For if the future of the Republic is first decided by guns within our borders, the war with the international creditors to collect what they see as their due will surely follow.
From Real Clear World:
December 31, 2009
China Goes for the Gold
By Daniel McGroarty
Nearly lost in the news of would-be air terror, protests in Tehran and best-and-worst retrospectives for the fast-vanishing Double-Zero Decade was a story about a tiny investment deal that raises big questions about China's strategic intentions towards the United States.
The story, reported on the New York Times' business page, noted the decision of Northwest Non-Ferrous International Investment Company - a Chinese state-controlled mining conglomerate - to withdraw its request for U.S. Government approval of its purchase of a controlling interest in Nevada-based gold-miner. The withdrawal spared the Northwest Non-Ferrous/Nevada deal from becoming only the second proposed foreign investment since 1988 to be formally rejected by CFIUS - the Committee on Foreign Investment in the United States, chaired by the Treasury Department with seats for more than a dozen U.S. agencies including the Departments of Defense, State Homeland Security. (Trade wonk trivia spoiler alert: the first CFIUS refusal involved a proposed Chinese acquisition of a Washington State aerospace company, during the presidency of George H.W. Bush.)
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In this week's case, the object of Chinese affection was FirstGold Corporation - a tiny Nevada gold mining company, small even for junior mining standards, with a single producing mine and a market cap just above $5 million. Precisely why the Chinese firm selected FirstGold from among scores of U.S. gold mining companies is not clear, but in recommending that the deal be refused, CFIUS apparently focused on "serious, significant and consequential national security issues" - namely, the proximity of one of FirstGold's projects to Fallon Naval Air Station, home to the Navy's TOPGUN training facility, as well as "other sensitive classified assets." What benefits China might enjoy from being a Nevada neighbor of TOPGUN were left to the reader's imagination. The New York Times also noted Obama Administration concerns that what might have interested the Chinese in FirstGold may not have been gold at all, but its rights to mine zinc and uranium - both of which are designated strategic minerals by the U.S. Government.
The setback for Northwest Non-Ferrous follows successful investments in Canada and Australia. The Chinese firm bought a Yukon mining company with lead and zinc assets in 2008, and made a second investment that same year in an Australian gold company which also holds prospective uranium properties. Northwest Non-Ferrous's non-Chinese purchases form part of a pattern: other Chinese state-controlled agencies have sought stakes in two Australian miners who happen to be among the very few non-Chinese companies that mine rare earth minerals critical to a range of military and commercial uses.
CFIUS' refusal parallels recent Australian decisions denying mining company acquisitions proposed by Chinese state-controlled firms. Earlier this year, Australia's Defense Department denied a proposed joint venture involving a Chinese state firm and an Australian resource company with properties near a missile test site. A second Australian mining company investment by yet another Chinese state firm was approved by Australian authorities, but only after a property near the same missile test site was excluded from the deal.
Is this month's CFIUS refusal merely a blip on the business page - or a harbinger of heightened levels of scrutiny for Chinese mineral and metals investments? Here's hoping it is a sign that the U.S. and its resource-rich allies are beginning to notice a pattern of Chinese commercial purchases with potentially serious geo-strategic consequences. China apparently sees value in the West's vast and varied resource base. Can we say the same?
Daniel McGroarty, principal of Carmot Strategic Group, an issues management firm in Washington, D.C., served in senior positions in the White House and at the Department of Defense.