By Congressman Bob McEwen
Amid the largest land war in Europe since the Second World War, two things have become apparent: the need for a sustainable ammunition supply to counter Russian aggression has never been more prevalent and among the most crucial necessities in war are supplies and allies. Today, a pertinent review that is now making its way through the Committee on Foreign Investment in the United States (CFIUS) – the regulatory authority responsible for vetting all major foreign transactions – could have impacts on both fronts.
This spring Vista Outdoors, a major U.S. firearms and ammunitions manufacturer, announced it reached an agreement to sell its ammunitions division, the Kinetic Group, to the Czechoslovak Group (CSG). As its name implies, the buyer is headquartered overseas, which, coupled with the Kinetic Group’s role as a key ammunitions supplier has triggered a CFIUS review.
Soon after the deal was announced, a separate entity, MNC Capital, made a counter offer to buy Vista Outdoors. Ultimately, Vista rejected MNC’s bid and moved ahead with CSG. But, as the New York Times reported, this was not before outside actors stoked concerns that the deal could pose a national security issue. It should be noted that on its face, wrongly accusing a NATO supplier of having Russian ties is concerning – but it crosses another line entirely when it becomes clear that the accusation is being made (without evidence) against a company which has provided “hundreds of thousands of pieces of artillery ammunition” to Ukraine. As such, policymakers should let CFUIS’ review run its course unobstructed by such unsubstantiated public speculation.
The CFUIS review is intentionally rigorous. Spearheaded by the U.S. Department of Treasury, the process invites agencies from across government—including the departments of Defense, Justice and Commerce and the intelligence community—to thoroughly scrutinize transactions for any national security liabilities. Established in 1975, CFIUS was updated in 2018 by the Foreign Investment Risk Review Modernization Act (FIRRMA), which was meant to ensure the process had sufficient teeth to deal with modern transactions.
From an outside perspective, there is every reason to believe that CSG’s proposed purchase of the Kinetic Group will pass muster. Vista voluntarily withdrew and refiled its application for CFIUS review earlier this year to provide the committee with additional time to review the deal—a significant sign of good faith by the companies. And CSG has been through the CFIUS process before.
Just two years ago CFIUS reviewed a CSG acquisition of another American ammunition manufacturer (largely by the same top officials in the Biden cabinet) with no problems when it bought a controlling stake in Fiocci Ammunition. Today, CSG continues to operate Fiocci in the U.S., with domestic output actually increasing since the acquisition – demonstrating the company’s commitment to manufacturing in America and ensuring the integrity of the U.S. ammunition supply chain.
China and other adversaries are following CFIUS’ review closely. The decision will signal whether the U.S. is willing to help its allies develop their defense industrial sectors and thereby counter China’s and other’s illegitimate global ascension, or double down on a strategy of isolationism. That will have a huge bearing on countries like Taiwan, whose semiconductor manufacturing industries have offset China’s grip on the market and which the Chinese military openly antagonizes almost daily.
Of course, CFIUS’ review should not be a rubber stamp, either. It must take into account the full range of potential national security implications. But, again, it’s hard to imagine any serious red flags. The Czech Republic, where CSG is headquartered, is a strong ally of the United States and a member of NATO and the European Union. The country has been one of the strongest supporters of Ukraine, even leading a multi-nation initiative to speed up ammunitions deliveries.
If approved, CSG’s purchase of the Kinetic Group would bolster our ally’s military production capabilities and that of the NATO alliance more broadly, which is an important step towards multilateralism. And, unless CFIUS turns up publicly undisclosed evidence to the contrary, claims that the sale would jeopardize ammunition supply chains here at home should be dismissed. CSG has a long track record of operating in the U.S. – including with top American defense contractors – and if needed CFIUS could go further to put guardrails on the deal to address any lingering concerns.
Despite the reasons, motives, or financial incentives to sow doubt about this proposed deal, it is clear that there are global implications riding on the final decision. It is imperative that CFIUS be able to do its job and run a thorough review free and clear of public opinion campaigning or legislative interference. If that happens, Americans can be confident the deal is good for our allies, good for consumers here at home, and bad for our adversaries.
Congressman Bob McEwen represented the 6th District of Ohio for six terms and served on the Select Committee on Intelligence.