank is still closed for regular trade finance
transactions in Iraq, it has determined it is no longer legally
prohibited from supporting any U.S. exports to the country.
Following is the text of the news release:
(begin text)
Export-Import Bank of the United States
Press Release
JUNE 19, 2003
EX-IM BANK NO LONGER PROHIBITED FROM BACKING U.S. EXPORTS TO IRAQ
The Export-Import Bank of the United States (Ex-Im Bank) has
determined that it is no longer legally prohibited from supporting
U.S. exports to Iraq. While it is still closed for routine trade
finance transactions, Ex-Im Bank is prepared to immediately start
processing applications for exports to Iraq that involve buyers or
letters of credit from banks located in third countries. Ex-Im Bank is
also ready to consider applications under its Working Capital
Guarantee Program (WCGP) for subcontractors providing goods and
services to Iraq under USAID contracts. The Bank's determination will
also allow it to consider support for trade finance facilities that
may be established in connection with the reconstruction of Iraq.
Under the WCGP, Ex-Im Bank provides guarantees to allow small and
medium size businesses in the U.S. to obtain the working capital they
need to fulfill export contracts. In addition to the support for
subcontractors noted above, coverage under the WCGP may be available
for transactions that are supported by an irrevocable letter of credit
issued by a bank, and/or due from a buyer, located in a third country
where Ex-Im Bank is open without restrictions for short-term
transactions.
In addition, under its general loan and guarantee export finance
programs, Ex-Im Bank support may be available for transactions where:
-- the primary source of repayment is an acceptable financial
institution or other party located in a third country where Ex-Im Bank
is open for the amount and term of the proposed transaction;
-- there are structured financing arrangements that offer a reasonable
assurance of repayment, including reliable access to adequate foreign
exchange. Such financing arrangements include limited recourse project
finance (where repayment is based on project revenues) and asset-based
aircraft leases; and
-- the primary source of repayment is the Development Fund for Iraq,
or another entity established under the auspices of the Coalition
Provisional Authority with access to foreign exchange and protection
from claims of creditors of the former regime. This could include
trade finance facilities designed to support the reconstruction
efforts.
Ex-Im Bank is an independent U.S. government agency that helps finance
the sale of U.S. exports primarily to emerging markets throughout the
world by providing loans, guarantees and insurance. The Bank is
mandated by Congress to have reasonable assurance of repayment for
every transaction. In fiscal year 2002, Ex-Im Bank supported $13
billion of U.S. exports worldwide.
(end text)
(Distributed by the Bureau of International Information Programs, U.S.
Department of State. Web site: http://usinfo.state.gov)



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