NATIONAL SECURITY FOREIGN INVESTMENT REFORM AND STRENGTHENED TRANSPARENCY ACT OF 2007 -- (House of Representatives - February 28, 2007)
Mr. HOLT. Mr. Chairman, I am pleased that the House is considering this measure today, and I intend to vote for it.
According to the Congressional Research Service, in 2005, direct foreign investment in the U.S. totaled some $109 billion. By year-end 2004, the latest year for which detailed data are available, foreign firms employed 5.6 million Americans (just under 4% of the U.S. civilian labor force) and owned over 30 thousand individual business establishments. While the impact of foreign investment on our economy is generally positive, last year we saw how inadequate monitoring of the foreign investment process can produce threats to our security.
It was just over a year ago that we learned from media reports that the Bush administration had quietly approved the sale of an American port operations company to Dubai Ports World (DPW), an entity owned by the government of the United Arab Emirates. The deal was approved by a little-known government entity, the Committee on Foreign Investment in the United States, or CFIUS for short. CFIUS was created by President Ford in 1975 via executive order in response to Congressional concerns over OPEC's investment activities in the United States.
In the DPW case, we subsequently learned that at least some elements of the intelligence community had expressed concerns about the security implications of the DPW transaction. In Congress, we were concerned that CFIUS had ignored or downplayed any potential security issues surrounding the transaction. We were told that DPW is well run and efficient. That may be, but there was good reason for concern.
The UAE, which owned and controlled the acquiring company in this case, had previously been identified as a key transfer point for shipments of nuclear components that were sent to Iran, North Korea, and Libya, which were sold by Pakistan's nuclear scientist A.Q. Khan. In addition, the UAE was one of only 3 countries (including Pakistan and Saudi Arabia) to recognize the Taliban as the legitimate government of Afghanistan prior to 9/11. Two of the 9/11 hijackers were UAE nationals (Fayez Banihamrnad and Marwan al-Shehhi), and the Federal Bureau of Investigation had previously claimed the money used for the attacks was transferred to the 9/11 hijackers primarily through the UAE's banking system. Furthermore, after the 9/11 attacks, the Department of Commerce complained of a lack of cooperation by the UAE and other Arab countries as the U.S. was trying to track down Osama bin Laden's bank accounts.
The Bush administration initially denied there were any such security concerns surrounding the DPW deal, so I worked to get a portion of the United States Coast Guard intelligence estimate declassified so the public would know the truth. The Coast Guard finally provided me with the declassified executive summary on May 25, 2006, and I want to make sure my colleagues and the public are aware of what this assessment says.
While the USCG assessment stated that the DPW deal posed no ``immediate' threat to the United States, it also stated that the deal ``could also provide a potential vector for Dubai-based terrorists to enter the United States, exploiting the port facilities in the same way that other terrorists have exploited individual shipping companies.'
I note for the record that I spent three months pressing Coast Guard officials to declassify this single page. Congress should not have to haggle with the executive branch to get intelligence assessments on potential security threats to our people in a manner that protects intelligence sources and methods. The bill before us contains changes in the law governing CFIUS that should help prevent a repeat of the Dubai Ports World fiasco, particularly with regards to intelligence assessments and Congressional notification.
Specifically, the bill before us requires a mandatory 45-day investigation for all acquisitions involving foreign governments, to include a requirement that the Director of National Intelligence play a direct role in evaluating the national security implications of such acquisitions. The bill also requires automatic notification of Congress within five days after the conclusion of each investigation. Finally, the bill requires the Secretaries or Deputy Secretaries of the Departments of Treasury and Homeland Security to personally approve such transactions. These are common sense reforms of the CFIUS process that are long overdue, and I urge my colleagues to join me in voting for this important legislation.