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Aug 15, 2014 - 2:00pm

Unilateral Disarmament—Literally: Ex-Im and National Security

Executive Director, International Policy


Helicopter flying over the U.S. Capitol.
Helicopter flying over the U.S. Capitol.
Without the Export-Import Bank "we are going to find ourselves even less capable of reconstituting our military production lines when, not if, they are needed." -- Frank Gaffney

Without congressional action, the U.S. Export-Import Bank (Ex-Im) will close its doors on September 30. One of the many reasons why Congress must renew Ex-Im before that date is the bank’s unheralded role supporting the U.S. defense industrial base.

Consider these concerns expressed by Frank Gaffney, who served as Assistant Secretary of Defense for International Security Policy during the Reagan Administration. Writing today as founder and president of the Center for Security Policy, Gaffney examines the likely consequences of closing Ex-Im—beyond lost sales and lost jobs:

Of particular concern is the likelihood that among the casualties will be the already-beleaguered U.S. defense industrial base. For example, what is left of the skilled workforce, engineers, design teams, machine tools, etc., needed to produce state-of-the-art fighter aircraft, transports, and satellites now resides substantially in our commercial aerospace sector.

And if the industry’s commercial operations cease to be able to sell their products to overseas customers, as a practical matter, we are going to find ourselves even less capable of reconstituting our military production lines when, not if, they are needed.

That would amount to unilateral disarmament, not just in the figurative sense, but in the literal one.

Stephen Ezell, senior analyst with the Information Technology and Innovation Foundation (ITIF), has written on the issue as well:

… the Ex-Im Bank plays an invaluable role in enabling U.S. exporters to compete on a more level playing field in commercial markets where current and future competitors continue to enjoy aggressive support from their countries’ export credit agencies.

Yet some have argued that the United States should unilaterally abandon export credit financing activities on the principle that it constitutes industrial policy or government picking winners. Others fret because they don’t like the fact that Beijing’s or Seoul’s aggressive embrace of export credit financing is setting the terms and pace of global export financing policy—though it does…

This would be akin to saying during the Cold War, “to let Moscow set the terms and pace of military spending in the United States is foolhardy at best.” Would anyone say that it’s okay and prudent to let China (or Russia before it) outinvest the United States in defense expenditures, moreover to unilaterally abandon our investment in a sound defense?

But that’s exactly what those who advocate for the United States to unilaterally abandon the use of export credit financing activities are calling for. The simple reality is that America’s economic competitors are in the game to win and if the United States unilaterally disarms the U.S. Ex-Im Bank, the only result will be fewer U.S. exports and the jobs dependent on them.

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About the Author

Executive Director, International Policy

Christopher W. Wenk is executive director of international policy at the U.S. Chamber of Commerce.

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