James A. Harmon recalls that when he moved here in 1997 to head the Export-Import Bank, he asked a friend how to succeed in Washington. "You'll know you've been successful if, when you leave, nobody knows who you are," the friend advised. In other words: Keep your head down, stay out of the newspapers, don't make powerful enemies. Unlike New York, where Harmon had headed the investment bank Schroder Wertheim, Washington is a play-it-safe town.
Now Harmon is about to become more famous than he'd like. His board of directors is scheduled to meet Tuesday to decide whether to provide a $500 million loan guarantee to a Russian oil company called Tyumen Oil. Normally, approval of such a loan--to finance Tyumen's purchase of oil field and refinery equipment from two U.S. companies, Halliburton and ABB--would be fairly routine. But in this case, some powerful Washington forces are urging Harmon to drop the loan, or at least delay it for several months.
The pressure campaign includes senior officials of the Clinton administration, prominent members of Congress, the editorial board of The Washington Post, lobbyists from the law firm Patton Boggs. Indeed, there's unusual agreement among the Washington establishment that Harmon should take a pass on this one. Opponents of the loan say now isn't the right time--with Russian troops assaulting Chechnya--for the United States to be lending money to the kleptocrats who run the Russian oil industry, no matter what the Ex-Im Bank's charter says.
But the strange thing is: Rather than accede to the pressure, Harmon is holding his ground. He thinks it would be wrong--not politically or tactically wrong, which is what people in Washington often mean when they use the word, but morally wrong--to violate the Ex-Im Bank's normal rules, simply because this is a politically sensitive case.
"I don't know how I can do anything here but the right thing," Harmon said last Thursday, between taking calls from people urging him to pull the plug on the loan. The easiest thing, he knows, would be simply to delay the loan for several months, which is what the White House has reportedly urged him to do. That might win Harmon praise as a savvy pragmatist, but it bothers him. "I don't feel I could live with myself if I don't deal with this directly," he explained.
The Ex-Im Bank usually evaluates loans according to two criteria: Will they help produce jobs for U.S. workers, and are the borrowers creditworthy? The Tyumen transaction meets both tests, Harmon says: It will create at least 6,000 American jobs, and the risk of default is low because the loan will be repaid with oil revenues. Moreover, says Harmon, there's nothing in the Ex-Im Bank's charter that allows it to make judgments on broader foreign-policy grounds. If the administration thinks there's a national-security argument against the loan, then it can request cancellation under a special procedure.
Harmon also doesn't like getting muscled. He knows the pressure campaign has been mobilized partly by a big Western oil company, BP Amoco, which is battling Tyumen for control of some Russian oil reserves. It's a confusing chain of events, but to briefly summarize: BP in 1997 bought a 10 percent stake in a Russian oil company called Sidanco, which went bankrupt this year. BP hoped to acquire Sidanco's richest oil field, called Chernogorneft, but it was outfoxed by Tyumen, which grabbed the property last month at a Russian bankruptcy auction.
BP is furious--suspecting that its Russian adversaries have used improper tactics--and it wants to pressure Tyumen into negotiating a fairer deal. As leverage, BP hopes to block the Ex-Im loan. So BP and other Sidanco investors have been working with the Patton Boggs lobbyists to squeeze Harmon.
An early warning of Harmon's troubles came in September when an amendment was added to a Senate appropriations bill that would require congressional approval for any Ex-Im loan in excess of $10 million. That language was later removed, but Harmon was warned that if he persisted with his support for the Tyumen loan, he would spend the rest of his time in Washington testifying before congressional committees.
The Clinton administration has its own reasons for wanting the Tyumen loan to go away. Clinton and Gore have both been burned by criticism that they didn't do enough to stop Russia's oligarchs from looting the assets of that country. Tyumen arguably is part of that ugly story, and the administration doesn't want to compound past mistakes. So it wants Harmon to shelve the loan. Wait several months. Take a powder.
The administration is right, in my view, that now isn't the time for the U.S. government to be helping a Russian oil company. But it is wrong in asking Harmon to be the fall guy. His job is to make loan guarantees, not foreign policy. If the administration wants to stop the loan, it should follow the rules and cancel it on national-security grounds.
There's something about this little drama that reminds me of the scene in "On the Waterfront," when Marlon Brando recalls the admonition of his tough-guy brother, played by Rod Steiger, to take a dive in a prize fight. "It's not your night," Steiger told Brando, meaning: Do the easy thing. Sit this one out.
The rarest thing in Washington is a genuine stand on principle. And I can't help admiring Harmon, who's trying to do what's right--even when he's got an unpopular cause, even when it may hurt his reputation, even when all the smart people in town are telling him to sit this one out.