Obama prevents Chinese company from purchasing U.S. wind farms

Ralls Corp. a company owned by Chinese nations, had purchased wind farms near the Naval Weapons Systems Training Facility in Boardman, Ore. / nwstfboardmaneis.com/

WASHINGTON

Citing national security risks, President Barack Obama on Friday blocked a Chinese company from owning four wind farm projects in northern Oregon near a Navy base where the U.S. military flies unmanned drones and electronic-warfare planes on training missions.

It was the first time in 22 years that a U.S. president has blocked such a foreign business deal.

Obama's decision was likely to be another irritant in the increasingly tense economic relationship between the U.S. and China. It also comes against an election-year backdrop of intense criticism from Republican presidential challenger Mitt Romney, who accuses Obama of not being tough enough with China.

In his decision, Obama ordered Ralls Corp., a company owned by Chinese nationals, to divest its interest in the wind farms it purchased earlier this year near the Naval Weapons Systems Training Facility in Boardman, Ore.

The case reached the president's desk after the Committee on Foreign Investments in the United States, known as CFIUS, determined there was no way to address the national security risks posed by the Chinese company's purchases. Only the president has final authority to prohibit a transaction.

The administration would not say what risks the wind farm purchases presented. The Treasury Department said CFIUS made its recommendation to Obama after receiving an analysis of the potential threats from the Office of the Director of National Intelligence.

The military has acknowledged that it used the Oregon Naval facility to test unmanned drones and the EA-18G "Growler." The electronic warfare aircraft accompanies U.S. fighter bombers on missions and protectively jams enemy radar, destroying them with missiles along the way.

At the Oregon site, the planes fly as low as 200 feet and nearly 300 miles per hour.

The last time a president used the law to block a transaction was 1990, when President George H.W. Bush voided the sale of Mamco Manufacturing to a Chinese agency.

In 2006, President George W. Bush approved a CFIUS case involving the merger of Alcatel and Lucent Technologies.

The Treasury Department said in a statement that Obama's decision is specific to this transaction and does not set a precedent for other foreign direct investment in the U.S. by China or any other country.

China's trade advantage over the U.S. has emerged as a key issue in the final weeks of the presidential campaign. Romney accuses Obama of failing to stand up to Beijing, while the president criticizes the GOP nominee for investing part of his personal fortune in China and outsourcing jobs there while he ran the private equity firm Bain Capital.

Both campaigns are running ads on China in battleground states, especially Ohio, where workers in the manufacturing industry have been hard-hit by outsourcing.

Obama, in an interview Wednesday with The Plain Dealer of Cleveland, said the U.S. must push hard against Beijing but "not go out of our way to embarrass" China.

"We're not interested in triggering an all-out trade war that would damage both economies," Obama said.

The president has the power to void foreign transactions under the Defense Production Act. It authorizes the president to suspend or prohibit certain acquisitions of U.S. businesses if there is credible evidence that the foreign purchaser might take action that threatens to impair national security.

CFIUS is chaired by the treasury secretary. The secretaries of state, defense, commerce, energy and homeland security are also on the committee. The director of national intelligence is a non-voting member.

Earlier this month, Ralls sued the national security panel, alleging CFIUS exceeded its authority when it ordered the company to cease operations and withdraw from the wind-farm developments it bought. Ralls asked for a restraining order and a preliminary injunction to allow construction at the wind farms to continue. The firm said it would lose the chance for a $25 million investment tax if the farms were not operable by Dec. 31.

A lawyer for Ralls said Friday that the project posed no national security threat and said "the President's order is without justification, as scores of other wind turbines already operate in the area."

Ralls dropped its request for a preliminary injunction this week after CFIUS allowed the firm to resume some pre-construction work. The firm's lawyers were expected to react quickly to the administration decision, said a person familiar with the lawsuit who insisted on anonymity because of the sensitive legal repercussions.

Ralls' legal team includes Paul Clement and Viet Dinh, two top law veterans of President George W. Bush's administration. Both men were key players in Bush's aggressive national security operation.

Clement, who was solicitor-general and argued administration positions before the Supreme Court, has since opposed the Obama administration's health care plan and defended the Defense of Marriage Act before the top court.

Dinh, a former assistant attorney general who was the main architect of the Bush administration's anti-terror USA Patriot Act, has lately served as a director and legal adviser to Rupert Murdoch's News Corporation.

A second Chinese firm stymied by CFIUS urged U.S. authorizes this week to investigate their firm to quell fears of ties to China's military. Huawei Technologies Ltd. announced in early September that it would unwind its purchase of U.S.-based computer firm 3Leaf Systems after the deal was rejected by CFIUS.

Huawei, one of the world's largest producers of computer network switching gear, has repeatedly struggled to convince U.S. authorities that they can be trusted to oversee sensitive technology sometimes used in national security work.

[hypnotoad72]

Excellent news.

None of us should be criticizing him and here is why:

The amount of toxic goods China has sold should have raised eyebrows.

The amount of poorly built goods China has sold should have raised eyebrows.

The amount of counterfeit goods China has sold should have raised eyebrows. Especially to our own military.

I could post a large number of examples telling of China's history, and while we have offshored to many other countries, only China and India have shown not to be respectable or trustworthy... but I digress. Here's one article that none of us should be in disagreement about:

http://www.c-span.org/Events/Senate-Investigates-Counterfeit-Parts-in-Military-Equipment/10737425339/

Why do we offshore the manufacturing of our defense? That's DUMB and for enough reasons that even the most devout partisan should be able to contemplate without being told hints, since this about the military and not a lemonade stand. If you need an explanation over the nuances, then you really need pity.

Unless, of course, the military is just another dog and pony show, with the current and future wars being economic in nature? Like China would care either way... they have our money now. Just like how Charlie would say it...

Never mind human rights violations, ecological issues (the developed countries have such laws, which can turn a company's 75% profit margin down to an apparently pathetic 65% if made here, since most of it is automated nowadays... but why think, when short-term greed is better?)

Those criticizing Obama would doubtlessly cheer Romney for doing the same thing. But we know where this tangent is headed...

[royrogers1948]

I could not agree with you more, 100% correct.

[nohater]

if it were my call, china would not be allowed to buy a thing here in the USA. chinese individuals holding dual citizenship would not be allowed to buy a thing either. only chinese individuals with only U.S. citizenship would be allowed to buy in the USA. but it's not my call. obama did the right thing here.

[hypnotoad72]

Thank you.

I too prefer individual issues than toeing the line; not without good reason. The evidence has to be laid out, truthfully and in good faith.

If it were your call on this issue, I would be tempted to agree as well. I can't hold all individual people as being agents of another country as being an enemy by default, but if future wars are to be based on economics rather than military, then I would definitely agree with your ideas.

[Well_You_Aint_Me]

nohater, there is no such thing as dual citizenship in China. You are either a Chinese citizen or not.

[nehicks]

Obama has finally done something that I agree with.

[payasyougo]

Wouldn't want any competition w/ GE now would we.

[hypnotoad72]

While you lack proof, the cynic in me would find your claim fascinating.

There is plenty of evidence that already shatters the notion we are a "free market" where "competition helps all" and the rest of the jingoistic claptrap. GE does have a bit more money than competing entities, so if it is using its money (freedom) to deprive others...

Time will tell.

But even the headline suggests your tangent isn't ideally suited. "prevents Chinese company from purchasing wind farms". Obama is making sure some competition remains, in a new field that is crucial for tomorrow. Obama is preventing a monopolistic act and trying to do something for the sake of anything approaching any "free market", since to do nothing and let one country hold a monopoly via unethical means is anything but... and, yes, noting product quality over a mass slew of issues, from pet food to toothpaste, from computers whose chips contain malware to drywall, China's record has never shown much improvement but has shown a LOT of unethical behavior, if not acts of war (e.g. building counterfeit machinery for other another country's military, but why would a country rely on another for self-defense? Who was the IDIOT that decided that to blindly offshore would be assured of "quality product" to keep our country safe?!! But since we have a global economy, how long before we have a one-world government? Oh well, I'm taking the tinfoil hat off now...

And, yes, I do support Obama over Solyndra as well. New technologies, especially those that compete with long-standing competition that have far more freedom (money) can use their freedom to exterminate competition. I shouldn't have to cite examples of predatory practices (again)...

[hypnotoad72]

...New technologies that help us all, that is...

Subsidy for those that help all, or those to help recover I'm for.

Giving handouts to companies that offshore to pocket as 'profit' -- that is not help. That's thievery. That I do not support. Obama's voting record on that shows Obama does not care about thievery. Ask these guys about that:


http://www.ontheissues.org/senate/Rick_Santorum.htm#Corporations
http://www.ontheissues.org/john_mccain.htm#Corporations
http://www.ontheissues.org/senate/mitch_mcconnell.htm#Corporations
http://www.ontheissues.org/senate/jim_demint.htm#Corporations
http://www.ontheissues.org/senate/Orrin_Hatch.htm#Corporations
http://www.issues2000.org/senate/Judd_Gregg.htm#Corporations
http://www.ontheissues.org/senate/john_cornyn.htm#Corporations

amongst others

"Voted NO on repealing tax subsidy for companies which move US jobs offshore. (Mar 2005)"

Now, read that - giving taxpayer money to corporations that offshore (to communist countries; didn't we fight them in the past while saying communism was bad? Or are such countries no longer communist, noting how their actions have been quite unfriendly). This means people in America are out of work as we're shipping jobs overseas. This also means we create a revenue problem because there are fewer working people to tax.

Obama voted 'YES' to repeal the anti-free market corporate handout issue...


http://www.c-span.org/Events/Senate-Investigates-Counterfeit-Parts-in-Military-Equipment/10737425339/
(hey, there's the C-word again)

http://economyincrisis.org/content/oakland-bay-bridge-built-china

http://prestowitz.foreignpolicy.com/posts/2011/06/27/cheap_is_expensive

http://abcnews.go.com/US/bringing_america_back/american-infrastructure-jobs-shipped-china/story?id=14592567

http://www.theatlantic.com/national/archive/2011/07/why-are-our-bridges-made-in-china/242115/

http://www.time.com/time/world/article/0,8599,1856168,00.html

http://www.bbc.co.uk/news/world-asia-pacific-13036943

http://www.chinatoday.com/china.topics/china.milk.scandal.htm

http://www.fda.gov/AnimalVeterinary/SafetyHealth/RecallsWithdrawals/ucm129575.htm

http://www.nytimes.com/2007/06/19/business/worldbusiness/19toys.html

http://www.zdnet.com/blog/security/does-microsofts-sharing-of-source-code-with-china-and-russia-pose-a-security-risk/6789

http://money.cnn.com/magazines/fortune/fortune_archive/2007/07/23/100134488/
(we let them pirate and get away with it, and - even better - the article touts with much pride how they developed Vista...)

http://www.nytimes.com/2010/02/10/world/asia/10pollute.html

http://www.cbsnews.com/stories/2008/11/06/60minutes/main4579229.shtml

I could go on forever...

[matt6052]

They complain about trade imbalances, but the reality is that if China wants to buy it, it's not for sale. China offered top dollar for Chevron, and top dollar for technology company whose defense subsidiary they promised to spin off. No deal. Nobody else was willing to pay nearly as much, but still congress wouldn't permit these sales. If China wants to buy it, it's not for sale.

[hypnotoad72]

"it's just business".

What you say would be the end result of "free market" policies.

Free market supporters have some explaining to do, especially if they were incapable of seeing the predatory practices that led to "too big to fail", much less this.

I'm no longer sure one can be "free market" at the same time one also states "energy independence"... or ANY OTHER FORM of "independence". As if we're a "free market" now, giving entitlement to corporations that have gutted this country and its workers... amongst other things that would contradict the very concept of "free market". But "free market", as a phrase, came about only when "trickle down economics" was seen through. Ditto for "supply-side economics" - a one-sided system is simply not sustainable. Once again, "too big to fail" and how we got there (lowering wages, offshoring jobs, propping up those that offshored, US workers engaging in wealth redistribution by being forced to train their own replacements and paying taxes that go to those that have gutted, illegally using illegals to drive down wages, and scores of other issues...)

[cattiej]

Another company that Romoney has pobably invested money in..I think that is whe he won't release his tax records..he has millions invested in Chinese companies. If Romoney is elected, I think that within 3-4 months we will be at a another Civil War from within our own country. For all you gun lovers, Romoney and company will take them from you in the interest of national security..I think the Chinese will and have already spied and collected many many secrets and will take over our industrial and military complex if Romoney is elected. Romoney and his group being lead by Karl Roverer are like the Brown Shirts in Germany right before World War II. Anyone with a passport many not even be able to travel to another country..I know this comment sounds crazy but then again, I remember World War II. The Germans never thought Hitler was going to destroy millions of people either when they elected him to head their country..History does have a way of repeating itself..

[hypnotoad72]

Here's an issue that should grab peoples' attention - first, some examples of people who support the initiative:

http://www.ontheissues.org/senate/Rick_Santorum.htm#Corporations
http://www.ontheissues.org/john_mccain.htm#Corporations
http://www.ontheissues.org/senate/mitch_mcconnell.htm#Corporations
http://www.ontheissues.org/senate/jim_demint.htm#Corporations
http://www.ontheissues.org/senate/Orrin_Hatch.htm#Corporations
http://www.issues2000.org/senate/Judd_Gregg.htm#Corporations
http://www.ontheissues.org/senate/john_cornyn.htm#Corporations

"Voted NO on repealing tax subsidy for companies which move US jobs offshore. (Mar 2005)"

Now, read that - giving taxpayer money to corporations that offshore (to communist countries). This means people in America are out of work as we're shipping jobs overseas. This also means we create a revenue problem because there are fewer working people to tax.

Including McConnell, a man who voted to raise the debt ceiling several times during the 6 years he and the GOP had complete and total control, but since has done nothing but bash Obama... by voting to help those who gut our country, McConnell has no place in our political system. Or maybe his supporters can tell, with some good detail, why McConnell should be... the more his voting record is read by people only shows how he's done nothing to benefit this country.

Yes, some Democrats voted to continue the handouts as well. Obama was not one of them.

[myopinionpal]

And Romney says the president is soft on China well thats another lie he has told.

[hypnotoad72]

Maybe Obama, who - at one time - said how an economic alliance would be a good thing, has caught up on all of the issues that had, have, and will continue to come out of that country. Nothing is being "developed".