Threat to National Security, Part 1

First off, let me say I'm a firm believer in the market, globalization in general, free trade and international capitalism. However, when all players don't play by the same rules, I begin to have issues with global trade.

But I absolutely draw the line at allowing enemies to own companies that are vital to national security. No matter how 'superior' they may be:

AP: CNOOC to Press on With Unocal Bid

By JOE McDONALD
The Associated Press
Thursday, June 30, 2005; 12:53 PM

BEIJING -- CNOOC Ltd. will press ahead with its takeover bid for Unocal Corp. despite a planned shareholder vote on a competing offer by Chevron Corp. and Unocal's recommendation that it should be accepted, the Chinese company's chairman said Thursday.

In an interview with The Associated Press, Fu Chengyu expressed confidence that CNOOC will persuade Washington the $18.5 billion offer for the ninth-largest U.S. oil company doesn't pose any risks to American national security.

"We'll continue to talk in negotiations, and we will meet with government figures for the (security) review," Fu said by telephone from his Beijing office. "I believe that our superior offer, which will help shareholders, this will convince the U.S. government this is a good offer."

Unocal, based in El Segundo, Calif., sent its shareholders proxy materials Wednesday with a letter from chairman and chief executive officer Charles R. Williamson reiterating its board's recommendation to accept the $16.6 billion offer by Chevron.

CNOOC says its all-cash offer will benefit the United States by paying Unocal shareholders more and causing fewer job losses. Chevron, based in San Ramon, Calif., has countered that its offer already has received regulatory approval and a switch to CNOOC could require lengthy new reviews.

Fu wouldn't say whether CNOOC might raise its offer.

"I think this is a kind of strategy that shouldn't be discussed," he said. "We don't have firm plans as to what we'll do. But we do have something that we are developing."

Fu denied that CNOOC was acting on behalf of China's government, which is in the midst of a multibillion-dollar campaign to secure foreign oil and gas supplies to power its booming economy.

Some members of Congress are urging President Bush to block CNOOC's bid, arguing that the deal threatens national security.

If Unocal decided to entertain the CNOOC offer, the deal would have to pass the scrutiny of the Committee on Foreign Investment in the United States, headed by Treasury Secretary John Snow.

However, some members of Congress are seeking to bar the Treasury Department from taking such action.

The chief concern is that CNOOC's bid for Unocal is part of a broader strategy by communist China to hoard energy supplies before they run out.

In a letter to Congress on Monday, Fu said CNOOC was eager to submit to such a review. He also attempted to address some of the concerns the deal raises about America's energy security by noting that Unocal's oil and gas production amounts to less than 1 percent of all U.S. consumption.

CNOOC also says it would consider selling some Unocal assets and putting those in the United States not connected to oil production under U.S. management if necessary.

CNOOC is based in Hong Kong but 70 percent of its shares are owned by China's third-largest government oil company. Fu is president of the mainland parent company in addition to his posts as chairman and chief executive officer of CNOOC.

"This company is driven purely by economics," Fu said. "If there's a good market, the more we can supply, the more value we can add for shareholders. Not because the government asked us to do it, but because we believe it's the profitable thing to do."

Fu said CNOOC wants Unocal's reserves, 70 percent of which are in Asia and 60 percent of which are gas _ a fuel that China is eager to acquire as an alternative to dirtier coal.

...

Earlier Thursday, the Chinese government tried to mollify American anxiety, insisting the bid is purely commercial and saying it wanted to see both the United States and China benefit.

"China wants to find a `win-win' result," said Foreign Ministry spokesman Liu Jianchao.

"This issue is a commercial transaction between two companies, and a normal exchange between China and the United States," Liu said. "It should stay free of political interference."

As told by Christo on June 30, 2005 @ 13:44

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