Commentary: The Business of National Security & Foreign Investments
Tuesday, March 14, 2006LINDA O'BRYON: In tonight's commentary, the post security controversy and its impact on foreign investment in America. Here's Laura Unger, former commissioner at the Securities and Exchange Commission.
LAURA UNGER, FMR SEC COMMISSIONER: Washington has been abuzz about a Dubai government owned company taking over a London company. The ruckus did not focus much on the financial transaction, but more on the end result: that the Dubai government would have a hand in operating some major U.S. ports. While national security should be the government`s number one priority, this raises the difficult question of how to grow a truly global marketplace. What is the appropriate role of politics in foreign investments?
The U.S. government has long distinguished between foreigners owing pieces of companies as investors do and owning the whole company through direct investment, imposing certain ownership thresholds accordingly. We have always implicitly assumed that the U.S. markets were so desirable that foreign investors would tolerate any limitations on their entree.
On the other hand, U.S. investors can participate relatively freely in overseas markets. Lately, however, U.S. markets have lost some of their cachet. Foreign companies no longer flock to our markets, in part because of Sarbanes-Oxley and the costs of compliance. Indeed, many U.S. companies are looking to their overseas operations to bolster earnings. Considering that foreigners own more than half of our $4 billion public treasury debt, the U.S. cannot look small minded in deciding who can and cannot participate in the U.S. marketplace. Blocking access to U.S. investments for security reasons should be applauded. Blocking access to score political points will chill the foreign marketplace and hinder economic growth. I'm Laura Unger.
