President Barack Obama has blocked a Chinese company from owning interests in four northern Oregon wind farms, citing national security risks given their close proximity to a United States military base where unmanned drones and electronic-warfare planes are tested.
The decision marks the first time in more than 22 years that an American president has vetoed a foreign business deal in the interest of American security. While every American president has the power to void foreign transactions involving United States-based businesses under the Defense Production Act, the ability has not been exercised since President George H.W. Bush preempted the sale of Mamco Manufacturing to a Chinese-owned agency in 1990. (See more: Wind Power Layoffs Abound as Industry Threatened by Tax Credit Expiration)
Owned by Chinese nationals, Rall Corp. purchased interest in the wind farms, located only miles away from the Naval Weapons Systems Training Facility in Boardman, Oregon, earlier this year. With this turn of events, the company will have to divest its interests in the wind farms immediately.
The company has already filed suit against the Obama Administration, alleging that the president had “acted in an unlawful and unauthorized manner”.
“By failing to provide Ralls with sufficient notice and opportunity to be heard prior to prohibiting its acquisition of the wind farms and imposing extraordinary restrictions on the use and enjoyment of its property interests, CFIUS and the president have unconstitutionally deprived Ralls of its property absent due process,” the complaint reads.
The news of President Obama’s decision comes during an election campaign that has seen his opponents accuse him of being soft with China, helping the president to combat such claims, but the call is likely to further irritate already tense economic relations with China. With this risk obviously in mind, the Treasury Department statement attempted to play down the political gravity of the decision.
“The President’s action demonstrates the Administration’s commitment to protecting national security while maintaining the United States’ longstanding policy on open investment,” said a statement from the U.S. Treasury Department. (See more: Why China’s Purchase of a Canadian Oil Company is NOT Harmful to U.S. National Security)
“The President’s decision is specific to this transaction and is not a precedent with regard to any other foreign direct investment from China or any other country,” the statement reassured.