Harper’s delicate dance on Nexen
OTTAWA— Barack Obama last week became the first U.S. president in 22 years to block a Chinese takeover of an American asset, citing national security concerns.
It was a private deal, a Chinese buyout of wind farms in northern Oregon, too close, in the Democrat’s view, to a U.S. military installation.
It would be easy to blame election-year politics as the driver behind the decision.
Obama has regularly been criticized by Republican Mitt Romney for being “soft on China,’’ a message that works well in rust belt swing states, where it is easy to fuel resentment over China’s trade and manufacturing policies and its perceived currency manipulation.
Four years ago, Democrats took aim at Canada in those same states but the guns fell silent after voting day.
But U.S. attitudes toward China run deep — some would say verging on paranoia — and they may be moving across the 49th parallel as Stephen Harper grapples with one of the toughest decisions during his time in office, the proposed $15.1-billion Chinese takeover of Calgary-based Nexen.
In Oregon it’s the military base, but in telecommunications it is fears of wiretapping and spying.
The case of the Shenzhen-based telecom giant Huawei illuminates the different attitudes in North America as the Nexen decision looms.
In the U.S., Huawei has been repeatedly rebuffed because of espionage concerns.
In the past year, congressional opposition led to the death of Huawei’s bid for a division of Motorola and it withdrew a bid to supply equipment to Sprint Nextel for the same reason. It was before a congressional committee last month, defending itself over unsubstantiated suspicions of wiretapping and sabotage.
In this country, its expanding reach is celebrated by Harper at a Beijing signing ceremony and Ontario Premier Dalton McGuinty toured its new Markham headquarters.
Are we being naive or progressive?
New Democrats officially called for a rejection of the Nexen deal Thursday, but in so doing, they turned their objections into gripes over process rather than substance, taking a position they knew would immediately be branded by some as a typical anti-trade, protectionist position.
The party’s natural resources critic, Peter Julian, cited stateowned China National Offshore Oil Corporation’s environmental record, human rights concerns, fears of a “tidal wave” of similar takeovers and the lack of transparency in the decision-making process of the Conservative government.
A day earlier, the NDP lost a vote in the Commons that would have forced the Conservatives to hold public hearings into the takeover bid.
Julian acknowledged national security concerns, but conceded there are more questions than answers. He referred to a previous statement from the company in which it referred to itself as a “mobile national territory,’’ hardly the definition of a Crown corporation that would be familiar to Canadians. The party’s industry critic, Hélène LeBlanc, was more forthright during debate in the Commons. “Concerns over our country’s national security should take greater priority in the debate over ownership of our natural resources,’’ she said. In Canada, national security concerns posed by foreign takeovers are left to the industry minister and the cabinet to arbitrate. “In the United States, the law specifies that a committee must examine foreign investments and immediately consider that national security may be at risk when foreign investments touch on crucial sectors, such as infrastructure, mining, transportation, energy and key industrial capabilities,’’ LeBlanc said. “Where American law is clear, Canadian law is vague.’’ But the U.S. process also provides lots of room for such decisions to end up as the bone for partisan dogs. Obama has faced criticism for his wind farm veto. “The decision . . . will unfortunately be seen as yet another signal — this time from the highest possible level — that the United States does not really want Chinese investment,’’ wrote Edward Alden, a senior fellow at the Council on Foreign Relations. “And for an economy still struggling to create jobs, that’s the wrong signal to send.’’ CNOOC has run afoul of U.S. politicians in the past, most notably with its bid to take over California-based Unocal in 2005. Then, public and congressional backlash forced them in to retreat. Senior members of Congress from both parties are now pushing Obama to block the transfer of Nexen’s offshore leases to CNOOC if the takeover is approved here. The stakes are huge for Harper, the economic downside of a rejection obvious. But when he factors in national security concerns, he better bet that the tougher American view to Chinese investment is rooted in paranoia and partisanship, not solid intelligence. Tim Harper is a national affairs writer. His column appears Monday, Wednesday and Friday. tharper@thestar.ca