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Pelosi Statement on Amendment to Block Chinese Bid to Acquire Unocal

June 30, 2005

Pelosi Statement on Amendment to Block Chinese Bid to Acquire Unocal

Thursday, June 30, 2005

Contact: Brendan Daly/Jennifer Crider, 202-226-7616

Washington, D.C. - House Democratic Leader Nancy Pelosi spoke today on the House floor in support of an amendment offered by Congresswoman Carolyn Kilpatrick of Michigan that blocks the purchase of Unocal by a Chinese company. Below are her remarks:

"Mr. Speaker, the Chinese National Overseas Oil Company's (CNOOC) bid to acquire the Unocal Corporation is a graphic example of America's energy vulnerability. President Bush should refuse to approve the acquisition, and Congress should indicate its disapproval as well.

"I urge my colleagues to support Congresswoman Kilpatrick's amendment, and I thank her for her leadership on this issue.

"The Chinese bid for Unocal is compelling evidence of America's strategic energy vulnerability. China has clearly decided to meet its growing energy demand by obtaining control of energy assets around the world. Yes, it is true -- China will turn to Iran, Sudan, and other countries, and in fact it already has. Arrangements made in Iran, Sudan, Australia, Venezuela, and other places illustrate this strategy. With the Unocal bid, the Chinese plan reaches our doorstep.

"The Chinese government's control of CNOOC made the bid possible, not the free market. My Republican colleagues and Democratic colleagues are all dedicated to the free market system, and should understand that this is not a free market transaction. Government-provided low-interest loans allowed the company to bid at rates not otherwise available, and if the acquisition of Unocal was critical to the Chinese, they would probably allow the bid to be increased to any level needed to seal the deal. Control of energy assets by China means they controls where those assets go, and when. That raises serious national security concerns for the United States.

"Among those other serious national security concerns is the transfer of technology associated with the Unocal acquisition. It is been reported that China could assume ownership of a 'cavitation' technology. Cavitation is a process which Unocal uses to go into deep water to drill for oil. That same technology can be used by the Chinese to do nuclear tests underground and to mask them so we would not ever be able to detect them. It may also have applications for locating matter in deep water.

"Given China's commitment to improving its military capabilities, why would the United States permit the sale of this kind of technology? Left on its own, we probably would not, but as part of the Unocal deal, it is being pulled through with this Trojan horse.

"The reason the Chinese believed a bid for Unocal could succeed lies in our dependence on them to finance a significant portion of our massive budget deficit. Our reliance on the Chinese to finance our debt gives them far too much leverage over our decision-making process.

"I go back 15 years now, on arguments that expanded trade with China would result in increased freedom for the Chinese people, which were proved wrong long ago. At that time, just before the Tiananmen Square Massacre in 1989, the trade deficit with China was $3.5 billion a year. We thought that huge trade deficit would give us leverage on improving human rights, improving trade relations, and stopping the proliferation of weapons of mass destruction.

"We failed in persuading Congress to do that, and today the trade deficit with China is not $3.5 billion a year, it has grown to $3.5 billion a week. With all that capital, China is able to purchase our debt, have leverage over us so that now we have to -- hopefully not -- but some believe, agree to their buying a strategic asset which, Unocal represents.

"Our reliance on China to finance our debt weakens our ability to influence China on human rights, on proliferation of weapons of mass destruction, on North Korea - you name it. This is the price we pay for failing to live within our means, and it is long past time we recognized that danger and addressed it.

"Let us heed the wake-up call provided by the Chinese bid for Unocal. Let us get serious on both issues: reducing risks in energy by adopting an innovative energy policy for the 21st century and getting our fiscal house in order.

"And again, I caution my colleagues that a serious transfer in technology would be contained in this purchase of Unocal, and I urge my colleague to support the Kilpatrick amendment."