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Obama blocks Chinese company’s acquisition of Oregon wind farms

By Neela Banerjee and Don Lee, Tribune Washington Bureau –

WASHINGTON — President Barack Obama, in a rare move, blocked the acquisition by a Chinese-owned company of four wind farm projects next to a military base in Oregon.

Obama cited in a presidential order issued Friday “credible evidence” that the company “might take action that threatens to impair the national security of the United States.”

The decision comes against the backdrop of a presidential race in which Obama and Republican opponent Mitt Romney have traded jabs over who would be more effective in answering the challenges the ascendant Chinese economy poses. The U.S. and China filed international trade complaints against each other earlier this month, boosting tensions over economic issues.

The presidential order, the first of its kind since 1990, instructs Ralls Corp., whose owners are Chinese, to divest itself of four Oregon wind farm projects that it acquired this year. Ralls is affiliated with the Sany Group, a Chinese maker of wind turbines.

The wind farm sites are all in or near restricted air space at the Naval Weapons Systems Training Facility in Boardman, Ore., according to a statement by the Treasury Department, which chairs the inter-agency Committee on Foreign Investment in the United States that oversees such transactions. The committee initially recommended against allowing the transaction in July. But only the president can halt an acquisition.

The military flies highly sensitive drones at the Boardman facility, according to the Associated Press.

“The administration will continue to ensure that the United States remains the most attractive place for businesses to locate, invest, grow, and create jobs. 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 Treasury Department statement said.

A Treasury Department spokeswoman declined to elaborate on the national security threats Ralls Corp. project posed.

Tim Xia, Ralls’ lawyer, said that the project did not constitute a national security threat and that the company has filed a lawsuit against the committee. “The president’s order is without justification, as scores of other wind turbines already operate in the area where Ralls’ project is located,” Xia said in a statement. “The selective and arbitrary singling out of the Ralls’ project drives our effort to seek redress in U.S. courts.”

The lawsuit, filed in U.S. District Court in Washington, D.C., alleges that the U.S. foreign investment review panel exceeded its authority by rejecting the project without due process. Ralls was formed to identify markets and develop wind-energy projects for Sany Electric’s turbine generator business. The four Oregon projects were once owned by Terna Energy.

The White House has been particularly eager to protect U.S. interests in renewable energy, an area in which China has made strong moves to garner a growing share of a globally competitive business. In May, the Obama administration slapped huge tariffs on U.S. imports of Chinese-made solar panels.

Obama was mandated by law to make a decision by Sept. 28, after the committee delivered its conclusions about the Ralls project. His rejection of the project is the first time since 1990 that a president has scuttled a foreign investment deal. Given the committee’s qualms about the project, Obama’s decision was not surprising, although some foreign investment experts questioned the tone and prominence of the announcement.

For years the foreign investment review panel operated in obscurity, but in 2006 it came under scrutiny after the proposed purchase of commercial operations of six U.S. ports by Dubai Ports World sparked an uproar in Congress. As a result, Dubai Ports World officials said later that year they would sell the operations to an American owner.

In 2005, officials of a Chinese state-owned oil company withdrew their proposal to acquire Unocal after that bid triggered a furor in Congress. That had a chilling effect on Chinese acquisitions in the U.S., but so far this year, China investments in the U.S. have surged to record levels.

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