IN THE NEWS ~ Opposition to proposed China-backed takeover bid puts oil sands move up for 'kitchen table national debate'

Opposition to proposed China-backed takeover bid puts oil sands move up for

'kitchen table national debate'

GLORIA GALLOWAY AND CARRIE TAIT

   The federal New Democratic Party formally disapproved of CNOOC Ltd.'s

   $15.1-billion (U.S.) offer to acquire Calgary's Nexen Inc., aiming to

widen opposition to China's plan to secure a major foothold in the oil sands.

Peter Julian, the energy and natural resources critic for the Official

Opposition NDP, told a news conference on Thursday that his party does not have

confidence in the Conservative government's ability to handle the deal

transparently.

   The government is reviewing the foreign takeover and must determine

whether it has a "net benefit" for Canada. CNOOC is the third-largest

state-controlled energy company in China, and critics worry Canada is at risk of

losing control of important natural resources to foreign governments.

   The NDP's opposition to the Nexen takeover puts the federal government in

a politically sticky spot. Prime Minister Stephen Harper wants the oil sands

industry to continue to flourish, which requires billions of dollars in foreign

investment. But some Canadians, including politicians within his own caucus, are

leery about China's expanding oil sands ownership and uncomfortable with the

restrictions Beijing places upon other counties which want to do business in

China.

   The Canadian government has never fully revealed what it takes to pass the

"net benefit" test, and the NDP's stance may force Mr. Harper to be more

specific. With the NDP speaking out, the debate over Nexen's future - and other

Canadian takeover targets - is now mainstream, rather than isolated to the

business world.

   "Now it is burst wide open onto the political scene," and becoming "a

kitchen table national debate," said Penny Collenette, a law professor at the

University of Ottawa, as well as a former senior director in the Prime

Minister's Office under Jean Chretien and a former vice-president at George

Weston Ltd.

   New Democrats "cannot support the rubber-stamping of the CNOOC takeover of

Nexen," Mr. Julian said. "We cannot see the net benefit when we look at a

variety of concerns and criteria that have been raised by the Canadian public."

Those concerns, he said, included the environmental and human-rights record of

CNOOC, the potential for job losses and the risk of decision-making gravitating

away from Nexen's Calgary head office, plus risks to national security.

   CNOOC has been seen as a "strategic arm" of the Chinese government, Mr.

Julian said, pointing to a particularly controversial aspect of the proposed

deal. CNOOC, for its part, insists it operates as an independent company. And

"the idea that this government would enforce conditions is simply a smoke

screen," Mr. Julian said.

   "Every single takeover that has been rubber-stamped by this government,

regardless of whether the companies have maintained their commitments or not,

the government has never responded to enforce those conditions."

   Mr. Harper said the NDP is merely adhering to its socialist ideological

bent and its rejection of the transaction would not affect the government.

   "We do have to remember as Canadians that a lot of jobs in this country, a

lot of jobs and growth, depend on investments. As well, Canada is a significant

investor in other parts of the world," Mr. Harper said. "So our economy depends

on the kind of jobs and growth that international investment flows create."

   The Conservative government has been generally welcoming of foreign

investment, he said, but it has also significantly modified and blocked some

transactions.

   "This particular transaction raises a range of difficult policy questions,

difficult forward-looking issues," Mr. Harper said. "And those things will all

be taken into account under the Act in assessing the net

benefit of this investment to this country before we take a decision."

   Industry Minister Christian Paradis slammed the NDP for speaking out

against the CNOOC-Nexen deal.

   "The true motivations for the NDP's actions are clear; frighten off

investment and shut down trade. This is not surprising coming from the party

that opposed free trade with the United States, our largest trading partner," he

said in a statement. "The NDP's actions are reckless and irresponsible. By

attempting to politicize the review process they are creating the kind of

uncertainty that scares off the investment Canadian companies rely on to create

jobs, innovate and compete."

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