USS Ronald Reagan (CVN-76) and USS Lake Champlain (CG-57)
USS Ronald Reagan (CVN-76) and USS Lake Champlain (CG-57)

Rumors surfaced last week that Chinese oil giant PetroChina (NYSE: PTR) was showing interest in purchasing McDermott International (NYSE: MDR) a corporation which owns the Babcock & Wilcox Company, the sole supplier of nuclear fuel and nuclear systems to the United States Navy.  McDermott International also manages the U.S. Strategic Petroleum Reserve.  As a Panama-based firm, McDermott may fall outside U.S. jurisdiction with regard to sale or transfer of strategic or sensitive technology or equipment, or ownership in companies engaged in such ventures.

Aside form the obvious implications to national security of having fuel supplies for the American fleet subject to the ups-and-downs characteristic of the growing storms between the U.S. and China, the acquisition of McDermott and its nuclear power subsidiaries offers great benefit to a Communist China whose naval expansion is in full swing.

The effect of such an acquisition would be felt along defense and economic vectors.  From the blog of the United States Naval Institute:

Finally, China’s economic jockeying comes at a time when the Obama Administration is still racing to reset national security policy. There’s a heck of a lot going on, and it all gives SECDEF Gates’ recent comments regarding America’s ability to confront modern-day economic warfare a particular poignancy.


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