China’s bid has security risk: US experts: Purchase of Unocal
WASHINGTON, July 13: Security experts cautioned on Wednesday against China’s bid for US oil giant Unocal, warning US lawmakers that a takeover would have dire economic and national security repercussions for the United States.
The warnings came at a hearing by the House Armed Services Committee, whose Republican chairman, Duncan Hunter, underscored what many lawmakers see as foreboding threat posed by the bid from the China National Offshore Oil Corp. (CNOOC).
“Although it is a relatively small player in the United States energy market, Unocal is a significant provider of natural gas in Southeast Asia,” Hunter said, noting that the company’s pipelines also run though several Central Asian republics friendly with the United States.
“China’s purchase of Unocal would dramatically increase its leverage over these countries, and therefore its leverage over US interests in those regions,” Hunter warned.
Witnesses mostly agreed, saying the motives behind Beijing’s last-minute bid for Unocal, America’s ninth-largest oil company, must be closely scrutinized.
“One has to ask, why is the Chinese government willing to spend so much money to buy this company?” said Richard D’Amato, chairman of the US-China Economic and Security Review Commission.
“If it affects the national security of the United States, intervention by the US government must be seriously considered,” he said.
James Woolsey, former US CIA director, was even blunter: “Oil can be used as a tool of war,” he told the panel, and dismissed the view held by some that the regime will become less hard-line as its economic interests become more intertwined with those of the rest of the world.
The lone dissenting voice, Jerry Taylor of the free-market CATO Institute think tank, said that the risk posed by China is overplayed, and cautioned against alarm.
“The more China invests here, the less likely that we will be running into conflict,” said Taylor, director of natural resource studies at Cato.
“America has enough enemies abroad without conjuring new ones out of thin air.”
The board of Unocal was to meet on Thursday to go over the 18.5-billion-dollar offer from CNOOC, which trumped a bid worth 16 billion dollars from US oil company Chevron. Unocal shareholders will vote on August 10.
The hearing comes just two weeks after the House passed a resolution expressing concern that if the Unocal sale goes through, CNOOC “could take action that would threaten to impair the national security of the United States.”
The dire warnings reflected growing US unease over China’s recent ascent as a global military and economic power, and its increasing competition with the United States for scarce energy resources.
It also comes amid growing tensions over a recent flood of low-cost Chinese goods — particularly textile — in US stores, at the expense of American manufacturing.
Chinese firms, scanning the globe for potential acquisitions, have snapped up IBM’s personal computer business, and in addition to looking at Unocal, now is vying to purchase US appliance maker Maytag.
Militarily, China’s submarines soon will acquire supersonic missiles that could threaten US aircraft carriers if they moved to defend Taiwan.
US companies have clashed with the government over the loss of millions of dollars to Chinese theft of intellectual property, such as pirated movies and software.
Nevertheless, US business interests are reluctant to do anything that would alienate Beijing and its lucrative market of 1.3 billion consumers.—AFP
