Legislation Extending and Revising the Authority of the Overseas Private Investment Corporation

Only limited success has been made by the Overseas Private Investment Corporation (OPIC) to increase private participation in its insurance programs. The private participation mandate established by the 1974 legislation probably cannot be attained. The 1974 legislation provides for OPIC's political risk insurance programs, which include expropriation, inconvertibility, and war risk, to be fully transferred to the private sector by December 31, 1980, with OPIC remaining solely as a reinsurer. The mandate established by the Overseas Private Investment Corporation Amendments Act of 1974 has placed OPIC in an unfavorable negotiating position, resulting in reduced premium income through redistribution to the private sector of substantial payments in reinsurance fees, with OPIC still remaining liable, as a reinsurer, for the bulk of its portfolio. The future of OPIC's political risk insurance program involves consideration of four alternatives: (1) continue to try for complete privatization, but provide deadlines more realistic than 1980; (2) modify the private participation provisions by recognizing the unlikelihood of ever being able to achieve 100% privatization; (3) abandon private participation; and (4) dissolve OPIC. Each of these actions would require either the repeal or amendment of the existing legislation. The dissolution of OPIC would also require that the existing contracts be assigned to another agency for liquidation.