U.S. Department of State
Press Statement by James B. Foley, Deputy Spokesman
Russia: Revocation of Chafee Determination
On March 31, the Secretary of State revoked her December 21 decision to invoke the Chafee Amendment to the Export-Import Bank Act of 1945 that delayed approval by the Export-Import Bank of the United States of two loan guarantees for the Russian company, Tyumen Oil (TNK). Her action today allows the Export-Import Bank to move forward on these loan guarantees whenever its board decides to do so. The loan guarantees would allow TNK to purchase $498 million in U.S. oil refinery and exploration equipment.
The Secretary's decision to delay the transactions was based on concerns about respect for shareholder and creditor rights in bankruptcy proceedings in which TNK was involved. We concluded then that the manner in which the Administration dealt with those concerns should reflect the policy priority we attach to the rule of law in Russia, and for that reason, more time was needed to review the issues and consult with Ex-Im Bank and other government agencies before the transactions went forward.
Since that time, the Administration has been engaged in an extensive review of the concerns and allegations that were raised in this case. Additional information and interagency consultations have clarified a number of specific concerns to our satisfaction.
The privatization of TNK was successfully completed, and the company has entered into serious negotiations with shareholders and creditors of the bankrupt companies to resolve their differences.
We have also opened a dialogue with the Russian government to impress upon them the need to address weaknesses in Russia's legal framework that led to the abuses in this case.
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.
Following extensive consultations and after full consideration of the circumstances and these developments, the Secretary decided that the available evidence did not justify making the Chafee hold permanent. On March 31, the Secretary revoked her Chafee determination to permit the Ex-Im transactions to proceed.
The U.S. remains concerned about respect for the rule of law generally in Russia, which is fundamental to Russia's successful transition to a market economy. President-elect Putin and his government have indicated that they share our concerns, and are determined to improve the climate for foreign and domestic investment in Russia.
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