Based on a recommendation by the Committee on Foreign Investment in the U.S. (CFIUS), last week President Obama signed an executive order that blocked Ralls Corporation from making an investment in wind farms in the United States. The order said in part:
There is credible evidence that leads me to believe that Ralls Corporation . . . might take action that threatens to impair the national security of the United States.
For those unfamiliar with this story, Ralls Corporation is a private, Chinese owned company. In early 2012, it “purchased four wind farms projects next to a naval test facility in Oregon.” Obama’s decision to block the deal was the first time in twenty two years that a foreign direct investment had been blocked on national security grounds.
As expected, Ralls Corporation is not taking the decision to block its purchase of winds farms sitting down. Earlier this week, it filed an amended complaint challenging Obama’s executive order (Ralls already had filed a suit last month against CFIUS alleging its recommendation to block its purchase of wind farms constituted an “unconstitutional deprivation of property absent due process [and an] unconstitutional violation of the right to equal protection of the law.”).
Most of the media outlets I have come across covering this story indicate that Obama’s executive order was, at least in part, motivated by a desire to make the administration seem “tough” on China. I hope they are wrong.
Obviously, if our national security is truly threatened by allowing Chinese interests to be so close to sensitive military testing, then the blocking of the purchase makes sense. But, if this is simply a political stunt, I am going to be truly disappointed with the administration. Given the fragile state of our economy and our economic dependence on a vibrant trading and investing relationship between ourselves and China, I hope the administration is not potential jeopardizing the relationship to score a few political points. I’ll be watching this case to see how it develops.