Some Yankees Go Home

MANY countries express a love-hate relationship about U.S. capital.

They prize the economic growth, advanced technology and jobs that American investment brings, but at the same time worry that Yankee corporate colossi will rob them of economic independence. Thus foreign investments are alternately sought out and chased away. Now the cycle is in a marked swing toward nationalism. Country after country is imposing or contemplating restrictions on the American investment that it was once pleased to get. Generally, the measures are aimed against certain types of investment, not against all U.S. capital--a policy of "Some Yankees Go Home." Among the places where it is manifest:

> In Canada, the government last spring proposed an act that would have banned takeovers of sizable Canadian companies by foreign owners unless a government review board found that such acquisitions promised "significant benefit" to the national economy. Before the bill could be passed, Parliament was dissolved in preparation for last week's election. The inconclusive results left Canada's future course unclear. The governing Liberals, who pledged to reintroduce the act, lost many seats to the Progressive Conservatives, who opposed the act--but the Conservatives have their own ideas for controlling foreign investment. Among other things, they would require all federally chartered companies to have a majority of Canadian citizens on their boards.

> In addition the New Democratic Party increased its power in Parliament, and its support will be vital to any new government. The N.D.P. has taken a strong stand against U.S. investment; Party Leader David Lewis has regularly denounced "corporate welfare bums," including General Motors and Ford, which, he claims, earn excessive profits in Canada while paying only minimal taxes. In British Columbia, an N.D.P. administration that came to power in September has announced that within the next four years it will nationalize British Columbia Telephone Co., which is controlled by a subsidiary of General Telephone & Electronics of the U.S.

> In Australia, which was once so eager for U.S. investment that former Prime Minister John Gorton likened the country to "a dog lying on its back with its legs in the air waiting for its tummy to be tickled," fear of U.S. economic domination has become an issue in the campaign for national elections on Dec. 2. The ruling Liberals last month enacted legislation under which the government plans to stop acquisitions by foreign investors of a 15 % or larger voting interest in Australian companies that have assets of $1,000,000 or more. Agitation is high for still tougher measures. An all-party committee of the Australian Senate has called on the government to give "urgent consideration" to limiting or even excluding altogether further foreign investment in "strategic" areas of the Australian economy, including banking and mining.

> In India, Esso Eastern Inc.,* the country's largest U.S. investor, expects to suffer its first loss on refining operations this year. The reason is that India has made it difficult for overseas-owned oil companies to buy as much imported crude oil as they need to run refineries efficiently; the government will not let the companies acquire scarce foreign currency in the quantities needed to pay the currently rising prices for imported crude. Frustrated officials of Esso, which has invested $99 million in an Indian refinery, 2,000 gas stations and a half-interest in a lubricating-oil venture, have proposed to negotiate sale of all these assets to the government. Under the terms of its concession, Esso cannot be nationalized until 1979, but the company in effect is offering to go home now if it is not wanted.

>In Argentina, the government is also making life sticky for foreign oilmen, even though both major parties say that they still welcome U.S. investment. The government diverts so large a share of crude oil supplies to a state-owned combine, Yacimientos Petroliferos Fiscales, that the foreign concerns, principally an Exxon subsidiary and Royal Dutch/Shell, are running their refineries at little more than half of capacity. The government recently invited bids on an exploration contract in Tierra del Fuego--where potential reserves are so rich that the territory is sometimes called "Argentina's Kuwait" --but under such restrictive conditions that no foreign company dared take the risk.

> In Mexico, the government is drafting legislation limiting purchases by companies of foreign patents, copyrights and other technology, and outlawing some types of business arrangements like those that oblige Mexican affiliates not to export products in competition with a parent U.S. concern. The government also talks vaguely of a comprehensive investment-control law. Some U.S. businessmen would welcome definite regulations because they would at least clarify a confusing situation. Mexican politicians have been assailing foreign investment in inflammatory terms; Finance Minister Hugo Margain last week condemned as "traitors to Mexico" those nationals who, he said, serve as "front men" for foreign-owned companies. Yet President Luis Echeverria Alvarez declares that foreign capital is still wanted if it is "complementary to our development." The government indicates that it wants investment that would create jobs, enable Mexico to make for itself products that it must now import, or increase output of goods for export. But it will demand that foreigners sell majority control of their enterprises to Mexicans.

Good Manners. The news is not all bad for U.S. investors. In Western Europe, Gaullist suspicion of American capital has largely evaporated; U.S. concerns actually are being invited to participate in the development of some of Europe's poor regions, like Southern Italy. Elsewhere, U.S. companies can do little to counter the new wave of economic nationalism. The right of a host country to determine how much foreign capital it will allow entry, and under what conditions, is unquestioned. American companies would be well advised, however, to shun takeovers of existing domestic companies, the type of investment that provokes the greatest nationalist ire. Instead, U.S. companies should concentrate on setting up new plants in industries that clearly need outside capital, and invite local businessmen to participate by purchasing stock in U.S. operations, or forming joint ventures with them. That low-profile approach would constitute good corporate manners at any time, and now it seems especially needed.

* An affiliate of Standard Oil Co. (New Jersey), which last week changed its name to Exxon Inc., and adopted the Exxon name for all products sold in the U.S.--while retaining its other familiar names, like Esso, abroad.

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