September 4, 2006
Conservatives believe that private industry does a better job than
government - right? Conservatives are for divesting some government
functions so private industry can run them more efficiently - right?
Many state and local governments take this idea seriously and,
unnoticed by the U.S. public, have been selling off some of our
infrastructure to foreigners. Then suddenly the news hit the fan about
the proposed sale of 22 East and Gulf Coast port operations to Dubai
Ports World, a maritime company controlled by a Middle East government.
When devotion to private enterprise ran up against U.S. sovereignty and
national defense, not only conservatives but the American people opted
for the latter. The anti-Dubai uproar swept across all party and
economic lines because there is a limit to whom we want to sell our
essential transportation systems. A federal agency known as the
Committee on Foreign Investment in the United States is supposed to be
guarding our national interests when foreigners seek to buy U.S.
properties. CFIUS operates in secret, so the public is in the dark
about its procedures.
CFIUS is apparently also in the dark about what the U.S. public thinks
and didn't foresee that the Dubai Ports deal would be controversial.
Foreign purchase of U.S. infrastructure has been proceeding at a rapid
pace both before and after the Dubai Ports flap.
Frank J. Gaffney Jr., a former Defense Department official during the
Reagan administration and current columnist for Townhall.com,
discovered that "out of more than 1,500 cases of foreign acquisitions
reviewed since 1988, CFIUS has only formally rejected one." Homeland
Security admits that 80 percent of our 3,200 terminals nationwide are
operated by foreign companies and countries. In June, a Spanish firm,
Cintra Concesiones de Infraestructuras de Transporte, S.A., paid $1.3
billion for a 50-year lease to operate a 10-lane toll road through the
heart of Texas. The same month, an Australian company bought a 99-year
lease on Virginia's Pocahontas Parkway.
Also in June, an Australian-Spanish partnership paid $3.8 billion to
lease the Indiana Toll Road for 75 years. Last year, Chicago sold a
99-year lease on the eight-mile Chicago Skyway to the same buyer for
$1.8 billion, and tolls are expected to double.
Almost weekly, we learn about other U.S. properties that have been sold
or leased long-term to foreign companies. The tolls from the U.S. side
of the tunnel linking Detroit to Windsor, Canada, belong to an
Australian company. Why the rush to sell our transportation systems to
foreigners? "Follow the money" explains all.
State and local governments pocket the money upfront and get to spend
it here and now, so politicians can cover their runaway budget deficits
and enjoy the political rewards of spending for new facilities. They
ignore the fact that U.S. citizens must pay tolls to foreign landlords
for the next two or three or even four generations.
Foreigners like the deals because they know that, unlike the rest of
the world, American law enforces contracts and the U.S. government
doesn't nationalize industries. The foreign companies can raise tolls
without having to cope with objections from local customers.
These deals leave a lot of questions unanswered. Texas ranchers are
concerned about the use of eminent domain to cut a wide swath through
their properties in order to build a very-limited-access corridor on
which foreign trucks and trains will transport Chinese goods in sealed
containers, uninspected until they reach Kansas City, Mo.
The Texas governor is already talking about more toll roads through
Texas, north and south, east and west.
Indiana legislators are concerned that the Spanish firm could rake in
$133 billion over the 75-year life of the Indiana toll road lease for
which Indiana received only $3.8 billion.
The Indiana governor is now seeking an I-69 toll road from Evansville
to Indianapolis that critics claim will destroy vast Hoosier
properties: 5,100 acres of farmland, 1,600 acres of forest, 140 acres
of wetlands, 400 homes, 76 businesses, and 135 existing roads. A
foreign company could collect tolls for decades into the future.
Orange County, Calif., was burned by its contract with a French company
that bought part of state Route 91 for $130 million. When Orange County
found that the fine print in the contract prohibited it from building
more roads, it had to buy back the lease for $207.5 million.
The U.S. government blessed this rush to sell off American
infrastructure on April 30, 1992, when then-President George Herbert
Walker Bush signed Executive Order 12803, called "Infrastructure
Privatization." It directed federal departments and agencies to
encourage state and local governments to "privatize infrastructure
Infrastructure assets were defined to include "roads, tunnels, bridges,
electricity supply facilities, mass transit, rail transportation,
airports, ports, waterways, water supply facilities, recycling and
wastewater treatment facilities, solid waste disposal facilities,
housing, schools, prisons and hospitals."
The first President Bush's order failed to put restrictions on who the
purchasers could or should be, American or not, or friend or foe. The
current president, George W. Bush, is now acquiescing to European Union
demands to open U.S. airlines to foreign ownership.
Is America for sale?