Time for post-election sanity: Approve Nippon-US Steel deal

Every knowledgeable observer of the Nippon Steel-U.S. Steel drama knows that the politics of the presidential election had warped what should have been a simple decision: to approve the best available offer for the legacy American steel company, and the only one likely to keep steel manufacturing in the Steel City.

With the election and all its political pressures behind us, President Joe Biden should approve Nippon’s proposed acquisition of U.S. Steel. Or he should do nothing, and allow his successor, Donald Trump, to do so. What Biden must not do is block the deal during his lame-duck tenure, which would only hasten the end of steelmaking in southwestern Pennsylvania under the guise of protecting American economic and security interests.

The renewed enthusiasm for using federal authority to block or to shape foreign interventions in the U.S. economy that are not in the national interest is a good development. Washington should be more aggressive about defending U.S. interests, and not allow strategic American assets to be traded like Monopoly properties in the global economy.

But Nippon’s investment in American steelmaking is a terrible test case for this flex of federal muscle. Nippon is a cash-flush company from an allied nation whose interests, especially regarding China, closely align with America’s. It’s a deal which promises to breathe life into a struggling regional industry while maintaining, or even expanding, U.S. production of strategic materials. Blocking the deal may be emotionally satisfying — it is not pleasant to see the iconic U.S. Steel on the auction block — but it will accomplish nothing but signal paranoia to America’s allies.

Further, a new report from the Post-Gazette has revealed just how lax federal oversight of foreign investments in American steel production has been — demonstrating just how unusual, and political, Washington’s treatment of Nippon has been. In recent years, the PG reports, the Committee on Foreign Investment in the United States (CFIUS) — an interagency panel that reviews major foreign transactions involving U.S. firms — allowed a Ukrainian oligarch to collect small steelmaking facilities across the country.

That oligarch, Ihor Kolomoisky, is under U.S. investigation for using these American steel holdings as part of a complex money-laundering operation, and is now serving a prison sentence in Ukraine for fraud and murder. CFIUS never examined the oligarch’s dealings in America, but is suddenly terribly interested in protecting U.S. interests when Nippon offers to invest over $1 billion in Pittsburgh-area steelmaking — a boost most observers here had given up on, and an offer which would be impossible from any other suitor.

It’s a series of events that raises the question: What is CFIUS really for — objectively assessing security risks to the United States, or laundering the political preferences of the current administration? A negative evaluation of the Nippon-U.S. Steel deal would be embarrassing for the committee.

And domestically, it would be an act of economic vandalism for Biden or Trump to scuttle the Nippon-U.S. Steel deal. The Japanese investment will save thousands of jobs in the Pittsburgh area alone, and possibly add many more. Grandstanding from both men (and from Vice President Kamala Harris) during the campaign was damaging enough. Following through on that grandstanding, rather than weighing the facts in the light of reason, would be far worse.

— Pittsburgh Post-Gazette