Why CNOOC wants Nexen

Ever since the CNOOC deal for Canadian oil company Nexen has come to light, debate has raged on about selling the company.  While most of the arguments have been based on a distrust of the Chinese government, as well as a state owned company owning highly coveted Canadian resources, I looked into the economic reasons as to why it would be bad not only for Canada but every oil producing nation in the world.

Firstly, let me say the point that a CNOOC purchase would be a security threat to North America is moot.  An oil producing company, employing Canadians, with the majority of it's executive positions in Canada, filled by Canadians, would pose not much of a threat to Canada, and with Nexen likely to axe all operations in the U.S, that problem is solved.

Now firstly, CNOOC is aiming for Nexen because China has a voracious appetite for resources.  In the immediate short term, the oil sands are means to meet China's growing need for energy to keep pace with it's economy which has grown at an astonishing rate over the past 20 years.  The primary argument from proponents of the deal has been that when south of the border growth is a measly 1-2% annually, and increasing calls for more protectionist policies are being heard across the country, the future lies across the ocean in  Asia, and Prime Minister Stephen Harper, despite a belated start, has taken these calls to heart.  China is now a priority for trade with Canada, along with India, the European Union and South America.  Initially this has consisted primarily of Chinese injections of capital into Canadian companies, primarily in the resource sectors.  Recently, however, there has been a flurry of acquisitions of projects and entire companies, not just in Canada, such as the McKay River oil sands project and Talisman Energy by state-owned Chinese firms.  Nexen is the biggest oil company yet that the Chinese government wishes to acquire, and it is a major player in the Athabasca oil sands, a title that is the cause of all the debate surrounding the potential sale of the company.

With all that said, this is all the public line, what everyone is being told.  Chinese capital, through Chinese companies, will create jobs because they will fund infrastructure to ship resources out of the country to Asia. Now the one glaring hole in all of this is that Nexen has two primary projects in the Alberta Oil Sands, the Long Lake and Horn River projects.  After this what is left to be done?  Nothing in the Gulf of Mexico seeing there is no appetite for Chinese investment in the U.S, at least when it comes to resources.  The answer is at home.  The proven reserves in all of Nexen's current projects equates to a measly 6% of proven oil reserves within China.

Now this is why the CNOOC, and by extension the Chinese Government need Nexen.  China already has one of the largest middle classes in the world, and their ranks are due to be vastly increased as more and more Chinese are lifted out of poverty and into a consumer class with voracious appetite for cars, consumer electronics and generally things that require power.  In a world with more people competing for rapidly dwindling resources, it's only natural that China would move to secure plentiful energy supplies in stable regions where acquisition would face little risk of expropriation (Argentina and the Repsol fiasco) or disruption (Syria, South and North Sudan).  All of this is great, but not many countries (stable ones at least) are not so willing to give up energy assets they view as strategically important, and China would prefer to keep money at home if possible, and this is where the domestic reserves come into play.  Large shale gas fields, sizable offshore reserves, and oil in the north of the country all account for what is a sizable energy play in China, in the hands of what essentially is a government backed oligopoly between three state owned company.  Now the Chinese have little if any experience in extraction of resources, while that seems to be an age-honoured tradition in Alberta, so who better to learn from?  Essentially the game plan is to buy an under performing Canadian company with projects that will be able to satisfy China's short-term energy needs while providing domestic companies such as  CNOOC but also Sinopec and China National Petroleum Corp. the expertise that they require to extract China's vast resources.  While yes, CNOOC has promised to keep it's current staffing numbers as well as expand jobs at the head office, which will remain in Calgary, not to mention list stocks on the TSX, is that really of net benefit to Canada?  That's all arbitrary stuff that while yes important, are things prerequisite to getting the deal approved by shareholders, plus a healthy premium of course.  Compare all this to what we are giving away, and then all of the offerings pale in comparison to the potential loss.

 Now don't think for one second I'm saying that Nexen as a company is of strategic value to Canada, but what it does enable China to do once it is out of our hands is not to great benefit to us.  Sure, they'll be exporting the oil produced by Nexen in the Oil Sands to China, but not for long, maybe even as short as 10 years.  proponents of the deal argue that the exporting of oil will create jobs, but will they increase Nexen's levels of investment in the Canadian market? No, they've promised to maintain current levels, all because they can afford to do so, despite it not really being in their long term interests.  And where does all this profit go?  Straight into the coffers of China's Energy Ministry, from which it will be put into their sizable war chest to fund their acquisition spree, and the development of domestic reserves so that China will not depend on countries like us for oil.  That is like saying Wal-Mart opening up shop in India is for the net benefit of the majority of India.  Yes, it's good business for the suppliers, real estate developers and other retailers set to benefit from the droves of people streaming into these new Wal-Mart anchored shopping malls, but the multitude of small business owners that India is home to suffer, and the benefit to consumers is negligible considering how cheap most consumer products in the country are already.  Back to Nexen, one must notice that the loudest proponents of the deal are the ones who will walk away with fatter wallets after or soon after the transaction is completed, including shareholders, executives, and other oil companies who view this case as being the signal to open the floodgates when it comes to foreign investment in our Oil Sands.  What I'm concerned is that will Canadians be ensured access at a reasonable price to their own resources?  Will Canadian values be maintained and respected?  Will this deal be beneficial to the average Canadian?

These are questions we must leave to the federal government to decide, and I'm not too sure either as to whether it will get passed or not.  What I do think we should do is this;  If this was our water we were selling, under these very same conditions and promises, would it be good for us?  In a world reliant on fossil fuels, and one where we will probably depend on it for years to come, it is essential we do exactly what the Chinese are doing and ensure we have a reliable supply to fossil fuels while we work on solutions and alternatives which are beneficial to everyone.  And this doesn't only mean we protect our oil reserves and ensure they remain in Canadian hands, we ensure the necessary infrastructure is in place to refine, ship and distribute it.  Whatever the government decides, I hope it's in the interests of EVERY Canadian and not jsut a select few people.  

Quebec's special status is no invitation to depose of Canadian values

After having talked about some stuff far from home in my last two posts, I want to take the time to talk about a issue closer to home.  Well, MY home that is. :)

I was reading a National Post article about the elections in Quebec, specifically about a mayor who took offense to a PQ candidate's suggestion that the crucifix displayed in legislature didn't fit in with the Parti Quebecois' vision of a secular Quebec.  There is so many things wrong with what politicians of every stripe in this election are saying that is mind numbing, and I will list all I can think of, but after the story.  This mayor, an ultra conservative, who held prayers before every council meeting, took this remark as an invitation to question her trust worthiness because she was "from Africa" and "I can hardly pronounce her name.". He concluded by ruefully saying "These people think they can come here and tell us what to do.  They will destroy our culture!" (A note of irony here, because the French seemed to have destroyed plenty of cultures shortly after arriving here themselves.) Now, apart from being complete misinformation (She was born in Europe, although her father is Algerian.) this blatant and public display of xenophobia, from an elected official nonetheless is shocking and completely wrong.  But the sheer ridiculousness of these elections doesn't stop there.  In response to the tirade, Pauline Marois called for an apology, calling Quebecers "Open, tolerant and respectful of all cultures.  I think she forgot the "when its politically convenient" part.  The aforementioned PQ candidate, not so surprisingly, isn't exactly a tolerant embracer of all faiths like Marois painted her.  She's a hardcore anti-islamist, and the public face of the PQ's pledge to make Quebec "secular" (Catholics notwithstanding).  This takes a page from French law in which objects expressing religion are banned from the public realm, and this encompasses anything from crucifixes to prayer hats worn my Muslims and Jews.  In departing from French law, however, what really is a two tier system emerges.  The only objects that have been confirmed as banned are hijabs, head scarves worn by Muslim women as a sign of modesty.  Nothing has been said about other faiths, but it has been confirmed that crucifixes have been excepted, as they supposedly a part of Quebec's culture because one has been hanging in Quebec Legislature.  A little history lesson: in the mid thirties, Maurice Duplessis, upon arrival in the chambers, hung a cross in the room to show his government's commitment to Catholicism, understandable since the majority of Quebec at the time was church-going, God fearing Catholics.  But times have changed and while I feel religion, especially Catholicism, has played a major role in the history and culture of the province, but if the PQ is so eager to banish religion from the public realm, it should do it across the board, and not with this flimsy legislation that is essentially thinly veiled racism.  And do I need not mention the muted response to these travesties from the public?  In the rest of the country, such open denouncements of minorities would quickly be followed by public outcry to the point where its almost overreacting.  But this mayor's unfair denouncement was met with little resistance and even a few "hear hear!"s from nationalists.  The only statement that seemed to elicit any emotion from pretty much anyone was one where Francois Legault said that Quebec teens generally were lazy and unmotivated, and that they should "work harder, like Asians."  Firstly I don't know what is it with people, but "Asian" seems almost like a dirty word in this country, with that mess with the $100 bill, but it's no secret that Asians, and by this definition I think he means Asia as a whole, work very hard.  Look at China, India, Japan.  School is a drudgery that I would be horrified to have to participate in, but they take it with no qualms.  I attribute this outcry to Quebec's surprising unwillingness to address it's shortcomings if it involves drastic change, hence the animosity to multiculturalism, English instruction in school and futile programs to "breed" more Francophone children.  Regardless, blatant xenophobia and intolerance is rife in Quebec, something that for the most part would be met with denouncement in the rest of the nation.  I don't know if it's Quebec's "Nation within a Nation", but it is no excuse to go ahead and peddle values many would view as "Uncanadian."

The Sino-Russian Situation

What Would and Israeli-Iranian War mean for the World?

Talk is heating up of an Israeli confrontation with Iran is heating up fast, not to mention what could blow up into a regional conflict with players all over the globe.  Hilary Clinton has admitted that enforcement of a "no-fly zone" in Syria is on the table, similar to one that was in place in Libya, whilst Israel has given the United States memo after memo detailing a potential Iranian threat.  It came to light yesterday  that Israel had detailed a scenario for any conflict with Iran, and it encompassed a large scale cyber-attack on Iranian nuclear facilities, followed by a missile barrage, then a further wave of  jet fighters.  All this was to be accompanied by a massive mobilization of Israeli defense forces on the ground in anticipation of what could be retaliatory attacks  from Iran proxies such as Hamas and Hezbollah from Sinai and the West Bank.  All this, of course, would be carried out in conjunction with the U.S.  All though it seems as though Israel has covered all the immediate bases, for some reason or another the implications this conflict could have on ones throughout the region and for countries all around the world.

China and Russia are two countries that have vehemently refuted any attempt by any country to intervene, and I would agree with them if their motives had been as innocent and kind-hearted as they try to make it seem.  Russia has been the primary source of nuclear expertise and equipment, while China, along with India and many other emerging economies, has continued to buy Iranian oil, inadvertently funding a government that has incited genocide, a crime in itself,  against the Jewish people on multiple occasions, all while developing an arsenal of nuclear weapons that will allow them to carry out their threat to "wipe Israel from the map."  Both these countries opposed any form of support for various insurgent groups throughout the Middle East in the Arab Spring, and China even shipped weapons to Qaddafi during this conflict.  Why would they do this in the face of international pressure to do the complete opposite?   I'll outline it below.

China's rise on the world stage has been meteoric; annual growth numbers that make the rest of the G8 finance ministers green with envy, and even the numbers put up by Brazil and India, two other emerging economic powerhouses pale in comparison.  With it has come increased political clout for Beijing, and the politburo is determined to harness this to outdo not only the U.S, but every other western power, primarily Japan, through what we'll call "soft power."  American culture is everywhere, and everyone knows the good ol' US of A, and you only need to turn on news channels from Russia to China to Ethiopia to catch up on what's going on stateside.  American music and movies are loved across the globe, and China seethes at the sight of this.  It should be their culture in the spotlight, and so they set out to do that.  Although they do use the traditional avenues such as cultural attaches and expositions, not to mention the Olympics, they've realized that creating a sphere of influence outside of traditional American allies will help establish China as a rival superpower to the Americans.  They've invested heavily in African countries, building dams, roads and factories that the West, bloated with bureaucracy, and held back by red tape, has been unable to build.  This efficiency has impressed many in Africa, who now prefer doing business with the Chinese, rather than us.  But what does Africa have to do with the situation in the Middle East, you may ask.  Well, if you noticed, many African leaders haven't been too impressed with the West, however unfair their judgement may have been.  In the Middle East, Iran and now Syria are both countries with and adamant hatred for America, as well as the West at large.  With these countries in a sphere of influence centered around Russia and China, they are now all nations allied against the U.S and it's allies,  not in a militaristic sense, but an ideological sense.  By protecting these countries, and this is where Russia comes in, they are defying a group of countries they view as a tired old boys club, interfering in their affairs.  

So with that out of the way, if Israel and the U.S do go ahead and launch a preemptive strike against Iran, it would go without saying that Canada, most of Europe, South Korea and the Philippines would pony up on their side, although I feel only maybe the U.S, Canada and possibly Great Britain would actually put down boots on Israeli soil should Iran attempt a land invasion either directly.  More likely, Iran, which has threatened to do so, would fire multiple ballistics towards major cities in Israel, followed by terrorist attacks by Iranian proxies, which would probably result in a higher casualty count than the predetermined 500 dead. I doubt that China and Russia would actually attack Israel, but Russia especially would supply money and arms to Iran while China would make a lot of noise in the security council and denounce the U.S and it's allies, and it could plunge U.S-Sino relations to new lows, as well as hurt Chinese relations with South Korea, Taiwan, Japan and the Philippines.  

China and Russia have repeatedly irritated the West, ignoring sanctions and blatantly funding the war machines of autocratic states that sponsor terrorism and intentionally building diplomatic relations with countries that are a proverbial thorn in America's side.  While much ado has been made about the immediate consequences, I feel that the U.S feels reluctant to attack primarily to avoid upsetting China, whom's actions it is frustrated by, but who at the end of the day is America's largest single foreign creditor, and a major trade partner.  A case can be made for the war-weary American public as well.  After having been led through that rabbit hole we know as Iraq in search of WMDs, and a increasingly impossible situation in Afghanistan, a conflict with Iran, however justified it is, will not be very popular with the public, and popular with the public is one thing President Obama must be if he is to win this election.

On a side note, in regard to the ongoing civil war in Syria, international support for the rebel FSA is picking up steam, but Saudi Arabia and the U.S, two primary backers of the opposition, have been in this all to familiar situation before.  In the 90's, Iran had warned the U.S about the growing prominence of a Islamic fundamentalist group, backed by the Saudis, called the Taliban, and a clan of essentially a group of religious zealot mercenaries, a group we know as the Al Qaeda, and the threat they posed to the U.S.  Alas, blinded by the need to eliminate their immediate foe, they not only  paid no heed to the inner workings of these organizations but went forward and funded their crusade against the "infidel invaders" from the north. Now years later, with the Soviet Union dead and gone, these same fundamentalists, painted as revolutionaries and freedom fighters by the media, much in the same way that the fighters in Syria are, set their sights on America. It seemed to tolerant, too "morally bankrupt" (oh horror, women in the army!) for their taste, and lacking any better enemy, set out to wage "jihad" against them. Prior to this though, the American and international media, primarily the Saudis, had given people the impression that the people actually fighting the Soviets were for the most part actually Afghan. As it turned out, that was the opposite. The majority of these glorified militia men were actually from across the Middle East, but primarily from Saudi Arabia, come to wage a holy war to "liberate" their Muslim brothers, much like the steady flow of mercenaries now flowing into Syria from Lebanon and Jordan to fight a battle against a bloody tyrant in the name of freedom. Iran has warned that the opposition is not much better than the Assad regime, and this is clearly exemplified in its indiscriminate use of IEDs, suicide bombs and liberal application of extra judicial justice, not to mention brazen attacks on UN observers for no apparent reason. Iran correctly warned the U.S against supporting a group that would go on to become public enemy number 1 once, and it isn't much of a stretch to imagine that they could be right again. Replacing tyranny with tyranny is not a recipe for success and is a situation ripe for disaster.  

A Bullet for Your Thoughts

(This was written prior to the tragic shooting rampages in Wisconsin and Texas)

In wake of the horrific shooting spate last month, beginning with dozens of people shot in a brazen attack at a block party in Toronto, culminating in the horrific massacre in a Colorado theatre, I can't seem to get guns off my mind.  Strong but probably meaningless rhetoric from politicians about "cracking down" on crime is widespread, and the usual post-massacre damage control by the NRA and other right wing political groups and individuals is in full swing.  This collective group, in the U.S claims that any move to regulate firearms is an infringement on their second amendment right to bear arms, and in Canada point to the recent spate of shootings as evidence that tighter gun control do not result in lower crime.  One gentleman felt so sure about this he wrote to the  Globe and Mail pinning the blame for the violence on Canadian firearms.  This man who no doubt values his right to shoot his fellow compatriots, felt the need to point out how Canada's strict control of handguns had not prevented Toronto "from turning into a shooting gallery."   Now I felt that this proud exerciser of the second amendment was overlooking one key fact: The large majority of weapons used in cases of gang violence were cheap handguns smuggled in FROM the U.S.  Yes, we need more "hug a thug" programs, as our mayor calls them, and as long as he is mayor, we probably won't get them, but this man should really check his facts before he goes ahead and makes such a spurious and superficial statement with probably no research.

Now we can add the poor souls murdered for no good reason in Wisconsin and Texas, and not to mention the countless other unnamed but no less important victims of gun crime across North America since then.  With the bodies piling up, you'd have to wonder when the conservative electorate will wake the hell up.  The countless victims, their families and ordinary civic minded people cry for it.  The Second Amendment was signed into law in a time where the country was under constant threat of invasion, and the founding fathers who signed it could not fathom the weapons that would follow in the future.  It is technically legal to possess nuclear weapons in the United States, all because of the lack of foresight of the founding fathers, which they cannot be held accountable for, because no one would have fathomed the development of an entire industry churning out cheap and readily available firearms for anyone willing to pay, no questions asked, from a simple declaration that allowed Americans the privilege of defending themselves from invasion.  I think it is time for Americans to revalue whether they really need full blown assault rifles and handguns to defend themselves, the safety of countless people not only in North America, but around the world depend on it.