Legislation Introduced to Keep Tabs on Arab Investments in U.S.

The Senate subcommittee on securities is studying legislation aimed at barring investments detrimental to the American economy, notably by the wealthy Arab oil producing states. The legislation was introduced in the Senate this week by Sen. Harrison A. Williams (D.NJ) and referred to the subcommittee which he heads. The measure would require disclosure of all substantial foreign holdings in American firms and would authorize the President to prohibit foreign investments that could harm the economy or U.S. foreign policy.

Williams noted in a statement that his bill would be directed at all foreign investors. He pointed out, however, that the Arab nations have received huge amounts of capital recently as a result of their oil exports, far in excess of what they could channel into their own economies. He said that in 1973, the Arab oil producers took in $112 billion while their countries at best could absorb only an estimated $60 billion leaving a huge surplus for investment abroad.

The Senator acknowledged that some foreign capital investment is needed in the U.S. “But we must ask ourselves,” he said, “whether permitting foreign investment without any government oversight is consistent with the national interest. In my opinion, the absence of a watchman at our door exposes us to dangers which we have no reason to accept. This is particularly true in light of unpredicted political and economic implications of Arab oil diplomacy,” Williams said.

An aide to the Senator explained that he was referring to the ability of foreign investors to cripple the American economy if they gained control of large companies. They could provoke a recession by laying off large numbers of employes or they could cause a crisis in the manufacture of defense weapons by refusing to manufacture such items as steel, the aide said.