Author Topic: Government Can Stop Sale of Canadian Companies on Grounds of National Security  (Read 22714 times)

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Offline E.R. Campbell

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More on the China/oilsands issue, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail:
China's move into oil sands irks Washington
Alarm bells are sounding in the U.S. capitol over PetroChina's $1.9-billion investment in Alberta projects
Shawn McCarthy

Ottawa — Globe and Mail
Wednesday, Sep. 02, 2009

PetroChina Co. Ltd.'s (PTR-N109.15-0.60-0.55%) $1.9-billion investment in the oil sands is raising alarms in Washington, with thehead of a congressionally-appointed China watchdog saying the company is clearly a vehicle of Beijing's Communist government.

Carolyn Bartholomew, chairwoman of the U.S.-China Economic and Security Review Commission, said Tuesday that Ottawa should subject the proposed investment to a thorough review that would include sensitive national security issues.

And she rejected the contention by PetroChina and its supporters that the state-owned enterprise acts like any other commercial oil company in its international operations, professing concern about a growing Chinese presence in America's “backyard.”

“I think that an acquisition like this should raise national security questions both for the government of Canada and for the government of the United States,” Ms. Bartholomew said in an interview from Washington.

With reserves second only to Saudi Arabia, the oil sands have been recognized as an important component of U.S. energy security. The State Department explicitly cited the benefits of a secure, non-Middle East source of oil when it issued a permit last month to Enbridge Inc.'s $3.3-billion Alberta Clipper project, which will carry oil sands bitumen to U.S. refineries.

Ms. Bartholomew declined to say whether Ottawa should block the deal, saying that is a decision for the Canadian government to make.

Under the Investment Canada Act, Ottawa reviews foreign takeovers worth more than $600-million to ensure they represent a net benefit to Canada, and has recently added a national security test that requires input from departments responsible for Canadian security.

In December, 2007, the Harper government introduced guidelines for state-owned enterprises looking to invest in Canada. It said it would approve deals that are made on a commercial basis from companies that have transparent and commercially oriented corporate governance.

Prime Minister Stephen Harper Tuesday acknowledged that PetroChina's investment in the assets controlled by Athabasca Oil Sands Corp. is more controversial than a private sector, foreign investment in Canada would be.

“I will just say that there are laws in place to review foreign investment transactions when they meet a certain threshold and our government has strengthened those reviews by including a clause that allows officials to examine issues of national security,” he said.

Ms. Bartholomew said PetroChina and China's two other major state-owned oil companies –Sinopec and CNOOC – are key players in the Asian giant's drive for energy security.

“The evidence is that they aren't commercial companies. Some people believe they function a little independently, but the reality is they are controlled by the government, and for that matter, they are controlled by the Communist Party, which of course controls the government,” she said.

The bipartisan commission that Ms. Bartholomew heads was created by Congress in 2000 to monitor China's economic expansion and provide advice on its implications for U.S. security interests, and it has influence with the so-called “China hawks” among both Democrats and Republicans on Capitol Hill.

Ms. Bartholomew was originally appointed to the commission in 2003 by Nancy Pelosi, then minority leader in the House of Representatives and now Speaker of the House. Before joining the commission, Ms. Bartholomew served as Ms. Pelosi's foreign affairs adviser.

PetroChina is the international operating arm of China National Petroleum Corp., the country's largest oil and gas company. The subsidiary has shares listed in New York, Hong Kong and Shanghai, and employs some independent directors on its board.

Wenran Jiang, a China expert from the University of Alberta, said PetroChina's investment in the oil sands appears to be commercial in nature.

Gordon Giffin, a former U.S. ambassador to Canada, said he doesn't expect the Obama administration to oppose the Chinese investment in the oil sands.

“While the leases involved are pretty substantial, in the scheme of things, it's not that huge,” said Mr. Giffin, now a lawyer who now works with several Canadian energy firms.

But the deal will certainly raise the profile of the strategic value of the oil sands at a time when U.S. environmentalists are pushing for punitive measures that would discourage development in order to limit emissions of greenhouse gases.

“I think it's good in the sense that it's an event that should bring about some turning of attention by American energy thinkers to the value of the assets sitting in Alberta, and not enough thought is given in Washington to the strategic value of the assets that sit in Canada,” Mr. Giffin said.

If, and it’s still a very BIG IF we are going towards a fall election then Ms. Bartholomew’s “suggestion” that ”Ottawa should subject the proposed investment to a thorough review that would include sensitive national security issues” is almost a 100% guarantee that the sale will go ahead with only the most cursory review. Most Canadians are, broadly, anti-American and they love nothing more than to ”pull the eagle’s feathers” when that can be done without fear of reprisal.

Giffin gets it. The proposed deal is not, in and of itself, a “big deal” and it might, finally, provide a wee tiny bit of logical thinking in Washington – something that has been sadly lacking for nearly 20 years.

Caveat lector: I have a pretty long record of advocating a sharp turn in Canadian foreign policy – away from Europe and towards Asia. I do not regard China as a military threat to the West, in general, and to America in particular. I know some (many?) US officials want to make China into a threat but, in most cases, the real “enemy” they are battling is in Washington and it consists of people who want to cut budgets for defence projects that “need” a big, sophisticated “competitor” like China. I am, additionally, a philosophical free trader. I oppose trade restraints, including those based on “national security” grounds. I thought the government’s decision to block the sale of MDA, for example, was entirely unjustified and, mainly, was a reaction to the “knee jerk anti-Americanism” (of too many “ordinary” Canadians) that drives too many decisions made by Canadian governments.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline GAP

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Well your comments yesterday regarding the US sitting up and taking notice has come to fruition.....was it not Japan/China that was investing heavily in infrastructure inside the US not more than a decade ago? Strange how that's OK for us, but not you....
Two things are infinite: the universe and human stupidity; and I´m not so sure about the universe

Offline MarkOttawa

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MacDonald Dettwiler back in the news--will gov't do anything?
MacDonald Dettwiler to buy satellite imagery firm DigitalGlobe for $3.1-billion
DigitalGlobe’s satellites supply high-resolution images to its customers such as the U.S. Department of Defense and companies including Facebook Inc. and Uber Technologies Inc...

MacDonald, Dettwiler head office may move from Vancouver to U.S.

...given the highly sensitive nature of the technologies involved and the number of approvals required on both sides of the border, the deal has hurdles to jump.

Asked if MDA has received any objections from the Canadian government, [MDA CEO Howard] Lance told The Canadian Press: "Not that I'm aware of."

Lance said he thinks the administration of U.S. President Donald Trump will see the deal as positive "based on our ability to bring the U.S. government [NGA, NRO, Pentagon] enhanced solutions to their missions."..

Ça explique, mais ça n'excuse pas.