patron saint of the Internet

[Henry C.K. Liu]

Supporting American business for 25 years, OPIC (Overseas Private Investment
Corporation) is a self-sustaining federal agency that encourages private sector
investment in countries and areas important to U.S. foreign policy. Since 1971,
OPIC has supported investments worth $84 billion that will generate $43 billion
in U.S. exports and help to create 200,000 American jobs. OPIC earns a profit of
about $200 million a year from the sale of its services and now has reserves
totaling more than $2.7 billion.

OPIC offers limited recourse project financing that is hard to find elsewhere,
and is another important mechanism for risk management. OPIC also supports a
number of privately owned and managed direct investment funds that can provide
equity capital for investment projects.  Coverages offered by private insurers,
especially U.S. political risk insurers, are also available. In some cases,
investors may prefer private coverage, or may find that private insurers offer
protection against some risks that OPIC does not.

I never understood why OPIC limits itself to FDI (foreign direct investment)
rather than extensive coverage on comprehensive investment including debt
instruments.

Henry C.K. Liu

Doug Henwood wrote:


> Adam Stevens wrote:
>
> >I don't doubt at all that debt is used to subordinate poor counties, but if
> >debt forgiveness would be financially inconsequential to the creditor
> >nations, why is it always a "crisis" with "systemic implications" when some
> >Third World nation looks like it might default on its debt?
>
> Depends on the Third World nation. If Brazil or Mexico were to flip their
> creditors the bird, that wouldn't be a small matter. The 41 HIPCs all
> together owe about $206 billion; Mexico alone, about $150 billion; Latin
> America, about $750 billion. And the HIPCs creditors are mainly governments
> and official banks like the World Bank, while Latin America's are mostly
> commercial banks and private bondholders. A default by a major debtor
> nation, especially a conscious political default, would not only have an
> effect on the private financial system, it might also cause creditors to
> panic, pulling their money out of anything that looked vaguely risky (not
> only other Third World debtors, but domestic U.S. junk bonds too), and
> might embolden other debtors to default as well. So talk of systemic risk
> isn't just propaganda. But that isn't to say there's no propaganda content
> to the crisis talk, it's also a way to discourage debtors from
> contemplating default and to soften up voters in the creditor countries for
> any bailout that might come to pass.
>
> Doug