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29–690PDF 2018

FINANCING OVERSEAS DEVELOPMENT:

THE ADMINISTRATION’S PROPOSAL

HEARING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

SECOND SESSION

APRIL 11, 2018

Serial No. 115–119

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

MO BROOKS, Alabama 

PAUL COOK, California 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

ADAM KINZINGER, Illinois 

LEE M. ZELDIN, New York 

DANIEL M. DONOVAN, JR., New York 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ANN WAGNER, Missouri 

BRIAN J. MAST, Florida 

FRANCIS ROONEY, Florida 

BRIAN K. FITZPATRICK, Pennsylvania 

THOMAS A. GARRETT, JR., Virginia 

JOHN R. CURTIS, Utah 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

KAREN BASS, California 

WILLIAM R. KEATING, Massachusetts 

DAVID N. CICILLINE, Rhode Island 

AMI BERA, California 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania 

DINA TITUS, Nevada 

NORMA J. TORRES, California 

BRADLEY SCOTT SCHNEIDER, Illinois 

THOMAS R. SUOZZI, New York 

ADRIANO ESPAILLAT, New York 

TED LIEU, California

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

(III)

C O N T E N T S 

Page

WITNESS 

The Honorable Ray W. Washburne, president and chief executive officer, 

Overseas Private Investment Corporation ......................................................... 4

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ray W. Washburne: Prepared statement .................................... 7

APPENDIX 

Hearing notice .......................................................................................................... 34

Hearing minutes ...................................................................................................... 35

Material submitted for the record by the Honorable Edward R. Royce, a 

Representative in Congress from the State of California, and chairman, 

Committee on Foreign Affairs 

Statement from the Press Secretary Supporting the Goals of the Better 

Utilization of Investments Leading to Development (BUILD) Act of 2018, 

dated April 10, 2018 ......................................................................................... 37

Letter from the Honorable Elizabeth L. Littlefield, former President and 

CEO, Overseas Private Investment Corporation, dated April 6, 2018 ........ 39

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: 

‘‘Opinion: The Development Credit Authority needs to stay in USAID,’’ 

by Eric Postel and Andrew Natsios, devex.com, February 26, 2018, submitted for the record ........................................................................................ 41

Prepared statement .............................................................................................. 45

Written responses from the Honorable Ray W. Washburne to questions submitted for the record by the Honorable Dina Titus, a Representative in 

Congress from the State of Nevada .................................................................... 47

(1)

FINANCING OVERSEAS DEVELOPMENT:

THE ADMINISTRATION’S PROPOSAL 

WEDNESDAY, APRIL 11, 2018

HOUSE OF REPRESENTATIVES,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The committee met, pursuant to notice, at 10:00 a.m., in room 

2172 Rayburn House Office Building, Hon. Edward Royce (chairman of the committee) presiding. 

Chairman ROYCE. We will call this hearing to order. 

Across the planet, lack of access to capital often constrains economic growth and especially this is true in the world’s least-developed countries. In these emerging markets, foreign investment is 

critical to empowering entrepreneurs, to creating jobs, and, of 

course, to reducing poverty. 

America has an undeniable interest in supporting the development of vibrant and stable economies around the world and 

healthy private sectors promote good governance, supports thriving 

civil societies. They help reduce civil strife within the country and 

the resulting stability is not only good for our national security, it 

also benefits U.S. exports and benefits jobs. 

Increasingly, other countries are working to advance their economic and political interests by shaping overseas markets. Beijing 

is doing this in a big way. China’s $1 trillion ‘‘One Belt, One Road’’ 

initiative could be contrasted with the Marshall Plan, which rebuilt 

war-torn Europe. But it works in a very different way. If you visit 

any African capital you’ll see China’s name on new construction 

projects. 

But as Chairmen Yoho and Smith’s subcommittees know well, 

China often entices foreign governments in search of easy money 

and then saddles them with unsustainable debt burdens, and they 

do that through predatory—basically, predatory lending practices. 

In the Indian Ocean, for example, Sri Lanka was forced to forfeit 

a 99-year lease to one of its strategic ports because it could not afford the debt burden on that Chinese loan. 

The U.S. cannot and shouldn’t match China’s investments dollar 

for dollar, but we can and should do more to support international 

economic development and do it with partners who have embraced 

the private sector-driven development model and done so under a 

concept of rule of law. 

Today, we will hear from the president and CEO of the Overseas 

Private Investment Corporation whose mission is to complement 

traditional U.S. foreign assistance by mobilizing private capital in 

2

support of America’s development objectives and support of our foreign policy interests. 

This was established in the 1970s. OPIC was to provide, to quote 

from the document, ‘‘businesslike management of investment incentives’’ and that included political risk insurance, direct loans, loan 

guarantees, and other services to developing nations. 

So we are 50 years later here. The OPIC’s toolkit has largely remained the same while the international economic landscape has 

changed dramatically. 

And that’s why I am in support of this bipartisan legislation by 

our Subcommittee Chairman Yoho to build a modern development 

finance institution that will promote enduring growth in emerging 

economies and will support our U.S. national security objectives. 

In an era of tight budgets, this proposal would consolidate the resources and consolidate the expertise of OPIC and the Agency for 

International Development’s Development Credit Authority and it 

would do all this under one roof with new powers to make limited 

equity investments, conduct feasibility studies, provide wraparound services such as grants and technical assistance, and double its book of business. 

This proposal would also create an independent inspector general. Now, that would increase the accountability for taxpayers and 

it would put in place tough statutory benchmarks that must be met 

to ensure that American development finance complements and 

does not crowd out private sector investment. 

I am encouraged that the administration has embraced this bipartisan approach, which members of this committee have been 

working on, and today we’ll hear more about its vision for international cooperation and how the new development finance institution would work with USAID and Millennium Challenge Corporation to ensure coordination between our development agencies. 

With the right leadership and authorities, a new development finance institution can be a powerful instrument to create opportunities in countries hungry for growth and jobs and its creation would 

also send a strong signal about America’s commitment to international economic engagement in uncertain times. 

And with that, let me yield to the ranking member, Mr. Bera, 

today for an opening statement. 

Mr. BERA. Thank you, Mr. Chairman. While Facebook may be a 

household name, I think this is the most important hearing that’s 

happening this morning because the impact of the Overseas Private Investment Corporation that you oversee, Mr. Washburne, has 

had the ability and has impacted lives of millions of folks across 

this world. 

This is a very timely hearing as we look at the BUILD Act, as 

we think about how we modernize overseas investment and credit. 

It is one of the remarkable things that we can do in terms of 

good will for the United States and not cost the taxpayers anything—actually, generate revenue for the Treasury as well as generate good will around the world. 

So as we look at these programs it’s important for us to examine 

OPIC’s story as well as its role in the development toolkit. Founded 

in 1971, OPIC seeks to promote economic growth in developing and 

3

emerging markets by providing political risk insurance and direct 

loans and guarantees to businesses. 

And while OPIC is appropriated by Congress, it actually returns, as I said, over $250 million to the taxpayers because it runs a surplus and it’s achieving important development outcomes. 

OPIC is doing this while enhancing the welfare of recipients. One 

small example is its partnership with MicroBuild, which is a housing first micro finance program established by Habitat for Humanity. 

MicroBuild provides micro finance lending to families who do not 

have access to traditional means of credit in developing countries 

like Cambodia. 

By investing in the MicroBuild fund, OPIC has allowed thousands of low-income individuals around the world to find homes. 

It’s a great example of development at work. 

OPIC helped to crowd in investment for MicroBuild and improved the lives of new homeowners who would not have been able 

to access the financing otherwise. 

This focus on quality and improved outcomes is in stark contrast 

to other countries are who are in developed finance. Take, for example, the Isimba and Karuma Dams in Uganda funded by the ExIM Bank of China, both of which have sprouted cracks. It’s probably not a good thing that you want to see in dam. 

Development finance by the newly empowered DFI then offers a 

high-quality alternative to Chinese financing. As we seek to confront the challenges of the 21st century and to ensure that the 

youth dividend is not wasted in developing countries, development 

finance can be a powerful tool in our tool kit. 

It’ll need to be wielded expertly by our development professionals 

and cannot replace our other forms of assistance but, rather, complement them. 

Ultimately, development finance can improve the lives and 

wellbeing of millions of people, catalyze private sector growth, build 

capacity in recipient nations, and set these nations on a path to 

self-reliance. 

I look forward to hearing from Mr. Washburne on how a newly 

empowered DFI can achieve these development outcomes in a sustainable and responsible way. 

And with that, Mr. Chairman, I yield back. 

Chairman ROYCE. Well, I thank you, Mr. Bera, and this morning 

I am pleased to welcome Ray Washburne, president and CEO of 

OPIC, the Overseas Private Investment Corporation. 

This is his first appearance before our committee and he brings 

to the table decades of experience in business and investment including overseas and including in the real estate and restaurant industries over the course of his career. 

He has served on the board and loan committees of several 

banks, infrastructure, construction, and manufacturing businesses. 

He’s been engaged in those as well. 

He’s spent a great deal of time in Africa where he funded the 

construction of a new K-12 school for children in Zambia. 

So we very much appreciate him being with us today to discuss 

this and without objection the witness’ full prepared statement is 

going to be made part of the record. 

4

Members here are going to have 5 calendar days to submit any 

statements or questions to him or extraneous material for the 

record. We will ask him to summarize his remarks and then we 

will go to questions. 

I know the Summit of Americas starts today and I know something about the flight schedule down to Lima, Peru. 

So I think we are going to have to probably wrap up by 12:15 

for you to make that flight. So we will go right to your opening 

statement now, and thank you again, Mr. Washburne. 

STATEMENT OF THE HONORABLE RAY W. WASHBURNE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, OVERSEAS PRIVATE 

INVESTMENT CORPORATION 

Mr. WASHBURNE. Thank you. 

Thank you for inviting me to testify today on this critical topic. 

Chairman Royce, I’d like to acknowledge the work you have done 

to advance U.S. foreign policy, particularly in Africa. 

From the African Growth and Opportunity Act to empowering 

women to Electrify Africa, you were a step ahead. Dr. Bera, I enjoyed getting to know you yesterday and learning more about your 

priorities. 

Indeed, this committee’s bipartisan work has helped set the stage 

for the administration’s proposal for the United States to establish 

a reformed, more effective Development Finance Institution with 

modernized tools and a focus on supporting private sector-driven 

development. 

When it comes to meeting the massive development needs 

around the globe and advancing American foreign policy, this proposal—and the legislation the committee is weighing—is essential. 

As you know, development finance uses tools such as loans, guarantees, and political risk insurance to facilitate private sector investment in emerging markets that will have positive developmental impact. 

These are transactions the private sector won’t do on their own. 

Through OPIC, the U.S. Government has used these tools to 

back projects in key sectors such as power, water, and health that 

improve life for millions and lay the groundwork for economic 

growth. 

Likewise, the U.S. Government has used USAID’s Development 

Credit Authority to drive private investment into countries that 

have not had sufficient—or any—access to commercial finance. 

This model of mobilizing private investment is only becoming 

more prominent, as the needs in the developing world are just too 

great to meet with government resources alone. 

Yet, U.S. capabilities have become outdated as we have gone 

without significant legislative updates. As a result, we lack the 

modern 21st century mechanisms needed to either compete with 

countries like China or cooperate with our allies like Britain, Germany, and Japan, which are investing heavily in emerging markets. 

And a global competition for influence is on. While I was in Asia, 

I saw how China’s Belt and Road Initiative is changing the political 

and economic landscape. 

5

The amount of investment China has planned for this initiative 

is staggering, aimed at interconnecting 65 percent of the world’s 

population, one-third of the world’s GDP, and a quarter of all goods 

and services. 

Of course, a condition of many of these loans is that Chinese 

firms and labor get the business. And we know what happens when 

countries can’t pay. 

In December, for example, Sri Lanka gave control of a strategic 

port to Beijing for 99 years. This comes as China has been stepping 

up its presence in the Indian Ocean and South China Sea and all 

of its critical shipping lanes. 

Mr. Chairman, we have to be engaged in the developing world 

with a robust alternative to these state-directed investments, which 

can leave developing countries worse off. And we have an alternative in a new United States Development Finance Institution. 

This proposal is a result of the President’s Executive order on reorganizing government which prompted a fresh interagency look 

over several months. We found that the U.S. Government’s ability 

to deploy these tools strategically is limited by outdated legal authorities and fragmentation. 

With this in mind, the administration developed a proposal to 

improve efficiencies, reform programming, and—as envisioned by 

the National Security Strategy—elevate these tools to advance U.S. 

foreign policy goals. 

The President’s budget proposes to consolidate multiple U.S. Development Finance Institutions into a new stand-alone Development Finance Institution. The DFI will have better policy alignment and strong links to State and USAID to ensure its transactions align with U.S. foreign policy and leverage USAID’s programming. This includes $56 million in funding for technical assistance and 

grants for potential DFI projects that need a bridge to becoming investment ready. We also need governance and management structures to ensure the DFI and USAID’s field work seamlessly. 

The administration is requesting $96 million in administrative 

expenses for the DFI. However, through careful loan and insurance 

underwriting, it is expected the DFI will not only offset its own operating costs but also return hundreds of millions of dollars to the 

U.S. Treasury. 

The new DFI will include reforms to better manage taxpayer risk 

and ensure its investments are additional to the private sector. We 

will not subsidize projects that can or should be financed on their 

own and we will ensure that our work upholds the highest environmental, social, and worker rights standards. 

Another part of the reformed DFI is increased transparency and 

accountability through expanded inspection and oversight. The 

President’s budget requests $2 million for this purpose. 

In conclusion, Mr. Chairman: In 7 months as the head of OPIC, 

I’ve seen the power of the private sector unleashed to advance U.S. 

foreign policy. 

OPIC approved a transaction which will increase Ukraine’s energy independence from Russia. OPIC formally launched its 2X 

Women’s Initiative to catalyze over $1 billion in capital to invest 

in projects that empower women; and OPIC signed an MOU with 

6

our Japanese counterparts to bolster investment in the Indo-Pacific 

region and beyond. 

A new modernized DFI will be far more competitive, creating 

countless opportunities throughout the developing world. But this 

modernization of development finance cannot happen without the 

support of this committee. 

I am extremely thankful for the leadership of Mr. Yoho for embracing this concept through H.R. 5105. Indeed, just last evening, 

the administration released a statement noting its strong support 

for the goals of this legislation. I look forward to working with the 

committee as the process moves forward to ensure the DFI is structured for long-term success. 

I’ll be happy to address any questions you may have. 

[The prepared statement of Mr. Washburne follows:]

7


29690a-1.eps

Statement of Ray W. Washburne, President & CEO, Overseas Private Investment 

Corporation, to the House Foreign Affairs Committee 

Financing Overseas Development: The Administration's Proposal 

April 11, 2018 

Introduction 

Thank you for inviting me to testify today on this critical topic. 

Chairman Royce -I'd like to acknowledge the work you have done to advance U.S. foreign policy, 

particularly in Africa. From the African Growth and Opportunity Act to empowering women to 

Electrify Africa, you were a step ahead. Ranking Member Engel, your leadership has been 

instrumental in strengthening U.S. engagement in the world, particularly in the Western 

Hemisphere. 

Indeed, this Committee's work has helped set the stage for the Administration's proposal for the 

United States to establish a reformed, more effective Development Finance Institution - with 

modernized tools- and a focus on supporting private sector driven development. 

Development Finance and the International Landscape 

When it comes to meeting the massive development needs around the globe and advancing 

American foreign policy, this proposal - and the legislation the committee is weighing - is 

essential. 

As you know, "development finance" uses tools such as loans, guarantees and political risk 

insurance to facilitate private-sector investment in emerging markets that will have positive 

developmental impact. These are transactions the private sector won't do on their own. 

The U.S. Government has used these tools through the Overseas Private Investment Corporation 

(OPIC) to back projects in key sectors such as power, water, and health that improve the quality 

of life for millions, and lay the groundwork for creating modern economies. 

Likewise, the U.S. Government has used USA I D's Development Credit Authority (DCA) risk-sharing 

guarantee program to drive private investment into countries and sectors that have not had 

sufficient- or any- access to commercial finance. 

This model of mobilizing private investment is only becoming more prominent, as the needs in 

the developing world are just too great to meet with official government resources alone. 

Yet, U.S. capabilities have become outdated. We have been operating for years without 

significant legislative updates. 

As a result, we lack the modern, 21'1 century mechanisms needed to either compete with 

countries like China, or cooperate with allies like the United Kingdom, Germany, and Japan, which 

are investing heavily in emerging markets. 

ll 
8


29690a-2.eps

And a global competition for influence is on. While I was in Asia, I saw how China's One Belt, One 

Road initiative is changing the political and economic landscape. The amount of investment China 

reportedly has planned for this initiative is staggering - aimed at interconnecting about 65 

percent of the world's population, about one-third of the world's GDP, and about a quarter of all 

goods and services. 

Of course, a condition of many ofthese loans is that Chinese firms- and labor- get the business. 

And we know what happens when countries can't pay. In December, for example, Sri Lanka gave 

control of a strategic port to Beijing for 99 years. This comes as China has been stepping up its 

presence in the Indian Ocean region and its critical shipping lanes. 

Mr. Chairman- we have to be engaged in the developing world with a robust alternative to these 

state-directed investments, which can leave developing countries worse off. This state-directed 

approach is not consistent with our values, which incorporate the high standards of international 

financial institutions related to governance, transparency, debt sustainability, environmental, 

and social safeguards. 

The President's Initiative 

We have that alternative in a new, U.S. Development Finance Institution (DFI). 

This proposal is a result of the President's Executive Order on reorganizing government, which 

prompted a fresh look at the issue. Over several months, we worked closely with the Department 

of State, USAID, and others through an inter-agency effort, led by the Office of Management and 

Budget and the National Security Council, to discuss challenges related to development finance. 

This group concluded that the U.S. Government's ability to deploy these tools strategically is 

limited by outdated legal authorities and fragmentation across government. 

With this in mind, the Administration developed a proposal to improve efficiencies, reform 

programming, and, as envisioned by the National Security Strategy, elevate development finance 

to help advance U.S. foreign- policy goals. 

Proposed Development Finance Institution 

The President's Fiscal Year 2019 Budget Request proposes to consolidate multiple U.S. 

development-finance functions, such as OPIC and USAID's DCA, into a new, standalone, 

Development Finance Institution (DFI) that will coordinate all development financing. 

The DFI will have better policy alignment through updated governance structures and stronger 

linkages to State and USAID to ensure the DFI's transactions also align with U.S. foreign policy 

and leverage USAID's programming. For example, the linkages include $56 million requested in 

Economic Support and Development Funding that can be used to provide complementary 

technical assistance and grants for potential DFI projects that need a bridge to becoming 

investment ready. We also need to establish innovative governance and management structures 

21 
9


29690a-3.eps

to make sure the DFI works closely with USAID's Bureaus and field Missions, so USAID can invest 

in the DFI's transactions. Similarly, U.S. Embassies and diplomats will explore and champion new 

market opportunities on behalf of U.S. commercial, development, and national security interests. 

The Administration is requesting $96 million in administrative expenses and $38 million for credit 

programing, project-specific feasibility studies, and other tools for the DFI. However, through 

careful loan and insurance underwriting, it is expected the DFI will not only offset its own 

operation and program costs but also return hundreds of millions of dollars to the Treasury. 

The new DFI will include reforms to better manage taxpayer risk and ensure that US government 

investments are additional to the private sector. We must ensure that while our work supports 

the creation of economic growth in emerging markets, it will not displace the private sector or 

subsidize projects that can or should find their own financing. And we must also ensure that this 

work upholds the highest environmental, social and worker rights standards. 

Another part of a reformed DFI is increased transparency and accountability. One example of 

how the DFI will achieve these objectives is through an expanded inspection, oversight, and 

evaluation function. The President's Budget requests a robust $2 million for this purpose. 

Conclusion 

Mr. Chairman: In seven months as the head of OPIC, I've seen the power of the private sector 

unleashed to advance U.S. policy: 

~ OPIC approved a transaction which will increase Ukraine's energy independence from 

Russia; 

~ OPIC formally launched its 2X Women's Initiative to catalyze over $1 billion in capital to 

invest in projects that empower women and stabilize communities; and 

~ OPIC signed a Memorandum of Understanding with our Japanese counterparts to bolster 

investment in critical sectors in the Indo-Pacific and beyond. 

A new, modernized DFI could be far more innovative and competitive, creating countless 

opportunities for communities throughout the developing world who will benefit from the 

economic impact of its investments. 

But this modernization of development finance cannot happen without the support of this 

Committee through authorizing legislation. We are thankful for the leadership of Mr. Yoho and 

other Members for embracing this concept through H.R. 5105, and look forward to working with 

the Committee on the details of this legislation to ensure it grants the DFI the authorities and 

creates the structure needed to foster its long-term success. 

I would be happy to address any questions you may have. 

31 
10

Chairman ROYCE. Very good. I have some quick questions for you 

and, as you know, one of the advantages of USAID’s development 

credit authority is it relies on the expertise of the men and the 

women in the field and that their expertise helps to ensure that the 

risk sharing agreements are in line with America’s development objectives. 

So the question I have is if you’re going to merge the development credit authority and OPIC, would the new Development Finance Institution still be able to benefit from USAID’s personnel in 

the field? Is that what this is predicated on? 

Mr. WASHBURNE. Yes, sir. I met with Administrator Mark Green 

last week. We have his strong support. We have a letter of support 

from USAID. In the field they can use OPIC now as a force multiplier——

Chairman ROYCE. Okay. 

Mr. WASHBURNE [continuing]. Because USAID right now has one 

tool and merging it with the new DFI they’ll have seven different 

financing fields. 

Chairman ROYCE. So just so we have a grasp on this, what sort 

of institutional linkages here to do envision between USAID and 

the development credit authority that——

Mr. WASHBURNE. Well, the development credit——

Chairman ROYCE [continuing]. In other government agencies? 

Mr. WASHBURNE. The development credit authority will be 

moved over to OPIC and administered by OPIC——

Chairman ROYCE. Okay. 

Mr. WASHBURNE [continuing]. But the field staff will still be 

USAID. 

Chairman ROYCE. All right. All right. 

Chairman Yoho’s BUILD Act would authorize the new Development Finance Institution to make limited equity investments in 

projects. So I just ask what investment criteria would the—a new 

development—the new DFI use to ensure that such authority goes 

to worthy recipients and that it is not politicized and that it is—

does not replace private sector capital? 

Mr. WASHBURNE. The equity authority helps modernize OPIC’s 

financing tools. Currently, every other DFI in the world has equity 

authority and we have an opportunity to participate in some very 

strategic investments with the British and the Germans and others 

and we don’t have the ability to do that because we are purely a 

debt instrument at this time. 

So having the equity authority enables us to participate in many 

more projects. 

Chairman ROYCE. We discussed one example—there are a number of examples of predatory practices in terms of loans that we’ve 

see applied by other countries. 

During Secretary Tillerson’s trip to Africa, I know he warned nations on the continent not to forfeit any elements of your sovereignty as you enter into loans with China. 

As you noticed in your testimony, you mentioned a condition of 

many of these loans is that Chinese firms and Chinese labor get 

the businesses, not local firms, right—not people in country—and 

that comes at a cost. 

11

A new think tank paper out last month identifies eight countries 

that China is loaning to at risk of debt distress. So how would a 

new Development Finance Institution counter this predatory Chinese model and allow for sustainable economic growth? 

Mr. WASHBURNE. Well, in the banking business we call what the 

Chinese are doing ‘‘loan to own.’’ Their whole purpose is to overloan 

on projects with the purpose to go in and take control of them. 

As you know, the United States—this development authority will 

only make private sector-led projects. We don’t lend to state enterprises, and so a considerable amount of equity goes into these 

projects. 

So we’ve had a great success in investing with the private sector 

into these areas. One thing that the equity authority gives us is the 

ability to counteract a lot of these Chinese investments because we 

don’t have enough tools in our tool belt to compete with them. 

Chairman ROYCE. My time is going to expire here. 

So I will go to Dr. Ami Bera. And he’s deferring to Mr. Brad 

Sherman. 

Mr. SHERMAN. I think the basic facts are clear. You do a lot to 

help international development, which is an important objective of 

the United States, and instead of at a cost to the taxpayer you actually return some money to the taxpayer. 

What’s absurd is you haven’t—you’re not functioning under a 

long-term authorization. That is not your fault. That is Congress’ 

fault. 

Back in 2007, we worked together on a comprehensive long-term 

reauthorization. My hope is that the provisions of that bill find 

their way into the legislation we are working on. 

But I want to commend OPIC for doing what I would like to see 

other agencies do and that is take congressional input seriously you 

have adopted by regulation or by policy. 

Many of the provisions of that 2007 bill which passed this committee overwhelmingly with the support of the chairman and 

which—as a matter of fact, I think we were both chair and ranking 

member of the relevant subcommittee that created that product. 

And I would hope that your staff would indicate whether you 

have an objection to including those same provisions in the new 

legislation. In particular, a preference for renewable energy 

projects, annual reports to Congress, support for international 

workers’ rights. 

I assume that these are things that are now part of your ongoing 

process and that you wouldn’t have an objection to seeing them in 

statutory language. Mr. Washburne? 

Mr. WASHBURNE. Yes, sir. 

Well, thank you, Representative Sherman, and thank you for our 

conversation yesterday. We talked many of these points out. And 

thank you for your leadership. You went over yesterday in 2007 

your frustrations in getting this bill pushed forward. 

Mr. SHERMAN. I have been a strong supporter of a unicameral 

legislature for the Federal Government for a long time. 

Mr. WASHBURNE. Yes. 

Mr. SHERMAN. To Nebraska. Yes. 

Mr. WASHBURNE. Okay. And your points—we went back and discussed them with the staff. The provisions of the bill, you chamVerDate 0ct 09 2002 15:00 May 11, 2018 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 Z:\WORK\_FULL\041118\29690 SHIRL
12

pioned many of them, have become part of OPIC policy and we are 

happy to have our staff get together with yours to go over the other 

specific issues that you don’t feel are included. 

Mr. SHERMAN. And I want to commend you for having a policy 

against what I call an anti-Armenia railroad and for limitations on 

investments in Gaza. 

The new bill does not have the provision that would require you 

to have on your board a representative of small business and a representative of organized labor. 

Have the people filling those posts been useful? Would it be useful to have those people on your board in the future? 

Mr. WASHBURNE. Yes, sir. I had nothing to do with the makeup 

of the board. That was what the committee brought to us. They 

have been helpful in the past, yes. 

Mr. SHERMAN. Okay. My colleagues will point out usually I have 

a host of not entirely pleasant questions for witnesses and I am at 

a loss with——

[Laughter.] 

Mr. SIRES. Would you yield? 

Mr. SHERMAN. I could indeed, but that would be so uncharacteristic that the effect on the cardiovascular system of some in the 

room would not be something I could take responsibility for. 

I go through a few of—now, when it comes to the extractive industry transparency standards, it’s one thing to say that OPIC’s 

project would adhere to those standards. 

But could you live with a rule that said that the host country in 

all of its activities would live with those extractive industry standards? 

Mr. WASHBURNE. Sir, whatever the committee decides to include 

in the bill is how OPIC will operate. So I don’t have a comment 

on that. 

Mr. SHERMAN. At the risk to Karen’s health, I will yield back. 

[Laughter.] 

Chairman ROYCE. We thank the gentleman for yielding. 

We go now to Mr. Dana Rohrabacher of California. 

Mr. ROHRABACHER. Mr. Chairman, I will yield to Mr. Yoho. 

Mr. YOHO. I thank my colleague from California. 

Mr. Washburne, thank you for being here. We are excited, obviously, with the rollout of this bill. I want to thank Chairman Royce 

and Member Engel and all the people that are on the committee 

that have co-sponsored this bill, H.R. 5101, the BUILD Act. 

The BUILD Act sets out to accomplish one not-so-simple thing—

transitioning countries—and this is something that—you know, I’ve 

been up here going on 6 years—is how do we move countries from 

aid to trade, and if you look at our top 15 trading partners, 12 of 

them were a recipient of foreign aid. 

And so we looked at a way that we can coalesce all the different 

agencies and departments. I think there are over 70 of them that 

give out some form of foreign aid and assistance. And so we wanted 

to bring them together and we appreciate the input you have had 

on this and moving forward. 

We met with a group today that rebutted what you just said 

about the lending to private-owned enterprises and we do not lend 

13

to state-owned enterprise—we brought that up but they didn’t believe that. So we sure help you putting that out more. 

And I think one of the big things is to counter China. We can’t 

compete with them dollar for dollar, and as we know, it’s the One 

Belt, One Road and I tell people it’s one way and it leads to China’s 

depositories. 

And they remind me of the robber barons of the old days in 

America where they did those lending practices to consume what 

they lent to, as we saw with Sri Lanka and their port there. 

And so as we move forward with this, I think Chairman Royce 

brought out a very good point. It mobilizes the private capital markets is what we see and what I envision in this is by the BUILD 

Act acting as a catalyst to spur that private capital investment in 

countries that are searching for that investment with the goal, 

again, to transition from foreign aid of the past where we spent $1 

to moving to where we are investing $1 in infrastructures, developing those economies so where we can grow this. 

Knowing that we can’t compete dollar for dollar with China, do 

you see this bill as a way to counter what they’re doing in, like, 

the South China Sea? 

We know that that area now—ASEAN bloc of nations—there’s 

going to be more people living in the Southeast China Sea area. By 

2050, there’s going to be more people living in that than outside 

of that in the rest of the world. 

Do you see this as a good vehicle to start countering that and one 

that’s needed by this country? 

Mr. WASHBURNE. Thank you, and your leadership has been critical to this bill and I thank you for that——

Mr. YOHO. Thank you. 

Mr. WASHBURNE [continuing]. And the entire DFI community 

thanks you for that. 

Mr. YOHO. This has been a team effort with the whole committee 

so I appreciate it. 

Mr. WASHBURNE. Right. But speaking specifically to the South 

China Sea, one thing that OPIC does, as you know, is large infrastructure projects—things like ports, railroads, LNG plants, things 

that bring power and electricity. 

The Chinese have swung under the underbelly of India, I was recently in India. They have come to us and wanted us to come in 

and help prop up, with private enterprise, their ports and things 

so the Chinese don’t come in and control that area because the Sri 

Lanka deal was a wake-up call for that entire region. 

Mr. YOHO. It sure was, and we are seeing that in other areas like 

the Maldives and that island—they’re investing between Australia 

and the United States in the Hawaii area——

Mr. WASHBURNE. Yes. 

Mr. YOHO [continuing]. And they’re going to do that over and 

over again and we’ve seen that in Djibouti. And we just need a vessel, a vehicle, that we can change the dynamics and we haven’t had 

a major reform to OPIC, which was started in 1971, for the last 

40 to 50 years and this is something that is sorely needed and I 

look forward to having your leadership on this and any recommendations that you can give us. I don’t know if you can in your 

official capacity but anonymously—if you can give them to us 

14

through Edward, maybe——[laughter]—would be great and we look 

forward to this getting moved down through that. And I think the 

biggest thing is, how do you choose a country to go ahead and invest with the model that we are putting up here with the development finance? I would like to also hear your thoughts on the Development Finance Institution that’s being created that we can partner with private enterprise and we can partner with other countries where before we were limited what we could do with OPIC. 

What’s your thoughts on that? 

Mr. WASHBURNE. Well, I will start with the first one—the regions 

that you spoke to. One is as the chairman mentioned earlier, I am 

going to the Summit of the Americas this afternoon. 

The Western Hemisphere is a top priority for this Government. The Chinese have committed $10 billion to Port-au-Prince in Haiti. 

So right at the front door of the United States they’re going to control one of the largest ports. 

I am meeting with multiple port development people and government officials in Mexico, Colombia, Peru, trying to see what the situation is there because the ports in most of these countries, as you 

know, are controlled by private enterprise because they have the 

shipping. We are talking to Dole Bananas, actually, in Peru. 

They’ve got a very large port on the Pacific that they want to expand because they need to get agricultural products out. 

The Chinese have stepped up and said they’d like to do it. The 

local governments are on to what the Chinese are up to and so 

they’ve asked us to step in. 

When we look at multi-billion-dollar type projects, OPIC’s max- imum loan that we do to a single project is only $500 million. 

These projects are multi-billion-dollar size projects. 

Mr. YOHO. Right. 

Mr. WASHBURNE. But the fact that we have some involvement in 

it shows those host countries that the United States has an interest in keeping them secure. 

Mr. YOHO. Thank you. I yield back. 

Mr. Chairman, thank you and I appreciate your support. 

Mr. WASHBURNE. Thank you. 

Chairman ROYCE. Well, thank you, and without objection I would 

just like to submit for the record a statement by Elizabeth 

Littlefield, the former president and CEO of OPIC under the 

Obama administration in support of this proposal, Reform and 

Modernize America’s Development Finance Toolkit. 

And also I would like to submit for the record a statement of support from the White House also for Subcommittee Chairman Yoho’s 

legislation here, the H.R. 5105, the BUILD Act. 

Without objection. 

Chairman ROYCE. And we go now to Mr. Ami Bera. 

Mr. BERA. Thank you, Mr. Chairman. 

Mr. Washburne, what you have been able to accomplish is pretty 

miraculous. The White House, Obama administration officials, Mr. 

Sherman, a broad consensus, House and Senate all supporting 

something. So maybe this is a beginning of a new era in Congress 

and in Washington, DC. 

If not, it’s a testimony to the importance of OPIC and the belief 

that the United States has to be engaged globally in a smart way, 

15

that we have to be looking at modernizing our ability to invest and 

compete around the world, again, in a smart way. 

One thing that you touched on in one of your comments with the 

modernization—with the BUILD Act was the ability to give OPIC 

equity authority versus just debt investment. 

If you could expand on the limitations that OPIC currently has 

as well as with modernization, the ability to do equity authority—

how that would benefit us. 

Mr. WASHBURNE. Sure. Well, what the equity authority does is 

today we just give a debt instrument on a loan, which gives us senior status to all the other debt. 

If a project was to have issues with it, the equity gets wiped out 

and goes away, and that’s fine and we can continue doing that. 

The problem is where the world has gone is we’ve lowered, in 

many instances, the leverage we give on a project to not that much 

debt, maybe 50 percent debt or less, and the equity portion goes 

in. 

But other countries won’t go in that if they think the United 

States has a superior position to them. 

And so we need the ability to put a portion, and we are talking 

about club deals where you go in together with other countries. 

In some instances, some we’ll do on our own, When we are able 

to compete more effectively on the worldwide scale that these other 

countries are going into. 

For example, in Japan when I signed the MOU in Tokyo last fall, 

the Japanese wanted to co-invest with us in projects but they don’t 

want to do it where we are senior to them. 

And so we signed an MOU that we are going to look at projects 

where we can do it on a collaborative basis. On the debt side, if 

this legislation goes through we’ll be able to also do a portion of 

it on the equity side. 

And the British have had equity authority since 1948, and we 

are the last country, kind of the hold out that hasn’t done it. 

Mr. BERA. So, again, this would be an important tool——

Mr. WASHBURNE. Absolutely. 

Mr. BERA [continuing]. To modernize things. You also touched 

on—as you were highlighting some of the port deals and so forth, 

if I heard correctly, OPIC has a limit at $500 million. Is that 

what——

Mr. WASHBURNE. Well, currently, per project. 

Mr. BERA. Right. And in the BUILD Act would you be given 

greater authority? 

Mr. WASHBURNE. Yes, sir. It would. I don’t know the exact number it would be. It would be larger, yes. 

Mr. BERA. And raising that and giving you that ability as we 

look at the Chinese model and how China’s investing, will it give 

us a competitive advantage or at least a better advantage to——

Mr. WASHBURNE. Well, again, the Chinese are putting in sometimes 100 percent of the debt on projects. We’ll keep our cap at, on 

an extreme basis, at 75 percent. 

So there’s still a large amount of equity in there. That’s why the 

default rate is so low with OPIC. There’s so much equity in projects 

behind us that we just back reputable developers and project sponsors that we haven’t had an issue. 

16

Mr. BERA. What is the default rate? 

Mr. WASHBURNE. What? 

Mr. BERA. What is the——

Mr. WASHBURNE. The default rate? As I understand it, since 

OPIC’s inception, 1 percent. 

Mr. BERA. That’s pretty remarkable. 

Mr. WASHBURNE. Yes, and OPIC’s made a profit for 40 years in 

a row, including last year. OPIC made a profit of $260 million. But 

we call that deficit reduction. We give it back to you. 

Mr. BERA. Absolutely. Which certainly is a good thing. So and for 

the taxpayers that is a good deal as well. So, again, relatively noncontroversial, and I want to thank my colleague, Mr. Yoho, for his 

leadership on this and, again, this is the type of thing that we 

ought to be able to get done in Congress. So I thank you. 

Mr. WASHBURNE. Thank you, sir. 

Mr. BERA. With that, I yield back. 

Chairman ROYCE. We go to Mr. Dana Rohrabacher of California. 

Mr. ROHRABACHER. Thank you very much. 

First and foremost, I want to make sure that people understand 

that these micro loans that we just touched on, how important they 

are to establishing to the people of the world that we are not just 

on the side of the big guys. 

We are not just going in and making friends with the rich people 

who control their societies. Countries like Cambodia, where—which 

was mentioned, where you have basically a criminal regime headed 

by Hun Sen, who was—basically held power with brute force and 

corruption—these micro loans do—give people the sense of optimism that they can improve their lives and thus resist tyranny. 

So I would like to make sure that that’s clearly on the record and 

I would imagine you agree with that? 

Mr. WASHBURNE. Yes, sir. 

Mr. ROHRABACHER. Okay. Let me ask you this. OPIC, over the 

years, has OPIC ever lost money, and you might describe the situation where it has, if it has—lost money where they have guaranteed a loan to a business idea that didn’t work out and thus the 

taxpayers didn’t get paid back? 

Mr. WASHBURNE. Well, I haven’t seen the records for the entire 

history of OPIC. Since I’ve been here in August we haven’t. 

Mr. ROHRABACHER. You haven’t? Okay. 

Mr. WASHBURNE. We haven’t. Sir, I am happy for our staff to get 

with you and give you a complete list of all the transactions——

Mr. ROHRABACHER. I think I would like to have that list——

Mr. WASHBURNE. Yes, sir. 

Mr. ROHRABACHER [continuing]. If you could have one of your 

staff, because the second part of that question is, now, as I would 

assume that the way we’ve set this up that there have been situations where a private loan that was guaranteed by OPIC didn’t pan 

out and that the money was lost and thus the American taxpayers 

were guaranteeing the loan and thus we had to pay for it. 

The question then is has there ever been a bank that lost any 

money once the OPIC has guaranteed a loan? 

Mr. WASHBURNE. Sir, I would have to get my staff with you to 

give you those details. 

17

Mr. ROHRABACHER. Well, what I would like to know is the procedure that you use, does it put the bank that is the partner—basically, we are ensuring that the bank will either break even or make 

a profit. 

Is there any risk that a business that receives this kind of a benefit is having to make in order to receive that benefit? 

Mr. WASHBURNE. If we give a guarantee to a bank, we will give 

them a guarantee on the principal, not on the interest. 

So if a project was to go bad, again, these are real asset properties. These aren’t a software development company or something 

to where—I mean, it’s a hard asset. So a hard asset doesn’t go to 

zero. 

And so since we’ve been a senior lender we have got an underlying asset for—to collect upon. Typically, there’s 25 percent skin 

in the game, as I said, with the equity side of the equation and 

that money gets lost. So if we did a——

Mr. ROHRABACHER. So the bank actually—if something goes 

wrong—we miscalculated, we are trying to help some people but 

they don’t succeed, the bank actually loses money as well as the 

taxpayer? 

Mr. WASHBURNE. No. No, not——

Mr. ROHRABACHER. No. 

Mr. WASHBURNE. So, I just want to clarify. So on a typical deal, 

if we put in 75 percent debt and there’s 25 percent equity, of the 

75 percent debt the bank is at risk for 25 of that 75 percent. 

Mr. ROHRABACHER. So the bank——

Mr. WASHBURNE. So they would lose 25—if $1 is lost, the equity 

to the private developer——

Mr. ROHRABACHER. Okay. 

Mr. WASHBURNE [continuing]. Gets totally wiped out and then 

every lost dollar after that is 75 from OPIC, 25——

Mr. ROHRABACHER. So there is some risk that these——

Mr. WASHBURNE. Oh, absolutely. Absolutely. 

Mr. ROHRABACHER. We are not just guaranteeing a profit and no 

loss so——

Mr. WASHBURNE. For example, we recently did a deal in Costa 

Rica for small business lending with a large U.S. commercial bank. 

We put in $50 million. They put in 25 percent of that and then the 

local bank put in the equity of that. 

So if there was a loss on a loan, the local bank gets their equity 

wiped out and, once again, OPIC would lose 75 percent and the 

partner institution in the U.S. would lose 25 percent. 

Mr. ROHRABACHER. Thanks for clarifying that, and just one 

note—that the Chinese are deeply involved, as we’ve already heard, 

throughout the developing world and quite often they rely on bribes 

and on making sweetheart deals with government officials in countries that are not really all that democratic. 

So that’s something that we—if that’s our competition, we have 

to understand that and we do not want the Chinese to have this 

outreach and actually beginning to have that type of global influence. 

It is a negative influence on the world, and so we wish you luck 

in your restructuring and hope we can work together in the future, 

18

even though Ed Royce, who’s put his heart and soul into this all 

of these years, isn’t going to be with us. 

We’ll carry on, Ed. Thank you very much. 

Mr. WASHBURNE. Thank you, sir. 

Chairman ROYCE. Thank you. We go now to Mr. Greg Meeks of 

New York. 

Mr. MEEKS. Thank you, Mr. Chairman. Mr. Washburne, welcome. 

Mr. WASHBURNE. Thank you. 

Mr. MEEKS. Now I just want to say offhand I really have, for the 

most part, believed that OPIC does excellent work and this propose 

of the Development Finance Corporation I assume is presumably to 

provide loans and grants and guarantees to businesses that commercial banks won’t or can’t support, right? That’s basically what 

it’s going to do. It gives people there an opportunity. 

But I want to be sure that those efforts extend to—I am always 

concerned about diversity and that there’s diversity in lending and 

everybody has an opportunity. 

So my first question is well, is how well did DFC work continue 

with existing—will it continue to work with existing U.S. programs 

to complement traditional assistance and encourage diversity in its 

partnerships? 

Because oftentimes when I go to certain communities, there’s no 

diversity or they want to make sure they have the opportunity to 

be included in some of the lending and investment opportunities. 

So have you thought about how you’d make sure that there are 

diverse loans that are there? 

Mr. WASHBURNE. Are you saying with U.S. companies for——

Mr. MEEKS. Yes. 

Mr. WASHBURNE. Yes. Well, a big part of my job is being an outward-facing CEO and going and meeting with new potential people. 

Only 8 percent of our loans are with Fortune 500 companies. 

So we have 675 projects in 90 countries. So we have a very diverse and open marketing apparatus. We have—we use the U.S. 

Commerce Department to help market us as well with this new 

legislation. USAID and their field offices are going to help drive 

this business. 

Mr. MEEKS. So I just want to make sure, because we know 

there’s a lot of minority and women-owned businesses that are 

looking to invest abroad. 

Mr. WASHBURNE. Sure. 

Mr. MEEKS. And I want to make sure that they have a clear opportunity and whether or not there will be specific policies within 

the new DFC that—you know, strong outreach to women and to 

minorities so that they know that you exist and that they know 

what their opportunities are because they are looking to do it and 

oftentimes they don’t know the opportunities that are there. 

Mr. WASHBURNE. Yes, sir. Well, the first person I hired when I 

came to OPIC is a lady that set up a women’s initiative area within 

OPIC. We committed $350 million from OPIC, which will catalyse 

$1 billion of investment. I am going to Lima this afternoon and tomorrow we are having a large press conference to announce this. 

It’s called the 2X Initiative and is an example—I spoke earlier 

on that small business loan deal we did in Costa Rica. We required 

19

of that loan that 20 percent had to go to women-owned businesses. 

And so we’ve not only talked about it, we’ve put real money to 

work. 

Mr. MEEKS. And on the flip side of that, I know that generally 

OPIC had been very conservative, which meant that many of the 

poorest countries were not included in the investment portfolio. So 

I didn’t see as many investments in some of the poorer countries 

and I was wondering if not—if you could now with this new DFC 

there would be further investment in some of the poorest communities like on the continent of Africa. 

Mr. WASHBURNE. Sir, I think we have projects in almost every 

country in Africa and I am happy to submit to you where our 

projects are located and a map to show where they are. We are 

open in 130 countries. 

We are active in 90 countries. We are closed in the high-income 

countries or Communist countries. We are throughout Africa. In 

fact, I had a team over there a couple weeks ago. I am going myself 

this summer for 2 weeks and we are marking ourselves heavily 

there. 

As you know, OPIC was one of the leads of Electrify Africa 

and——

Mr. MEEKS. Absolutely, and I want to be assured that that will 

continue. 

Mr. WASHBURNE. Oh, absolutely. 

Mr. MEEKS. Yes. 

Mr. WASHBURNE. When we look at——

Mr. MEEKS. So let me ask this. I don’t know whether this does 

anything or not. I know that under the BUILD Act it proposes that 

the DFC have equity authority, right, so too, that I know OPIC 

doesn’t currently have, and I was just scratching my head. 

Why is equity authority important and how would that change 

the way that DFC approaches investments? 

Mr. WASHBURNE. OPIC was set up in 1971 and the tools under 

which we loan to and invest with are pretty much the same as they 

were then. The world has changed a lot since then and what equity 

authority enables us to do is partner up with other countries such 

as England and Germany. 

Every other country that has a DFI has equity authority and we 

are able then to participate in a lot more projects and a lot more 

deals. 

Currently, by just having a debt instrument we are left out of a 

lot of things. 

Mr. MEEKS. My time is up. Thank you very much. 

Chairman ROYCE. Thank you, Mr. Meeks. 

We go now to Mr. Ted Poe of Texas. 

Mr. POE. Thank you, Mr. Chairman. 

Thank you, Mr. Washburne, for being here. I also want to recognize Mr. Mosbacher, who’s in the audience today, and thank him 

for all of his work that he’s done in this area. 

In 2016, Congress unanimously adopted my bill, the Foreign Aid 

Transparency And Accountability Act basically to strengthen accountability of development agencies—mainly, reporting short 

verse—it’s an audit of our foreign aid, foreign assistance, things we 

do in foreign countries. 

20

How are you ensuring accountability of OPIC to American taxpayers? 

Mr. WASHBURNE. Well, sir, part of this bill is going to be funding 

for an inspector general to come in. So we, fortunately, have had 

very tough underwriting and this is going to ensure as we go forward that the concerns you might have are going to be covered. 

Mr. POE. I noticed that was in the bill. I just wanted to hear it 

orally that that’s a concern of yours and you’re going to make sure 

the American public knows how the money is being spent? 

Mr. WASHBURNE. Yes, sir. 

Mr. POE. That’s the purpose of the Foreign Aid Transparency 

Act. Tell me what your feelings are, opinion, and how Ex-Im Bank 

plays into all of this. 

Mr. WASHBURNE. Well, I can’t really speak to Ex-Im because it’s 

a domestic oriented institution. We are, as you know, totally international and we can’t do anything in the United States or its territories. So——

Mr. POE. But can you give me your opinion of the Ex-Im Bank? 

Mr. WASHBURNE. I haven’t studied it, sir. [Laughter.] 

Mr. POE. What a great answer. 

Mr. WASHBURNE. This is my day job. So I can’t speak to that. I 

am sorry. 

Mr. POE. I am a supporter of the Ex-Im Bank and it’s been 

stonewalled over in the Senate because the Senate refuses to appoint commissioners so that it can do what I think is a good—beneficial not only to America but other entities across the globe as 

well. 

What role does China play in financing similar entities and their 

government in dealing with foreign countries? What is China 

doing? 

Mr. WASHBURNE. Well, they have the China Investment Corporation, or CIC, and they’ve committed several trillion dollars to—

that’s their main investment entity and that’s what we come up 

against and every country I travel to you get off the plane and 

China—I was in—like last summer in Zambia and you get off. The 

airport is a Chinese airport being developed by the Chinese. You 

drive through town, they’ve just built a soccer stadium and given 

it to the government. 

And so it’s a coordinated effort by the Chinese. As I said in my 

opening statement, they want to tie together 65 percent of the 

world’s population in their Belt-Road Initiative, from China all the 

way around through the Suez Canal. 

Mr. POE. And they use Chinese workers when they build all 

these projects. They bring in all the Chinese. Locals don’t build 

these projects. No matter where it is, it’s Chinese workers come in 

and develop, build, construct, maintain all of these projects. 

Mr. WASHBURNE. And even a country like the country of Georgia, 

which has a port. If you look at the Belt and Road as it goes all 

the way to England, that’s a key logistic point for the Chinese and 

the Georgian Government has come to us, said, will you help us finance the logistics port so the Chinese don’t do it? Otherwise the 

Chinese are going to do it, and that’s a key, and you think the 

country of Georgia, how would that have anything to do with the 

Belt and Road? That is a key point for distribution. 

21

So we can’t match them dollar for dollar nor do we desire to 

match them dollar for dollar because they do a lot of things that 

don’t make any economic sense whatsoever. But we could back 

projects that are strategic to the United States. 

Mr. POE. Once again, I want to thank you for what you do. I believe this OPIC is a—not only a financial entity that works good 

for America and other countries but it’s a diplomatic positive for us 

in foreign countries, and I know this is going to shock the chairman 

but I am going to yield back a minute to the chair. [Laughter.] 

Chairman ROYCE. I thank your Honor. Thank you, Judge. 

We go to Albio Sires of New Jersey. 

Mr. SIRES. Thank you, Chairman. 

Mr. Washburne, thank you for being here. Thank you for helping 

us pay the debt that we owe—for the money you return to the 

Treasury—just a little bit. 

I have a couple of concerns and I am glad you’re reorganizing 

and I think it’s the right thing to do, and you’re focusing on the 

Western Hemisphere, which is one of the committees that I serve 

on. 

How does this political risk insurance work with some of these 

countries? I am thinking in terms of Venezuela. You know, they’ve 

been just atrocious. 

Did we ever have any investment there or anything like that in 

the past? 

Mr. WASHBURNE. No, sir. We are closed in Venezuela and have 

been for years. We don’t have any projects there nor are we allowed 

to even look at projects there. 

Mr. SIRES. Okay. And in terms of—we just had island hit very 

badly by these hurricanes. U.S. Virgin Islands, Puerto Rico, St. 

Thomas. 

Mr. WASHBURNE. Yes, sir. 

Mr. SIRES. Are you making any effort to partner up with the private sector to see if we can help or just some of the projects to assist these islands? Because they really are a mess and I know that 

they don’t have a lot of equity to put forward in some of these 

places when you do this partnership. 

Mr. WASHBURNE. We are closed in U.S. territories so I can’t go to Puerto Rico. But we committed $1 billion to the Caribbean region, whether Dominican Republic, a lot of the islands throughout 

there, and we are working on multiple projects right now, primarily 

infrastructure—power grids, ports, upgrading airports. 

Mr. SIRES. That’s what I was thinking in terms of some of these 

islands that got hit so hard. 

Mr. WASHBURNE. Yes. And the interesting thing is very little 

money goes a very long way in a lot of those islands. But we are 

very actively—obviously, we are not open in Cuba or Venezuela but 

everything else through that region we are very actively engaged. 

Mr. SIRES. So, in other words, Puerto Rico is out of the question? 

Mr. WASHBURNE. Yes, sir. It’s a U.S. territory. 

Mr. SIRES. So the U.S. Virgin Islands also? 

Mr. WASHBURNE. That’s out. St. Croix is out. 

Mr. SIRES. St. Croix. 

Mr. WASHBURNE. You know, the Solomon—anything that’s a U.S. 

territory. 

22

Mr. SIRES. Is there any way in your new reorganization that you 

can try to include some of these places that got hit so hard by the 

hurricanes? 

Mr. WASHBURNE. Sir, this is an international—that’s not in the 

legislation currently. And if that’s something the committee wanted 

to change—but that’s not what OPIC was for. There are other aid 

programs that feed to the domestic issues. 

Mr. SIRES. No, I mean, I just——

Mr. WASHBURNE. And I will tell you, we did look at the Puerto 

Rico issue when that hit. Obviously, we got a lot of calls and our 

staff looked at it and we just can’t participate in there. 

Mr. SIRES. Totally? 

Mr. WASHBURNE. At all. Yes. Yes, sir. 

Mr. SIRES. And this political risk insurance, can you go over that 

again for me? How does this work? 

Mr. WASHBURNE. Okay. Well, sometimes we just do the political 

risk insurance. We don’t even do a loan. But if a company is going 

to build a project, for example, like a power project in Vietnam, 

which is a Communist government but they’ve got democratic reforms, we are trying to get them away from the Chinese. 

We gave them a political risk insurance which meant we get a 

contract that we guarantee will be honored and then we go to the 

Vietnamese Government and we get a counter party that, if they 

sell electricity produced by an LNG plant into the Vietnamese grid, 

they don’t change contract terms. 

They don’t nationalize it, expropriate it, and those things. And 

the governments know that it’s the U.S. Government with an insurance policy on that and that’s why we had a very low default 

rate because people realized it’s actually the U.S. Government 

they’re changing the contract terms on. 

Mr. SIRES. Okay. Chairman, I am also finished. Thank you very 

much. 

Chairman ROYCE. Thank you for yielding back. 

Mr. Tom Garrett of Virginia. 

Mr. GARRETT. Thank you, Mr. Chairman, and thanks to the committee and specifically Member Yoho as well as Mr. Washburne 

and the administration for advancing this initiative. 

A moment ago you said, and I quote verbatim, ‘‘The Chinese do 

a lot of things that don’t make any economic sense.’’ I agree. Would 

you submit that they make strategic sense? 

Mr. WASHBURNE. I would. 

Mr. GARRETT. And so if the Chinese are not dumb, and they’re 

not, and they’re doing things that don’t make economic sense with 

lots and lots of money, would it seem then logical to presume that 

they’re doing them in order to advance a strategic agenda? 

Mr. WASHBURNE. Well, they could do things like build a soccer 

stadium in Zambia that makes no economic sense and then just 

give it away. So——

Mr. GARRETT. Right. But they might do that to curry favor with 

the regime in Zambia, for example, and that would be then advancing their strategic agenda, correct? 

Mr. WASHBURNE. That’s correct. 

Mr. GARRETT. Okay, and I am not trying to be hostile. I think 

what you’re doing is great and I think you’re doing it well. 

23

But I’ve pointed out in this committee before that there seem to 

be two paradigms in the patterns of foreign aid. The Chinese tend 

to give aid to dictatorial regimes and autocrats—for example, building entire Presidential palaces that rival in size and scope, say, for 

example, the Rayburn Office Building with Chinese dollars and 

then giving them to foreign autocrats, versus the United States, 

which renders aid in the form of clean water and food to people, 

right? 

There’s aid to the top and aid to the people, and I would submit 

that the American paradigm works only when the people exist in 

a nation wherein the people have the ability and the right to assert 

themselves, and where that is the case that indeed the American 

paradigm is superior to the Chinese paradigm. We get more bang 

for the buck. We generate more good will. 

I will tell you that as a soldier deployed in uniform every pack 

of M&Ms I pulled out of my MRE went to a young person in that 

nation where I was deployed so that the memory that they had 

would be of an American soldier giving them a pack of candy that 

they might not otherwise have the opportunity to enjoy ever. 

And I hoped at the time, as a 20-something, that that might foster good will amongst these young people toward our nation, moving forward. The Chinese paradigm is give their dad $1. 

But I am not going down this road wantonly. I would submit that 

this legislation and the bipartisan nature thereof should—and I 

think it was Dr. Bera who said serve as a wake-up call or maybe 

a new beginning that when Vandenberg suggested that politics 

should stop at the water’s edge, all too often in this committee and 

in Homeland Security—I understand it Education and Workforce 

where I also sit—I’ve seen partisan sniping by this side taking 

shots at policies from the previous administration and by that side 

taking shots at this administration, which don’t serve to advance 

the American nation’s best interest at home or abroad and it makes 

me want to pull my hair out—that we should get back to that Vandenberg concept that politics should stop at the water’s edge because we are so darn far behind here that I wonder if we can catch 

up. 

And I am not trying to lecture you, but this needs to be said. 

Maybe somebody somewhere will watch it and take it to heart. An 

American prominent political philosopher recently stated publicly 

that there were inherent advantages to the autocratic regime in 

China by virtue of their ability to act decisively without debate. 

Now, as someone who is absolutely passionately in love with the 

idea of the American experiment—that individuals should have the 

rights to make decisions for themselves—that the best interests of 

the collective is advanced best by empowering the individual—I 

loathe the idea that that person might have been right. 

But to the extent that we can all get behind something that 

makes more efficient private investment in foreign nations in a 

manner such to create alliances and strengthen trade partnerships, 

to advance not only the interests of the United States but a free—

and those who aspire to be free across the planet, it’s about time. 

So thank you for what you’re doing. My genuine and sincere 

thanks to my colleagues on the other side of the dais. We need to 

work together to get this sort of thing right because we are being 

24

lapped by people who do not have the best interest in freedom and 

self-determination at their hearts. 

I would yield back. 

Chairman ROYCE. We thank the gentleman for yielding. 

Karen Bass of California. 

Ms. BASS. Thank you, Mr. Chair, and once again thank you for 

your leadership in bringing a bipartisan bill that I think is really 

going to make a difference and I also want to thank Representative 

Yoho for your leadership on this bill. 

Mr. Washburne, I appreciated our conversation yesterday and 

welcome you to OPIC. Excited that you’re there and very excited 

by this initiative. 

I raised a couple of concerns with you yesterday that I think 

were probably in reference to a much earlier version of the bill and 

know that I’ve had time to look at it, very excited about it. 

So I want to ask you in terms of moving forward in the future, 

I know one of the things that you were saying yesterday that you 

thought was going to be helpful was the fact that the DFI would 

not have staff around the world but you could take advantage of 

staff that were already there from USAID or in Embassies. 

So if you look at what the British are doing, which they call their 

DFI CDC, they do have staff around the world. 

So thinking out in the future, do you see the need for that? 

Would you want to come back to us and ask for that type of support? How do you think will develop in the future? 

Mr. WASHBURNE. Well, we want to use the USAID staff and we 

also use a lot of the Commerce Department. They have staff in almost every Embassy around the country for their purposes and 

through a joint marketing we have been very successful with them. 

When I was recently in the Ukraine we went and marketed to 

a number of companies there—U.S. companies that were there 

through the Commerce Department’s embeds into the Embassy—

their Commerce Department. 

Ms. BASS. So you see that model being stagnant? You don’t see 

it growing? 

Mr. WASHBURNE. Oh, I see it growing. It’s a big education process. With this modernization of it, going forward, I am with the 

State Department. 

We, obviously, interface with them on a daily basis about countries we are going to, what’s strategic, where should we stay out 

of, where we need to be cautious. So yes, ma’am, and I also 

checked. Yesterday you asked on the African Women’s Entrepreneurship Program. 

Ms. BASS. Yes. Yes. I was going to ask you about that. 

Mr. WASHBURNE. And it’s a State Department grant program, 

and one that is going to continue working under OPIC and State 

can contact us with women entrepreneurs and through that program we can give them financing through OPIC. So that is——

Ms. BASS. So it stays in USAID? 

Mr. WASHBURNE. Stays, but we provide the capital for them. 

Ms. BASS. Right. Okay. Good. Good. Good. 

Mr. WASHBURNE. Yes, I went and checked on that for you, and 

on the African trade hubs——

25

Ms. BASS. Before you move onto that, at AWEP then if you would 

be providing the financing, I would think that AWEP would be able 

to expand then. Is that correct? 

Mr. WASHBURNE. Oh, absolutely. Yes. 

Ms. BASS. You would be adding much more resources than currently exist. 

Mr. WASHBURNE. Right. And the head of our 2X Women’s Initiative I talked to her yesterday and she’s actually going to Lima with 

us today and when she gets back that’s the top of her agenda. 

Ms. BASS. Great. Great. I appreciate that. And you were going 

to reference the trade hubs. 

Mr. WASHBURNE. Oh, you asked about the trade hubs. 

Ms. BASS. Uh-huh. 

Mr. WASHBURNE. We see them as rainmaking deals for us in 

these areas. 

Ms. BASS. So how do you think you would specifically collaborate 

with them? 

Mr. WASHBURNE. Well, no. It’s just market. They just could submit us ideas and things that we market off of. 

Ms. BASS. Okay. We probably, at another point, should talk a little more about that. 

Mr. WASHBURNE. Absolutely. 

Ms. BASS. Because I think that there have been improvements 

in the trade hubs. 

Mr. WASHBURNE. Right. 

Ms. BASS. There’s definitely the need to have more trade hubs on 

the continent of Africa. But how successful they are and how that 

collaboration—I think it could be very beneficial but we probably—

it probably deserves deeper conversation. 

Mr. WASHBURNE. Good. Okay. Thank you. 

Ms. BASS. Thank you. I yield back, Mr. Chairman. 

Mr. CONNOLLY. Would my friend yield? 

Ms. BASS. Oh. Be happy to yield to you, Mr. Connolly. 

Mr. CONNOLLY. Because I am going to be brief. Thank you so 

much. 

First of all, Mr. Chairman, I would ask that an opinion piece on 

the development credit authority published in the devex.com be entered into the record. 

Chairman ROYCE. Without objection. 

Mr. CONNOLLY. I thank the chair. Have you seen this op-ed piece 

by a former aide to Administrator Natsios raising some concerns 

about including the USAID piece in a superannuated DFI and that 

it would, they claim, would hurt USAID’s ability to finance longerterm development projects? 

Mr. WASHBURNE. Sir, I haven’t seen the article but Administrator Green is in full support of this and——

Mr. CONNOLLY. Yes, but that’s not my question. I am trying to 

get at the substance of it. Do they have a point that potentially this 

could hurt USAID’s capacity without intending to and have you 

taken that into consideration? 

Mr. WASHBURNE. From the legislation that’s been presented to 

us, which USAID has given its approval to. I don’t understand 

what the issue would be. 

26

Mr. CONNOLLY. Would you be willing to talk to former USAID 

Republican Administrator Natsios on this matter? 

Mr. WASHBURNE. I would be happy to speak with him. Sure. He 

has never reached out to me. I have not seen that article. But I 

wish he had contacted me before he wrote it. 

Mr. CONNOLLY. We’ll make it available. 

Mr. WASHBURNE. Okay. Thank you. 

Mr. CONNOLLY. I thank you. Thank you to my colleague. 

Chairman ROYCE. Would the gentleman yield? 

Mr. CONNOLLY. Of course. 

Chairman ROYCE. And an earlier debate here we had some of the 

discussions about the linkages to make sure that we guaranteed 

the expertise and involvement of those men and women on the 

ground. 

It probably would behoove us to, as the bill moves forward, define that a little more precisely. And so in keeping with the gentleman’s point we’d be happy to work with you in order to strengthen 

and guarantee that symbiotic relationship there and the use of that 

personnel and experience on the ground. 

Mr. CONNOLLY. Mr. Chairman, I thank you so much for that because that’s the only point I am trying to make. There can be unintended consequences and let’s make sure there aren’t. 

Chairman ROYCE. Precisely. 

Mr. CONNOLLY. And certainly Mr. Natsios has some gravity in 

this matter that should be considered and why he didn’t reach out 

to Mr. Washburne I don’t know. But we can fix that. 

Chairman ROYCE. In his own way I think he did. [Laughter.] 

Mr. CONNOLLY. That’s right. I thank the chair. 

Chairman ROYCE. Thank you. 

We go now to Joe Wilson of South Carolina. 

Mr. WILSON. And thank you very much, Mr. Chairman, and 

thank you, Chairman Ed Royce, for your long-term commitment to 

the Overseas Private Investment Corporation. 

The chairman has been an OPIC cheerleader for a number of 

years, understanding how important what you’re doing. And Mr. 

Washburne, your background is just, in my view, perfect, fulfilling 

something that I really respect—that President Trump has appointed people of great talent to serve. So thank you very, very 

much, and I we all look forward in a bipartisan manner to working 

together with you. 

OPIC has a dual mandate to support development while advancing America’s foreign policy and interest. How does it balance with 

these priorities? 

Mr. WASHBURNE. With our foreign policy objectives? 

Mr. WILSON. Yes. 

Mr. WASHBURNE. Well, it’s a tool of foreign policy in the sense 

that countries are regions that the U.S. Government would like to 

prop up through free enterprise and I will give you an example. In 

the Northern Triangle of Central America where there’s a very, 

very high unemployment rate we’ve been tasked with finding companies that can go down there and create employment to help stabilize those regions. 

And so a big part of our mandate is how do we create employment in those regions. 

27

Mr. WILSON. And I wish you well. I, last summer, had the opportunity for the Food for the Hungry program to visit Guatemala. 

Mr. WASHBURNE. Right. 

Mr. WILSON. And it was exciting to me to see the level of economic development that was very clear in Guatemala City and 

then needed in the more rural areas. 

So what you’re doing is making a difference. How does the dual 

mandate compare to other Development Finance Institutions including China’s development finance model and should support or 

preference for U.S. jobs and commercial interests be an explicit 

mandate in the new Development Finance Institutions? 

Mr. WASHBURNE. Well, the Chinese strategic goal is the Belt and 

Road Initiative and also worldwide trade. So they have gotten into 

the Western Hemisphere through the Panama Canal. 

They’re trying to control, as I said earlier, through a lot of the 

ports and things like that so they can open trade passages for their 

ships. So we are very cognizant on where they are. I’ve signed an 

MOU with the Australian Government recently when their prime 

minister was in DC to where we are going to work with the Australians and the Japanese on trying to strengthen the outer islands 

outside of Australia on things they need, like undersea cables to 

get communication going—that the Chinese are trying to control 

that. 

And so, like I said earlier, we can’t match them dollar for dollar 

but we can strategically find some places to——

Mr. WILSON. Well, it’s really making a difference and we all appreciate that. What opportunities for cooperation exist between 

OPIC and foreign DFIs to address common development goals? 

Under your leadership, OPIC has signed memorandums of understanding with Japan and Kazakhstan to support development 

finance cooperation. 

Does OPIC have other similar agreements or plans for additional 

cooperation with foreign DFIs? 

Mr. WASHBURNE. Well, we also have one with Australia, as I 

mentioned. We are currently working on one with India to where 

Japan, Australia, India, and the United States will combine forces 

in that Indo-Pacific region and try to share in projects we can do 

together and intelligence that we can find projects to go into. 

As far as other DFIs, each country has specific regions or areas 

they’re interested in. A lot of them are interested in Africa and 

OPIC was the leader on the Power Africa initiative. 

We’ve invested over $2.5 billion to help electrify Africa and other 

countries look for us to be the lead. They’re smaller. A lot of them 

are organized together and they would like to invest together and 

that’s why the equity authority is so important to us because a lot 

of them invest is equity, not through debt. 

Mr. WILSON. And I am grateful to hear about the working relationship with India. I am very grateful that I have worked very 

closely with Chairman Ed Royce, who was the former chairman of 

the Caucus of India and Indian-Americans and I followed him and 

the opportunities that we have with Prime Minister Narendra Modi 

are just so positive. So this is really very good news. 

28

You pride yourself on a self-sustaining agency which returns 

funds to the Treasury every year. Will the new DFI also be expected to make returns to taxpayers? 

Mr. WASHBURNE. Yes, sir. 

Mr. WILSON. And that’s good. In fact, that is so good I yield back 

my time. You were very clear. [Laughter.] 

We are not used to people being this clear. Thank you very 

much. 

Mr. WASHBURNE. Yes. 

Chairman ROYCE. We go now to Norma Torres of California. 

Ms. TORRES. Thank you, Mr. Chairman. 

Mr. Washburne, thank you for all the work that you’re doing. I 

have very focused my work in the Western Hemisphere, specifically 

I co-lead the Central America Caucus. It’s a bipartisan caucus that 

has been focused on the Northern Triangle. 

I understand that OPIC has an active project in Guatemala involving Banrural—a rural development bank linked to the Government of Guatemala. 

Unfortunately, there’s been accusations of public corruption. Are 

you aware of these allegations? 

Mr. WASHBURNE. You know, Citibank is the lead on that particular loan. I don’t have the minute details of that. But OPIC’s 

loan is through Citibank and they’re the ones managing that relationship and that’s the only project we have. 

Ms. TORRES. My question is, sir, are you aware of these allegations of public corruption. 

Mr. WASHBURNE. Well, there’s a lot of corruption in Guatemala. 

Ms. TORRES. That is not my question, sir. 

Mr. WASHBURNE. Right. On that particular deal, I don’t have the 

specifics. No, ma’am. 

Ms. TORRES. So what is it that you do to ensure that you are not 

working and that American dollars—taxpayers’ dollars are not 

going to corrupt individuals, the drug cartels, the people that are 

harming—the people that are making their way north to our southern border are the people that we are trying to help in trying to 

address the root causes of migration, which is a primary objective 

of this administration? 

Mr. WASHBURNE. Well, when I first started at OPIC I was asked 

to focus on the Northern Triangle where OPIC had not had a focus 

in a long, long time. 

Ms. TORRES. I appreciate that. 

Mr. WASHBURNE. And so in El Salvador, Honduras, Guatemala—

I took a trip there. My teams have been down there multiple times 

looking for projects we can do to help the people on the ground. 

Electrification, transportation—as you know, in Guatemala—it’s 

very difficult to drive anywhere with the mountainous roads. We 

try to go in with ag businesses where they can get the agriculture 

out of the mountains and to the ports. The ports are very undersized, and we realize the immigration issue but we feel with creating opportunities of employment in those countries that’ll stabilize those countries. 

Ms. TORRES. I wholeheartedly agree with you, sir. The issue is 

because there is so much public corruption opportunities for American business to thrive there when they’re having to compete with 

29

other local organizations that may be having to pay off a corrupt 

government official I want to know what steps are you taking to 

work with the attorney generals in this region, with CICIG specifically, to ensure that the folks that you are trying to help are not 

the ones that are hurting our American agenda. 

Mr. WASHBURNE. Well, the businesses that we back to go in 

those countries are very well vetted. We always go in with a U.S. 

partner like a Citibank or someone like that goes through their 

own anti-corruption——

Ms. TORRES. Should my question be addressed then to Citibank 

to see why, as an American bank—banking institution is doing 

business with a corrupt organization in Central America? Is that 

your statement here today? 

Mr. WASHBURNE. My statement is we do very intense investigations of the people we do business with as well as the lending institutions we partner with. 

Ms. TORRES. What does that look like—an intense investigation? 

Mr. WASHBURNE. Well, I am happy for our staff to come over and 

walk you through exactly how we process a loan, how we monitor 

a loan, and how we do background checks on who we deal with. 

Ms. TORRES. I know that this is an uncomfortable conversation 

to have and to have publicly, but I need to have some reassurances 

that while you’re working there and we want you to continue to 

work to create local opportunities for the youth there but at the 

same time I don’t want you to focus and for the work to damage 

the work that we are doing in trying to address the public corruption issues there by providing opportunities for these corrupt individuals to continue to thrive. 

Mr. WASHBURNE. We are very happy to sit down with you and 

your staff and walk through everything. All our loans are totally 

transparent. You can go on the web and see who we do business 

with. And so I am happy to come over anytime and——

Ms. TORRES. Just for the record, Mr. Chairman, since I can’t get 

an answer from our guest here today, does that mean that this is 

a classified briefing that I need to ask for? 

Chairman ROYCE. Congresswoman Torres raises a point, which 

has to do with a case for which she’s seen a press report. We have 

strong laws on the books in terms of, well, the Foreign Corrupt 

Practices Act and other laws which should guarantee that we do 

not have a situation where U.S. agencies are engaged with financial interests overseas. 

A cartel is what you refer to. There are also laws on the books 

that prevent the engagement here in terms of involvement with 

foreign governments overseas. 

So that being the case, I would suggest, Congresswoman Torres, 

you and I and the ranking member should meet along with the 

staff of the agency and we should review this particular case—get 

to the details and have their investigative people come in and we’ll 

get to the bottom of it. 

Ms. TORRES. Thank you, Mr. Chairman. I yield back. 

Chairman ROYCE. Very good. We go now to Mr. Mike McCaul of 

Texas. 

Mr. MCCAUL. Thank you, Mr. Chairman. 

30

Ray, good to see you again. We’ve known each other for quite 

some time. I want to applaud and commend the President’s decision to put you in this position. I can’t think of a stronger mind, 

business leader, and someone with just dogged determination to get 

things done, and I think you bring a fresh enthusiasm to what was 

becoming not such a fresh face for us, and it’s what we need right 

now and we need it from a foreign policy standpoint. It’s really the 

soft power piece that complements what our military does around 

the world. 

So, again, I want to thank you. I want to say personally anything 

we can do to assist your mission we are strongly supportive of you. 

My question has to do with—I get two but the first one, China, 

they are a superpower now. It’s hard to compete. As you know, 

they’re in South America. They’re in South America. Their model—

they have $12.6 billion in loans now. It’s also hard to compete with 

a country that doesn’t have any anti sort of corruption practices—

laws on them, so they can walk in a room and hand basically a 

suitcase full of cash. Our guys, we obviously can’t do that. We are 

prohibited by Federal law. 

They also offer to build soccer stadiums to get their contracts, to 

get access into these countries. So I guess my first question is how 

do you compete with someone when you’re on sort of an unlevel 

playing field from the get-go and they have made great advances 

and strides in both these continents? 

Mr. WASHBURNE. Thank you for your comments, first of all. I appreciate those. 

You know, the Chinese—we are not going to match them dollar 

for dollar and your point of soft power is exactly what OPIC is. It’s 

a soft power agency of foreign policy for the United States. 

And so there are certain areas we can go in. If the Chinese are 

at Port-au-Prince, which I mentioned earlier—they’re rebuilding 

the port there, which gives them control—then as a counteraction 

we need to find other ports. We should have been the ones in there 

doing that and we kind of fell asleep at the switch. I don’t know 

why we weren’t there. 

And so it’s more of a strategic play for us because our dollars are 

very limited. We are not an aid agency. We are a business agency, 

and I have to underwrite projects that businesses believe will make 

a profit and come back because they have so much equity in them. 

So building a soccer stadium obviously serves no purpose. Building a port like in Sri Lanka that made no sense to begin with, we 

can’t find a developer to do that and we are not an aid agency. So 

we are very strategic on where we go and what we are investing 

in. 

Mr. MCCAUL. Right. I think Djibouti is another example where 

we actually have a military post there and they’re there as well. 

I think one argument that always plays against them though are 

these countries that they move into, it doesn’t benefit the host 

country, at the end of the day. They may have shiny objects they 

can wave in front of them but they really don’t invest in the 

wellbeing of the country’s health overall. 

In fact, they bring in their own workers many times and it brings 

no real, I think, assets to the host country itself. 

31

And so, hopefully, over time countries in Africa and South America will see that and they’ll turn away from that competition. 

Secondly, I think—maybe Mr. Yoho had maybe asked you this 

question—but I co-sponsored his BUILD Act, which creates a U.S. 

international Development Finance Corporation and it really helps 

leverage all the loans that you have with OPIC and USAID’s development credit authority. Are you supportive of this? I know it was 

in the President’s budget as well. 

Mr. WASHBURNE. I am supportive and Administrator Mark 

Green is supportive of it. The White House—we gave them a letter 

last night. They’re in support. In fact, USAID and I met and so, 

yes, I am supportive of it. 

Mr. MCCAUL. And just to close, I mean, I think, again, your enthusiasm is welcome here. You’re going to do a great job and OPIC 

has a great story to tell because a lot of—most of it, it can bring 

billions of dollars of investment yet with almost—with not a whole 

lot of appropriations from Congress. 

And so a lot of it is primarily self-funded and I think we should 

be taking greater advantage of OPIC’s reach and authorities 

throughout the globe to advance the United States’ interests 

abroad. 

When we have such a complex world right now with Russia and 

China being expansive and with Iran and North Korea and so 

many hot spots, I really applaud your leadership, sir, and I look 

forward to working with you. 

With that, I yield back. 

Mr. WASHBURNE. Thank you. 

Chairman ROYCE. I thank the gentleman for yielding back. 

I want to thank Mr. Washburne for being here today and for 

sharing the administration’s views on the importance of development finance and how it can be reformed and for your support here 

today for Subcommittee Chairman Yoho’s BUILD Act. 

I know you’re on your way to the Summit of the Americas. But 

before you go, I also want to acknowledge Edward Burrier sitting 

behind you. Edward was the deputy staff director of this committee 

and one of our closest advisors for many years, and Edward is one 

of the best. 

And while it’s a little strange to see him sitting behind the witness and not behind the chairman, I can’t imagine anyone better 

than Edward to be serving you at OPIC and we thank Edward for 

his work and dedication. 

And Mr. Washburne, we wish you all the best in Peru. 

The hearing stands adjourned. 

[Whereupon, at 11:30 a.m., the committee was adjourned.] 

(33)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

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29690n.eps

FlJLL COMMITTEE HEARING NOTICE 

COMMITTEE ON FOREIGN AFFAIRS 

U.S. HOUSE OF REPRESENT A TTVES 

WASHINGTON, DC 20515-6128 

Edward R. Royce (R-CA), Chairman 

April 11, 2018 

TO: MEMBERS OF THE COMMITTEE ON FOREIGN AFFAIRS 

You are respectfully requested to attend an OPEN hearing of the Committee on Foreign 

Affairs to be held in Room 2172 of the Rayburn House Office Building (and available live on the 

Committee website at http://www.Forei gnAffairs.house.~ov ): 

DATE: 

TIME: 

SUBJECT: 

WITNESS: 

Wednesday, April 11, 2018 

10:00 a.m. 

Financing Overseas Development: The Administration's Proposal 

The Honorable Ray W. Washburne 

President and Chief Executive Officer 

Overseas Private Investment Corporation 

By Direction of the Chairman 
35


29690m-1.eps

COMMITTEE ON FOREIGN AFFAIRS MINUTES OF FULL COI\11VIITTEE HEARING 

Day Wednesday Datc, ___ 0::_4::.'1c:c1c:cll_:2c:Oc:cl ___ Room ___ _::2c:/_;_7::_2 __ _ 

Starting Time JO:Ol!AM Ending Time 11:31JAM 

Recesses 

Presiding Member(s) 

Chairman Edward R. Royce 

CheeR all of the following that apply: 

Open Session I1J Executive (closed) Session D Televised 0 

TITLE OF HEARING: 

Electronically Record!'!!Jtaped) 0 

Stenographic Record l:LJ 

Financing Overseas Development: The Administration's Proposal 

COMMITTEE MEMBERS PRESENT: 

See attached. 

NON-COMMITTEE MEMBERS PRESENT: 

IV/A 

HEAlUNG WITNESSilS: Same as meeting notice attached? Yes[!l NoD 

(lf «no", please list belmt' and in etude title, agency, department, or organization.) 

STATEMENTS FOR THE RECOH.D: (List any statements suhmittedfor the record.) 

IFR- Chairman Edward R. Royce and Representative Gerry Co11nolly 

SFR- Representative Gerry Connolly 

QFR- Repre.ventative Dina Titus 

TIME SCHEDULED TO RECONVENE ___ _ 

or 

TIME ADJOURNED U:30AM 
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PRESEc'vT 

X 

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HOUSE COMMITTEE ON FOREIGN AFFAIRS 

Fuu COMMIITHF H~_AJIING 

]\,[EMBER PRESENT MEMBER 

Edward R. Royce, CA EliotL EngeL NY 

Christopher H. Smith. NJ X Brad Sherman. CA 

Ileana Ros-Lehtinen, FL X Gregory W. Meeks, NY 

Dana Rohmbacher. CA X Albia Sires. NJ 

Steve Chabot. OH X Gerald E. Connolly, VA 

Joe Wilson. SC Theodore E. Deutch. FL 

Michael T. McCaul, TX X Karen Bass, CA 

Ted Poe, TX X William Keating, MA 

Darrell Issa, CA David Cicillinc. RJ 

Tom Marino, PA X Ami Bem.CA 

Mo Brooks. AL Lois F rankcL FL 

Paul Cook. CA T ulsi Gabbard, HI 

Scott Perry. PA Joaquin Castro, TX 

Ron DeSantis. FL X Robin Kelly. TL 

Mark Meadows, NC Brendan Boyle. P A 

Ted Yoho. FL Dina Titus. NV 

Adan1 Kinzinger,TL X Nonna Torres, CA 

Lee Zeldin. NY X Brad Schneider, IL 

Dan Donovan, NY Tom Suozzi. NY 

James F. Sensenbrem1er. Jr., WI Adriano Espaillat. NY 

Ann Wagner, MO X Ted Lieu, CA 

Brian J. Mast. FL 

Brian K. Fitzpatrick, PA 

Francis Rooney, FL 

Thomas A. Garrett. Jr.. VA 

John Curtis. UT 
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MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE EDWARD R. ROYCE, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, 

COMMITTEE ON FOREIGN AFFAIRS


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Strategy and the nscal Year 2019 Budr;et Request, which proposed the creation of a consolidated, 

reformed Dt! with strong institutional linkages to the Department of State and the United States 

Agency for International Developm<mt (USAID) lo enhance America's global competitiveness and 

help drive economic growth in the developing world. 

The 1\dministration looks forvvard to continuing to work with Congress on H.R.Sl 05/5.2463 as the 

bills progress through the legislative process. In particular, we believe the bills need to be 

strengthened to further ensure that the important work of this institution aligns with U.S. national 

interests and has strong institutional links to the programming of USAID and other development 

agencies. The bills must also include a revised funding structure for the institution and reforms to 

better manage risk to the U.S. taxpayer and avoid displacing private sector resources. 
39

MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE EDWARD R. ROYCE, A

REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA, AND CHAIRMAN, 

COMMITTEE ON FOREIGN AFFAIRS


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entrepreneurship, self-reliance, rule of law and international cooperation. And it is 

usually our businesses, their partnership and their investment that countries want most 

from the United States. 

Development finance has been a powerful force in serving our national security 

interests through, for example, rebuilding infrastructure in Iraq, providing small business 

loans in Egypt or creating employment for women in Afghanistan. On average, roughly 

one-third of OPIC's portfolio is in conflict-affected nations. As history has shown, 

poverty prolongs, exacerbates and, in some cases, causes destabilization and conflict 

Sustainable, private sector jobs integrated with local and global markets can be a 

valuable antidote to that threat They are a force for stability. 

In 2008, for example, water shortages across Jordan were so severe that households in 

the capital had potable water only a few days per week. By 2014, with the help of OPIC, 

a 200-mile-long water pipeline had been constructed and was delivering safe water to 

residents as well as to the Syrian refugee camps in the north. This, in a nation of 

paramount strategic importance that is within driving distance of ISIS-held territories. 

The case has been made that Congress should expand development finance. I believe 

there is an equally strong case that it can do so-prudently, cost-effectively and with a 

high degree of confidence in success. Having the tools that businesses need under one 

roof will be an essential element to assuring the most effective and efficient service 

delivery to those businesses. 

During the years of my tenure at OPIC (201 0-2017), the agency invested heavily in 

building the institutional infrastructure to support a broader role in achieving U.S. 

development goals. This meant building 21st century financial institution equipped with 

state-of-the-art risk management systems and other systems necessary for prudent 

origination, underwriting and management of a large portfolio of emerging market risks. 

The result is a very strong core that is ready to serve as a foundation for a new, scaled 

up development finance institution. 

Mr. Chairman, in sum, this is the right step at the right time. It will advance America's 

national security aims. It will tap into the dynamism of America's companies and 

investors. It will project the best of American values. And it will accomplish all of these in 

an efficient, cost-effective and time-tested way. I urge you to support this initiative. 

Respectfully submitted, 

Hon. Elizabeth L Littlefield 

Former President and CEO, Overseas Private Investment Corporation 
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MATERIAL SUBMITTED FOR THE RECORD BY THE HONORABLE GERALD E. CONNOLLY, 

A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF VIRGINIA


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investors, and on the 

same terms as other G-8 DFis. The proposal will permit the U.S. development bank to retain 

more of its profits, allowing it to grow to meet the demands of the market. And it will equip the 

new institution with the ability to make small grants and conduct feasibility studies, giving U.S. 

investors and developers a leg up in challenging foreign markets. To supporters of OPIC, 

these are all positive moves and will better position the U.S. to counter the growing influence 

of China and other new actors in emerging markets. 

But the planned legislation contains one especially destructive provision that is unnecessary to 

achieve its broader intent. It calls for the consolidation of the United States Agency for 

International Development's flagship private sector engagement tool. the DeveloQment Credit 

Authority, into the new DFI. For the past 18 years, DCA has been partnering with local banks 

to channel local private capital toward U.S. development objectives. Instead of simply granting 

money directly to agricultural enterprises, for example, USAID uses DCA to prudently share 

risk with lenders and unlock a sustainable source of local commercial capital as part of broader 

agricultural sector improvement efforts. 

This critical tool has been championed by members of both parties and across five successive 

USAID administrators. Since its creation in 1999, it has unlocked nearly $5.2 billion of private 

capital in some of the world's toughest sectors and countries and has transformed the way 

USAID development professionals think about market-based solutions to poverty. 

Having seen the development of the DCA tool and its significant expansion within USAID, we 

are alarmed by the notion that it should now be stripped from the agency and placed into the 

new DFI to "increase operational efficiencies" and "reduce redundancy." In our view, doing so 

will have the exact opposite effect and will greatly reduce USAID's ability to incorporate the 

private sector into its development work. 

To be sure, avoiding duplication of programs across government is essential, but using the 

same tools across multiple agencies is not the same as duplicating programs. Indeed, DCA is 

a tool, not a stand-alone program. It is part of a well-coordinated, integrated, and multiyear 

development strategy. Stripping that tool from USAID will weaken the sustainability of 

programs without adding anything new to the U.S. Development Bank that the DFI won't 

already have. Those who argue that the DFI can simply play the role DCA once played for the 

agency do not appreciate the differences between the tools, their mandates and operational 

models. Here are just three worth mentioning: 

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1. Different missions and metrics 

DCA's mandate is to support USAID's development objectives. Any deal it supports is part of a 

holistic program designed and funded by USAID country missions in consultation with partner 

governments. OPIC's mandate, on the other hand, is to support specific projects in developing 

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countries. This is an equally important objective, but it begets a much different operational 

strategy, skill set, and risk appetite. 

2. Different risk-return requirements 

Because of its pure development mandate, DCA often supports deals that most development 

finance institutions try to avoid. DCA's deals lend to be small, higher risk, and more favorable 

from a pricing perspective. For OPIC, or any future DFI, undertaking too many risky projects 

and suffering 10 percent losses would be a disaster given it frequently advertises that it makes 

money. As documented by the Cenll'lLf9LGl.o.Q_gLQe'l!'IQQ_11J<l!JJ:. the result is a lot of DFI capital 

is provided to middle-income countries. But at USAID, the DCA tool can responsibly risk 

relatively more capital in the least developed countries since USAID is normally issuing grants, 

not seeking a market return. 

3. Sectoral progress versus projects 

A DFI, !ike OPIC, responds to proposals made by investors. This is a necessary and prudent 

approach to respond to the needs of market participants. But what if there is no market, or the 

market needs modernization? What if there are noncommercial improvements needed? Such 

work is in the realm of development. The extensive effort on agriculture, for example, requires 

complex development interventions across food systems- only one of which may be an 

investment of the sort which the DFI will support. USAID uses the DCA tool as an integrated 

component of broader projects. This is quite different than a DFI project which stands all on its 

own and is not adjusted as the broader sectoral effort proceeds. 

While a number of distinguished leaders support the creation of a DFI, what efficiencies are 

achieved by moving the tiny, 30-person DCA office out of USAID into the new institution? 

There are no savings here, only a shift of people from one building to another, a 

"consolidation" box falsely checked, and a weakened USAID with no ability to attract 

sustainable funding for projects that are part of larger development efforts. DCA's enthusiastic 

and bipartisan supporters in Congress are unlikely to allow this to happen. And even if they do 

for political reasons, the need for the tool is so strong within USAID that we predict it will 

eventually be recreated inside USAID by some future administration. Let's save the trouble 

and get this right. 

About the authors 

• Eric Postel 

Eric G. Postel has more than 25 years of pioneeri~g development fi~ance experie~ce. As an Associate 

Administrator at USAID 2011-2017 he was extensively engaged in accelerat;ng USAID's work with the private 

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sec:tor including via DCA 

• Andrew Natsios 

Andrew Natsios served as USAID adm~nistrator from May 2001 to January 2006. He was als0 U.S. special 

envoy for Sudan from 2006 to 2007 and vice president of World Vis1on U.S. from 1993 to 1998. Natsios, who is 

currently executive professor and director of the Scowcroft Institute of lnternat1onal Affairs at The Bush School 

of Government & Public Service at the Texas A&M University, has just written a soon-to-be-released book on 

foreign aid and :nternational development. 

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Statement for the Record 

Submitted by Mr. Connofly of Virginiu 

Development finance is an area of this Committee's jurisdiction that has long been neglected. The topic 

encompasses the mobilization of public and private investment for market-oriented approaches to 

international development. The Trump Administration has proposed the creation of a new development 

tinance institution (DFT), consolidating various agencies and functions that support private sector growth 

in emerging economies. While development tinance is an important tool to help achieve U.S. foreign 

assistance and foreign policy goals more broadly, it cannot supplant traditional U.S. development 

programs. This proposed institution should be designed to achieve development objectives in close 

cooperation with the U.S. Agency for International Development (USAID). 

The United States has used development tinance as a tool of foreign assistance since the early days of 

USAID's existence. Before Congress created the Overseas Private Investment Corporation (OPIC) in 

1969, USAID already had a range of investment guaranty and promotion functions. OPIC promotes 

economic grow1h in emerging economies by financing overseas investments and insuring against the 

political risks of investing abroad for qualifying U.S private investors. This work has contributed an 

estimated $80 billion in U.S. exports, supported more than 280,000 U.S. jobs, and complemented larger 

U.S. development assistance objectives. 

Despite OPIC's clear returns for American taxpayers, the Trump Administration's FY 2018 budget 

sought to eliminate funding for OPIC and the U.S. Trade and Development Agency (TDA). Last fall, 

the Administration perfonned an about-face on development finance. President Trump committed to 

refonn U.S. development tinance institutions so that they ·'better incentivize private sector investment" 

and "provide strong alternatives to state-directed initiatives that come with many strings attached." Tn 

the FY 2019 budget, the Administration proposed consolidating all U.S development tinance functions 

into one U.S. development finance institution. While U.S. development finance programs are a critical 

catalyst to spur growth, they alone cannot fill the gap created by the Trump budget cuts and counter the 

narrative of retreat that the Trump Administration has peddled around the world. We must ensure that 

an expansion of development tinance does not serve as a substitute for traditional foreign assistance 

programs. 

Following the release of the Administration's budget, Representatives Ted Yoho and Adam Smith 

introduced H.R. 5105, the Better Utilization of Investments Leading to Development (BUILD) Act. This 

legislation would establish the U S Development Finance Corporation and consolidate various U S 

development finance functions, including USAID's Development Credit Authority (DCA), within the 

new institution. DCA is a private sector engagement tool that US AID employs to stimulate private sector 

lending through partial loan guarantees in support of U.S. development objectives. According to former 

USAID Administrator Andrew Natsios and former USAID Associate Administrator Eric Postel, moving 

DCA to the new DFI would lead to "a weakened USAID with no ability to attract sustainable funding 

for projects that are part of larger development efforts." There are also concerns that this bill does not 

have robust transparency and accountability provisions to ensure that the DFT investments are 

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contributing to U.S. development objectives. Given the importance ofUSAID to today's discussion, it 

is disappointing that we could not hear trom the US AID Administrator as well on the Administration's 

proposal. 

Development finance institutions play a significant role in the overall U.S. approach to international 

economic engagement and development. These entities harness private capital and help make U.S. 

assistance more sustainable. We should modernize the use of development tinance and enhance the 

capacity ofU.S. development tinance institutions to work with the private sector in emerging economies 

However, that expansion should not come at the expense of USAID's authority as the premier U.S. 

development agency. We must ensure that this proposed development finance corporation would 

advance development objectives, be transparent and accountable to the American taxpayer, and have 

strong institutional linkages to US AID. 

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Questions for the Record from Representative Dina Titus 

Financing Overseas Development: The Administration's Proposal 

Aprilll,2018 

Thank you Mr. Washburne for coming to testify today. I certainly agree that OPIC plays an 

important role in helping to support development in fragile markets and advancing U.S. foreign 

policy, but we all know it is not the only solution or arrow in the U.S. foreign policy quiver. I 

want to make sure that any legislation to carry out the President's plan for a strengthened and 

consolidated Development Finance Institution does not provide justification for the elimination 

or reduction of direct foreign aid which is crucial to U.S. foreign policy. 

Question: 

The Administration's budget for FY18 did not support any new OPIC transactions and 

significantly reduced OPIC staff What has changed from last? What conversations did you have 

with Administration officials to come to the conclusion that now, instead of eliminating it, OPIC 

should have increased authorization and be consolidated with USAID's Development Credit 

Authority? Was there any mention that reconfiguring the Development Finance Institution would 

provide rationale for cutting existing foreign aid? 

The 2018 President's Budget proposal, coupled with the President's Executive Order on a 

Comprehensive Plan for Reorganizing the Executive Branch, helped catalyze fresh thinking 

about how the U.S. Government deploys its development finance tools and whether we are using 

them most effectively. 

Over the course of several months, the Office of Management and Budget and the National 

Security Council convened a robust interagency dialogue that included input from the 

Department of State, the United States Agency for International Development (USATD), and the 

Overseas Private Investment Corporation (OPIC) as well as the Departments of Treasury, 

Commerce, and others. The interagency working group observed that outdated legal authorities 

and fragmented interagency coordination hamper the U. S. Government's current ability to 

deploy development finance. 

Currently, both OPIC and USAID's Development Credit Agency (DCA) are re-authorized 

annually in appropriations bills, which causes uncertainty for their potential private sector 

partners. OPIC has operated for the last 15 years without significant legislative updates. 

Likewise, DCA has operated for over 18 years without any significant update or expansion of its 

original authorities. As a result, these institutions lack the modern, development-finance 

mechanisms needed to counter the state-driven model of countries. 

With this in mind, the group developed a proposal for streamlining and consolidating U.S. 

development-finance functions to improve efficiencies, reform programming, and help advance 

U.S. foreign-policy goals while achieving greater development impacts through private sector 

oriented transactions. For too long, U.S. development finance has been implemented in a 

fragmented manner across multiple U.S agencies. This has resulted in underutilized 
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programming, inconsistent alignment with US. foreign policy and national security objectives, 

and reliance on outdated tools and approaches. 

The proposed Development Finance Institution (DFI) will be a strong complement to the good 

work at USAID. The DFI will have an updated governance structure and stronger institutional 

linkages with State and US AID to the prioritization of projects that are critical ensure national 

security and developmentally impactful. The connectivity will drive better pipeline and 

programming coordination amongst U.S. Government agencies. 

The Administration is seeking to elevate development tinance tools to strengthen U.S foreign 

policy and mobilize billions in private sector dollars to the developing world. There has been no 

discussion among the interagency working group that establishing a new DFI would provide a 

rationale for cutting direct foreign aid. 

Question: 

I want to make note of the Cameroon Cataract Development Impact Loan, an OPIC project that 

will help prevent blindness through the provision of some 18,000 cataract surgeries in Cameroon 

over the next five years. I appreciate this project's preventive health care approach and 

partnership with Sightsavers, an organization that works to promote the rights of people with 

disabilities. 

Ensuring all groups are included in public life through development brings economic stability 

and prosperity for all. What portion of current OPIC projects have a focus on disabilities? If 

OPIC' s portfolio cap is increased, are there any discussions or commitments to increasing the 

portion of projects focused on promoting inclusive development for people with disabilities in 

emerging markets? 

Thank you for recognizing the developmental importance of OPIC's $2 million investment in 

Cameroon to prevent blindness. The Cameroon Cataract Development Impact Loan represents a 

new way of funding health care in low and middle income countries by bringing together public 

and private investors, health donors, and eye care delivery experts. 

The funding will support the Magrabi ICO Cameroon Eye Institute (MICEI), which has been 

established by the Atfica Eye Foundation. MICEI will not only provide comprehensive, highquality and affordable eye care procedures, but will also play an important role in strengthening 

health care systems by developing healthcare talent for the region by providing certified (through 

the University of Yaounde) training to grow the next generation of African eye care experts. 

Currently, it's estimated that 15% of the world population experiences some fonn of disability, 

with prevalence rates higher in developing countries. Often opportunities for sustainable income 

generation are directly tied to a person's ability to access finance, markets, and community 

networks. Yet, research tells us that countries cannot achieve optimal growth by leaving behind a 

large group of their citizens -persons with disabilities - with economic losses from employment 
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exclusion ranging from 3 to 7% of the GDP. Women with disabilities are more likely to earn 

less than men with disabilities, and they are affected by inaccessible sanitation, smaller social 

and professional networks, and gender-based violence. 

In developing countries, the definition and measurement of disability is challenging. There are 

large differences in disability figures relating to varying measurement techniques due to the 

stigmatization of disability in some cultures, subjective perceptions of what is 'disability', and 

different cultural standards of what is considered to be 'normal'. 

Regardless of whether disability is defined by a diagnosable condition or a person's ability to 

participate in social roles, such as going to school or being employed, OPIC' s development 

mission is firmly intertwined with the needs of disabled persons. One common theme across 

OPIC projects is the commitment to improve the communities the projects were meant to serve. 

And to serve communities where it operates, OPIC seeks to focus on health, education, 

agriculture, water, energy, access to finance and critical infrastructure- all of which create jobs. 

Over the last 10 years, OPIC has committed over $2.25 billion dollars to improve health care in 

emerging markets. For example, OPIC recently financed a 2,060 bed hospital project in Izmir, 

Turkey that will serve an estimated 12,000 patients per day with services such as women's 

health, pediatrics, cardiovascular, oncology, and forensic psychiatry. It will have a stafi of 1,000 

doctors and 2,159 other professionals running the hospitaL This highly developmental project 

will enable Turkey to improve the country's under-resourced health care infrastructure. The 

project will also enable residents to access quality healthcare without having to travel to IstanbuL 

The project will also introduce new medical technologies that will save and enhance lives. 

OPIC's projects encourage workforce participation, often reaching rural areas that lack basic 

employment opportunities. New projects in FY16 are expected to create over 10,000 permanent 

host country jobs and support over 12,000 temporary and construction jobs in developing and 

emerging markets. OPIC's clients reported that nearly half of the 10,000 jobs supported in host 

countries belong to women. The application of OPIC' s strong labor standards, including the 

implementation of safety measures and clearly defined working conditions, make jobs atOPICsupported projects particularly desirable. 

If OPIC' s portfolio cap is increased, it will be possible to support even more developmental 

projects that will, among other things, help improve healthcare in developing markets and 

provide more employment opportunities for those with disabilities. The Administration's 

proposed Development Finance Institution would further enhance the U.S. government's 

outreach efforts by adding complementary activities, such as the ability to support feasibility 

studies and subsequent early-stage financing for new projects. To cement further alignment with 

USAID, the Budget requests $56 million in resources for State/USAID programming (and other 

transfer authorities) to support activities, such as grants for technical assistance or "wrap-around'' 

services, that complement and support the DFl's project-specific investments. For example, this 

could include technical assistance to a finance institution to augment underwriting around underserved communities. 
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Question: 

OPIC is widely regarded in the development finance community as having among the most 

extensive policy requirements for projects to receive its support. Can you provide some examples 

of where OPIC's stringent policy requirements have helped advance US foreign policy in 

human rights, workers' rights, and environmental goals and prevented development financing by 

another country, like China, that might have had more adverse outcomes in some of these areas? 

How would a new Development Finance Institution continue to advance US. policy on human 

rights, labor rights, and environmental protection in the projects it would finance? Would 

anything change in this evaluation for projects? 

OPIC-supported projects must meet international best practices for environmental and social 

sustainability, treatment of workers, and respect for human rights. OPIC reviews each project to 

identify potential adverse impacts and if necessary, develop strategies to mitigate those impacts. 

OPIC's Environmental and Social Policy Statement (ESPS) provides guidance to investors and 

ensures that OPIC projects are environmentally and socially sustainable. The policy statement 

reflects OPIC' s continued focus on the environmental and social performance of its portfolio and 

builds on the agency's commitment to transparency and accountability. We as an agency view 

the environmental and social policies and performance of our portfolio as integral to the 

development impact that we strive to achieve with our work. 

OPIC completed a two year process of consultation and review last year. OPIC initiated that 

process of revising the ESPS in 2015. Over an eight month period, OPIC conducted a series of 

stal<eholder meetings with OPIC stail the business community, civil society and interested 

Federal Agencies. After consideration of comments and suggestions received through 

stal<eholder meetings and written submissions, OPIC issued a draft revised ESPS on September 

23,2016 for public comment. The statement was approved in January 2017. 

OPTC uses an environmental and social assessment process to evaluate the potential 

environmental and social impacts of an applicant's project and to identify means to improve the 

project by preventing, minimizing, remediating or compensating for potential adverse impacts as 

a condition of OPIC support. The process includes the following: 

• Identification of potential adverse environmental and social impacts 

Disclosure of the project's environmental and social impact assessment (ESIAs) for 

public review and comment for certain projects 

• Comparison of the project's performance in relation to internationally-accepted standards 

and alternative approaches 

• Evaluation or design of mitigation measures 

Evaluation or design of associated management and monitoring measures 

Investments utilizing these types of stringent policies represent the most sustainable and 

responsible approach to development and offer a stark contrast to the opaque, exploitive, and 

low-quality deals offered by authoritarian states. However, China's Belt and Road Initiative 
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(BRI) continues to change the political and economic landscape across the Indo-Pacitic - and 

beyond. 

The amount of investment planned for this initiative is staggering. Estimates suggest investment 

of up to $8 trillion aimed to interconnect about 65 percent of the world's population, about onethird of the world's GOP, and about a quarter of all the goods and services. The projects are 

operationally uncoordinated, and China remains one of the least transparent nations in the world. 

In 2017, the State Department said, "the financing mechanisms it [China] brings to many of 

these countries which result in saddling them with enormous levels of debt They don't often 

create the jobs, which infrastructure projects should be tremendous job creators in these 

economies, but too often, foreign workers are brought in to execute these infrastructure projects. 

Financing is structured in a way that makes it very ditlicult for them to obtain future financing, 

and oftentimes has very subtle triggers in the financing that results in financing default and the 

conversion of debt to equity.'' 

For years, the international community has expressed concerns about China's commitment to 

environmental and social safeguards. China is funding infrastructure projects that carry 

significant environmental risks and involve the involuntary resettlement of large numbers of 

people. Tts position is that it follows the laws and regulations of the host country. 

It would be speculative to state OPlC projects would have had more adverse outcomes had they 

been sponsored by a country like China. But a cursory comparison of OPIC's stringent 

environmental and social policy standards reveal a significant disparity in China's policies versus 

the US. government's commitment to instituting best practices respecting human rights and the 

rights of workers as well as protecting the environment 

The new Development Finance Institution will continue to uphold the highest environmental, 

social and worker rights standards.