A Dubai government-owned company says it is buying nearly 20% of the Nasdaq. US politicians question the deal, citing national security concerns. President Bush promises scrutiny. At a White House news conference, President Bush said that the proposed tie-up would be examined to assess national security risks posed by US assets being sold off to certain overseas investors. So far, so predictable.
The next day, the Saudi Arabians, along with 50-50 joint venture partner Shell, announce a $7 billion (Rs27,930 crore) expansion of an oil refinery in Texas. The howls of protest are notable by their absence.
It’s sad that this reaction, too, is predictable. It reflects both the US’ “special relationship” with the Saudis, but also the politicians’ eye for an easy target that isn’t likely to fight back. Still, it’s potentially damaging for the US.
First off, if there really are overriding national security concerns, the refineries should be front and centre.
The Shell-Saudi joint venture, known as Motiva, owns three of them, which with the planned expansion account for about 6% of US capacity.
If that isn’t of strategic importance, it’s hard to imagine what is. Of course the Saudis are seen as broadly friendly, and their shareholding is not new. Even so, you’d think any increase in foreign influence over the US’ refining capacity should attract interest in Washington.
By contrast, a non-controlling 20% stake, worth less than $1 billion, in a provider of services to the financial industry seems minor. Assuming, then, that any opposition to the Dubai-Nasdaq deal is largely political—as was the scuttling of Dubai’s DP World’s effort to buy into the operation of US ports—it’s still problematic.
The deal helps Nasdaq, a US company, offload its stake in the London Stock Exchange—an asset that had become a bit of a millstone—and buy OMX, the Nordic exchange. Dubai’s planned stake in Nasdaq is also a reflection of globalization and the growing wealth of unfamiliar parts of the world.
Given the US’s reliance on foreign funding of its massive deficits and its biggest companies’ global presence, it’s a shame US lawmakers can’t resist souring the international atmosphere by scoring political points.