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Red storm ahead

By Lou Dobbs




Unocal Corporation
United States
Duncan Hunter

(CNN) -- Americans owe Congressman Duncan Hunter their gratitude and congratulations. The powerful chairman of the House Armed Services Committee ordered hearings on China's $18.5 billion bid to buy California-based Unocal this week.

Not only were Chairman Hunter and his committee the first elected officials to seek the truth about the Communist Chinese government's effort to buy this important U.S. energy asset, they did so in direct opposition to the demands of the Chinese government that Congress not interfere with what it calls a "purely commercial" transaction.

Congressman Hunter and the Armed Services Committee had the temerity to actually put U.S. national security ahead of so-called free trade and laissez-faire politics. Their courage stands in stark contrast to the default libertarian views of the Bush administration and its obvious role as lackeys of U.S. multinationals. It also stands in stark contrast to the cowardly and unprincipled congressional vote to deny President Bush the power to impose sanctions against European companies that sell weapons and sensitive technology to China.

Even if the Chinese National Offshore Oil Company, or CNOOC, agrees to every demand the Unocal board of directors requests, we must always intensely question and analyze the promises of a company that's 70-percent-owned by a Communist government. And the Chinese state's mission is clear, whether we choose to continue our ongoing naiveté or awaken to reality: It seeks to control the world's natural resources, become the global manufacturer of choice and rapidly build its military power to rival that of the United States.

You have to hand it to the Chinese government, though. China has the audacity to demand that the United States' Congress allow this deal to proceed, despite the utter absurdity and contradictory position it holds, denying foreign ownership of companies in its country, including its energy assets. The Chinese also must have absentmindedly forgotten it owns nearly all of CNOOC and carries an unadulterated record of currency manipulation and unfair industry subsidization.

As former CIA Director James Woolsey testified at the Armed Services hearing: "For anyone who believes that this is purely a commercial undertaking, unrelated to a national strategy of domination of energy markets and of the western Pacific, I would suggest that that view is extraordinarily naive."

While China is showing its teeth on this deal, President Bush is saying nothing at all. Speaking at the G8 summit in Scotland, the president said he thought it best to let the U.S. security review of the offer "move forward without comment." Some of our lawmakers have spoken out against the bid, but there's been no indication whatsoever from the people in charge of protecting the homeland and upholding our national interest that the merger will be challenged.

China has an astounding $700 billion in U.S. currency in reserve. Here's an idea of what China could do with that money if this administration and Congress decide to allow it to buy the U.S. strategic assets: $700 billion, for example, could buy all of this nation's top oil companies, worth an estimated $615 billion. It would still have enough money to buy two of our top defense contractors, Boeing and Lockheed Martin, worth a combined $81 billion.

Having covered Wall Street for several decades, I understand the desire for Unocal's board to back CNOOC's bid, which bests the Chevron offer by $2 billion. After all, the board has a duty to secure the best possible deal for the company's shareholders. But this offer should by no means win the complicit support of the U.S. government or the Bush administration, especially at a time when crude oil, heating oil and gasoline prices are rising to new record highs seemingly every day.

"It makes no rational sense to help China soak up more and more supply," says C. Richard D'Amato, chairman of the U.S.-China Economic and Security Review Commission, "pushing us toward an earlier energy train wreck in the foreseeable future."

But not only would China gain control of oil pipelines and gas storage across North America and key assets in Alaska's Cook Inlet and North Slope, we would be transferring technology for Alaskan oil production and deep sea drilling that could have significant military applications. And I hope I'm not alone in thinking it would be a grave mistake to give the Communist government of China such a strategic asset.

"The object of China's strategy is inexorably to supplant the United States as the world's premier economic power," says Frank Gaffney, president of the Center for Security Policy, "and if necessary, to defeat us militarily."

And shortly after Congress denied the president the power to impose sanctions against companies selling arms to China, a top Chinese general fiercely declared the People's Liberation Army would respond with nuclear weapons if it's provoked by the United States. Engagement anyone?

Laissez-faire economics can no longer disguise the potentially ruinous C'est la vie politics that define our relationship with China.

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