China’s insatiable thirst for oil is a boon to Canada’s capital-intensive oil sands, but the communist regime’s control over investments in Alberta has some watchers spooked.
With its US$15 billion bid for Nexen Inc., the China National Offshore Oil Company (CNOOC) is turning heads, raising questions about long-term impacts if the authoritarian regime plays a significant role in Canada’s national economy.
At least one security expert is concerned the deal will worsen a pattern of senior government officials who retire from their posts to work for the Chinese regime or business lobby.
Any enterprise subject to the jurisdiction of China could—in a flash—be rendered a stalking horse or operating arm of the communist party of China.
− David Harris, Director, Insignis Strategic Research
David Harris, former chief of strategic planning for CSIS and director of the international and terrorist intelligence program at Insignis Strategic Research in Ottawa, said Canada needs to remember that the Chinese Communist Party (CCP) maintains a tight grip on state-owned enterprises (SOEs) and has no qualms about using them to whatever end it deems necessary.
“We must, of course, regard these as arms of the Beijing government. This is simply a prudent and realistic way of viewing this, as we know any enterprise subject to the jurisdiction of China could—in a flash—be rendered a stalking horse or operating arm of the communist party of China,” said Harris.
Harris said it’s not enough to count the dollars. Canada must consider the “extremely complicated” issues of political influence and that the regime uses its asset purchases and foreign investments to project power and influence.
That means leveraging investments to gain concessions in other areas like human rights or international agreements.
Former Officials Find ‘New Masters’ in Beijing
Those concerns are exacerbated by the string of high-level officials, both elected and from the public service, who have left their posts to go on to careers advocating for the Chinese regime, said Harris.
“Canadians can find little solace in the rather sordid spectacle of former senior bureaucratic and political Canadian government officials haring off, as though their new masters, to Beijing, especially so shortly after leaving government service.”
Among those are former Prime Minister Jean Chretien, former Foreign Affairs Minister David Emerson, and former Deputy Minister of Foreign Affairs Peter Harder.
Harris said the pattern challenges the integrity of certain facets of Canadian governance, a problem that could be exacerbated if Chinese SOEs become major players in Canada’s oil and gas sector.
He also points to Chinese espionage activities that include hacking attacks targeting sensitive government departments in finance and defence as well as private companies like Nortel. Also concerning are the regime’s efforts to spy on and suppress Chinese dissident groups in Canada like democracy activists, Tibetans, and Falun Gong adherents.
CNOOC comes to Canada with a troubled history that includes human rights violations in other countries and a failed bid to take over a similarly sized U.S. oil company.
In 2004, CNOOC had a joint venture with Golden Aaron in Burma, a company under sanctions from the Office of Foreign Assets Control (a branch of the U.S. Treasury) for supporting Burma’s junta and maintaining links to drug traffickers.
CNOOC worked hand in hand with the junta to forcefully evict farmers to get access to lands that were never fully paid for, notes a 2008 report from Arakan Oil Watch, an environmental and human rights NGO.
The report details how those actions sparked outrage among villagers who later ransacked CNOOC’s drilling site before facing a crackdown by the junta. Over 70 of the villagers fled the country to avoid reprisals, notes the report.
CNOOC had to withdraw an uninvited takeover of U.S. producer Unocal in 2005 after the deal caused uproar among U.S. representatives.
Given China’s military buildup and plans to contradict U.S. support for democratic Taiwan, a congressional report reviewing the bid after it was withdrawn questioned the wisdom of allowing the regime to acquire sensitive access to the U.S. coastline and technology with possible military uses.
“Should a Chinese company be allowed to acquire deep-water drilling equipment, technology (similar to that used in underground nuclear tests), underwater mapping capability, and platforms that could be used to observe underwater activities in the Gulf of Mexico or in assisting the Chinese navy,” asked the report.