US blocks $500m loan for Russian oil industry over Chechnya issue Tom Doggett
Washington, Dec 22: The Clinton administration on Tuesday blocked a $500million loan guarantee for Russia's oil industry, amid criticism of Russianaction in Chechnya and concern over US business interests in Russia. A government official said US secretary of state Madeleine Albright sent aletter telling the Export Import Bank to ``not approve for the time being''the loan guarantee for Tyumen Oil, because it would not be in the USnational interest. The US Export-Import Bank delayed a scheduled vote on theloan package after Albright invoked a seldom-used law allowing theadministration to block the loan. The administration of president Bill Clinton had come under pressure toblock the loans to protest Moscow's bloody military campaign against thebreakaway republic of Chechnya and the Russian government's failure toprotect foreign investment. The move comes just two days after Russia's parliamentary election that sawgains for prime minister Vladimir Putin. The Ex-Im loan guarantees would have paid for the services of companiesdeveloping a Tyumen oil field in Siberia and upgrading the firm's refinery.Ex-Im Bank is an independent agency that by its charter approves loans basedon economic, rather than political, criteria. However, the bank would berequired to comply with US law in this case. BP Amoco had lobbied for the loan be turned down after losing a fight withTyumen through a bankruptcy proceeding to gain control of Russian oilcompany, Chernogorneft, a subsidiary of bankrupt Sidanko. BP Amoco has a 10per cent interest in Sidanko. Earlier on Tuesday, a source in Moscow toldReuters the three oil companies had agreed to settle the dispute. Aspokeswoman for Tyumen declined to comment, saying the company had not yetreceived official word on the administration's decision. A BP Amocospokesman also declined to comment. US representative Carolyn Maloney, a New York Democrat, praised theadministration's decision, saying, ``I hope this reprieve will allow foradditional scrutiny of the reports of manipulation of bankruptcy lawinvolving this company (Tyumen), which is almost half owned by the Russiangovernment.'' Maloney was one of 14 members of Congress who jointly asked the Ex-Im Bankto delay its vote on the oil loan after raising concerns about Tyumen'sbusiness practices. Maloney also said she will introduce legislation when Congress returns inlate January to allow the Ex-Im Bank to take into account fraud andcorruption charges against a foreign company or country when decidingwhether to provide any financial assistance. The Ex-Im Bank was created in 1934 and provides funding and other financialassistance to promote US exports. The bank guarantees the repayment of loansor makes loans to foreign purchasers of US goods and services. The financial package being considered by the Bank included a $292 millionloan for US oil service giant Halliburton Co to develop the Tyumen oil fieldand a separate $198 million credit for ABB Ltd unit ABB Lummus Global, toupgrade the refinery. Copyright © 1999 Indian Express Newspapers (Bombay) Ltd. All rights reserved throughout the world. feedback at financialexpress.com