Expropriation Has a Silver Lining

by Peter Nehemkis

Fall 1974

Volume 17
Issue 1

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In the past four years, thirty four countries in Latin America, Africa and Asia have taken over or squeezed out American overseas operations valued in excess of 1.2 billion dollars. To protect their investments against further seizures by Third World nationalist regimes U.S. companies last year bought 2.3 billion dollars of expropriation insurance from the Overseas Private Investment Corp. (OPIC). With skillful political management, however, a menaced U.S. investor can often turn a potential hazard to his own advantage. It goes against the grain of most businessmen to opt for passive tactics. Dynamics of nationalism may work in favor of a threatened foreign investor who sits tight and does nothing. A rival faction may overturn the regime that had announced it would take, or has taken, expropriatory action. The OPIC could play a vital role in assisting U.S. investors to experiment with new kinds of business relationships. This could take the form of flexible premium rates for investment or insurance guarantees.

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