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Indeed, as Albert Keidel, a senior associate at

What may concern Congress more than

the Carnegie Endowment for International

the so-called security threat, which was never

Peace, writes, "Those who would build a Great

clearly defined in the case of CNOOC, is the

Wall of America to fend off China's influence

idea that China may gain control of energy

could end up jeopardizing everyone's long-

sources, crowd out American buyers, and use

term peace and prosperity while doing little to

the "oil weapon" to undermine U.S. influ-

improve prospects for political change in

ence in East Asia and elsewhere. The logic, as

China."7 By politicizing the takeover market

stated in House Resolution 344, is simple:

and weakening the private property rights of

1. Oil and natural gas are "strategic assets

Unocal's shareholders, Congress violated the

critical to national security and the

very free-market principles it is supposed to

Nation's economic prosperity."

uphold.

2. China is an authoritarian regime "strong-

ly committed to national one-party rule

The Politicization of

by the Communist Party" and owns

CNOOC's Unocal Bid

about 70 percent of CNOOC's stock.

3. Subsidized loans will be used to help

The firestorm on

finance the proposed takeover.

Congress is right to criticize China for its

Capitol Hill

4. CNOOC may ship oil and natural gas

human rights violations, its failure to protect

directly to China rather than sell it in

intellectual property rights, and its lack of a

surrounding

world energy markets, which "would

genuine rule of law. Nevertheless, in more

CNOOC is

result in the strategic assets of Unocal

than two decades of economic reform, China

merely one case

Corporation being preferentially allocat-

has made significant progress in reducing

ed to China by the Chinese government."

poverty and opening to the outside world.

in the rising

That "would weaken the ability of the

Capitalists are now free to join the Chinese

anti-China trend.

United States to influence the oil and gas

Communist Party, people can own private

supplies of the Nation through compa-

property, and the PRC Constitution has been

nies that must adhere to United States

amended to better protect the private sector.

laws."

Article 13 of the constitution now reads,

5. The acquisition "could provide access

"Citizens' lawful private property is invio-

lable."8 In contrast, "under Mao, large public

to Unocal Corporation's sensitive dual-

use technologies that the United States

notices everywhere had urged people to `Strike

would otherwise restrict for export to

hard against the slightest sign of private own-

ership.'"9

China."

6. The CNOOC deal therefore threatens

China has a long way to go before it is a

"to impair the national security," and

full-fledged market economy and a free soci-

"the President should initiate immedi-

ety, but preventing China from entering U.S.

ately a thorough review of the proposed

markets, whether for capital or for goods and

acquisition, merger, or takeover."12

services, will not ensure "peaceful develop-

ment"--the professed goal of President Hu

Jintao of the PRC.10 Washington's interfer-

In fact, the Congressional Research Service

ence with the CNOOC-Unocal deal might

reports that Unocal is an insignificant player

have been warranted if there had been a legit-

in the U.S. energy market, accounting for only

imate threat to national security, but in this

0.8 percent of U.S. production of crude oil,

case that possibility seems remote. As energy

condensate, and natural gas liquids. Unocal's

economist Phillip Verleger said: "There's no

U.S. production of petroleum is a miniscule

national security issue here--zero. Unocal

0.3 percent of U.S. consumption. The CRS

doesn't have technology that needs to be kept

report also notes that "because oil is a fungible

secret."11

commodity in a world market, it can be

3