Ex-Im bank's phony 'national security' cred: Column

Government officials often invoke "national security" to further their arguments, even on causes having little or nothing to do with American safety. A recent letter to congressional leaders from 12 former U.S. officials — including secretary of State Madeleine Albright and 11 other diplomats, advisers and secretaries — is the latest in this well-worn approach. Their claim: Our national security depends upon reauthorizing the U.S. Export-Import Bank before its charter expires next month.

I've got a simple answer to that: No, it doesn't.

Never heard of the Export-Import Bank? That's no surprise — it's anything but important, at least not in the way these former officials describe. In fact, when it comes to the U.S. economy and national security, Ex-Im may be harming Americans on both fronts.

Ex-Im is a relic of the New Deal that provides subsidized loans, guarantees and other financial assistance to foreign companies that pledge to buy American products. Ex-Im currently supports less than 2% of all U.S. exports, making it a mere drop in the bucket of the overall economy.

Moreover, the bank's primary domestic beneficiaries are a mere handful of America's largest corporations. In 2013, for instance, over 90% of its loan guarantees benefited only five companies; the year before, nearly 83% benefited just one.

And while the bank's mission is to support U.S. exports, it may be doing more harm than good. By subsidizing foreign companies that compete with U.S. businesses, in many instances Ex-Im puts American job creators at a competitive disadvantage in the global marketplace.

The U.S. aviation industry can attest to this reality. According to a 2012 letter to Congress by Delta, the bank's support for competitor foreign airliners has resulted in the loss of 7,500 American jobs.

Ex-Im's effect on the U.S. economy is similarly worrisome. Economists at the World Trade Organization found in 2006 that export subsidies like those given by Ex-Im have a "decidedly negative" impact on the host economy — that's us.

But the real thrust of the ex-government officials' letter dealt with the national security implications of Ex-Im. This line of argument is one the bank's supporters should not have picked.

For decades, Ex-Im has done business with countries that either actively oppose American interests abroad or otherwise should be disqualified from receiving U.S. taxpayer support. A case in point is Ex-Im's support for Vnesheconombank (VEB), a Russian state-owned bank that since 2012 has received two loan guarantees totaling $1.2 billion. This is the same VEB that President Obama sanctioned last year in response to Vladimir Putin's aggression towards Ukraine.

VEB has an operating agreement with Russian arms dealer Rosoboronexport — which is responsible for more than 80% of Russian weapons exports — to "promote exports of Russian military products and boost their competitive edge in the world market." A good chunk of these weapons don't go to democratic countries with peaceful intentions. The company is the primary source of arms to Syria's Bashar al-Assad and has also sent advanced missile systems to Iran.

VEB is not an isolated incident of Ex-Im supporting countries that are hostile to American interests. Over the last 18 years, the bank has provided billions of dollars in financial assistance to the likes of Venezuela, China, Pakistan and other countries that raise serious red flags. Many of the recipient companies are also state-owned, meaning the American taxpayer is indirectly supporting these foreign governments. Even this former infantryman can do that math.

The letter's authors also explain that a central reason they support reauthorizing Ex-Im is because other countries provide export subsidies too. They even styled this argument in familiar national security language: "Unilateral disarmament has never been considered a viable defense policy, and we cannot think of a reason why it should be considered a rational export policy." Not so fast.

We're not talking about removing missile batteries or nuclear submarines from strategic locations across the globe. We're debating the future of a crony federal program that supports less than 2% of total U.S. exports and harms jobs and the economy along the way.

As for "a rational export policy," the notion that America should model its economic policies off of corrupt and fraud-riddled schemes used by less-than-democratic regimes around the globe is really something else.

The basis of America's economic greatness isn't the government intervention in the economy that Ex-Im represents. We're the most prosperous nation on earth because we unleashed the power of free and open markets, giving entrepreneurs and consumers the freedom that leads to economic growth. That, and that alone, is why the United States is the most powerful economic and military force the world has ever known.

Pulling the national security card to justify the Export-Import Bank is simply disingenuous. "For national security" is a phrase used all too often to justify any manner of bad policies. Ex-Im is the latest example of this game and is all the more reason it should be allowed to expire.

Pete Hegseth is the CEO of Concerned Veterans for America. A U.S. Army infantry veteran, he served tours in Afghanistan, Iraq and Guantanamo Bay.

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