You hear the cries emanate from all quarters in America : “Look
what the Asians – especially the Chinese are doing to us. We're being shafted.”
You look to where they point the finger and see an Asian (more likely a
Chinese) company doing business in Africa, South America or the Middle East
where a “Western” company used to be or could be at this time, doing as good a
job as the Asians if not a better one. Why is this happening?
If you want to know why this is happening, read the
September 6, 2013 article in the Washington Post which came under the title:
“In Egypt , U.S. oil
company Apache cuts its stake as private investment dwindles.” It was written
by guess who. Of course, who else could it be – it was Howard Schneider. Just
look at the title. It is made of two parts. First: “company cuts its stake,”
and second: “as private investment dwindles.” The first part is news which is
what the title should be about. The second part is editorial that should not be
in the title of an article pretending to be news. Worse, the opinion expressed
is shown to be false by what the article says.
But there is more. After introducing Apache to the reader,
and the relation it has had with Egypt for nearly 20 years, Schneider says this:
“amid what company executives said was uncertainty about the country and a
shareholder call to 'validate' its presence there, Apache announced that it
would sell a third of its operation to China's Sinopec...” He returns to that
theme near the end of the article: “There is a strong nationalistic streak in
the Egyptian economic debate. Apache executives did not explicitly raise that
risk … But in a recent call with analysts, chief executive Farris acknowledged
the pressure from stockholders to justify a continued stake in Egypt .”
This is loaded with so much spin; there is enough energy in
it which, if applied to the moon, would spin it like a pulsar. First of all,
let me explain that every once in a while, an executive would initiate a
telephone conference call during which time shareholders and analysts ask
questions and he responds. I did not participate in that conference even though
I received notification; so I do not know who asked the question – if indeed he
or she gave their name. But I know who requested that the company 'validate'
its presence in Egypt .
It was the investment firm, Oppenheimer that used the Egyptian born and
educated Fadel Gheit, to verbalize the request.
Wow, how clever that was! Or was it? What we have here is a
Schneider writing an article based entirely on what an Oppenheimer and a
mystery conference caller said. Oppenheimer, in fact, voiced its opinion only
days before Apache announced the sale of one third of its holdings to the
Chinese Sinopec. It called on Apache to 'validate' its presence in Egypt , says the
article. But the truth is that Oppenheimer advised the company to leave Egypt entirely,
having gotten wind of the pending announcement with Sinopec ahead of time.
People who want to sound important and get in the news often do that. They
preempt the real news thus become the news and have their fifteen minutes of
fame. Was that clever enough for you? It was not to me.
The real question is this: What does it mean that Apache
sold one third of its holdings in Egypt to a Chinese company for 3.1
billion dollars? It means that the Chinese see a great opportunity in Egypt .
Currently, the company produces the daily equivalent of 160,000 barrels in oil,
condensates and natural gas. It happens in the Western
Desert , a place that is the extension
of, and has the same geological formation as oil rich Libya . In
addition, Apache has exploration rights over 10 million acres in a region that
is known to hold excellent potentials for new discoveries.
The truth is that Apache has had some very good luck in Egypt where it
started as a minnow and grew to become a whale. As a result, it acquired rights
in other places in the world where it wishes to explore. But given that it also
has sizable acreage in Egypt ,
it needed a partner with deep pockets to be everywhere at the same time, and
get busy in every place. Sinopec was the right fit for it at this time, and the
deal was consummated. This sort of deals happens all the time, and no one knows
this more than us, Canadians, who constantly struggle with the subject of
foreign ownership of our resources.
And this brings us to what Schneider called a nationalistic
streak in the Egyptian economic debate. He idiotically tied it to “the era when
military leader Nasser nationalized much of the economy,” then shot down
whatever negative impression he was trying to convey by revealing: “Apache
executives did not explicitly raise that risk in announcing the sale.” So you
scratch your head and ask: What the hell was that about? Why did he feel it was
necessary to say all that?
Come to think of it, every country exhibits a certain amount
of nationalistic streak when it comes to the economy, including Canada and the United States who periodically turn
down foreign takeovers that do not suit them. And I still remember the days
when the railway company in Britain
was privatized and renationalized several times depending on whether the
Conservative Party or the Labor Party was elected to govern.
Then, as surely as night follows day, you hit the inevitable
BUT as when you read an article about Egypt in any American publication –
especially if the article is written by a Schneider. Look at this one: “The
sale, Apache said, was part of a broader shuffling of its business, not a
decision to divest in Egypt
… BUT it's a sign of the difficulties ahead.” Thus, not only does he inject his
famous but in there, he also plays the role of prophet by predicting
apocalyptic days ahead for Egypt .
He goes on to list a host of problems that, in reality,
would pale when compared with those that plague many European economies. In
addition, those in Egypt
have, in fact, been addressed in most part by the new government. Also,
Schnieder is forced eventually to admit that: “The Apache sale does not
necessarily augur an exodus of other U.S.
firms from Egypt … other
large U.S.
investors – firms such as General Motors, Procter & Gamble and Microsoft –
said they had no plans to scale back.”
And there is more: “U.S.
companies have continued through two years of turbulence to keep local earnings
there, whether to reinvest or because of U.S. or Egyptian tax laws,” which
means that companies will go to where the incentives will pull them. And the
result is this: “The value of private U.S.
holdings in Egypt actually
rose from $14 billion to more than $17 billion,” which belies the subtitle
assertion to the effect that private investment is drying up in Egypt .
But the author would not let that go without inserting his
own BUT in there once again. Here it is: “BUT the increase was more than accounted
for by the locally generated earnings.” This means the money coming into Egypt is new
money. Still, you ask: Who cares where the money comes from or for what reason?
The country is good for investment, and the businesses – American or otherwise
– are attracted to it.
You pause at this point and think: What can coverage as
asinine as this do to the American readers? Well, those who know Egypt feel
disgusted. Those who do not know the country well but are looking for
investment opportunities will be deterred from investing in Egypt . What
they do not take, they leave for someone else, which is how and why other
countries, especially the Asians, end up ahead of America . If you want to know how
the process begins, here is a taste of that: “Billions of dollars in loans from
Persian Gulf countries have stabilized Egypt 's finances and allowed the
cabinet to announce new infrastructure projects meant to jump start hiring.”
In the meantime, he goes on to say: “Most of the $1 billion U.S. debt
relief package offered by the Obama administration remains on hold.” Is that
all? Of course not. Not when there is an opportunity for a Schneider to insert
his BUT yet again. Here it is this time: “BUT the loans from the nearby gulf
monarchies won't fix Egypt 's
problems.” Did you notice that every time he talks about an Egyptian
apocalypse, it is about a future prediction? This time he hangs it on the IMF
officials who worry that the government will be left “deeper in debt and with
even more difficult problems to solve.”
For these reasons and “until the country's political
situation is settled, any discussion of possible help will be limited” says the
author of the article. Can you imagine what these characters would have said if
the Egyptian government was as gridlocked as the American? While you
contemplate what they might have said, here is what the Egyptian people said
loudly and clearly: Shove it!
And this brings us to another question: Who is really
shafting America America