“Beware the Greeks (i.e. or Russians or Chinese) bearing gifts (i.e. Trojan Horses)!

Observations by

Dave Harbour

Alaska-Ecuador Flag Pin

Rafael Correa, courtesy, Wikipedia

Now look what happened to Ecuador under socialist Rafael Correa’s presidency (i.e. Correa is now enjoying a pleasant life in Belgium, Cato Institute).  It’s what happened when a president wanted to spend money today by borrowing from China at the expense of his country’s children; now, his more conservative successor, Lenin Moreno, struggles to resolve the fiscal crisis he inherited. 

Bill Walker, Governor of Alaska. NGP file photo by Dave Harbour.

One hopes, against prevailing evidence, that Alaska Governor Bill Walker is not tempted to follow in Correa’s footsteps.  After all, Walker romances China while his state is in fiscal crisis with a bloated, unsustainable state government and cannot seem to talk lawmakers into raising taxes as he increases entitlement programs (i.e. Medicaid expansion and giving 229 Alaska Native “tribal governments” sovereignty that positions them for more taxpayer benefits and some degree of escape from the traditional rule of law). 

The Chron of 6-30-11 enables us to remember history: “At first blush, the bid by Chinese oil company Sinopec to build a natural gas line from Alaska’s energy-rich North Slope may sound like a pipe dream …  Alaska’s congressional delegation warned that a Sinopec-owned project could undermine U.S. energy security….”  And, did you know this, from Forbes:  “The most recent U.S. gas export to China was in May 2011, when 1.12 million cubic feet were sent via LNG tanker from Alaska to China.”

Let’s look at a few comparisons shared by Ecuador and Alaska (We’ve earlier compared Alaska, under Governor Bill Walker to Venezuela and Argentina, Ref. 2):

Ecuador: International Policy Digest.  “… Rating agencies have warned investors about the risks of investing in Ecuador given its poor economic outlook and increasing levels of debt. S&P downgraded Ecuador’s Sovereign Debt from B to B- in June 2017 while Fitch has a negative outlook on its B rating, reinforcing investor sentiment that Ecuador’s debt is not a safe asset. Ecuador has received funds from many different sources including the IMF but a large amount is being issued by China. So much so that the government has been accused of “mortgaging” Ecuador to China.”

Alaska:  S&P warns Alaska again of possible credit downgrade, citing need for … – Moody’s downgrades Alaska’s credit rating again.  Alaska credit rating downgraded for 2nd time in a week .  S&P Global Ratings dropped Alaska’s general obligation debt rating from AA+ to AA, with a negative outlook. This is just the latest in bad credit rating news for Alaska. Its rating has been sliding since last year.  Another top rating agency, Moody’s Investors Service, also downgraded Alaska less than a week ago

Ecuador: “His dilemma will be how to satisfy the demands of his left-wing supporters for continued high spending on Ecuador’s public services, while simultaneously managing a shrinking economy, whose reliance on stagnant oil revenues and addiction to debt, limit his room for maneuver.” IPD

Alaska: ‘Alaska Governor Bill Walker urged state legislatures on Tuesday to compromise on a budget in order to avoid an unprecedented government shutdown next month.” Reuters


Everyone knows the story about the Trojan Horse  “gift”, but how many remember that lesson and apply it to their current challenges?

Today, the Hill has taught us the details about how the Russians brought gifts to the Clinton Foundation and family (The Hill) when the latter sought riches over national security.  The Chinese brought gifts to Ecuador, as we show above, when the country’s leader wanted to supply benefits to his generation of voters at the expense of future citizens who were too young, then, to vote.

Now, Governor Bill Walker faces a dilemma of his own making.  He has increased entitlement programs.  He has an annual state government operating deficit of several billion dollars.  He has pursued no long term operating cost cutting of which we are aware.  He continues to spend money on a gas pipeline/LNG project that is infeasible in today’s low oil/gas price environment.

The Legislature is not inclined to increase taxes or create new ones in an economy that is shrinking.  Instead of focusing on cost cutting and the fiscal crisis at hand, Walker devotes effort to promoting his socialistic, government-owned, bureaucrat/politician directed gas project to Japan, Korea and China.

Any business person knows that he is promoting his government energy project without leverage.  So far, he’s gotten no nibbles from the Republic of Korea or Japan, save for diplomatic ‘Memoranda of Understanding”.  He has asked the Trump administration for “infrastructure funding”, so far without success — for which every taxpayer should be thankful.

Finally, he turns to China, which a previous administration rejected as a gas project bidder.  China, like Japan and Korea, is populated with highly intelligent, business and political negotiators…some of the same ones who negotiated years ago with Ecuador.  Knowing they are in a highly leveraged position against Alaska politicians desperate for any deal to buy their budget a few more years, what kind of a deal do our readers think Alaska can negotiate?   Would you allow Governor Bill Walker to negotiate your savings with China?  Actually, Alaska citizens are allowing Walker to negotiate their future and their children’s future with China.

We believe both history and common sense require that in such circumstances China would win big and Alaska’s citizens — current and future — would lose and lose big.

Trojan Horse. Source: YouTube.

We would also not discount a scenario of China partnering with Russia (i.e. publicly or in secret) to obtain a toehold into America’s only Arctic State.  In any Alaska energy cabal involving China and/or Russia, we could no longer envision the 49th state as a safe or profitable investment target for any natural resource investor groups, ranging from oil & gas to mining, timber and commercial fishing.

Mom had another way of teaching her sons the Trojan Horse story.  She used to say, “There is no free lunch”… quickly followed by, “If it seems too good to be true, Honey, it probably is.”