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Uncle Sam would like to speak with you

John Dimsdale Jan 8, 2007

KAI RYSSDAL: On the face of it, a joint venture by a Finnish company and a German one wouldn’t seem to be a concern of the U.S. government. But The Financial Times reports today the Feds are concerned, nonetheless, over some national security implications. Nokia, the cell-phone company, and the engineering giant Siemens are talking about merging their network equipment operations. Marketplace’s John Dimsdale reports from Washington.

JOHN DIMSDALE: Both Nokia and Siemens already do a lot of business in the U.S. making equipment and software for this country’s communications networks. The government’s Committee on Foreign Investment in the U.S. — or CFIUS — is said to be worried their joint venture threatens national security.

CFIUS decisions are secret and neither company is talking. But Ron Orol of The Deal magazine says it’s unusual for CFIUS to impose limits on financial transactions between two foreign corporations.

RON OROL: The U.S. government I think has made a conscious step that they believe that the equipment makers of telecom infrastructure are areas of vulnerability that they want to address.

CFIUS attracted a lot of publicity a year ago when it approved the takeover of a half-dozen U.S. port operations by a company in Dubai. The congressional outcry forced Dubai Ports to sell its U.S. acquisitions.

Now, global companies are worried CFIUS has overreacted by imposing too much government scrutiny on international investment flows. Todd Malan, president of the Organization of International Investment, says the number of CFIUS reviews has doubled in the past year.

TODD MALAN: The cost here is a less-effective national security screen, and secondly a reputational hit to the United States as a good place to do business.

Business lobbyists are pushing legislation this year to limit the scope and duration of CFIUS reviews.

In Washington, I’m John Dimsdale for Marketplace.

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