Agency finds political risk at home, too. Should US companies get special insurance for overseas operations?

Two years ago, Fischbach and Moore International wanted to build a waste water removal and treatment plant in Egypt. But the Dallas company was concerned about the safety of its investment. The region's physical and political climate were potentially threatening to the success of the project. With $5.1 million in insurance backing from the United States Overseas Private Investment Corporation (OPIC), however, and the US government's go-ahead, Fischbach and its joint partner in the project, Oman Construction Company, went ahead and built. Egypt will have its treatment plant this spring.

Today, Congress begins hearings on extending OPIC's authority to insure American business investment in developing countries.

Although OPIC is a US government agency - formed in 1971 under the 1969 Foreign Assistance Act - it is self-sustaining and receives no appropriations. Every four years, Congress must reauthorize its activity. And every four years, its purpose and benefit are debated.

OPIC is one of only a few corporations willing to insure US investors against political and economic risk in relatively obscure developing countries. In addition to insurance backing, it grants high-risk loans and loan guarantees.

``One-third of all US exports go to subsidiaries or affiliates of US companies overseas,'' says Robert Jordan, an OPIC spokesman. ``We have to be in these countries if we want to be competitive.''

Yet opponents of OPIC see it as a threat to United States domestic investment and a competitive disadvantage to US manufacturers.

``The government should be encouraging domestic investment, not helping companies move overseas,'' says Mark Anderson, an economist at the AFL-CIO, which has consistently opposed the reauthorization of OPIC, and will testify against the company at this week's hearings.

In reviewing OPIC's reauthorization proposal this week, the House Subcommittee on International Economic Policy and Trade will decide whether to grant reauthorization until Sept. 30, 1992, as well as allow OPIC to begin a pilot program to provide equity financing in Africa and the Caribbean Basin. OPIC says countries in the Organization for Economic Cooperation and Development have established their own ``OPIC'' equivalents, which in many cases heavily subsidize investors in order to help them succeed.

OPIC has the ``complete backing'' of the administration, says Lars Bang-Jensen, an aide to the subcommittee. More support comes from a recent study of the effect on US employment by OPIC-assisted projects. That study, mandated by Congress as part of its 1985 reauthorization requirement, and commissioned by OPIC, comes out strongly in favor of OPIC.

The study, by Arthur Young & Co.'s International Management Consulting Group, found that a sample of OPIC's 165 projects around the world ``have a significant positive estimated impact on US production and employment.''

Last year, OPIC assisted a total of $2.3 billion worth of investment, ranging from a shrimp farm in Ecuador to a soft-drink manufacturer in Swaziland.

A General Accounting Office report, released in the spring of 1987, disagrees with the methodology of these findings, calling them ``overly optimistic.''

It also reported:

OPIC approved projects it should have expected would have negative effects on US trade and potentially negative effects on US jobs.

It continued to assist some projects despite negative effects on trade and development. (The organization is legislatively required not to assist any project likely to have a significant negative effect on the US economy.)

It did not adequately report job-loss data.

The AFL-CIO says that at the least, it will ask Congress to ``prohibit OPIC's participation in manufacturing projects that might export back to the US, and hurt the trade situation.''

The AFL-CIO has further protested OPIC's encouragement of investment in countries with poor labor conditions. As a result, at the last reauthorization session, in 1985, a law was passed forbidding the company to enter countries that do not adhere to internationally recognized rights.

Romania, Chile, and Ethiopia have come off the list since then. Others remain questionable, like South Korea.

OPIC says its efforts bring business into countries that because of their past have difficulty attracting foreign investment.

Without the ``peace of mind'' that OPIC's backing gives US investors, a State Department spokeswoman says, ``there would be a falloff of investment in a lot of smaller countries about which US businessmen know very little.''

Indeed, OPIC's insurance against political violence is highest, for example, in countries like Egypt, the Philippines, and Pakistan.

Fischbach's treasurer, Roger Gambol, remarks, ``If they nationalize and take our equipment, then we can go to OPIC to recover it.''

``Companies have to believe if they go there, they'll make some money of it,'' says the State Department spokeswoman.