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How the United States Can Deal With Security Risks of Foreign Direct Investment

by Connor North

The United States is allowing foreign powers to own and operate land directly next to highly sensitive military facilities. Foreign direct investment (FDI) allows foreigners to own 37.6 million acres of US agricultural land and purchase land surrounding sensitive military installations. Foreign powers owning land near military installations undermines the integreity of high capability military bases, putting US strategic interests at risk, and ownership of agricultural land puts food security at risk. The US executive branch needs to do a better job at exercising its ability to review real estate transactions, and congress must do a better job at supervising the executive branch while it does this.

The US government is well aware of national security issues brought about by FDI. The Committee on Foreign Investment in the United States (CFIUS) reviews foreign investments to ensure they do not pose any national security risks. Moreover, in 2018, congress passed the Foreign Investment Risk Review Modernization Act (FIRRMA) which gave CFIUS the express power to review real estate purchases near military bases and other sensitive government sites. CFIUS had to put together a “Sensitive Base List” in which they would have jurisdiction on transactions within one mile of them, and a “Highly Sensitive Base List” in which they would have jurisdiction within 99 miles. Congress foresaw the vulnerability of US installations with foreign entities next door, and put in place organizations to deal with them, however there have been failures of CFIUS that serve as models for foreign powers to encroach on American security, and suggest that these organizations are not effective.

The Fufeng Corn Processing Plant in North Dakota is an ugly reminder that CFIUS does not solve the US’ problem on national security issues with FDI. The Fufeng Group, a Chinese based manufacturer with close ties to the CCP, purchased 300 acres of land to build a corn processing plant, and the land is located 12 miles from Grand Forks Air Force Base. The base has exceptional intelligence, surveillance, and reconnaissance abilities. The Air Force said, “the base is the center of military activities related to both air and space operations,” and that the “proposed project presents a significant threat to national securtity with both near and long term risks of signinifacnt impacts to our operations in the area.” The proximity of the CCP related corporation’s land to the base, makes it the ideal location to closely monitor and intercept military activity, and conduct acts of espionage and surveillance under the auspices of commercial activity. Presenting a clear threat to US national security, the CFIUS is rendered useless because Grand Forks Air Force Base was not put on either the sensitive or highly sensitive list. The CFIUS lacks the “teeth” to take decisive action on the Fufeng Group due to the bounds of the list, and the corn processing plant continues to operate.

It is a matter of speculation as to how Grand Forks Air Force Base was left off either of the CFIUS lists, but it is evident that this was a failure. When a failure occurs in an organization, look at the leadership. This holds true for CFIUS, and the problems are traced up to the top with the executive branch. The executive branch needs to ensure that CFIUS has covered all sensitive government sites in their list, as well as take action when CFIUS fails. The executive needs to “flex their muscles” and take action against FDI that poses a risk to national security. In not doing so, the US sets a bad precedent that they will not intervene in FDI, and opens the door for other cases like the Fufeng Group. Furthermore, the congress needs to hold the executive accountable for a failure to ensure that the CFIUS is effective. With each holding each other accountable, it will ensure that threats to national security will be able to be dealt with, not with warnings and letters, but with decisive action.

Complacency breeds contempt, and the US cannot take too much comfort in the fact that they are separated by two oceans from their adversaries. There are foreng entities present inside of the US, and they take the form of FDI. It is a major part of economies worldwide, and is no doubt valuable to each country. However, there must be limits to the amount of it that there can be in certain sectors, and the physical location. The US must be more conscious of how dependent they are on FDI in certain industries, such as agriculture, and where foreign entities are purchasing land. Economic interdependence and connectivity are staples of the modern world, however the US must be more vigilant of who owns land in their country, and where it is.

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