On his first full day in office, President Joe Biden signed a massive executive order that, among other things, killed the Keystone XL pipeline project. Buried in that same order were two short sentences that will allow the Chinese government to get into the American electrical grid.
Located at Section 7(c), the order reverses a previous directive by the Trump administration last May, which found that «foreign adversaries are increasingly creating and exploiting vulnerabilities in the United States bulk-power system, which provides the electricity that supports our national defense, vital emergency services, critical infrastructure, economy, and way of life.» [Emphasis added.]
The Biden order on its surface suspends the previous order for 90 days and directs the US Secretary of Energy and the Director of the Office of Management and Budget to determine whether it should be replaced. In practice, suspending the rule launches a window of opportunity for Chinese businesses to sell equipment into the US market for bulk-power systems, the crucial infrastructure that stores and delivers electrical power to the entire country.
Bulk-power systems refer to everything from electric power substations, transformers, high-voltage power lines, capacitors, and other equipment necessary to move electrical power from plants where it is produced to end users, whether for civilian, government, or military use. These systems are, of course, highly computerized and the Trump administration’s goal was to prevent the Chinese, America’s greatest geo-political and economic rival, from having their hands in it. Biden’s order strips that protection with the stroke of a pen.
The killing of the Keystone XL project got all the attention. That project, to greatly expand an existing pipeline that brings Canadian shale oil into the US through the central US to the oil facilities along the Gulf Coast that are properly equipped to refine it, has been a target of left-wing environmentalists for years. Biden’s cancellation of the pipeline was the fulfillment of a campaign promise he made to shore up support with Democrats who prioritize green energy and environmental fears.
When the Trump order was issued, there were fears that depending on electrical system transformers and other power-moving equipment made in countries hostile to the U.S. would create vulnerabilities to cyber-attack. In late 2015, the power system in Ukraine suffered a cyberattack so severe that it caused a large power outage in the country. Ukraine said that Russian security services were behind it. When the Trump administration issued the order in mid-2020, then-Secretary of Energy Dan Brouillette said that it is imperative that «the bulk-power system be secured against exploitation and attacks by foreign threats.» Analysts at the time identified China and Russia as the two main countries most capable of posing a threat to the U.S. power grid, which is still true today.
So, where was the constituency for allowing the Chinese access to the market for providing critical equipment to run and manage the US power grid? Who was clamoring to undo protections from cyber-warfare directed against America’s power system?
The answer may come within the 90-day window given to the energy secretary and the head of OMB to reconsider this rule.
The Keystone XL cancellation itself also benefits energy-hungry China. Without the pipeline, Canadian oil will seek other markets and both suppliers and the Canadian government have invested in pipelines that will make that oil easier to sell to Beijing. The pipeline cancelation immediately threatens the jobs of more than 10,000 construction workers in the U.S. and Canada plus many other related jobs, and an estimated loss of $1.6 billion in revenue. Sen. Mike Rounds (R-SD) told Fox News the cancellation would mean most of the oil would instead be carried on rail cars, with worse environmental effects than the pipeline would have had.
Canadian Prime Minister Justin Trudeau said his administration was «disappointed» with Biden’s decision to revoke the permit for construction on the Keystone XL oil pipeline, though he approved generally of Biden’s commitment to «green energy.» By cancelling the pipeline, Biden is not preventing any energy production of fossil fuels in Canada. He is simply shifting that consumption to China. Hedging its bets, Canada was already seeking more access to the Chinese energy market, and this will push them further in that direction. Economically, all Biden’s order does is damage America’s energy production and give the US less control of energy markets, and give China greater leverage.
With this one order, on his first day of work, Biden has given the communist government of China access to the U.S. bulk-power system and a more favorable market for buying the oil that makes it the top producer of carbon-dioxide in the world. It is difficult to see how such moves, done unilaterally and without negotiating anything at all in return, make sense to the security of the U.S.
The Biden family’s ties to China are now well known. His son, Hunter, has made millions from an investment partnership called Bohai Harvest RST (BHR) that he built after stepping off Air Force Two in 2012 while his father was Vice President, making a state visit to Beijing. BHR is a private equity firm founded by Hunter Biden and funded with $1.5 billion from the Chinese government via the Bank of China. That was the first of many other deals Hunter and Chinese military-connected firms would broker. In 2015, a Chinese state-run military contractor called Aviation Industry Corporation of China (AVIC), acquired a 51 percent stake in Henniges Automotive Co., an American company developing «dual-use» technologies with military applications. The other 49 percent was purchased by Bohai Harvest RST (BHR). Despite the dual-use concerns, the Obama administration approved the deal.
Hunter was involved in another deal called Chinese General Nuclear, a Chinese company that was implicated by the FBI in stealing nuclear secrets from the United States. Executives from that company were arrested. In 2017, he also worked on securing a deal with CEFC China Energy to invest in US energy projects, according to documents released by Senate Republicans investigating the matter. That deal eventually fell through, but not before CEFC’s founder and former chairman Ye Jianming reportedly gave Hunter a 2.8-carat diamond after a Miami business meeting.
There may be no financial connection between the business interests of Hunter Biden, who is currently under investigation by the FBI for money-laundering, and the Biden administration’s first-day retraction of his predecessor’s national security restriction on Chinese involvement in the critical bulk-power system. But I suspect many other investigative journalists will be as curious as I am and will be looking into the possibility that there is, given the amount of attention Hunter Biden’s activities received in the past year and the lack of any constituency for removing that restriction in the first place. The timing alone raises questions about exactly which supporters Joe Biden was making happy.
Peter Schweizer, President of the Governmental Accountability Institute, is a Gatestone Institute Distinguished Senior Fellow and author of the best-selling books Profiles in Corruption, Secret Empires and Clinton Cash, among others.