Will China come to Long Beach?

Insight on the News, August 10, 1998 by Timothy W. Maier

In the dispute about whether a Chinese shipping company should acquire a former U.S. naval base in California, everything is being considered except national security.

The White House defends its role in the Chinagate rocket/satellite scandal by calling the provision of U.S. missile technology to Beijing's military a "commercial" matter that makes economic sense. Ironically, a group of concerned Californians is taking that page from the Clinton spin book, charging in a federal lawsuit that it makes economic sense to stop the takeover of the former U.S. Navy base in Long Beach, Calif., by the Chinese Ocean Shipping Co., or COSCO, a firm linked to the Chinese military.

"Only this lawsuit can prevent approximately $569.7 million of waste from occurring, preserve the historic and other buildings and facilities located on the Naval Station, preserve the environment and ensure that the greatest number of jobs will result from the closure" says the group's Los Angeles attorney Richard Fine. He adds it would take some 75 years for the port to recoup its investment loss on the proposed deal and 52 years to pay back the principal on the money that would be borrowed to build new port facilities.

The money to transform the naval base into a 330-acre cargo-container operation for communist China is in the Tidelands Trust Act, which would provide financing from port operations. Lost in all this is the fact that the money belongs to California taxpayers, who apparently are to have little or nothing to say about how to spend it, Fine says.

The lawsuit was filed earlier this year in U.S. District Court for the Central District of California on behalf of eight taxpayers against the California Land Commission and the Navy. Fine says his arguments are based on simple economics. But that is precisely the same type of argument offered on the other side by Long Beach officials.

Long Beach Mayor Beverly O'Neil predicts some 1,600 construction jobs, hundreds of high-paying terminal jobs and thousands of other regional trade-related jobs are at risk if the deal with China does not go through, according to a June 5, 1997, letter addressed to President Clinton and obtained by Insight. She urged Clinton to help, saying the "delay has cost the City and Port some $20 million"

Clinton had lobbied hard for Chinese interests, sending an economic adviser to pressure Long Beach officials to go forward with the COSCO deal. This came after the president, a beneficiary of China's campaign largesse, entertained one of COSCO's top officials and invited him to a White House radio address.

Since receiving that letter from Long Beach officials urging more White House action, even more pressure has been applied. Los Angeles is building a container port very close to the proposed Long Beach site that could lure away tenants. The Los Angeles site is expected to be completed by 2001 and could affect the Long Beach port adversely, especially if the court continues to delay demolition of the naval base, O'Neil says. Insight has learned that even if the irate Long Beach residents prevent COSCO from taking over their facility, the Chinese shipping company already is courting Los Angeles authorities and a deal there could be imminent.

Meanwhile, Fine's lawsuit to stop the Long Beach deal with Beijing is moving forward with an argument that says there is not enough business to support two huge ports. He also points to the Navy's own study, which concluded the cargo-container yard would produce fewer jobs (3,003) than other alternatives. An auto terminal would produce 3,164 jobs and a college campus 4,593 jobs. Fine also argues that the government failed reasonably to consider other alternatives, such as a World War II Navy memorial park. It's for these reasons the court should grant an injunction to prevent the demolition of the base, the lawsuit contends.

However, the Land Commission argues that the case should be thrown out of federal court because this is not a federal fight but an intrastate conflict between the city of Long Beach and its citizens. The commission's objective is to activate the lease agreement with COSCO that was put temporarily on hold during the legal maneuvering.

What is surprising is that the reason for this battle has little to do with economics and much to do with national security. That argument nonetheless is missing from both sides' briefs despite concern in Long Beach, where dozens of national-security protests have taken place with crowds as large as 1,000 people. The protesters are frustrated about Clinton's interference.

They even feel let down by Congress, where Senate Democrats recently defeated the Hunter-Inhofe amendment to the Defense Authorization Bill, which would have prevented COSCO from leasing the Long Beach port. But Sen. James Inhofe, an Oklahoma Republican, says he is far from finished. While the bill passed overwhelmingly in the House, it needs some revision to pass the Senate. Recently Inhofe set up a committee to find a way to advance the bill. Inhofe's press secretary, Gary Hoitsma, says of the measure: "It's not dead yet. We're pushing along."