THERE were no protests by members of Congress when the American company Keyspan announced yesterday that it had agreed to be acquired by National Grid.

Nobody went on television to decry the threat to national security posed by a merger that gives a foreign company control of America’s fifth-largest gas distributor There were no suggestions that terrorist-sympathising employees of National Grid might seize the opportunity to pipe poison gas into the homes of the 2.6 million customers of Keyspan in the New York area. This despite the fact that National Grid is headquartered in Britain, a country where home-grown terrorists killed 50 people in London last year, and which produced the shoe bomber Richard Reid.

Welcome to the strange and not entirely consistent world of foreign direct investment in the United States.

The hysterical reaction to the proposed takeover of P&O by Dubai Ports World (DPW) has rightly focused attention on the undercurrent of ugly xenophobia that characterises the way that some Americans view economic exchanges with the rest of the world.

DPW has been the victim of allegations that it is little more than a terrorist front and will jeopardise US security. To anyone who has observed security at America’s ports of entry, this is a particularly sick joke. Whether it’s airports or container terminals, the idea that the law enforcement agencies responsible for protecting the public are succeeding is absurd.

Some have argued that the DPW fiasco speaks not only to domestic fears about security but also to a wider economic nationalism. Yet the non-reaction to the Keyspace takeover makes that seem implausible. Indeed, if you’re a non-Arab company, you probably don’t have too much to worry about in the US, even if you’re investing your way into the heart of America.

With a current account deficit of $700 billion and apparently rising, the US needs a lot of foreign investment. And, despite the occasional alarms when the Chinese buy up the US Treasury market (even though it keeps American mortgages low) and more frequent harrumphing about foreign direct investment, the general climate in the US for investors is remarkably positive.

Indeed, economic nationalism may be worse in supposedly integrated Europe than it is in the US. France’s hostility to the Mittal-Arcelor takeover, and its hurried championing of the Suez-Gaz de France deal point up the perils of cross-border ambitions for companies looking to invest in Europe.

Not that there haven’t been periodic bouts of investment protectionism in the US. When the Japanese bought Rockefeller Centre in the late 1980s, it ignited a brief spasm of national paranoia that coincided with fears about America’s lost leadership in the world.

As it turned out, the fears of American decline proved as ill-founded as Mitsubishi’s investment judgments. The Japanese company bought the home of the Rockettes at the very top of the New York property market. The US won the Cold War and continued its ascent to global hegemony.

When Chrsyler sold out to Daimler a decade later, it produced another spurt of paranoia. But again, it was the investor rather than the company invested in that seemed ultimately to be the victim; Daimler has had a hard time digesting its American acquisition, while Chrysler must be hugging itself that it found a foreign suitor to preserve shareholder value.

But the bigger story is how well foreign investment in general has gone down in the US in the past 20 years or so. Whether it is German or Japanese carmakers, with their efficient manufacturing facilities, or the ubiquitous British food companies, property developers and others, there has been virtually none of the hostility that greeted foreign investment in the 1970s.

In fact a poll published last week showed that the vast majority of Americans have strongly favourable views of foreign companies. According to the survey, conducted for the Office For International Investment (OFII) by Public Opinion Strategies, 74 per cent of voters in the US think the US benefits from foreign direct investment.

Hardly surprising really. Subsidiaries of foreign companies in the US, according to OFII, employ 5.3 million Americans. The average pay at these companies is more than $60,000 per year, 34 per cent higher than at all US companies.

While television fulminators such as Lou Dobbs, of CNN, express outrage every night about the so-called outsourcing of America, the truth is that the American economy would be much poorer without foreign investment.

Most Americans seem to have an impressively level-headed view about the free global market in capital. Until, that is, an Arab company wants to improve the way US ports are run.

gerard.baker@thetimes.co.uk

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