A Chinese communist-controlled company is using 'free' money to take over strategic oil assets in the United States, and will threaten America's national and energy security. That is the red flag the US House of Representatives waved last Thursday when it voted 398-15 on a non-binding resolution to urge the Bush administration to refrain from approving the China National Offshore Oil Corp's acquisition of American oil and gas producer Unocal Corp.
The belief of paranoid US politicians that the economic emergence of China constitutes a threat has completely overshadowed what should have been a normal business transaction. Since the September 11 attacks, the US has placed its emphasis predominantly on national security. It will go to any lengths to ensure it, even if that means apprehending terrorist suspects in a country without alerting its government, as the CIA appears to have done two years ago in kidnapping a Muslim cleric in Milan.
However, CNOOC's planned acquisition of Unocal has few implications for US national or energy security, a point which has been consistently and convincingly argued by more and more economists and mainstream media in the US.
Unocal has few strategic oil assets in the US; more than half of its production and reserves are in Asia - the prizes that both CNOOC and rival Chevron are really after. Unocal's production in Asia has never been shipped to the US.
To help ease fears about national security, CNOOC is willing to give up control of Unocal assets in the US, according to company officials.
During the past 20 years, CNOOC has been working with a number of US and other western oil giants, including Chevron, over drilling in the South China Sea. Beijing has never complained about China's national security being threatened.
Since it went public in 2001, CNOOC has raised at least US$5 billion from overseas stock and capital markets, all in a very public and transparent manner. As the Chinese government is pushing state banks to become commercial by luring American and other western banks as investors and floating them on the stock markets, it is difficult to imagine billions of US dollars would be given to CNOOC for free to fund the takeover, contrary to accusations by Peter Robertson, Chevron's vice-chairman.