In a complex set of transactions, Dubai is moving to acquire 19.9 percent of the Nasdaq in New York, placing the Arab government in an ownership position of the key U.S. stock exchange and raising concerns in Congress.

As a result of the transaction, Dubai also will acquire 28 percent of the London Stock Exchange, one of the oldest and largest in the world.

The transaction is being made through Borse Dubai, a holding company 100-percent owned by the government of the Emirate of Dubai and controlled by Mohammed bin Rashid al-Maktoum, the head of the Dubai ruling family.

According to its website, Borse Dubai was created Aug. 6 as the holding company for Dubai Financial Market and Dubai International Financial Exchange in a move to consolidate the Dubai government's two stock exchanges "as well as current investments in other exchanges, expanding Dubai's position as a global capital market hub."

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The announcement set off a firestorm of criticism in Washington, prompting President Bush to comment today in a news conference, "We're going to take a good look at it, as to whether or not it has any national security implications involved in the transaction. I'm comfortable with the process to go forward."

On July 26, Bush signed into law the Foreign Investment and National Security Act of 2007, a law passed after last year's controversy over the effort by Dubai Ports World to acquire London-based Peninsular & Oriental Steam Navigation, an international ports operating firm that would have given Dubai control of operations in up to 22 U.S. ports.

The Foreign Investment and National Security Act of 2007 was passed to strengthen the examination requirements of the Committee on Foreign Investment in the United States, or CFIUS, a highly secretive bureaucratic panel constituted by the Treasury Department to pass verdict on the national security implications of foreign investments in the U.S.

In a letter today, Sen. Charles Schumer, D-N.Y., urged Treasury Secretary Henry M. Paulson to conduct the Borse Dubai CFIUS review under the standards imposed by the Foreign Investment and National Security Act of 2007, even though most of the requirements of the new law do not take effect until later this fall.

Schumer chairs the Joint Economic Committee, composed of 10 members each from the Senate and House of Representatives.

"Nasdaq is not just any exchange, but one of the world's largest," Schumer wrote Paulson. "With approximately 3,200 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market."

Schumer's letter posed five specific questions for Paulson:

1. What national security concerns are raised by allowing a foreign government to own U.S. financial exchanges?

2. Specifically, with respect to Dubai, are there national security concerns about this particular country's influence or control over a U.S. exchange?

3. U.S. exchanges are a critical asset to our national economic infrastructure. What implications would foreign government control or influence have on our economic security?

4. U.S. economic security depends on continued competitiveness in a global financial market. What impact will this transaction have on U.S. financial competitiveness?

5. If national and economic security concerns can be satisfied, should restrictions be placed on this transaction to limit Dubai's control and influence over U.S. exchanges?

The Department of the Treasury could not be reached for immediate comment.

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