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Remarks of James A. Harmon Chairman of the U.S. Export-Import Bank

Announcement of Expansion of Ex-Im Bank Partnership with Russia


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Moscow, Russia - Thank you all for coming. Sixty-five years ago, the United States Export-Import Bank was created for the sole purpose of expanding trade with Russia. While today Ex-Im Bank works with countries around the world, I am here to announce a new effort that serves the original purpose of this Bank. After reviewing all that is happening in Russia today - from the new leadership to political reforms to the banking sector - Ex-Im Bank has concluded that now is the appropriate time to cautiously expand our work in Russia by creating a partnership with 15 banks in this country to provide financing for Russia to buy what it needs from the U.S. in order to build its infrastructure, its economy and its future.

This new partnership builds on a positive history between Ex-Im Bank and Russia. In the past five years, one-third of all U.S. capital goods sold to this country were financed by Ex-Im Bank -- from medical equipment for the Moscow children's hospital to oil and gas equipment to help build up a key sector of the Russian economy.

A number of circumstances make expanding our partnership a possibility today. First and foremost, Ex-Im Bank has had a positive experience in Russia. We were among the first financial institutions back in 1993. We were among the first back again after the 1998 crisis. Yet a full 99% of our Russia portfolio has been paid. This is better than the Bank's record worldwide.

We also are encouraged by a combination of factors that indicate that Russia will move further down the path of positive reforms. These factors include Russia's economic recovery; a leadership that is reform-minded on economic policy -- as evidenced by the Gref Plan; and, a leader - President Putin - who has demonstrated his ability to work with the Duma to enact major reforms. This is a skill that we in the United States can appreciate.

These developments offer the government of Russia its best opportunity in many years to enact the reforms necessary to attract more foreign capital and build a strong economic future. Having just completed a series of meetings with government leaders here, I am hopeful that the country will proceed with reforms to the banking system and to the private-sector environment - reforms that can help sustain the strong economic growth we see here in Russia today.

For 50 years, Ex-Im Bank has helped foster economic growth around the world through our work with foreign banks. These banks provide a mechanism for us to reach the private sector in other countries and offer financing for the purchase of U.S. goods and services. I am pleased to expand this partnership to include banks here in Russia. I also am pleased to note that 11 of the 15 banks we have chosen as our partners are private banks.

Our selection goes beyond Moscow to include banks in several key regions - St. Petersburg, the Urals, the Russian Far East. Several banks are smaller in size, but they are leading banks in their regions, so they enjoy a working knowledge of industries that offer significant opportunities for U.S. exporters. We also recognize that these smaller regional banks offer the best way to reach small- and medium-sized companies here that can drive Russia's economic expansion.

Today, Ex-Im Bank has about $2.3 billion in loans and guarantees outstanding in Russia. We expect that this will grow in the next few years. If the Gref Plan proceeds, Russia will embark on a significant modernization effort to upgrade key sectors of its economy and improve and expand vital social services. This effort will require modern technology, capital equipment and direct investment, and the financing is not likely to come from the private sector. This is precisely the climate in which Ex-Im Bank is designed to work to the benefit of both our nations. We step in and provide credit for Russia to purchase whatever it needs from the United States.

I am cautiously optimistic about this new chapter in the growing U.S.-Russian economic partnership. I think it will prove good for Russia and for the United States. It will strengthen the trading relationship Ex-Im Bank was originally created to promote, and it will reap dividends not only for our two countries, but for the world because a stronger, more prosperous Russia will carry with it greater global stability and economic opportunity. Thank you.