In 2005 the state-owned China National Offshore Oil Company (CNOOC), China's third-largest oil company, bid $18.5 billion to buy U.S. owned Unocal Corp. At the time, many U.S. lawmakers were calling
for China to crack down on intellectual property piracy and purchase more goods from overseas. Concerns over the potential affect on oil prices if China began hoarding oil for it's own use were also expressed. House and Senate members from both political parties demanded a review of the proposed Unocal deal under the Defense Protection Act
to assess potential economic and security risks.
During this same time there were tensions between China and the U.S. over Taiwan. The New York Times
reported that during an official briefing Chinese Maj. Gen. Zhu Chenghu said :
"If the Americans draw their missiles and position-guided ammunition on to the target zone on China's territory, I think we will have to respond with nuclear weapons."
This raised even more national security concerns regarding CNOOK's bid to buy Unocal.
Unocal eventually sold out to Chevron Corp.
The proposed deal however raised questions within the U.S. Department of Treasury. During a Keynote address
at the American Council on Germany Conference in January 2006, Treasury Deputy Secretary Robert M. Kimmitt said:
"Although the United States has long advocated such a policy, recent controversy over CNOOC's proposed acquisition of Unocal has caused some to question our investment policy and how the U.S. government monitors acquisitions to protect national security interests. Given the increasing number of cross-border transactions, it is important for U.S. and international businesses that the U.S. government operate in a manner that facilitates an open investment policy that both promotes foreign direct investment in the United States and addresses national security concerns. Of course, some of the most difficult cases we face involve state-owned or -controlled companies that seek to invest or expand in the United States while restricting investment and expansion opportunities in their home markets."
In January 2008, CNOOC entered into an agreement with Iran for 10 mm tons of liquefied natural gas according to GasandOil.com.
The Financial Times
says Beijing gave Cnooc the green light to sign a deal with Tehran immediately after the US agreed to sell arms to Taiwan.
According to a Wall Street Journal report says Wang Yilin, chairman of CNOOC, told rig workers via a video conference in May that
"Large-scale deep-water rigs are our mobile national territory and a strategic weapon."
The offer to takeover Nexan, if successful, would give China a number of footholds in the Gulf of Mexico, the Canadian oil sands in Alberta, the North Sea and the waters off Nigeria according to a New York Times
article. Because Nexan operates in U.S. waters in the Gulf of Mexico, the United States will need to approve the acquisition. Depending on the timing of all necessary filings, approval of the transaction will fall to the Obama administration or, if Romney should win the Presidential election in November and the matter has not been settled prior to inauguration day, it would be up to Romney and his administration to decide on whether or not to approve the deal.
What makes this situation a bit more interesting is the fact that Romney is an investor in CNOOC according to released tax returns
. Romney’s blind trust first invested in CNOOC in October of 2009, 4 years after statements were made about the use of nuclear weapons against the United States, and 20 months after CNOOC entered into an agreement with Iran. Romney has said many times that he has no control over decisions made by the blind trust. When confronted about investments made by Bain he stated
"Any investments that I make are managed by a blind trust,. I don't make investments in Bain or anywhere else. That's done by a trustee who makes decisions that he thinks are correct."
In July Brad Malt of the law firm Ropes & Gray said
"Each of these investments is in a blind trust. … This means the decision to make the investment was made by me, not by Gov. Romney."
However, in 1994 when he was challenging Ted Kennedy for the Senate seat, he said
“you can always tell a blind trust what it can and cannot do.”
He also criticized the notion that blind trusts are actually blind, calling
it "an age-old ruse."
The fact that Romney invested in the company after it had made threats against the United States and entered into agreements with Iran, a country the U.S. State Department calls
the world's "most active state sponsor of terrorism," may call into question the validity of his hard line stance against Iran. Romney has said
he has a "zero tolerance" policy toward Iran obtaining the capability to build a nuclear weapon. The Huffington Post
quotes Romney as saying:
"Make no mistake, the ayatollahs in Iran are testing our moral defenses. They want to know who will object and who will look the other way. We will not look away nor will our country ever look away from our passion and commitment to Israel."
It also may soften the rhetoric Romney has expressed regarding China. In an interview with the Wall Street Journal
Romney said his plan for helping the middle class was to "crack down on cheaters like China." Project Syndicate says
Romney is a proponent of free trade, but has said that he would be tougher on China’s trade practices and currency policies.
Whether the fact Romney was associated with CNOOC plays a roll in the decision of whether or not the proposed Nexan deal is approved is yet to be determined. Whether his investments in a company with ties to Iran plays a role how people cast their votes in November is something only time will tell.