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Article 26



World

China seeking to curb US clout in Asia, say critics

Eugene Low , US Correspondent
724 words
15 July 2005
Straits Times
English
(c) 2005 Singapore Press Holdings Limited

But others dismiss warnings of many lawmakers as alarmist

WASHINGTON - A BID by China National Offshore Oil Corp (CNOOC) to buy one of America's largest oil companies, Unocal, drew plenty of flak in Congress, with critics slamming the move as an attempt by Beijing to curb US influence in Asia.

'A Chinese takeover of Unocal will introduce or increase political influence in all the regions where Unocal's assets are located, some of which are of political and strategic importance to the United States,' said Mr Richard D'Amato, chairman of the US-China Economic and Security Review Commission.

He told the House of Representatives' Armed Services Committee on Wednesday that the deal was not merely commercially driven, but was aimed at advancing Beijing's strategic interests at the expense of the US.

The bulk of Unocal's assets are in South-east Asia. Among these are natural gas production facilities in Indonesia, which supply Taiwan, Japan and South Korea.

Mr D'Amato warned that if CNOOC locked up Unocal's gas holdings in Indonesia, there could be a threat to regional security.

Mr Frank Gaffney, a Pentagon strategist under the late president Ronald Reagan, said the deal was guided by Beijing's 'ominous' strategy to gain 'dominance over strategic energy resources and technologies'.

'China's aim is inexorably to supplant the US as the world's premier economic power and, if necessary, to defeat us militarily,' he said.

Republican Representative Duncan Hunter of California, who heads the influential Armed Services Committee, had convened the hearing.

Mr Hunter, who has been a consistent critic of CNOOC's US$18.5 billion (S$31.5 billion) bid, told reporters it would be a mistake for the administration to allow the deal to go through.

The proposed transaction is to be reviewed by the US government's Committee on Foreign Investments in the US.

Mr Hunter said he would consider legislation to block the deal even if it were approved by the government. The House has approved a measure to block the Treasury Department from using funds to approve CNOOC's bid.

The deal has provoked sharp opposition from Congress. China-bashing is on the rise as politicians become increasingly worried by its growing military and economic clout.

Most of the lawmakers at Wednesday's hearing agreed that selling Unocal to CNOOC, which is 70 per cent owned by the Chinese government, would harm America's interests.

A number of senators have also made similar protests. Republican Senator Chuck Grassley of Iowa, who chairs the Senate Finance Committee, and Democrat Senator Max Baucus of Montana said in a letter to President George W. Bush on Wednesday that the deal could contravene China's obligations to the World Trade Organisation.

Some experts, however, have described such concerns as alarmist.

Cato Institute analyst Jerry Taylor said at the hearing that Congress was wrong to imply that Chinese control of Unocal would hurt US interests in the global oil market.

'Even if a Unocal-CNOOC transaction led to the diversion of oil to China, it would have no net effect on the amount of oil available to buyers in the world market,' he said. 'America has enough enemies abroad without conjuring more out of thin air.'

His point was not lost on all the lawmakers at the hearing.

'If you call China an enemy, it will become an enemy,' warned Democrat Representative Vic Snyder of Arkansas.

eugene@sph.com.sg

POLITICAL CONCERNS

'A Chinese takeover of Unocal will introduce or increase political influence in all the regions where Unocal's assets are located, some of which are of political and strategic importance to the United States.' -- MR RICHARD D'AMATO, chairman of the US-China Economic and Security Review Commission

ECONOMIC AND MILITARY CONCERNS

'China's aim is inexorably to supplant the US as the world's premier economic power and, if necessary, to defeat us militarily.' -- MR FRANK GAFFNEY, a Pentagon strategist under the late president Ronald Reagan

NO REASON FOR CONCERNS

'Even if a Unocal-CNOOC transaction led to the diversion of oil to China, it would have no net effect on the amount of oil available to buyers in the world market.' -- Mr JERRY TAYLOR, a Cato Institute analyst

Document STIMES0020050714e17f0001j


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