New OPIC pres­i­dent wants to ex­pand in­vestor sup­port

Kyiv Post - - Business - BY JOSH KOVENSKY KOVENSKY@KYIVPOST.COM

An ob­scure U.S. gov­ern­ment agency will in­vest $17.8 mil­lion in two Ukrainian banks, the group’s chief an­nounced dur­ing a visit to Kyiv this week.

Ray Wash­burne, a Dal­las-born Repub­li­can fundraiser who was con­firmed to lead the agency on Aug. 4, vis­ited Kyiv on Aug. 30 to an­nounce the deals and meet with lo­cal of­fi­cials and busi­ness­peo­ple.

Wash­burne is the new chief of the Over­seas Pri­vate In­vest­ment Cor­po­ra­tion, a self-sus­tain­ing U.S. gov­ern­ment or­ga­ni­za­tion that fi­nances projects around the world in a bid to prime the pump for Amer­i­can pri­vate sec­tor in­vest­ment and fur­ther Wash­ing­ton’s for­eign pol­icy goals.

“The pipe­line looks good as long as re­form con­tin­ues,” he told the Kyiv Post in an Aug. 30 in­ter­view, not­ing that OPIC has al­ready in­vested $522 mil­lion in Ukraine. “Where it goes amount-wise, I don’t know, but I’ll say that we’re ac­tively look­ing at many deals.”

The or­ga­ni­za­tion has $21 bil­lion in the bank to loan around the world, and is au­tho­rized to go up to $29 bil­lion.

“This is not an aid pro­gram,” Wash­burne said. “Th­ese are le­git­i­mate busi­nesses and we get paid back.”

Art of the deal

Wash­burne was orig­i­nally sched­uled to travel to Ukraine with U. S. En­ergy Sec­re­tary Rick Perry, who post­poned his trip to Novem­ber at the last minute due to the flood­ing in Texas.

His visit to Ukraine was part of his first trip abroad as OPIC pres­i­dent, com­ing af­ter a one-day so­journ to Kaza­khstan.

“I met with the prime min­is­ter (Volodymyr Gro­is­man) and sev- eral cabi­net mem­bers,” he said. Other meet­ings in­cluded a ses­sion with Naftogaz chief An­driy Kobolev, Health Min­is­ter Ulana Suprun, Fi­nance Min­is­ter Olek­sandr Dani­lyuk, the U.S.-Ukraine Busi­ness Coun­cil and the Amer­i­can Cham­ber of Com­merce.

The OPIC chief did not come empty-handed.

Dur­ing the trip, he signed deals with two Ukrainian banks pro­vid­ing a to­tal of $17.8 mil­lion in sup­port.

The first deal — with Agro­pros­peris Bank — en­vi­sions a $10 mil­lion pro­gram to pro­vide credit to small and medium-sized farm­ers in Ukraine.

The sec­ond deal is with Bank Vos­tok, a sub­sidiary of Volodymyr Kostel­man’s Fozzy Group. That agree­ment is also fo­cused on smaller busi­nesses, giv­ing the lender $7.8 mil­lion to ex­pand its credit port­fo­lio to ru­ral busi­nesses.

“I came to Ukraine to show that we’re com­mit­ted to the coun­try,” Wash­burne said. “We’ve got a full pipe­line of deals that we’re look­ing at in every­thing from health to oil to gas to small busi­ness lend­ing.”

Other pro­pos­als came up at the U.S.-Ukraine Busi­ness Coun­cil meet­ing. One po­ten­tial in­vest­ment would see a 100-bed hos­pi­tal get built in Ukraine, in part for Ukrainian sur­ro­gate moth­ers. Wash­burne’s del­e­ga­tion de­clined to com­ment on that pro­posal.

The pos­si­bil­i­ties for po­lit­i­cal risk in­sur­ance — whereby OPIC un­der­writes the risks that U.S. in­vestors take in sit­u­a­tions that the pri­vate sec­tor will not in­sure — also re­main large. Citibank, for ex­am­ple, got $50 mil­lion in in­sur­ance in 2014 for loans to As­tarta and Ker­nel.

The long-dis­cussed Yuzivska shale gas field in Donetsk Oblast con­tin­ues to lie dor­mant af­ter An­glo-Dutch Shell pulled out fol­low­ing the Rus­sian-backed sep­a­ratist cap­ture of Slo­viansk in 2014, lo­cated at the cen­ter of the gas field.

But should an Amer­i­can firm be in­ter­ested in de­vel­op­ing the de­posit, which lies kilo­me­ters from the front line in some cases, OPIC would be there.

“If it’s a U.S. com­pany, we would con­sider sup­port­ing them,” said John Did­iuk, the or­ga­ni­za­tion’s in­ter­na­tional pro­ject fi­nance di­rec­tor.

Wind­ing down?

Wash­burne added that busi­ness lead­ers had come to him with a list of com­plaints fa­mil­iar to fol­low­ers of the coun­try’s eco­nomic scene.

“The needs are longer-term debt, longer than five years,” he said. “A lot of banks here don’t want to go longer-term.”

In terms of longer term projects, Wash­burne said that the coun­try “had been a good place to in­vest,” but that he did not talk to mem­bers of the U.S. busi­ness com­mu­nity in­ter­ested in in­vest­ing in Ukraine be­fore de­part­ing.

“I think the con­fi­dence level with Trump’s elec­tion has gone way up so that we’re gonna be very ac­tive,” he said.

But Wash­burne finds him­self in an odd po­si­tion as the agency’s pres­i­dent.

U. S. Pres­i­dent Don­ald J. Trump’s 2018 bud­get pro­posal asked the U. S. Congress to end OPIC, re­quest­ing $61 mil­lion in “wind-down costs.” The bud­get re­quests re­ferred to the group’s ac­tiv­ity as “un­nec­es­sary in­ter­ven­tions that dis­tort the free mar­ket.”

Af­ter his con­fir­ma­tion hear­ing, the far-right Her­itage Foun­da­tion think tank pub­lished an ar­ti­cle ask­ing “why, ex­actly, would a nom­i­nee fail to sup­port the pol­icy ob­jec­tive of the pres­i­dent who ap­pointed him?”

But Wash­burne down­played the is­sue, say­ing he wasn’t “a wind-down artist.”

“When the orig­i­nal bud­get came out, a lot of things were be­ing cut — mul­ti­ple agen­cies,” he said. “I’m a builder, not a wind-down guy.”

Over­seas Pri­vate In­vest­ment Cor­po­ra­tion Pres­i­dent Ray Wash­burne at­tends a meet­ing in Kyiv on Aug. 30. His or­ga­ni­za­tion op­er­ates is the epit­ome of pub­lic-pri­vate part­ner­ships, in­sur­ing U.S. in­vestors in Ukraine from po­lit­i­cal risk while in­vest­ing in busi­nesses that re­dound to Amer­ica’s ben­e­fit. (Oleg Pe­tra­siuk)

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