As Stocks Sink, Pentagon Fears Foreigners Will Buy Control of US Defense Firms

By Marcus Weisgerber

March 25, 2020

Top Pentagon leaders fear the decline in stock prices prompted by the coronavirus outbreak could lead to an increase in foreign investment in — and control of — U.S. defense companies. 

The foreign investment issue is something that I've been tracking for the last couple of years,” Ellen Lord, defense undersecretary for acquisition and sustainment, said during a Wednesday briefing at the Pentagon. “There's no question that we have adversarial capital coming into our markets through the various needs.”

While concerns about foreign investment in U.S. companies are hardly new, Pentagon officials have become increasingly worried as the pandemic sends markets plummeting.

We have tools to combat adversarial capital, like strengthening and expanding national security investment reviews under the Committee on Foreign Investments in the United States … are more important than ever,” Jennifer Santos, deputy assistant defense secretary for industrial policy, said during Wednesday’’s briefing. “We simply cannot afford to let this period of uncertainty eat into reviews that for investments is shifting into hyper vigilance.”

Last year, the Pentagon launched an effort to combat Chinese investment in some niche technology sectors, including small drones. Under the so-called Trusted Capital Marketplace, defense officials  would create a list of investors not backed by foreign financiers.

By Marcus Weisgerber // Marcus Weisgerber is the global business editor for Defense One, where he writes about the intersection of business and national security. He has been covering defense and national security issues for more than a decade, previously as Pentagon correspondent for Defense News and chief editor of Inside the Air Force. He has reported from Afghanistan, the Middle East, Europe, and Asia, and often travels with the defense secretary and other senior military officials.

March 25, 2020