Wednesday, July 13, 2005

Unocal bid raises security concerns?

For the Department of Defense, there are limits on foreign ownership of suppliers. But for equally important matters--like oil--could foreign ownership also harm national security?

The fate of the China National Offshore Oil Corporation's bid for Unocal remains uncertain, but one thing is clear. The takeover offer has prompted a gathering groundswell in Congress to make sure oil is defined as a product vital to America's national security.

If the political push gains momentum, it will change the mandate and reach of a little-known, secretive body with representatives from 12 government agencies, the Committee on Foreign Investment in the United States. The outcome of Cnooc's bid for Unocal may rest in the hands of that committee.

One salvo came at the end of last month with a House resolution that declared that permitting the Chinese company to buy Unocal would "threaten to impair the national security of the United States." It passed 398 to 15.

Now the members of a bipartisan advisory group to Congress are urging representatives and senators to amend the law that controls the work of the foreign investment committee. The Congressional advisory group wants the law to specifically expand the definition of America's national security to include matters of economic security, like energy and oil supplies.

"Is energy security national security? We certainly think it is," said C. Richard D'Amato, chairman of the United States-China Economic and Security Review Commission, which advises Congress.