Weapons of Mass Destruction (WMD)

DATE=7/14/05

TYPE=CORRESPONDENT REPORT

TITLE=CHINA / UNOCAL DEAL (L-O)

NUMBER=2-325942(CQ)

BYLINE=STEPHANIE HO

DATELINE=WASHINGTON

/// Re-running w/correct in Introduction (change from "two-thirds" to "three-quarters")///

HEADLINE: American Public Hostile to Chinese Bid for Unocal

INTRO: Concern over a bid by Chinese company CNOOC to purchase the U.S. oil company Unocal is taking hold among the American public as a new Wall Street Journal poll finds nearly three-quarters of the people surveyed oppose the CNOOC deal. VOA's Stephanie Ho reports from Washington.

TEXT: Chinese company CNOOC's offer to buy Unocal has been described in the U.S. House of Representatives as a threat to U.S. national security. House lawmakers have also approved another measure aimed at blocking the Bush administration from approving a CNOOC-Unocal deal.

This viewpoint was given popular support Thursday, with the publishing of a Wall Street Journal poll that found that 73-percent of more than one thousand people polled, in its words, "dislike" the potential deal.

Speakers focused on this issue at a discussion in Washington hosted by the Carnegie Endowment for International Peace.

Carolyn Bartholomew is a member of the U.S.-China Economic and Security Review Commission, a body that advises Congress. Ms. Bartholomew accused the Chinese government of largely owning and controlling CNOOC. She added that, therefore, if CNOOC were to take over a U.S. oil company, this could have implications for U.S. national security.

/// BARTHOLOMEW ACT ///

"The purchase of Unocal was approved by the Chinese State Council, China's cabinet, and the governor of the State Central Bank helped to assemble the financing package. The enterprise has direct and special access to the unlimited deep pockets of the Chinese government's reserves. Calling the transaction a free market activity is absurd and a distortion of the notion of free markets."

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CNOOC is worth an estimated 22-billion dollars. The Chinese company has made an 18-point-five billion dollar offer for Unocal, as opposed to a competing bid of 16-point-five billion dollars from U.S. company Chevron.

On the other side of the issue, Carnegie Endowment senior associate Albert Keidel said he thinks blocking the deal would actually compromise U.S. security.

/// KEIDEL ACT ///

"We need to engage China in a rules-based global system, as the bedrock for our national military security, going forward. If we try to create a non-price based system for securing or guaranteeing energy sources or any other scare resource, we will be creating a climate that will force China into a similar posture. And that is dangerous, in a national military-security sense, to my child and her grandchildren."

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Approval of any CNOOC deal will ultimately be made by the Committee on Foreign Investments in the United States, or CFIUS (sih-fee-us), a multi-agency panel chaired by the U.S. Treasury. (SIGNED)

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