The combination of escalating tensions with Beijing, over its belligerence in the South China Sea, and continued U.S. commercial engagement of that country, indicates an insufficient U.S. concept of national security and a resultant failure to protect and promote U.S. interests at home and abroad. National security increasingly relies on private industry, which originates, develops, and controls intellectual property and infrastructure across multiple sectors. Consequently, the commercial field will increasingly be an area of geopolitical competition. This emerging reality requires a revamped Committee on Foreign Investment in the United States (CFIUS).    

A significant blind spot for the United States is an indifference to threats from state actors. There is uninhibited commerce with China and a desire to do business with Iran – a state sponsor of terrorism. A prominent political candidate has expressed affinity for a Russian despot. The decade-and-a-half focus on non-state actors engaged in terrorism, has led Washington to largely ignore the potential for state-sponsored thuggery. 

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Keeping state actor threats in check, without having to engage in armed conflict, requires being able to leverage elements of national power (ENP) – not only militarily but also diplomatically and economically. Innovation – and the ability to maintain an advantage in pursuing it – is essential across all ENP. The most striking example is the implication of innovation for the Department of Defense’s “third offset” strategy, which relies on a technological advantage to compensate for decreases in other areas. However, this approach is only effective if the United States maintains control over the underlying capabilities.

The U.S. government is increasingly an adopter and adapter of commercial innovation. The Central Intelligence Agency’s creation of In-Q-Tel acknowledged this paradigm and DoD, through its Defense Innovation Unit Experimental (DIUX), has followed suit. However, ceding its status as the driver of innovation – as it was during the Cold War – means that the U.S. government is not well-positioned to govern industry’s transactions with clients that are competitive or outright adversarial to Washington.

National security is vulnerable to U.S. companies’ “selling out” and in foreign companies’ (particularly state-owned or directed enterprises’) “buying in” to the U.S. market. When a U.S. company sells technology to a foreign country it adds to that country’s long-term capacity for technological progress. When a company moves development and production abroad, it provides a foreign actor with a local “how to” tutorial that obviates the need for reverse engineering. Similarly, when a company, such as China’s Lenovo or Huawei, buys into the United States, it gains access to human capital that can assist an adversarial foreign entity with future innovation.

The Committee on Foreign Investment in the United States (CFIUS) has not kept pace with these realities. This small, interagency body, under the auspices of the Department of the Treasury, still vets foreign acquisitions of U.S. entities based on a limited concept of national security, focused on defense-related industries. However, it ignores the idea that non-defense acquisitions can contribute to a capacity for coercion. CFIUS also misses the significance of human capital. It does not regulate “greenfield” developments – foreign direct investment to establish new facilities – even though such developments will likely rely on a local workforce and associated subject matter expertise. The current bipartisan request for the Government Accountability Office to review CFIUS operations will hopefully produce some fresh thinking on these matters.

Practically, CFIUS is limited by a lack of resources. Its interagency approach is susceptible to a fractured understanding of vulnerabilities and threats. To provide effective guidance CFIUS needs a dedicated analytic component that is focused a holistic approach to preserving and bolstering ENP regardless of sector. Gaps identified by CFIUS analysis should be incorporated into the National Intelligence Priorities Framework (NIPF) which guides the U.S. intelligence community.

U.S. industry needs to be an active participant in ensuring that its decisions are consistent with ensuring a holistic picture of national security. Recent friction between technology companies and the U.S. government indicate that an appeal to patriotism will not necessarily be an effective motivation. However, firms that engage in risky, short term relationships with companies that are directed by foreign governments imperil the interests of shareholders whose investments will be undercut if proprietary information is compromised. Isolationism is not a viable solution but a realistic outlook about foreign intentions is consistent with preserving a U.S. company’s bottom line.

The United States’ antiquated concept of national security invites erosion of ENP by foreign acquisitions, across a wide variety of commercial sectors, while it continues to. The increasing role of the private sector in developing the capabilities on which the U.S. government relies means that CFIUS needs to take a broader view of what will impact U.S. interests. Private industry must operate with a similarly broad view.

Darren E. Tromblay is a co-author of Securing U.S. Innovation (Rowman & Littlefield, 2016) and has been published on intelligence-related matters by Intelligence and National Security, Brookings’ Lawfare, and Small Wars Journal. He has served as an intelligence analyst with the U.S. government for more than a decade. Mr. Tromblay can be reached at Tromblay@gwu.edu. The views expressed in this article are entirely his own and do not represent those of any U.S. government agency.


The views expressed by authors are their own and not the views of The Hill.