Political Correction

Despite Republican Claims, President Obama Has Not Loaned Money To Brazil For Oil Production

April 28, 2011 9:46 am ET

Two years ago, the Wall Street Journal ran an op-ed complaining about President Obama's decision to "finance oil exploration off Brazil." Although the article noted that it was only a "preliminary commitment," conservatives expressed outrage over Obama's supposed decision to finance drilling in Brazil and not at home instead. The issue resurfaced when gas prices spiked in March, prompting a round of attacks against the president. In reality, however, President Obama has not financed drilling in Brazil. The loan given was issued to Brazil by The Export Import Bank, an independent, non-taxpayer funded organization, and requires that the money be used to purchase American products, stimulating America's economy and creating American jobs.

Republicans Attack Obama For Loaning $2 Billion To Brazil For Oil Exploration

Sen. David Vitter (R-LA):

We have abundant energy resources off Louisiana's coast, but this administration has virtually shut down our offshore industry and instead is using Americans' tax dollars to support drilling off the coast of Brazil. ...  It's ridiculous to ignore our own resources and continue going hat-in-hand to countries like Saudi Arabia and Brazil to beg them to produce more oil. We need to get serious about developing our resources here at home and working towards lower gas prices and long-term energy independence. [Vitter.Senate.gov, 3/21/11, emphasis added]

Sen. John Cornyn (R-TX):

The EPA's overreach is emblematic of the Administration's larger energy policy that champions new offshore drilling in Brazil and new energy taxes at home, but obstructs production of red, white, and blue energy that creates jobs in Texas and across the nation. It's disappointing my Democrat colleagues put partisan politics ahead of American jobs and lower energy prices. [Targeted News Service, 4/6/11, via Nexis, emphasis added]

Speaker John Boehner (R-OH):

Obama wants to develop Brazilian offshore oil to help the Brazilian economy create jobs for Brazilian workers while Americans are left unemployed in the face of skyrocketing energy prices by an administration that despises fossil fuels as a threat to the environment and wants to increase our dependency on foreign oil. [JohnBoehner.House.gov, 3/22/11, emphasis added]

Rep. Ted Poe (R-TX):

The President's answer to the energy crisis and four dollar gasoline is to give money to Brazil, while at the same time stonewalling drilling in our gulf. Why are we doing that? Instead of propping up energy companies in Brazil and letting them drill off their coast, let's keep jobs and money in America and drill off of our coast and on our land. Let's develop our own domestic energy instead of developing Brazil's. Are you in for that Mr. President? And that's just the way it is. [GOP.gov, 4/6/11, emphasis added]

Rep. Michele Bachmann (R-MN):

Never forget the president went to Brazil and told the Brazilians, drill more offshore oil because we want America to be their best customer. He gave them $2 billion of loans. [Fox News, 4/27/11, via Nexis, emphasis added]

Obama Never Financed Drilling In Brazil In 2009 Or In 2011

Controversy Over $2 Billion Loan "Continues Despite The Fact That Not A Single Cent Has Exchanged Hands In The Agreement." According to Kenneth Rapoza of Forbes: "On August 18, 2009, opinion writers for the Wall Street Journal incited a mini-riot against Brazilian oil major Petrobras. Two years later, the controversy over a $2 billion loan offer from the Export Import Bank of the United States continues despite the fact that not a single cent has exchanged hands in the agreement." [Forbes.com, 3/21/11]

The Loan Came From The Export Import Bank "Before Any Obama Appointees Joined The Bank." According to the Import Export Bank of the United States:

There is no connection between federal policies on offshore drilling in U.S. waters and financing U.S. export sales for drilling by other countries.  In fact, should Ex-Im Bank refuse to finance sales by U.S. companies it is likely that the sales will go instead to their foreign competitors. 

It is notable that the Bank's bipartisan Board unanimously approved the preliminary commitment to Petrobras on April 14, 2009, before any Obama appointees joined the Bank. In fact, at the time the Bank's Board consisted of three Republicans and two Democrats, all of whom were appointed by President George W. Bush. [EXIM.gov, 4/25/11]

The e-mail is false on two counts.

If The Loan Is Carried Out, It Will Benefit The American Economy

The Export Import Bank "Is A Self-Funding, Independent Agency Which Operates At No Cost To The Taxpayer." According to the Export Import Bank of the United States: "Ex-Im is a self-funding, independent agency which operates at no cost to the taxpayer.  Ex-Im does not make grants, and charges fees and interest for the financing it provides.  In fact, since 2006 the Ex-Im Bank has generated more than $3.4 billion in revenue for U.S. taxpayers." [EXIM.gov, 4/25/11]

Under Bank Rules, If Petrobras Decided To Take The Loan, They "Would Have To Use That Money To Purchase Goods And Services Of U.S. Companies." According to Kenneth Rapoza of Forbes:

On February 4, 2010, the Bank authorized a mid-term credit guarantee of $308 million. What is it? It is part of the $2 billion still on the table. The $308 million would be made available through JP Morgan Chase if Petrobras wanted it. Ex-Imp would guarantee the loan from default. Again, no documents have been signed on the loan so the facility is inoperative at this time.

Under the rules of the Bank, Petrobras would have to use that money to purchase goods and services of US companies. In effect, the money goes into the US economy. The foreigners have to pay the bill. [Forbes.com, 3/21/11, emphasis added]

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