Nexen takeover bid State or privately-owned companies are not the issue
Thursday, October 25, 2012 @ 3:45 AM
By Peter Ewart
Much is being made in the press and political circles these days about Chinese, Malaysian and other Asian companies taking over companies in Canada. Just recently, the Harper government denied the Malaysian state-owned company, Petronas, a permit to take over Progress Energy which is involved in the natural gas sector in British Columbia. The federal government’s reasons for this abrupt and controversial decision are still murky, although it is rumoured the state-owned nature of Petronas was a factor. Whatever the case, the federal decision has seriously upset the government of BC which is counting heavily on foreign investment in the liquid natural gas (LNG) sector for its economic development plans.
In addition to the Petronas case, there has been heated opposition to China’s CNOOC buying up of Nexen, a multinational company with some of its operations based in Canada. This opposition has mainly come from certain U.S. politicians and from the federal NDP and Green parties in Canada.
One of the central arguments in this opposition is that China’s CNOOC is also a state-owned company, and that this is bad because China is a human rights violator, is engaged in industrial espionage, and so on. Implicit within this argument is the idea that U.S. private multinationals are somehow better and should be allowed into Canada over multinationals from China. But is this really a valid argument? Is it keeping one eye open and the other shut? Is it applying a double standard?
The fact of the matter is that multinational companies, whether from China, U.S., Canada, Brazil, France and so on, routinely pursue their own narrow interests over the public interest. If they are allowed to do so, these companies will exploit, spy on, and engage in bribery and corruption in host countries, and there is a long history of such activity in the last one hundred years and before. They will do this whether they are privately-owned or state-owned, Chinese or American. Anyone who has spent time in the oil patch knows just how prevalent industrial spying is amongst these companies – it is a way of life for them and they all do it.
To elevate U.S. companies over Chinese companies or Malaysian ones is to lose sight of historical reality and to sow illusions. Far from being paragons of virtue as some seem to implying, American privately-owned multinationals have long been associated with death squads, coup d’etats, espionage, corruption, environmental violations and so on in Latin America, the Middle East and other regions of the world. And they are not alone. Multinationals (whether private or state-owned) from other countries, including Canada, have been associated with similar activities.
It also is not a valid argument to single out some countries such as China for human rights violations and let others who violate off the hook. The U.S. is no angel in that regard, especially with the numerous human rights violations carried out under the so-called “war on terror” and the Patriot Act, including targeted assassinations and indefinite detention, as well as the illegal invasion of Iraq and other countries.
In addition, it not just state-owned companies which have a close relationship with governments. It is a fact that privately-owned multinationals are intimately connected with home state governments and intelligence operations, providing them with information gathered through spying, corruption and other means. For example, it is well known that the U.S. state department is heavily involved in trying to sell the F-35 jet (manufactured by the U.S. privately-owned company, Lockheed Martin) to foreign governments, and is using every trick in the book to do so. Likewise, China is pushing the interests of its state-owned or state connected companies such as Huawei, and Malaysia is doing the same with its ones. But according to the prevailing globalist, dog-eat-dog mantra, isn’t that what all companies and all countries are supposed to be doing in this neo-liberal, brave new world?
Currently, in terms of overall foreign investment, Canada is dominated by U.S. multinational interests and our main trade is reliant on the U.S. More recently, of course, China and other countries such as Brazil and Malaysia have been increasing their stake substantially. Given that current situation, diversifying foreign investment in Canada, as well as our foreign trade, may not be a bad thing, depending on what arrangements are negotiated and what rules are in place.
However, in all of this, Canada should have the long term aim of achieving a more self-reliant and self-sufficient economy, as well as push for international trading relationships that provide mutual benefits for each country involved, rather than dog-eat-dog competition or destructive exploitation. One thing for sure – we should not fall under the sway of hysteria or double standards generated by U.S. politicians or anyone else as to our investment and trade decisions. These should be our decisions and no one else’s.
The critical issue is that, in regards to foreign investment and trade agreements (such as the proposed Canada-China Investment Treaty, the nature of which unfortunately the federal government has kept extremely murky), we keep both our eyes wide open to the reality of this investment and to the nature of multinational corporations whether privately or state-owned. Whichever country investment happens to come from, we need Canadian governments to bargain hard for us and negotiate transparent arrangements that benefit the Canadian people. Instead of weak, murky and arbitrary regulations for foreign investment (as the recent Petronas case has revealed), we also need clear and consistent sets of regulations in place that govern and restrict the activities of all multinationals in the country.
And that has always been a major problem with Canadian governments. Why is it that a small country such as Norway can negotiate hard with the big multinational oil companies and end up amassing a $500 billion sovereign wealth fund and have no national debt, yet an oil rich province like Alberta and an oil rich country like Canada still suffer from deep deficits and huge debts, and (in the case of Alberta) a relatively small sovereign wealth fund?
The political parties in parliament should focus on that problem, rather than wasting their time being sanctimonious about this or that country’s human rights record or promoting double standards over whether an investor company is state or privately-owned.
Peter Ewart is a columnist and writer based in Prince George, British Columbia. He can be reached at: peter.ewart@shaw.ca
Comments
Statoil is a majority state owned oil company from Norway that operates in the oil sands, I believe the government owns 70% of the company. They are one of the highest payers and have one of the most effiencent operations, and are a leader regarding emission controls.
“They will do this whether they are privately-owned or state-owned, Chinese or American. Anyone who has spent time in the oil patch knows just how prevalent industrial spying is amongst these companies â it is a way of life for them and they all do it.”
No I dont work for Statoil, but do work in the oil sands and this statement is not true for most operations. Statoil is very open about their technologies and developments, if they find a more effiecient process, it is put out for everyone to try. In fact most companies do not spy, there are too many variables in achieving effieciency, the main factor being geology. No matter the extraction method, it all depends on what the earth looks like 1.5 km down. Information is out in the open, it can be from engineers doing lunch or VP’s at conferences, there are no spies. It’s not world war 2 in northern alberta, it’s oil companies trying to please their shareholders.
And just what is the price of gasoline in Norway, to Norwegian consumers? How about other oil based products?
I think if you look a little deeper into why there are objections to the two deals in question, you’ll find they have more to do with how the price of oil products are set for Malaysian and Chinese consumers in those countries than it does anything else.
After all, why else would our own BC government act as if we should be increasingly penalised financially for having an abundance of resources, hydro-electric power, etc. ? To the point where BC consumers have to pay ‘world price’ for everything sourced right here in BC, regardless of what it actually costs us to produce these things.
Comparing A Chinese state owned entity with a publicilly traded multi-national based in the states is naive to the extreme. Publically traded companies are bound by reporting rules and exchange rules. Yes ,at times these are stretched, but its better than relying on communist china for data.(see sino-forest debacle) The federal government must clarify these rules. The currant approach is a diservice to the whole economy. But, the big question is, how should we treat sovereign investments? Norway good, China bad?
The ‘sovereign’ investments that we really hurting are our own – there are major penalties if we attempt to ‘nationalize’ – written expressly into the FIPPA. But other state controlled corporations are free to nationalize portions of our industries for themselves? How would this play out?
I tend to agree with dow7500. As devious as large multi-nationals based in North America can be, I’d prefer we work with them 100 times over before we gave de facto control of our resources to Chinese business interests. At the very least, the US shares a border with us, our policies generally need to be integrated for the good of the continental economy (yes there are going to be trade disputes, but at least we have forums to settle those) and for the most part, we have similar cultural beliefs and norms that translate into similar business practises (yes there are differences but nowhere near as foreign as what we would encounter with China). If we are going to integrate with other countries, then let’s choose to do business with those that at least share our common beliefs and societal norms (democracy, human rights, environmental regulations, fair labour practises, etc.). We can debate the nuances of those, but I think it’s pretty easy to figure out that we’re probably closer to Norway and the US than China on those.
It was interesting hearing Mitt Romney talk about having North American independence when it came to energy production. As much as I disagree with most everything he says, I do think this would make for an interesting discussion.
We know that we have the resources to do it in Canada and I suspect what he’s getting at is that our excess capacity could be used to help the US eliminate their reliance on Middle East oil. Would that benefit us? Would it benefit our economy? Would it help drive costs of production down to the point where North America could again become more competitive in regards to manufacturing and other industrial undertakings? How much does Canada benefit from helping the US achieve that goal? Perhaps more importantly, how much does Canada suffer if we don’t align ourselves with that goal and instead provide the benefit of cheap energy to China?
From the moment that the news began to explain the Nexen takeover there has been a strange omission of what this actually means to Canada. It was and is still reported as Nexen having most of its assets in countries other than Canada.
Little or no mention of considerable holdings in northern BC gas as well as the oil sands in Alberta. WHY would it be that the Canadian media would ignore what is the most important aspect of this deal here in Canada?
I agree with dow on this as well and wonder where Peter came up with his strange view of all this.
I too wonder how Peter came up with his strange view of all this. I usually find his opinions with merit, but I think he is way out in left field on this one. And Dow7500 I usually don’t agree with, but he is absolutely right this time around.
Consider that China is a serial abuser of currency manipulation and we have state owned corporations that do not operate by market forces. They benefit from the currency manipulation and have access to deep pockets of state funds that allow them to use ‘investments’ for political means of the state. This alone means state owned corporations do not play by the same rules as market based corporations and they don’t have a level playing field.
Consider also that in Canada we generally confer the rights of a person to that of a corporation. This gives state owned corporations a foothold into our political process for nefarious means.
Consider that a Chinese state owned corporation will claim state sovereignty over said corporations claims, as they have done the world over… and in allowing them this claim we open the door for grounds for war if they feel at a future date we are impinging on their sovereign rights. No sovereign wealth fund of corporation should be allowed to own a majority in any North American enterprise IMO.
Consider also that Harper is 100% in for Northern Gateway (Chinese state owned), and the biggest threat to Northern Gateway and Alberta oil sands is the development of BC off shore natural gas sales… its no surprise Harper nixed the takeover relating to BC natural gas, but will approve the state owned takeover of Alberta oil. Its all political for Harper IMO.
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