In recent years, a political debate has continued on whether the Export-Import Bank (EXIM), the U.S. export credit agency, should exist.
Opponents hold that EXIM favors large corporations and fails to drive sufficient job creation to justify its operations, while proponents argue that EXIM supports U.S. exports and jobs and matches mounting competition from overseas counterparts.
While the debate has continued in Congress and among pundits, the agency has not had quorum on its board since 2015, preventing it from approving deals worth over $10 million.
{mosads}Discussions of reviving EXIM have resurfaced with the nomination of Kimberly Reed as president and chair of the board, who was met with sweeping support at her recent Senate Banking Committee hearing. Committee members were encouraged by Reed’s testimony, in which she committed to increasing transparency at the agency.
Reed’s nomination may soon be in the hands of the full Senate with the nominations of board nominees Spencer Bachus, Judith Pryor and Claudia Slacik.
With these nominations, proponents hope that EXIM will soon have authority to approve larger transactions. However, any conversation on EXIM’s future, particularly with a potential expansion of its portfolio, must include strengthening its accountability framework to effectively address complaints from communities affected by EXIM’s activities.
Independent accountability offices, found across international financial institutions, serve a crucial role in this framework by addressing harm caused by the institution’s activities, such as labor violations and lack of proper consultation with communities.
A robust accountability office would be a value-add to EXIM, proactively mitigating risk, resolving problems as they arise and feeding useful lessons back into the agency to improve its practices and the sustainability of its investments.
Furthermore, it would provide communities with a constructive forum to raise concerns. At her hearing, Reed testified that she is committed to protecting U.S. taxpayers, workers and businesses.
This office would ultimately benefit the American people, ensuring that investments made in the taxpayer’s name are not only avoiding harm and preventing costly reputational, legal and financial consequences, but that they also support sustainable jobs for American workers.
And this office couldn’t come at a better time. Globally, there is growing recognition of the importance of accountability offices for export credit agencies. The U.N. Human Rights Council recently called on agencies to develop effective and accessible offices as part of a government’s duty to prevent and address human rights abuses.
EXIM’s Dutch counterpart, Atradius, recently established a complaint mechanism to address grievances, including from communities affected by its activities.
EXIM has the opportunity to be a leader in this regard. Although it has taken steps toward providing communities and workers with an avenue to raise concerns, it still has farther to go.
In its September 2015 report on the EXIM-financed Sasan coal project in India, which led to at least 19 worker deaths, EXIM’s Office of the Inspector General recommended that the agency establish a separate, formal process for complaints.
The following year, EXIM created an Environmental and Social Project Information and Concerns online form to receive feedback on these issues. While this was a positive start, EXIM must move beyond the form so that the experience in Sasan is never repeated.
Like other accountability offices, such as the Office of Accountability at the U.S. Overseas Private Investment Corporation, EXIM’s office should be independent, transparent and accessible.
Furthermore, it should have tools found at other offices, namely, compliance review and dispute resolution to convene EXIM clients and local people affected by their operations and find mutually acceptable solutions to harmful impacts.
A recent case that Accountability Counsel supported in Mongolia involving the International Finance Corporation’s accountability office demonstrates the benefits to all parties of a neutral dispute resolution process.
The case allowed nomadic herders to negotiate directly with the local government and a major mining company about impacts the Oyu Tolgoi mine, which EXIM supported, has had on local pastureland, water resources and herding livelihoods.
As a result, the parties reached two sweeping agreements that provide commitments addressing many of the herders’ concerns. If EXIM had been supporting the mine alone, the herders would have been left with little recourse.
While the nominee confirmations are not guaranteed, they set the stage to contemplate improvements to EXIM’s accountability framework. At a critical time in the agency’s existence, accountability must be at the center of its reform. The creation of an accountability office will only make the agency stronger, smarter and more effective.
Kindra Mohr is the policy director and Stephanie Amoako is a policy associate at Accountability Counsel, a non-governmental organization that amplifies the voices of communities around the world to protect their human rights and environment through case support, policy advocacy and research.