Tuesday, October 2, 2012

CNOOC take over of Nexen

I am not a fan of economic nationalism but in thinking about the move by the government of China to buy up an energy company based in Canada I am realizing there is a problem.    It is enough a problem when corporations are involved with politics, but it is so much more so if that corporation is the government and an unaccountable one.   The federal government should just say no to CNOOC buying Nexen.

Government and business are often in bed together but the closer they are linked typically the worse the decision making process is.  When it comes to a country that has no independent courts, no free press, and  no way for the public to express its will in the political system, Canada needs to be very wary.    A government controlled corporation tends to be used to further the interests of the government.   They also tend to not be very open about what it is they do and why they are doing it.   To show you an example, would CNOOC be willing to open all their books and agree to Canadian regulations for the whole company?  

It is clear that CNOOC has no functional independent oversight in China which means you have a corporate culture that does not understand how to function in an environment like Canada.   China is not creating a business class that understands the basic ethics one should expect in business.   In fact the political system in China would seem to operate in way to ensure that ethical business people do not succeed.

The nature of the relationship of a Chinese government corporation to the people in another country becomes the closest expression of colonialism since the end of widespread colonialism we have seen.  All the claims of American neo-colonialism pale in comparison.    Colonialism as a global economic model ranks down there with communism or fascism in effectiveness.  A new government colonialist model of economics is going only cause hardship and decline globally.   The current Chinese economic model is fundamentally unstable and will bring about a dramatic global recession when it has a significant downturn.  

We have to have a push for democracy in China, the government is not one the people wanted.   We need to see a China where business is run by the private sector and the public sector regulates in an even and fair manner.   We need a China where the rule of law and freedom of expression are core to the society.   Until there is a fully democratic China Canada has to protect itself from the government there.

Ultimately Canada needs to adopt a policy of banning ownership of anything in Canada by corporation that is primarily owned by a foreign government.   A corporation that is backed by a government has too much power to allow it to operate in Canada.   I would also like to see Canada create a law that says any corporation that has a presence in Canada has to agree that the whole company globally has to respect basic human rights and not take part in any bribery.  

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