OPIC Expands - Now Insures Against "Civil Strife"

On October 16, 1981, Ronald Reagan signed into law a bill extending the operating authority of the U.S. Overseas Private Investment Corporation (OPIC) for four more years and broadening the insurance coverage it may offer U.S. companies operating abroad (see MM, August, 1981).

Under the new law, OPIC is permitted to insure more freely in "middle income" countriessuch as Argentina, Brazil, south Korea, Taiwan, Portugal, Yugoslavia and Turkey-whose per capita gross national product is $2,200 or less annually in 1975 dollar terms. Previous laws had limited OPIC's activity in those countries to exceptional development projects or minerals and energy ventures.

The bill also authorizes OPIC for the first time to offer U.S. investors protection in developing countries from losses resulting from "civil strife," which is defined as violent action by political organizations trying to influence the policies of the host country's government. This includes insurance against plant damage, contractual defaults and "interference with operations" stemming from politically inspired riots, civil disturbances or terrorism, but excludes riots by students against their universities or labor unions against employers.

Previously, OPIC's risk coverage was limited to war, revolution, insurrection, expropriation and currency non-convertibility.

- Jeri Lynn Hessman