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What's Wrong with the Neoconservative Case for the Ex-Im Bank

July 2, 2014 in Economics

By Justin Logan

Justin Logan

As befits a guy who tries to sell prudence and restraint to the American foreign policy elite, I appreciate people who are willing to make unpopular arguments. So it’s with some irony that I approach AEI scholar Tom Donnelly’s case for expanding the Ex-Im Bank.

Donnelly is swimming upstream politically on the Right, siding with President Obama against the Tea Party, but he tries to reframe the debate not as being about the worst sort of crony capitalism, but rather about American foreign policy. Ruing the “green eyeshade” view of the Bank, Donnelly replies to the charge of crony capitalism by shrugging, “so what?” referring obliquely to its “strategic value.” For him, the Ex-Im Bank is all that’s standing between the world we live in today, and a world in which the United Arab Emirates has to purchase Boeing airplanes at market rates.

The Ex-Im debate is a smaller analog for the grand strategy debate the country needs.”

To which the casual reader might respond, “huh?” For Donnelly, there are three sorts of states: “allies, adversaries, and clients.” Client states like the UAE need to be bribed, in this case, with cheap loans from Ex-Im, in order to get them to help the United States pursue its foreign policy goals. So let’s look at what the options for the UAE would be if we stopped using U.S. taxpayer dollars to subsidize their aircraft purchases. First, they would get the private financing they needed to buy aircraft, which Donnelly concedes they “certainly” can afford. Then…well, it’s not clear what happens differently.

Donnelly vaguely refers to the capture of an al Qaeda cell in Abu Dhabi and Dubai’s status as a “critical ‘node,’” by which he presumably means its use for American spying on Iran, but it’s not clear why any of that would change if we do away with Ex-Im and the welfare it lavishes on the wealthy, Sharia-law practicing autocrats of the UAE.

Donnelly’s way of thinking is pandemic across the American foreign policy community. From Poland to Japan to the UAE, our foreign policy elites warn that our allies, partners, friends, and clients have options and may go elsewhere if we don’t bribe them to stay attached to us. And when they do, bad things will happen to us.

But this gets the equation exactly backwards. Every American ally needs us far more than we need them. Failing …read more

Source: OP-EDS

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