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Obama Orders Chinese Company to End Investment at Sites Near Drone Base

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Reposted from The New York Times

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Obama Orders Chinese Company to End Investment at Sites Near Drone Base

Helene Cooper | September 28, 2012 | NY Times

WASHINGTON — President Obama, citing national security risks, ordered a Chinese company on Friday to divest its interest in four wind farm projects near a Navy base in northern Oregon where training missions for drone aircraft are conducted.

The order, the first time a president has blocked such a business deal in 22 years, is another step in the tougher line on China that Mr. Obama has taken in recent weeks, as Republicans, including Mitt Romney, have accused him of being weak on Beijing.

Mr. Obama, on a recommendation from the federal Committee on Foreign Investment in the United States, issued an order prohibiting the acquisition and ownership of the wind farms by the Ralls Corporation, and directing the company to divest the interest it acquired in the farms this year. Ralls is owned by Chinese nationals and is affiliated with a Chinese construction equipment company that makes wind turbines.

The wind farm sites are near the restricted airspace at a naval weapons training facility that is used to test remotely piloted drones and electronic warfare aircraft that accompany American bombers on missions and can jam radar.

The president has the power to void foreign transactions under the Defense Production Act, which authorizes the president to suspend or prohibit certain acquisitions of American businesses if there is credible evidence that the foreign purchaser might take action that threatens to impair national security.

In 1990, President George Bush, acting on a case referred by the foreign-investments committee, blocked the sale of an American aircraft manufacturing company to a Chinese agency.

Obama administration officials said the timing of the order had nothing to do with politics. They said the president was obligated under the law to act once the committee sent the case to him.

The committee’s timeline “is determined by statute,” a Treasury Department official said.

Ralls notified the authorities of the acquisition on June 28, and a 30-day review period began the next day. If the committee concludes that national security risks cannot be mitigated, the case is referred to the president, who has the sole authority to prohibit a transaction.

In an interview on Wednesday with The Plain Dealer of Cleveland, Mr. Obama said that while he planned to continue to push hard on trade issues with China that will help American workers, he was not “interested in triggering an all-out trade war that would damage both economies.”

Beyond the political, the issue has national security resonance. The United States’s near-monopoly on armed drones is widely viewed as coming to an end, and other countries, particularly China, have an interest in them, with far-reaching consequences for American security and warfare. While the Obama administration has aggressively embraced drone warfare, American officials are uneasy about other countries doing the same.

“Let’s put it this way, we’re not going to rush to make it easy for them,” one senior administration official said on Friday, speaking on the condition of anonymity.

Micah Zenko, a fellow at the Council on Foreign Relations, said he was not surprised that Mr. Obama would stop Ralls’s acquisition of the wind farms. “It’s very realistic that you would be concerned that the Chinese could collect intelligence,” he said.

He and other national security experts pointed to a 1998 case in which the Central Intelligence Agency is said to have collected intelligence from Iraq by having C.I.A. engineers pose as United Nations weapons inspectors and technicians, installing equipment to spy on Iraqi sites without United Nations knowledge.

Tim Xia, the counsel for Ralls, said in a statement: “We regret President Obama’s order today prohibiting a jobs-creating wind farm project in Oregon. The project poses no national security threat whatsoever, and the president’s order offers no explanation otherwise. The president’s order is without justification, as scores of other wind turbines already operate in the area where Ralls’s project is located.”

He said that Ralls would appeal the decision in United States courts.

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