OK, so a company in China is making a bid to buy a company in the United States. Seventy percent of the Chinese company is owned by the Chinese Government. The company in the US produces 167,000 barrels of oil an 1,826 million cubic feet of natural gas per day – both of which sound like big numbers, but seem to be minimal percentages of the US consumption. This company does draw much of its production from domestic resources. Oil, more than any other commodity, has the capacity to effect the geopolitical stage overnight, in large part to the oil dependence of the first world and the oil wealth of the developing world.
China, for it’s part, has responded to the instability of global oil markets and supplies by embarking on a program of nuclear energy production to meet the estimated 300 Megawatts of electric production needed by 2050, that will result in an abundance of cheap hydrogen produced as a by-product of the reactor process, and a massive cut in the particulate and greenhouse gas production from the most populous nation in the world.
So, one might be inclined to ask, what is the motive behind a government owned Chinese corporation making a $18.5 billion cash bit to buy Unocal? It turns out a lot of people are so inclined. It it a scheme to further weaken a United States economy? Is it the seizing of an opportunity to secure a bargaining chip for future trade negotiations? Is it the action of a proto-superpower in an effort to win before steeping on the battlefield, as Sun Tzu advises? It certainly could be any or all of these.
For it’s part, the United States has said relatively little, and the Federal Trade Commission hasn’t yet been asked to approve the deal. Unocal has an offer on the table from Chevron that has been approved by the FTC, for $18 Billion in cash and stock, but hasn’t indicated which offer they will accept. The fancily opinion makers seem to think that Chevron will win-out, but that may be based upon a pro-Caucasian bias rather than any good business reason. Some editorials are even advocating the CNOOC deal be approved over the Chevron deal, though that may be based on a fiscal incentive rather than any good business sense.
The real issue is the boundary between the sphere of nationalist governance and the sphere of capitalist profit making, and which of these to ideals should be held superior in this particular case. Is it in the nation-state’s interest to allow another nation-state to control, directly as the government is the owner of the corporation, the production of natural resources within the sovereign territory of the nation-state? Does it create the situation wherein a civil penalty – let’s say for EPA violations – is interpreted as an aggressive act against the People’s Republic of China? Does an SEC investigation and indictment of corporate officers constitute the seizure of agents of the Chinese government by the United States? Does the requirement to maximize shareholder value borne by CNOOC imply that the Chinese government – which is to say the people of China – ought to benefit by the distribution practices of oil removed from U. S. Territory?
These might be easy questions to answer, or they might be difficult, but the point of asking them is to highlight this reality: Nation-states are always nation-states, even when they act and behave as though they are capitalists. The Sovereign might hold property, and the Sovereign might employ labor, and the Sovereign might trade capital, but the Sovereign is never not the Sovereign, and to offend the Sovereign in the marketplace is no different than offenses committed in the political arena, just as the response to those offenses is always undertaken in politics and should be interpreted as a political act first, and only then as a market response. No matter how ensconced in the practice or control of capital flow a Sovereign may be, the role of Sovereign holds primacy over the role of Capitalist. (It seems to be implicit in this argument that theocratic regimes are similarly Priest, then Sovereign.)