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Foreign Investments and US National Security

Foreign Investments and US National Security. “ Money, capital, is a coward; it will go nowhere where it is put in fear.” Colin Powell, April 23, 2002. CFIUS Committee on Foreign Investment in the United States.

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Foreign Investments and US National Security

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  1. Foreign Investments and US National Security “Money, capital, is a coward; it will go nowhere where it is put in fear.” Colin Powell, April 23, 2002.

  2. CFIUSCommittee on Foreign Investment in the United States • US gov’t inter-agency committee that reviews national security implications of foreign investments in US companies or operations. • Process: CFIUS reviews transactions submitted (voluntarily and involuntarily) by companies proposing to be involved in an acquisition by a foreign firm. • DHS is the most recent representative added under the committee by President Bush in 2003 • Foreign investment and National Security Act of 2007 • Since its establishment in 1975, only two FI’s have been blocked, but others have been less openly opposed.

  3. Dubai Ports World Controversy 2006 • DP World, a UAE state owned firm, was to purchase 6 US based ports from an already foreign owned firm, British P&O. • Approved by the executive branch, strongly opposed by congress. • Sale would compromise US security • Mitigation agreement: DHS letter of assurances • Threat III: Infiltration, espionage, and possible disruption • Discrimination? What about WTO’s anti-Discrimination principle?

  4. Proposal • Many have expressed their opinion on the committee as being useless and counter productive. After the DP World deal collapsed, many started to worry whether foreign investors abroad as still as confident about investing in American assets. • Instead of picking and choosing who of our allies are allowed to purchase our assets, which shows favoritism and hesitance, we should impose certain regulations such as the DHS letter of assurance in the DP World case where such purchases still operate under US management.

  5. References • http://www.piie.com/publications/chapters_preview/6604/04iie6604.pdf • http://www.lexisnexis.com.mutex.gmu.edu/hottopics/lnacademic/ • http://www.treasury.gov/about/organizational-structure/offices/International-Affairs/Pages/cfius-index.aspx • http://www.petersoninstitute.org/publications/chapters_preview/3918/02iie3918.pdf • http://www.cfr.org/foreign-direct-investment/foreign-investment-uzsz-national-security/p31477

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