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Four in 10 Canadians see China as a threat, if opinion polls are to be believed. Seven in 10 oppose approval of the $15.1-billion bid by China’s CNOOC for Calgary oil company, Nexen.
For a prime minister in need of a bump in his approval ratings, it must be tempting to go for the political sugar by nixing the Nexen deal. This was clearly the fear of China’s ambassador in Ottawa, Zhang Junsai, who is urging that the deal be judged solely on business terms. “If we politicize this, we can’t do business,” he told the Globe and Mail.
But for the Harper government to bow to its baser political instincts would be to put short-term political self-interest ahead of the long-term prosperity of the country. There appear to be no reasons of any substance to blow up the transaction.
The Industry department is weighing whether the Nexen purchase is of “net benefit” to Canada. This is pretty simple arithmetic, given the 66% premium CNOOC is willing to pay Nexen’s shareholders. Much of that money will be re-invested in the Canadian economy – a net benefit by any measure.
Industry Canada is apparently happy to give its blessing to the deal, provided it is made clear that the approval is specific to this company – Canada’s number seven oil producer – and this industry. As long as the bureaucrats can leave the rules of the game as opaque as possible, and thus avoid setting a precedent, there should be no objections from that quarter.
Neither it seems are there serious security concerns. Yes, Canada’s spy agency issued a generic warning about foreign state-owned companies trying to take control of strategic sectors of the economy.
The warning came out in the Canadian Security Intelligence Service’s annual report on the same day Nexen shareholders approved the CNOOC offer, and was widely assumed to be talking about that deal. In fact, the timing was largely coincidental and security concerns are said to be limited to the potential, yet almost unquantifiable, risk of Nexen being controlled by a hostile China a decade from now.
But any risk calculation has to include the potential downside to the economy of applying a tourniquet to the CanadaChina business relationship. Mr. Zhang’s warning was none too subtle – politicize this process and we can’t do business.
Of course, governments politicize things the moment they get involved and one hopes that the Conservatives will wring maximum concessions from the Chinese, in terms of reciprocity, before giving its blessing to the Nexen deal.
But blocking access to Chinese capital for a fleeting bump in the polls is quite another thing altogether. If he is tempted to do so, Mr. Harper should ask for a copy of the presentation given by Dominic Barton, the global managing director of McKinsey & Co., at the Canada in the Pacific Century conference in Ottawa, hosted by the Canadian Council of Chief Executives Monday.
For the rest of this column, please go to the National Post website: http://www.nationalpost.com/Huge+potential+China+deal/7293324/story.html