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OTTAWA — As he prepares the ground for a likely approval of the takeover of Nexen Inc. by a Chinese national oil company, Prime Minister Stephen Harper is cementing his government’s transformation from anti-communist China-skeptics to business-oriented pragmatists eager to pursue an economy-first Asia policy.
CNOOC Ltd.’s groundbreaking $15.1-billion deal for Calgary’s Nexen has revealed a continuing fault line in the Conservative caucus, pitting the more ideologically driven members who distrust the undemocratic regime in Beijing against their colleagues who want to expand trade and investment ties with the fast-growing Asian powerhouse.
The split has even surfaced in cabinet, according to several sources close to the government. Finance Minister Jim Flaherty, who has made it a personal priority to build commercial relations with China, has spoken in favour of judging the CNOOC deal on its merits rather than allowing broader political differences to derail it. Immigration Minister Jason Kenney – with his anti-communist roots and promotion for religious freedom – voiced his concerns that China is not a trustworthy economic partner.
Mr. Harper has placed himself squarely in the pragmatists’ camp. His government is now widely expected to approve CNOOC’s bid for Nexen after the Investment Canada review, an expectation that reflects the lack of opposition from the Alberta government – the owner of the oil resources – from oil industry executives, or from the broader corporate sector, which is eager to expand business ties with China.
It was nearly six years ago that Mr. Harper proudly wore the mantle of China-skeptic: defiantly proclaiming his government would not sacrifice human rights and other Canadian values to the “almighty dollar” in its dealing with the rising Asian powerhouse.
Since then, he has led his government in a re-evaluation of the China relationship, notably with his much-proclaimed view that Canada’s future prosperity depends on its ability to expand exports to Asia, and China specifically, and to attract investment from the region.
In recent public statements, Mr. Harper has highlighted the need to expand commercial relations with China, even as he acknowledged the concerns of the critics. He has been careful not to pronounce on the merits of the specific CNOOC-Nexen transaction.
In the weeks since the deal was announced, he has reiterated his view that expansion of commercial ties with Asia is an urgent priority for Canada. He stressed the importance of mutually beneficial trade, knowing that he was to meet President Hu Jintao in Vladivostok this week to sign a foreign-investment agreement that would signal China’s willingness to protect Canadian investors. And he has promised new guidelines that sources say will aim to protect strategically important Canadian companies while welcoming takeovers from market-oriented, publicly traded, state-owned enterprises.
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