IN THE NEWS ~ Nexen: Are we naive or visionary?

Nexen: Are we naive or visionary?

The stakes are huge for Harper, and the U.S. is paying attention

Tim Harper, Toronto Star

Duplicates: HAMILTON SPECTATOR (FIRST), A19 TORONTO STAR (ONT), A8

   Barack Obama last week became the first United States 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 state-owned
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 which 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.''

   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. tharper@thestar.ca

© 2012 Torstar Corporation