Congress ponders new Dubai security sale
WASHINGTON, March 27 (UPI) -- Lawmakers return from a week-long recess Monday with the issue of foreign -- and especially Gulf-Arab -- ownership of U.S. critical infrastructure front and center.
Several competing bills in both chambers of the U.S. Congress aim to reform the process by which the federal government assesses the national security implications of foreign takeovers of U.S. companies or assets.
And in the wake of the derailment of the Dubai ports takeover, lawmakers' concerns are also threatening another acquisition by the tiny oil-rich emirate.
Dubai International Capital, an investment company owned by the emirate's ruling al-Maktoum family, inked a deal last year to acquire a privately held British aerospace company called Doncasters Group, Ltd.
The company owns nine plants in the United States, and makes parts for U.S. tanks and military planes, including for the Joint Strike Fighter -- currently at the center of a transatlantic row about contracts and technology sharing.
After senators questioned officials about the Doncasters deal earlier this month, the secretive inter-agency panel known as the Committee on Foreign Investment in the United States, or CFIUS, which is responsible for assessing such takeovers, announced that it was launching a special 45-day national security review of the purchase.
The attention led Dubai International Capital to announce last week it was postponing the $1.2 billion takeover for two months while the CFIUS review went ahead.
During the furor over the Dubai Ports World acquisition, administration officials attempted unsuccessfully to head off angry lawmakers' efforts to stymie that deal by agreeing to exactly the same kind of review in that case.
Many lawmakers continue to believe the assessment process is inadequate.
"This CFIUS process is a flawed process that's being conducted behind closed doors," said Rep. John Barrow, D-Ga., whose district includes one of the Doncasters plants. He charged there was not "adequate oversight in place to determine if these types of deals pose a national security concern."
Under current law, because of concerns about the huge financial implications of information about blocked or potentially blocked takeovers being leaked, CFIUS investigations are kept confidential.
After a firestorm of criticism engendered by a foiled Chinese effort to buy a U.S. oil company last year, the administration agreed to provide Congress with more information about deals that CFIUS blocks.
Critics say it's not enough, pointing out that since being given the authority to review these transactions, CFIUS has received over 1,500 notifications of foreign acquisitions, but only one has ever been blocked -- in 1990.
"Rubber stamping these types of deals may have been business as usual before Sept. 11, but it shouldn't be the way we do business after Sept. 11," Barrow said.
Barrow and Rep. Bennie Thompson, D-Miss., the ranking Democrat on the House Homeland Security Committee are pushing a bill requiring that CFIUS notify Congress about pending foreign investments it is looking at, and calling on the president to make the homeland security secretary, rather than as at present the secretary of the treasury, the chairman of the CFIUS committee.
Business groups are concerned about proposals like the Barrow-Thompson bill that would extend the timeline of CFIUS reviews and increase notification to Congress, because many such investigations are instigated before a deal has been publicly announced.
Another bill, from the powerful House Republican who chairs the Armed Services Committee, Duncan Hunter of California, would effectively outlaw foreign ownership of any infrastructure listed as critical to national security by the Department of Defense and put the Pentagon rather than the Departments of the Treasury or Homeland Security in charge of the review.
Missouri Republican Roy Blunt is also working on CFIUS legislation in the House, while in the Senate several bills, including one drafted by the powerful Republican chairman of the Senate Banking Committee, Richard Shelby of Alabama, are jostling elbows.
Shelby has said that his bill "strikes the appropriate balance between national security and our open investment policy."
Several competing bills in both chambers of the U.S. Congress aim to reform the process by which the federal government assesses the national security implications of foreign takeovers of U.S. companies or assets.
And in the wake of the derailment of the Dubai ports takeover, lawmakers' concerns are also threatening another acquisition by the tiny oil-rich emirate.
Dubai International Capital, an investment company owned by the emirate's ruling al-Maktoum family, inked a deal last year to acquire a privately held British aerospace company called Doncasters Group, Ltd.
The company owns nine plants in the United States, and makes parts for U.S. tanks and military planes, including for the Joint Strike Fighter -- currently at the center of a transatlantic row about contracts and technology sharing.
After senators questioned officials about the Doncasters deal earlier this month, the secretive inter-agency panel known as the Committee on Foreign Investment in the United States, or CFIUS, which is responsible for assessing such takeovers, announced that it was launching a special 45-day national security review of the purchase.
The attention led Dubai International Capital to announce last week it was postponing the $1.2 billion takeover for two months while the CFIUS review went ahead.
During the furor over the Dubai Ports World acquisition, administration officials attempted unsuccessfully to head off angry lawmakers' efforts to stymie that deal by agreeing to exactly the same kind of review in that case.
Many lawmakers continue to believe the assessment process is inadequate.
"This CFIUS process is a flawed process that's being conducted behind closed doors," said Rep. John Barrow, D-Ga., whose district includes one of the Doncasters plants. He charged there was not "adequate oversight in place to determine if these types of deals pose a national security concern."
Under current law, because of concerns about the huge financial implications of information about blocked or potentially blocked takeovers being leaked, CFIUS investigations are kept confidential.
After a firestorm of criticism engendered by a foiled Chinese effort to buy a U.S. oil company last year, the administration agreed to provide Congress with more information about deals that CFIUS blocks.
Critics say it's not enough, pointing out that since being given the authority to review these transactions, CFIUS has received over 1,500 notifications of foreign acquisitions, but only one has ever been blocked -- in 1990.
"Rubber stamping these types of deals may have been business as usual before Sept. 11, but it shouldn't be the way we do business after Sept. 11," Barrow said.
Barrow and Rep. Bennie Thompson, D-Miss., the ranking Democrat on the House Homeland Security Committee are pushing a bill requiring that CFIUS notify Congress about pending foreign investments it is looking at, and calling on the president to make the homeland security secretary, rather than as at present the secretary of the treasury, the chairman of the CFIUS committee.
Business groups are concerned about proposals like the Barrow-Thompson bill that would extend the timeline of CFIUS reviews and increase notification to Congress, because many such investigations are instigated before a deal has been publicly announced.
Another bill, from the powerful House Republican who chairs the Armed Services Committee, Duncan Hunter of California, would effectively outlaw foreign ownership of any infrastructure listed as critical to national security by the Department of Defense and put the Pentagon rather than the Departments of the Treasury or Homeland Security in charge of the review.
Missouri Republican Roy Blunt is also working on CFIUS legislation in the House, while in the Senate several bills, including one drafted by the powerful Republican chairman of the Senate Banking Committee, Richard Shelby of Alabama, are jostling elbows.
Shelby has said that his bill "strikes the appropriate balance between national security and our open investment policy."
posted by Marko at 3/27/2006 10:25:00 AM
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