Tell Red China: Hands Off Unocal

It isn’t free enterprise. It isn’t free trade. And it will not serve the cause of freedom in the United States or in East Asia.

It is, rather, a brazen effort by the Communist regime of the People’s Republic of China to seize control of large Asian-based oil-and-gas reserves by buying up a major U.S. energy supplier.

We are talking about the bid by Chinese-government-controlled CNOOC to purchase Unocal, a U.S. oil company based in California.

So far, the White House has shown no serious concern about the potential takeover, saying only that it will be reviewed for national security issues if and when it nears consummation.

That is not good enough. The Bush Administration should abort any potential deal now.

Earlier this year, Chevron, another California-based energy company, offered Unocal stockholders $16.6 billion in Chevron stock and cash in exchange for the company. This deal has already been approved by the Securities and Exchange Commission, but cannot be completed until a scheduled August 10 vote of Unocal stockholders. Meanwhile, CNOOC has offered $18.5 billion in cold cash for Unocal.

This cash is not clean money.  Most of it will come directly from China’s Communist regime. “CNOOC’s state-owned parent company, Beijing-based China National Offshore Oil Corp., committed to providing $7 billion in loans, with an additional $6 billion coming from a state-owned bank,” reports the Los Angeles Times. This Chinese government money is at least in part derived from the Communist regime’s exploitation of its own people. These people live in an un-free state and are systematically denied basic fundamental rights, including in the workplace. Some are quite literally enslaved.

But two reasons closer to home also counsel against this deal: It disserves U.S. consumers—who now pay more than $2 per gallon for gas—and it disserves U.S. strategic interests.

The majority of Unocal’s oil-and-gas reserves are in Asia, in places such as Thailand and Indonesia. The full extent of these reserves is unknown. But the Chinese regime— presiding over a nation that is now the No. 2 oil consumer in the world—wants to get its hands on Unocal’s Asian reserves for two reasons: 1) To make sure this energy is consumed in China rather than in the U.S. and 2) to deny the U.S. political and/or military control over the reserves in the event of a U.S.-China clash over Taiwan.

Allow CNOOC to buy Unocal, and Unocal oil reserves could someday power Red Chinese tanks rolling down the streets Taipei.

President Bush must tell Red China: Hands off Unocal.