Thursday, June 23, 2005

So the Chinese Takeover Has Begun...

Won't it be interesting when the United States becomes a client state of China, and the US government becomes indebted to its master?

There's already been considerable speculation about the United States' economic dependency on China, and how that may limit US economic and defensive choices in the future. So dire is the situation, and so blind to the danger is the Bush administration, that the Army War College recently got involved, raising some very startling scenarios.

The NY Times is reporting today that a Chinese state-controlled oil company is offering an $18.5 billion unsolicited bid for Unocal, in what could be the first major takeover battle for an American corporation by a Chinese entity.

It kinda puts a different spin on things doesn't it?

Take, for example, the vote to allow oil exploration on the outer continental shelf - a provision inserted by our very own Louisiana Democrat Republican Mary Landrieu into the pending Senate energy bill.

The moratorium on shelf drilling was established in the 1980's to limit the threat of contaminating yet unspoiled coastline, but there's another aspect of oil exploration itself that is seldom mentioned. Oil exploration is typically done by firing chained explosives across wide grids - what can be an extremely destructive activity to local ecology. I don't know what impact that might have on oceans, but the impact of oil exploration, without even considering actual oil drilling, merits attention.

So, what would we citizens have to say about Unocal, for example, conducting oil exploration activity in the Gulf of Mexico, or off the coast of California, or even outright drilling, to benefit a Chinese company that repatriates all of the profits from mineral extraction here in the United States?

Well, that's what we do to countries like Saudi Arabia, Kuwait, and now Iraq. In fact, little do we think about it, but that's a defacto situation here in the United States.

Profits made on oil resource extraction here in the United States are being moved offshore - we just don't hear much about it because the companies doing it are US companies. Exxon Mobil, for example, has 17 subsidiaries in tax haven countries, including 13 in the Cayman Islands which does not impose a corporate tax, according to Government Accounting Office figures reported by Senator Carl Levin (D-MI) in 2004. Despite the protections enjoyed by US law (and let's not forget the protections earned for oil companies by US soldiers, paid for with the blood of Americans), and notwithstanding over $700 million earned in FY2001 by Exxon Mobil in US contracts, Exxon Mobil's shirking of its responsibility to share in the costs of nationhood is not just unpatriotic - it verges on treason.

As much as $650 billion was calculated in 2004 to exist overseas in "deferred tax shelters," although the Congress recently voted to allow the repatriation of those profits for a pittance 5.25 percent effective tax rate (here, here and here).

I don't want to stray too far afield in the realm of tax havens, but consider how absolutely insidious are the tactics, and even the language used, to sweeten the conversation about screwing America, as in this corporate advice column:

Yes, the tax issue may be "a" reason for going offshore but it may not be the only or principal reason. ...

Addressing a large audience of government regulators and bankers from forty countries, Walter H. Diamond, Editor and Economist had this to say:

"Within the past decade, the once eye-catching words 'Tax Havens' have given way to the far more acceptable term of 'Offshore Financial Centers.' Reflecting its increasing importance in the world of international finance, the Offshore Financial Center has vastly improved the global image of the continually popular 'Tax Haven.'" ...

"In conclusion, it is our firm conviction that offshore investment operations are here to stay and will expand rapidly in the future. In fact, we believe that the 21st Century will be known as the era of offshore domiciles."

Think about it! Here are these super rich effing a**holes talking about protecting their wealth, minimizing the contribution they have to make to the societies where they make their profits. Don't we all wish we could move our "assets" to offshore tax havens. Alas, most of us can't, but we pay our taxes dutifully, all the while lamenting that as much as 68 cents on every tax dollar goes toward military expenditures, and that we may be getting as little as 10 cents on every military dollar spent. As I have said elsewhere, capitalist money knows no borders, respects no flag, cares nothing about the environment, labor, living conditions, or the education and protection of citizens.

How much differently will US citizens view this issue when the company repatriating profits from the US is a Chinese company?

I welcome the change in perspective.

Although I'm not very optimistic, maybe we can get US corporations to start acting like responsible "citizens" - oh yes, I do mean citizens. That's how they've always been defined by US law, as entities with the same privileges as US citizens, without any of the obligations or penalties to which citizens are held. See The Corporation for more on the psychopathic character of corporations.


I got so carried away, I forgot to mention the one thing that disturbed me most about the possibility of a Chinese company owning a US oil firm. Imagine a future Iraq-type scenario in which pressure by a foreign-owned oil company is brought to bear on the US government, an excuse for invasion is conjured, and American soldiers are sent to fight and die for the benefit of that foreign-owned corporation.


At 6/23/2005 11:33:00 AM, Blogger Mixter said...

They don't have to act like "citizens" during the BushCo regime. Check out the Supreme Court's latest decision in favor of the fascist, corporate interests at Mixter's Mix.


At 6/23/2005 11:44:00 AM, Blogger Rob said...

Fascinating. Didn't Unocal (or some other US oil company) beat out the Chinese in Darfur or somewhere in the coveted Caspian region? I know I read that somewhere....

At 6/23/2005 01:12:00 PM, Blogger Schroeder said...

I'm not informed well enough about the Darfur issue and oil - although I know there's definitely a story to be told about how the Bush administration is courting the current regime to beat the Chinese out of Sudan to get to oil reserves - a fact which explains the failure to respond to the genocide in Darfur.

Mixter - I saw the post. That's right up my ally. I loved it - printed it up and read it over lunch. Well done.


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