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No Investment in Repression

The Washington Post has picked up the shocking story (broken by the New York Times and mentioned in contentions last week) of China Security and Surveillance Technology. This is a company that supplies high technology tools of repression to Beijing’s secret police and whose stock is hot right now; it has also received the lion’s share of its capital from U.S. hedge funds, and is about to be listed on the New York Stock Exchange. Columnist Harold Meyerson tells the story in today’s edition. He estimates that “high-end surveillance equipment” which was a $500 million industry in 2003 may be worth “$43 billion . . . by 2010.”

“To be sure, leading American companies have a long and sordid record of investing in totalitarian states, including Hitler’s Germany, Stalin’s Russia, and axis-of-evil Iran,” Meyerson notes. “But distinguish as we must among the various levels of hell, at least those American companies did not invest in the Gestapo, the Stasi, the KGB, or the Revolutionary Guard. Maybe that was only because it was hard to turn a buck on the Stasi. Once China turned repression into an investment opportunity, however, capitalism responded as capitalism is supposed to respond: it wanted in. There are mega-bucks to be made, the hedge funds concluded, in hedging against democracy.”

When we set up today’s special economic relationship with China, our plan, ostensibly, was to encourage China’s embrace of freedom and democracy; unfortunately, our current relationship with China entails turning our backs on our most fundamental values. Meyerson reports that when “[a]sked about the hedge funds’ activities, White House spokesman Tony Fratto said, ‘It’s not appropriate to interfere in the private decisions of Americans to invest in legally incorporated firms.'”

Not appropriate? The United States government forbids any economic relations with Cuba and other designated states—and once forbade them totally with a Communist China that has changed less, when it comes to human freedom, than some imagine. And under the Foreign Corrupt Practices Act we ban bribery, kickbacks, and so forth by American firms doing business overseas—even when other, competing countries are using such tools to win contracts.

What we need now is a “Foreign Oppressive Practices Act” that would outlaw American investment in, technology transfer to, or any other cooperation or collusion with the secret police and militaries of states that are not free. Drafting such a law will not be difficult. All we need is will and leadership. Some investors and traders will squeal, yes. And China and other dictatorships will still get much of what they need from countries that do not have such rules. But equipping foreign secret police organizations is no business for the United States of America (or any other country claiming to possess democratic values). The White House should speak out clearly. The Congress should take immediate action.



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