The Federal Election Commission has ruled foreign donors can finance U.S. referendum campaigns, opening the door to foreign spending on fights over high-profile policy issues, Axios has learned.

Why it matters: Foreign nationals are barred from donating to U.S. political candidates or committees. But the FEC’s decision — allowing them to support ballot committees — provides another avenue for foreigners to directly influence U.S. voters and domestic policy.

• A major question stemming from the decision is whether foreign nationals are now permitted to spend money to influence the actual mechanisms of the U.S. democratic process.
• That would include congressional redistricting, which is frequently subject to ballot referenda.
• The FEC’s ruling did not address that question, meaning it will likely be litigated in future fights at the commission.

The decision only concerns federal law; states remain free to outlaw foreign funding for state-registered ballot committees.

• Seven states already do so.
• In Maine, where a Canadian-owned power company is financing a ballot committee pushing for new energy transmission lines, Gov. Janet Mills, a Democrat, recently vetoed legislation to ban foreign ballot measure funding…

Driving the news: In a 4-2 vote in July, the FEC ruled ballot initiatives are not “elections” under existing federal law, and therefore the foreign donation prohibition doesn’t apply…