The Conservative Beacon

Uniting the Conservative Movement

U.S. Security Concerns Block China’s 3Com Deal

Posted by Joshua Price on February 22, 2008

Well those of us concerned about American sovereignty and security can chalk up another victory.

The potential merger between a Chinese company, Huawei Technologies, and 3Com has been shot down due to potential national security risks.

From The New York Times:

Does the “America for Sale” sign require a warning label?

That would seem to be the case in light of the apparent collapse on Wednesday of a Chinese company’s effort to purchase a stake in 3Com, an American maker of Internet router and networking equipment, in the face of Bush administration questions about the deal’s national security risks.

The proposed $2.2 billion deal had called for Bain Capital, a private equity firm based in Boston, to join with a Chinese company, Huawei Technologies, to acquire 3Com. The snag was that 3Com makes antihacking computer software for the military, among other things, and Huawei Technologies has ties to the Chinese military.

A special federal panel, the Committee on Foreign Investment in the United States, or Cfius, had been examining the national security risks of the deal. A person briefed on the talks said that at one point, 3Com offered to divest itself of the antihacking software unit, known as TippingPoint, but that the Bush administration was unswayed.

But if you think that we can relax and feel reasonably certain that our government has decided to crack down on foreign investments in technologically or security sensitives areas, think again:

Despite the collapse of the 3Com deal, American officials and specialists in the field said it would be premature to conclude that the United States had decided it needed to crack down on foreign investments, even in delicate technology areas.

You can bet that we will continue to monitor potential deals that would compromise our national sovereignty and or/security.

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