Deputy Secretary of the Treasury Robert Kimmitt provided an overflow Atlantic Council audience with a “snapshot” of how Treasury is working in the United States and abroad to advance open economies while protecting US national security.  Kimmitt said that globalization will only grow and that “the prosperity of the United States and the world economy will depend in large measure on our ability to balance open investment regimes and national security interests.”

Turning first to stress the importance of open investment policies, Kimmitt said for too long the fight against protectionism focused on trade and not investment.  The US is working hard to foster open investment policies that facilitate cross-border flows of capital, which is one of the three elements of a healthy global economy:

To balance an open economy with the need to protect national security, Kimmitt highlighted the role of the Committee on Foreign Investment in the U.S. (CFIUS), a thirty year old interagency group which reviews foreign investments in a manner that preserves national security without creating barriers to the U.S. market.  While attracting controversial press and Congressional attention during the Dubai Ports World controversy, Kimmit stressed that the vast majority of foreign investments reviewed by CFIUS continue to be processed expeditiously and without controversy within the initial 30-day investigation period. 

Kimmitt gave his address on the eve of his visits to China and Russia for talks on open investment.  Both of those nations are the top largest repositories of sovereign wealth funds, and Treasury wants to be sure they consider investment opportunities in the United States together with efforts to open their economies to greater participation by U.S. and other foreign firms.

Illicit finance was Deputy Secretary Kimmitt’s next topic, which can be the downside of an open economy and the free flow of capital across borders.  Kimmitt stressed that the international community must work together to ensure that “terrorists, proliferators, drug syndicates and organized criminal elements” cannot use the efficiency of the global financial system and cross-border capital flows to aid and abet their illegal activities.  Financial intelligence and analysis play a key role in the fight, and a robust Treasury capability has been built to take on this task, which is also a fully integrated part of the U.S. intelligence community.

Kimmitt reminded the audience that Treasury is also on the front lines of the struggle against terrorism and WMD, working to detect, disrupt, and dismantle illicit financial networks of those that sponsor terrorism or WMD proliferation.  He believes Treasury’s efforts have been successful, an example being Treasury’s role in the implementation of UN Security Council Resolution 1747 against Iran, which targets Iran’s nuclear and missile programs and obligates states to freeze the assets of named entities and individuals associated with those programs, including Iranian state-owned bank Sepah.

In closing, Kimmitt stressed the role the private sector must play in protecting the international financial system from abuse and pointed to Treasury’s efforts to share information with international financial institutions as an important contribution to helping business do its part.  Government and business are allies in a common fight against those who would use the financial institutions to support terrorism or other activities that threaten national security on the one hand, as well as threaten the reputation and financial integrity of business and financial institutions on the other.

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