Why are US Tax Dollars Propping up Anti-Israel Airlines?

Stephen DeMaura
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Posted: Mar 26, 2014 12:01 AM
Why are US Tax Dollars Propping up Anti-Israel Airlines?

American companies have yet to fully recover from the Great Recession, labor markets remain volatile, and the national debt continues to grow now more than $17 trillion. And yet recent reports indicate that one federal government agency is continuing to hand out taxpayer-backed money to foreign and state-sponsored companies--many of which are already flush with resources--all the while leaving American-based employers twisting in the wind.

The worst transgressor is a federal agency known as the Export-Import Bank of the United States (Ex-Im Bank), which provides loans to foreign companies purchasing American goods. In theory, the Bank was designed to create jobs by increasing American exports. This is achieved by providing sub-market loan rates and favorable terms to foreign buyers, so that it is more affordable for them to purchase American-made goods. Supposedly, this creates U.S.-based jobs as the demand for domestic goods increases when prices are reduced.

However, the economic reality of the Bank’s practices is not consistent with how it operates. When Ex-Im provides a foreign company with a sub-market loan or guarantees that same loan, it also gives foreign companies a leg-up on their domestic competition. Since the Bank precludes U.S.-based companies from receiving these tender financing options, American employers are put at a distinct disadvantage, and ultimately workers suffer. As a result, Ex-Im’s loans have the unintended consequence of substantially retarding growth and sometimes even negatively affecting employment in our nation.

The Bank’s financing has been primarily allocated toward a single entity with approximately 80 percent of its total loan guarantees favoring the foreign purchase of Boeing aircraft. This is obviously great for Boeing, but in recent years the Bank’s decision to heavily bankroll foreign-based airlines has grown increasingly concerning. This is evidenced by a Wall Street Journal editorial which stated that, “[t]his subsidy means that foreign airlines can then buy newer aircraft more cheaply than their U.S. competitors. This gives them an advantage in the global air transportation market. In a letter to Congress last month, Delta estimated that Ex-Im cost the U.S. airline industry up to 7,500 jobs and $684 million a year.”

These failures have not gone unnoticed by those with purview over the Ex-Im Bank. In 2012, the Bank received intense scrutiny and even a Congressional mandate to change how it operates, but since then, it has largely ignored the will of the legislature. The out-of-control federal bureaucrats are wreaking havoc on the airline industry. Most notably, stories have surfaced about two airlines, Emirates Airline and Etihad Airways, which benefit from Ex-Im’s financing, but have no business whatsoever in receiving aid from the American government.

According to a recent Bloomberg News article, Emirates Airline recently stated that, “[it] is well positioned to finance all its upcoming aircraft deliveries. We look at all financing options and it has never been a problem for us to get support from banks or financial institutions.” Despite being well-financed, the Ex-Im Bank in its infinite wisdom has unnecessarily provided Emirates with roughly one billion dollars in financial support over the past three years, according to Ex-Im’s own annual reports. These superior deals, which are unnecessary in the first place, are used to undercut the competition, which happens to be the American airline industry.

There is also an argument to be made that Ex-Im’s loans are ethically and morally inappropriate. Just recently, it was reported that Etihad Airways, a benefactor of Ex-Im’s largesse, fails to recognize Israel in its operations and openly discriminates against Jewish passengers. The New York Post reported that the carrier “has an official travel-route map that shows all surrounding countries, including Jordan, Iraq, Egypt, Syria, Lebanon and Cyprus – but not the Jewish state or its major cities.”

And perhaps even worse is the fact that, “Etihad also has refused to transport any Israelis, who aren’t allowed in the UAE. In 2010, it even began teaching its flight agents how to identify Israeli travelers by their ‘accents and traits,’ the BBC has reported.” It is incomprehensible that the American government would sanction such behavior, let alone reward it with financial guarantees.

Given the Bank’s past history and its inability to change its ways, Ex-Im must face serious consequences and stricter oversight from regulators. If it cannot abide by a basic tenet of do no harm and then it should be dissolved. American taxpayers should not be required to funnel taxpayer-backed money to an institution which refuses to abide its agreements, threatens American jobs and supports entities that with offensive business practices.