March 21, 2006
Tuesday

WASHINGTON - The Chinese almost bought Unocal last year. This month, a Dubai firm announced it would give up its recently acquired terminal operations at six U.S. ports.

Congressional and public outcry thwarted both deals over fears of foreign control.

And, the specter of national security has fueled further debate and legislation over who should own the backbone of America the critical infrastructure of ports, utilities, power plants, transportation systems, oil and gas facilities and defense contractors.

Many Republicans and Democrats, conservatives and liberals, in the House and Senate, have spoken out against foreign ownership.

Among the loudest voices has been Rep. Duncan Hunter, R-Calif., chairman of the powerful House Armed Services Committee.

He has introduced legislation to block or severely restrict foreign firms from owning any system or asset "on the national defense critical infrastructure list."

American ownership would guard national security, he said. While the Pentagon and Homeland Security would determine what constitutes "critical infrastructure," Hunter and other sponsors hope to spread a wide net over ports, power plants, airports and other systems.

"To those who say my views smack of protectionism," Hunter said at a hearing, "I say America is worth protecting."

His bill also would require the inspection of all incoming cargo containers. Currently, only 5 percent of containers arriving by ship are inspected.

Sen. Hillary Rodham Clinton, D-N.Y., also wants greater scrutiny of foreign ownership of U.S. firms, particularly port operations.

Clark Ervin, former Homeland Security inspector general, raised a red flag about foreign investment during a phone interview.

"My position in the age of terrorism is we can't allow foreign governments and foreign companies to be in control of key strategic assets," said Ervin, now Homeland Security Initiative director at the Aspen Institute.

He said the Bush administration and Congress should consider who might own or operate seaports, airports, the electric power grid, water supplies, chemical plants, pipelines and other infrastructure.

Ed Gresser of the Progressive Policy Institute said investments by China and oil-rich Arab countries are potentially troubling.

"Some investments of the next few decades aren't going to be from America's allies," said Gresser. The policy institute is affiliated with the Democratic Leadership Council.

He added that most foreign investment is beneficial, but safeguards are needed in vetting acquisitions and mergers.

Foreign ownership of utilities worries Lynn Hargis of the Public Citizen consumer group.

"You have all kinds of security concerns," said Hargis, an energy attorney. "You don't suspect any particular group, but you've just turned over a key part of the country to another country."

Not only terrorists could harm the electric distribution system, she said, noting that energy marketers can manipulate prices and supplies of electricity and natural gas.

"You have the economy factor as well as a security issue," she said.

Since last year's repeal of a longstanding utility regulatory law, foreign firms are free to invest in U.S. electric and gas companies with few restrictions.

"I think there will be an explosion [in foreign ownership]," Hargis said. "It's just a matter of time."

While support for his bill is uncertain, Hunter said he might insert some provisions in other defense bills handled by his committee.

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