Fred Bergsten is the director of the respected Institute for International Economics (IIE), a former assistant secretary of the Treasury for international affairs, and the second chairman of the CFIUS.
Based on his review of the situation, the Dubai Ports World purchase "will have no operational impact on the national security of the United States." He has some ideas about what to do next. He offered his thoughts in yesterday's Washington Post: Avoiding Another Dubai (Feb 28 - includes transcript of on-line discussion of his column).
We don't want to get Congress involved in micromanagement of future investments:
...it would be a grave mistake to enact new legislation that permitted Congress to exercise case-by-case review of individual applications for foreign investments in the United States. Such congressional micromanagement exists in other specialized policy areas such as arms exports to foreign countries. But applying it to commercial transactions would generate such uncertainties and potential delays for foreign investors that it would have a huge chilling effect on their proclivity to buy American assets. The United States needs to attract almost $1 trillion of foreign financing annually to fund our huge and growing trade and current account deficits. It would be the height of national folly to erect any such deterrent to one of the most desirable channels for such flows.
We could use more leverage on Dubai Ports World:
...To help deal with the immediate problem, the administration should obtain and make public immediately a letter of assurance from the government of the United Arab Emirates committing itself to avoid any involvement in the business operations of Dubai Ports World and to take all steps necessary to guard against security problems. Both the government and the company have proclaimed that Dubai Ports would act solely as a commercial entity, and the company has pledged its full participation in all U.S. security programs, so it should be routine to obtain such a letter. Any violation of these commitments, by the UAE government or the company itself, would subject the company to cancellation of its approval to operate in the United States and thus force its immediate divestiture, presumably at a fire-sale price. We obtained a similar statement from the French government in 1979 to resolve concerns about the acquisition of American Motors by Renault, which was then partially government-owned.
We have to address the structural problem with CFIUS:
The more fundamental problem of inadequate CFIUS transparency should be resolved by a structural change in the governmental review process. The CFIUS should henceforth provide to the leadership of the relevant committees of Congress, on a confidential basis to preserve legitimate business interests, quarterly (or even monthly) reports and briefings on pending as well as completed applications for approval of specific investments. The responsible members could then register any concerns they might have directly with the relevant government agencies for consideration during the CFIUS review itself.
In his column he notes that his institute will have a book out shortly on the CFIUS process.
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