Globalising world

Updated: Aug 4 2005, 05:30am hrs
Xenophobia is alive and well even in a globalising world as the events leading up to the withdrawal of China National Offshore Oil Corporations (CNOOC) offer for Unocal, the US oil company, would seem to demonstrate. What is strange is that it should have happened in what is supposedly the most open economy, the US. But such was the force of domestic sentiment that CNOOC finally beat a retreat, leaving the field clear for Chevron Corp. Ironically, CNOOCs bid at $18.5 billion was more attractive to Unocals shareholders than Chevron Corp.s $17 billion. Yet, even the board of Unocal seemed inclined to look more favourably at the latter.

CNOOCs decision comes after last weeks vote by a US Senate-House conference committee in favour of a 141-day delay in a Bush administration review of Chinese government-run CNOOC Ltd.s bid for the Ameri- can company. Negotiators wanted the US Energy, Homeland Security and Defence departments to first conduct a 120-day study on how Chinas growing energy demand affects the economic or national security interests of the United States.

After that, the governments Committee for Foreign Investment in the United States (CFIUS), which determines if major foreign investments in US companies are a threat to national security, would have had to wait another 21 days before concluding its review of CNOOCs proposed purchase. The intent was clear: to put as many spokes in the wheel as possible to scupper CNOOCs plans.

The US is not alone in such paranoia. In recent weeks, talk of Pepsi making a bid for French water and dairy products giant, Danone, has set off much the same kind of tremors in France. No less a person than the French PM has come to the defence of Danone, calling it one of the industrial jewels of France. The same argument was used in the past to drive Aventis, the pharma group, into the arms of its French compatriot Sanofi-Synthelabo rather than the Swiss Novartis. So next time the Left raises the bogey of national security whenever there is talk of raising the ceiling on foreign direct investment, remember, it has an unlikely ally in Uncle Sam.