- The Washington Times - Sunday, May 14, 2006

Capitol Hill lawmakers are taking sides over another battle to block partial foreign ownership of a potential terrorist target — U.S. airlines.

The Transportation Department has proposed allowing foreign investors to increase stock ownership from 25 percent to 49 percent but limits the actual voting stock to the 25 percent that involves financial matters, not security issues.

In this round, however, the Bush administration is getting more support from Republicans who say foreign investment is needed to support a fledgling airline industry that saw four bankruptcies last year.

“It is designed not to encourage increased investment, it is designed to encourage some investment,” says Jeffrey Shane, transportation undersecretary for policy.

“U.S. airlines must be under the actual control of U.S. citizens,” Mr. Shane told a Senate panel last week, and there will be “no semblance of influence, no shadow of influence, no semblance of foreign control.”

The administration hopes to sway members in both the House and Senate to kill language tucked into the supplemental spending bill that blocks the new rule from taking effect until the end of the year — a false deadline say supporters to put the decision off until after the fall elections.

“Most everybody favors this, with a few exceptions,” says Rep. John L. Mica, Florida Republican and chairman of the House Transportation and Infrastructure subcommittee on aviation.

“This will benefit the airline industry that is capital-starved — almost all have been in bankruptcy — and it’s an opportunity for more employment, an expansion of routes, more sales of American aircraft and lower prices for consumers.”

Democrats, some unions and at least one airline testified last week that foreign control threatens national security.

“You’re all familiar with Hula Hoops and Frisbees and Slip ‘N Slides,” said Sen. Byron L. Dorgan, North Dakota Democrat. “They are all products produced by Wham-O Corp., which has just been purchased by the Chinese. No one heard a whisper from me about that purchase. I could care less whether there’s foreign ownership of Frisbees. But foreign ownership and control of U.S. airlines is of concern to me.”

The proposal is key to the ongoing negotiations over the Open Skies agreement with the European Union, which will increase the number of flights to Heathrow Airport in London.

Senate Republican supporters include Sen. Trent Lott of Mississippi and Sen. John McCain of Arizona, who says opponents are being “protectionists.”

“We will probably continue these protectionist policies to the detriment of the American economy, to the detriment of the American airlines and certainly to the detriment of the airline passenger,” Mr. McCain said.

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