Another Dubai Deal Under Scrutiny
By Chad Groening March 20, 2006
(AgapePress) - One of the nation's prominent military analysts says he is concerned that the United Arab Emirates is trying to purchase a British manufacturing company that makes engine components for U.S. military aircraft and main battle tanks.
Lt. Col. (Ret., U.S. Army) Bob Maginnis says due to security concerns, there is a U.S. law that limits the amount of military equipment that can be produced overseas. Now he says the Bush administration has informed Congress about a deal involving the U.A.E. company Dubai International Capital, which describes itself as a world leader in manufacturing highly complex castings for the aerospace, gas turbine, and petrochemical industries.
"This Dubai International company ... has acquired London-based Doncasters Group, which produces engine components and blade turbines for military platforms," he observes. "That, of course, is the type of thing that we monitor -- and that's what the purpose of that law is."
This is the second U.A.E.-based company that has been in the news lately. The first involved the potential operations management of six major U.S. ports by an Arab-owned group that had purchased another British firm. In that case, Dubai Ports World had to agree to sell its interest in the U.S. ports.
According to Maginnis, this more recent deal is also being examined. "Apparently it's been reviewed by the same people who looked at the six-port controversy with Dubai Port World, the organization that of course has been much in the news," he says.
Maginnis admits he is concerned about the number of foreign companies involved in purchasing U.S. resources. He points out that the Committee on Foreign Investment in the U.S. has greatly reduced its oversight of foreign transactions of this kind.
"The security review of those purchases has declined dramatically from 204 such investigations in 1989 to only 65 last year," he states. "And yet the international trade and the acquisition of multinational conglomerates has radically increased across the world."
Maginnis says he is pleased that a Treasury Department official has announced there will be an additional review of the Dubai parts manufacturer because of "unresolved security concerns." Bloomberg.com reports that Dubai International Capital and Doncasters have agreed to delay the $1.2 billion transaction for up to two months from March 31 while an investigation takes place
U.S. finances China nukes Taxpayers provide $5 billion in loans to close $8 billion Westinghouse deal
WASHINGTON – Here's one that tops the Dubai Ports World deal – but, so far, no one is complaining.
U.S. taxpayers are lending Westinghouse Electric Co. almost $5 billion to build nuclear power plants in China – even though the company, based in Pennsylvania, is about to be sold to Japan's Toshiba Corp., and even though the company is currently owned by British Nuclear Fuels Ltd.
And, so far, no one in the U.S. government is showing any interest in scrutinizing the sale over the transfer of nuclear-power technology – or in halting the loan from the Export-Import Bank.
The saga began just over a year ago when the board of directors of the Export-Import Bank of the U.S., a federal agency whose board members are appointed by the president, approved a request from Westinghouse for a combination of guaranteed and direct loans of up to almost $5 billion to support export sales to construct four nuclear power plants at two sites in China.
The Ex-Im Bank, as it is known, boasts of assisting in financing U.S. goods and services to developing markets around the world. It typically finances around $15 billion in U.S. exports annually.
While that deal got almost no notice at the time – despite China's record of spreading nuclear technology throughout the world – last month the British parent company that owns Westinghouse agreed to sell it off to Toshiba, a Japanese conglomerate, for $5.4 billion in cash, a deal that is expected to close later this year.
Undersecretary for Export Administration David McCormick said Wednesday in a speech in Pennsylvania he had no plans to review the bid on the basis of the nuclear-transfer issue.
"The deal is not being formally reviewed," said McCormick, who heads the Commerce Department agency. "It's unclear if this deal required (U.S. government) review or not. Scrutiny would be justified, he said, if "there's a perceived or actual threat to national security."
Congress has not opposed the Westinghouse sale. In fact, the only member to call for scrutiny, Rep. Ralph Hall, R-Texas, a senior member of the House Energy and Commerce Committee, recently dropped his concerns. In a letter to Rep. Tim Murphy, R-Pennsylvania, whose district includes Monroeville, where Westinghouse is based, Hall called Japan "one of our finest allies."
Meanwhile, Westinghouse, armed with the $5 billion in loans from U.S. taxpayers, may have a better shot at the $8 billion in nuclear contracts bid by China. Its chief competitor for the project, the state-controlled French company Areva SA is considering dropping its bid because of concerns about nuclear-technology transfers to the Chinese. Areva SA has reportedly refused to match the offer from Westinghouse.
Another puzzling aspect of the deal is the fact that China has run massive trade surpluses with the U.S. for many years. In fact, trade statistics from the U.S. Census Bureau demonstrate that China has built up over $1 trillion in surpluses with the U.S. since 1993.
In the last five years, here is the trend on China trade surpluses with the U.S.:
2001 $83 billion
2002 $103 billion
2003 $124 billion
2004 $162 billion
2005 $201 billion
In U.S.-China trade, that's a total of $673 billion in trade surpluses for the Chinese (or trade deficits for America) in just the last five years.
Not only is the U.S. government not questioning the deal to build nuclear reactors in China, it is actively financing it and using political influence at the highest levels to consummate the arrangement.
"The U.S. government has been very supportive of overall China-U.S. nuclear cooperation,'' says Gavin Liu, Westinghouse's representative in Beijing. "It's a very, very critical market for Westinghouse.''
China's nuclear-power market is growing faster than any other in the world. The four planned reactors are the first of more than 20 in a $54 billion push to quadruple Chinese nuclear-power capacity by 2020 – an effort to ease power shortages in an economy that grew 9.5 percent last year.
Its already being produced by a foreign company.