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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

28 September 2005

Takeover nationalism

“National security … cannot take a second place to economic considerations. There needs to be balance, but we cannot sacrifice our safety for economic gain” (1). Thus declared Richard Shelby, chairman of the Senator Banking Committee, in reference to a report by the GAO on the process by which foreign bids will be evaluated by the American government.

My feeling is that America is driven more by emotion that by common sense in its effort to secure the “national interest.” Save some obvious exceptions (defense contractors), America’s hysteria to takeovers by firms from non-democratic states (read: China) is exaggerated.

Americans are afraid that foreign companies will play the game of their governments rather than abide by the rules of the market. To be sure, American companies serve American interests abroad just as well (and the perception abroad, rightly or wrongly, is very similar to the one Americans have of those “malicious” foreign firms,). But more importantly, the fear that companies will become a vehicle for political hostility confuses the political with the economic.

When a foreign government engages in hostile activities, the issue is no longer economic, but political. So the American reaction will be political; to think that foreign states can expect to hide behind their corporations and “attack” America without suffering retaliation is to accord them with more naiveté than they deserve. And for those states that want to take their chances, they will probably find that it is best to compete with America economically, rather than politically, and so will refrain from using corporate pawns to play a rough political game.

References:
(1) Stephanie Kirchgaessner, “Takeover panel under fire,” Financial Times, 28 September 2005

2 Comments:

Blogger Jim said...

The more our government borrows from China to pay our deficit, the more influence China will have over us. For this reason, it is exasperating to hear Republican apologists, like the Vice President, say that deficit spending doesn't matter much at the same time that they raise fears about Chinese buyouts.

7:40 PM  
Blogger Nikos Tsafos said...

Jim, your comment is very valid and it underscores the futility of focusing on one part of the US-China relationship (CNOOC and Unocal) in isolation. But the Unocal furor underlines two more truths: the first is that given the interlocking relationship that America and China have with one another, it would be almost impossible for China to use CNOOC for politically hostile purposes without reprisal (and however “vulnerable” America seems because China is buying American debt, this is not a one-way street); the second is that image matters: CNOOC buying Unocal is a concrete example of “dependency” that the public can appreciate and identify with. This should remind us that, despite the rhetoric and success of free trade, the specter of protectionism always lurks close by.

6:49 AM  

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