[Mb-civic] Xenophobia's Threat to Prosperity - Charles Prince - Washington Post Op-Ed

[William Swiggard]

Xenophobia's Threat to Prosperity
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By Charles Prince
The Washington Post
Wednesday, March 29, 2006; A19

Citigroup employs 300,000 people in 100 countries. We are a guest in 
every one of those countries. We've bought companies in many of them 
and, with a few notable exceptions during periods of war and revolution, 
we've been welcomed with great hospitality everywhere for over a century 
-- just as the United States has welcomed many companies based in other 
countries. I sincerely hope things stay that way.

But that could prove a challenge in the current political environment. 
There are now upward of 30 proposals in Congress to make changes in the 
Committee on Foreign Investment in the United States (CFIUS), a 
little-known body that has the authority to suspend or prohibit any 
acquisition, merger or takeover of a U.S. corporation that is deemed to 
threaten national security. The committee, made up of representatives 
from a dozen federal agencies, has recently come under intense scrutiny, 
even though it has not allowed a single breach of national security 
since it was established in 1988.

Some of the proposals would place new and potentially damaging 
restrictions on foreign investment in the United States. Legitimate 
national security concerns are one thing, but introducing overt 
political considerations into decisions regarding the allocation of 
capital has the potential to undermine investor confidence -- both 
domestic and foreign -- in U.S. markets and to jeopardize the continued 
vibrancy, depth and liquidity of those markets.

Like the investments made overseas by Citigroup, IBM, General Electric 
and countless other U.S.-based global firms, investment in the United 
States by companies based outside this country is essential for job 
creation and innovation. The same is true of individual and 
institutional investors in the United States and in other countries. 
U.S. assets owned by individuals or companies outside the United States 
total about $11.5 trillion. These investors have helped to finance the 
housing boom in the United States and have contributed significantly to 
the rise in home values and ownership. They bought nearly $227 billion 
of U.S. agency debt in 2005, and they currently hold more than $900 
billion of such debt.

Non-U.S. companies established in the United States support nearly 5.3 
million jobs in this country, spread throughout all 50 states. Put 
another way, 4.7 percent of Americans holding private-sector jobs are 
employed by companies based outside the United States. These employees 
receive compensation totaling $318 billion annually, and their numbers 
are growing rapidly. Indeed, the very presence of these companies in the 
United States creates a multiplier effect throughout local and national 
economies -- including tax revenue -- that benefits all Americans.

In an increasingly global economy, labels such as "foreign" and 
"domestic" have become less relevant. Many non-U.S. multinational firms 
have moved their U.S. personnel into senior global positions. For 
instance, many chief executives of U.S. subsidiaries, most of whom are 
American citizens, have gone on to become CEOs of the global company, 
including Don Shepard of Aegon, Don Robert of Experian, Marjorie 
Scardino of Pearson and Klaus Kleinfeld of Siemens.

At the same time, many companies based outside the United States have 
moved senior managers with global responsibility for an entire business 
unit or function to the United States. The leadership role played by the 
employees of these companies, and their operations, benefit the U.S. 
economy and must be taken into account when balancing the value 
conferred by non-U.S. companies against notions of national interest.

I respectfully urge Congress to take only those actions that will 
enhance the security review process for foreign investment in the United 
States, and to avoid endorsing proposals that could undermine America's 
support for access to capital markets and the free movement of capital. 
We must avoid measures taken in the name of national security that are 
isolationist and xenophobic, and could have the effect of choking off 
vital investments in America. Such a path could threaten job creation in 
the United States, impede American economic growth and jeopardize U.S. 
efforts to open foreign markets for American companies, consumers and 
investors. Any changes to the CFIUS process should result from an 
informed, sober and fact-based assessment of all of our interests.

Genuine threats to U.S. national security must be met with resolve and 
purpose -- no deal can be worth the safety of our citizens. But at the 
same time, challenges to U.S. economic success must be met with the same 
commitment to international leadership and engagement that has for 
decades contributed to increasing prosperity in this country and 
throughout the world. This is not a choice between protecting vital 
national interests and building a more prosperous future. These two 
goals are vitally important, but they are also compatible, and Americans 
will hold their leaders accountable for working to achieve both of them.

The writer is CEO of Citigroup Inc.

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/28/AR2006032801236.html
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