Casey Institute of the Center for Security Policy.
NewsMax.com. Wednesday, June 13, 2001
WASHINGTON - A front-page article in Tuesday's Washington Times identified
China Ocean Shipping Co. (COSCO) as a key player in the ongoing, surreptitious
delivery of weapons from China to Cuba. Ironically, this report comes shortly
after COSCO's CEO paid a visit to the Times for the purpose of disavowing widely
reported connections between his company and the Chinese military.
According to the Times, Beijing's arms deliveries to Cuba have taken place
on at least three separate occasions within the past several months. This
pattern of reported transfers belie the claim that COSCO's activities are solely
driven by the pursuit of profit, independent of the Chinese government's
foreign-policy agenda. Instead, it seems far more likely that COSCO - a 100
percent Chinese state-owned enterprise (SOE) - is doing precisely what its
owners instruct it to do, i.e., supporting the PRC's goal of increasing military
and economic collaboration between Havana and Beijing.
In a move that has, regrettably, become standard operating procedure for
making certain Chinese SOEs more palatable to U.S. and overseas investors, COSCO
created a wholly owned subsidiary, COSCO Pacific, to establish a funding vehicle
on the Hong Kong stock exchange. This and other so-called "Red Chips,"
however, generally remain largely under the influence of the parent company. The
contention by some market observers that there is a genuine "firewall"
between COSCO and COSCO Pacific is made still less plausible by the Times'
identification of yet another COSCO subsidiary (COSCO Tianjin) as the
transporter of sophisticated weaponry components to Pakistan in 1998.
American shareholders of COSCO Pacific now seemingly find themselves in the
unsavory position of holding the stock of a subsidiary of a Chinese state-owned
company allegedly implicated in untoward international arms smuggling and
possibly weapons-proliferating schemes. According to Thomson Financial Research
Services, these investors include: the State Teachers' Retirement System of Ohio
(which holds some 6 million shares), the Teachers' Retirement System of Texas,
Nomura Asset Management, Morgan Stanley Emerging Market Fund, Putnam Investment
Management, Goldman Sachs Core International Equity Fund, Credit Suisse Asset
Management and American Express Asset Management.
Should Bill Gertz's reports of alleged violations of U.S. law prove correct,
Congress and/or the Bush administration may feel compelled to deny access to the
U.S. capital markets to COSCO and its publically traded subsidiaries as a highly
leveraged and singularly effective penalty for activities that facilitate the
military armament of terrorist-sponsoring states like Cuba in violation of U.S.
law.
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