The U.S. is withdrawing its objection to a government agency issuing loan guarantees to Russia's Tyumen oil company, also known as TNK. In December, Secretary of State Madeleine Albright refused to allow the U.S. Export-Import Bank to guarantee up to $500 million worth of loans to TNK. On Friday, State Department spokesman James Foley said Albright is now satisfied that TNK is addressing the needs of its investors and creditors. RFE/RL economics correspondent Andrew F. Tully, reports.
Washington, 3 April 2000 (RFE/RL) -- The U.S. says it is withdrawing its objection to American loan guarantees for a Russian oil company because it is satisfied that the company is finally respecting the "rule of law."
On December 21, Secretary of State Madeleine Albright refused to allow the U.S. Export-Import Bank, also known as the Ex-Im Bank, to guarantee the loans of 480 million dollars to the Tyumen oil company. At the time, she pointed out that Western oil companies were complaining that they had been cheated by Tyumen when the Russian company bought a rich Siberian oil field at a highly discounted price during a bankruptcy proceeding.
The oil field had once belonged to the Western companies. One of the most prominent of them was the British-U.S. concern, BP Amoco.
The day after Albright delayed the Ex-Im Bank loan guarantees, BP Amoco withdrew its objections to the transaction. But the State Department said the administration of President Bill Clinton was not satisfied that Tyumen was properly addressing the needs of its creditors -- namely, the Western oil companies.
But on Friday, State Department spokesman James Foley said Albright believes Tyumen is finally addressing these concerns.
"Since that time, the administration has been involved in an extensive review of the concerns and allegations that were raised in the case. We've been able to clarify a number of concerns to our satisfaction."
Foley said he also believes that Albright's decision to withhold permission for the loan guarantees helped convince the government of President-elect Vladimir Putin to persuade Russian businesses to conduct their affairs legally and ethically.
"We believe that it (Albright's delaying the guarantees) had a tonic effect on this particular situation. Moreover, in recent appearances, President-elect Putin has made clear, public statements recognizing the importance of protecting investor and creditor rights and the role they play in creating a welcoming climate for foreign and domestic investment. This does not mean that all of our concerns about the protection of investor and creditor rights, and indeed the rule of law in Russia, have been addressed."
The Ex-Im Bank was ready to guarantee the loans, which would have allowed Tyumen to buy equipment and services from two American companies to develop the Chernogorneft oil field. The Ex-Im Bank said it was confident that Tyumen would be able to pay back the loans.
The Ex-Im Bank was created 65 years ago to provide funding and other financial assistance to promote U.S. exports. The bank guarantees the repayment of loans and sometimes makes direct loans to foreign buyers of American goods and services.
Therefore, the direct beneficiary of any loan guarantees involving Tyumen was not the Russian company but the Halliburton Company and ABB Lummus Global, American concerns that would sell equipment and services to Tyumen.
But Tyumen and other Russian companies that need U.S. investors ultimately would be hurt if the delay of the loan guarantees were to create an atmosphere discouraging to further investment by American entrepreneurs.