Harper in a Box re: Foreign Investment

Smoky Lake Signal Article No. 242 (October 24, 2012) Whispering in the Wind On more than one occasion I have offered the view: Canada is NOT for sale! I have also indicated that the continuing turmoil in the Middle East has put Canada (and Alberta) on a pedestal with the clear suggestion that Canada is now a secure, stable, energy super power. It’s now up to Prime Minister Harper to guide Canada on that stage. Actually that is not the wish for a few nations, including some global corporations – their interest is to claim ownership of Canada’s energy resources rather than simply trading in energy products – these foreign interests have made their position clear; if Canada wants funding for the development of Alberta’s oil sands then these foreign interests want more control over how things are developed and a greater share of the benefits pie. Events are unfolding and I am beginning to think that Prime Minister Harper is sending out mixed, confusing messages to the international investment community, if not sending out contradictory messages. Mr. Harper has tried to control the damage that he and his government created – in the last couple of days Mr. Harper has said that he will shortly make clear the rules of foreign investment in Canada. Canada – China Investment Treaty Mr. Harper’s government has recently and quietly tabled an investment agreement in the House of Commons - the Canada-China Foreign Investment Promotion and Protection Agreement. In itself these types of agreements are no big deal – except in this case it is a big deal. Experts in the investment field have expressed some concerns regarding the government’s rather blaze approach to the implementation process and that the agreement is going through the House of Commons without any serious debate. The law firm McCarthy Tetrault has concluded that the investment agreement with China “is likely to become one of Canada’s most significant investor protection treaties.” Gus Van Harten a professor of international law at Osgoode Hall’s law school in Toronto opines on the arbitration process in the agreement: “This process can override any decision we [Canadian’s] take. It could be a decision of the Alberta legislature, or the Parliament of Canada or the Supreme Court of Canada.” Last week opposition Members of the House of Commons asked for public hearings on the investment agreement with China but their request was turned down by the conservative dominated trade committee. State Owned Enterprises Make a Play on Canada’s Resources In my view, the main issue facing Prime Minister Harper (and his wish for an effective foreign investment development strategy), is going to be how he and his government views and treats State Owned Enterprises. Simply put, State Owned Enterprises are extensions of foreign governments and therefore are the arms of a foreign government and their policies. That in itself adds many levels of complexity to the issue and will generate major problems regarding the monitoring, transparency and accountability of any foreign government’s operations in Canada. There are two examples before Canada’s investment review group and things are not going well for either example. Malaysia’s State Owned Enterprise, Petronas” put forward a $6 billion bid for Progress Energy Resources Corp., a LNG operation in northern British Columbia. Petronas’ bid has been rejected by Investment Canada and Petronas has 30 days to review its proposal and show that their bid is of “net benefit” to Canada. One of China’s State Owned Enterprises, CNOOC has put forward a $15 billion bid for the takeover of Nexen Inc., a diversified energy company with holdings in various parts of the world – including the politically sensitive areas in the Gulf of Mexico and the North Sea. In this case the Government of Canada has asked for another 30 days to review the CNOOC proposal.

The Nexen Deal?

Milton Friedman has been correctly identified as one of the 20th century’s most influential economists. He has been labeled a staunch advocate of the free enterprise system with little or no respect for regulation, and regulation of the world’s financial sector is a no, no. Particularly important, Mr. Friedman was a passionate believer in free trade and by extension, globalization. Mr. Friedman died in 2006 but his theories continue to reign within many of the world’s developed nation states and their political infrastructures – including the present day government of Canada. One only has to look at Prime Minister Harper’s recent libertarian efforts, including his strategy to seek “quick” free trade agreements with Europe and the People’s Republic of China, to see that Mr. Harper’s approach to economic policy management is consistent with Mr. Friedman’s libertarian theories. Nevertheless, Prime Minister Harper might be forced to take a much more practical, political approach when reviewing China National Offshore Oil Corporation’s bid to purchase Nexen Inc. The Nexen Inc. Deal? China’s CNOOC bid to purchase Nexen Inc. for $15.1 billion has become an important political issue in Canada, and suggests a major dilemma for Prime Minister Harper’s government – as it should be. For Nexen shareholders, the bid by CNOOC is supported – after all, the share price offered has been pegged with a 60 percent premium. Premier Redford conditionally supports the sale and recommends that Nexen’s board of directors and its senior management group be sustained with a 50 percent Canadian content level – sooner or later this 50 percent Canadian content condition will likely prove unworkable but for the present it’s not a bad political tactic and the recommendation does have some merit. For the Prime Minister, the issues are quite complex with no clear answers. Following are a few questions facing the Harper government: Should Alberta’s oil sands be considered a strategic resource and should oil sands development be viewed as a strategic undertaking where the national interest is more relevant than most normal commercial undertakings? Should foreign national governments be allowed to establish a “political” foothold within Canada and conduct their commercial activities using a different set of norms and standards? Is Investment Canada’s singular “net benefit” rule sufficient when dealing with foreign investment and negotiating further, future free trade agreements? And finally, when will it be a good time to discuss Premier Redford’s idea of developing, having and implementing a national energy strategy that operates in Canada’s best interest? In the meantime China has reacted to the proposed Nexen purchase and Canada’s apparent procrastination. China’s ambassador to Canada, Zhang Junsai made a few very telling comments a few weeks back which I think demonstrates bully tactics, if not outright threats and not very well camouflaged threats. Ambassador Junsai observed when talking about the Nexen deal: “Business is business….It should not be politicized….If we politicize all this, then we can’t do business.” As well Ambassador Junsai made a connection between the approval of the Nexen deal and the possibility of having a free trade agreement (something that is very dear to the political wishes of Prime Minister Harper). The ambassador observed: “It’s time to open up each others markets….It’s time to do the exploratory work on the possibility of a free trade agreement.” In my opinion Ambassador Junsai came on strong and his message was quite clear – Canada has to approve the Nexen deal or forget about any free trade talks. Even then Canada can forget about any useful free trade talks for at least ten years.

Justin, Where's the Beef?

Smoky Lake Signal Article No. 240 (October 10, 2012) Whispering in the Wind About 30 years ago Wendy’s, a major hamburger chain in the United States and Canada put out an award winning TV ad featuring Clara Peller and a couple of elderly friends poking and searching through a rather large hamburger bun; Clara cried out; “Where’s the Beef?” Hopefully some of you will remember the hilarious ad because I’m trying to connect Clara’s question to Justin Trudeau and his bid for recognition. “Where’s the Beef?” Last week, 40 year old Justin Trudeau kicked off his Liberal leadership bid in Montreal and then traveled the country to acknowledge his considerable “fan” support in Calgary, Richmond and Mississauga – and let’s not forget about his visit with one of his biggest fans, boyhood buddy Dominic LeBlanc at an often used cottage hangout near Dieppe, New Brunswick. I don’t think there is any doubt; Justin Trudeau has the celebrity status of a rock star and in the very short term that is exactly what the Liberal Party of Canada wants and needs if the party is to regain some serious attention by those at the centre of the country’s political spectrum. But very quickly, Mr. Trudeau will have to demonstrate his leadership skills if he is to lead the Liberal Party’s team (as weak as it currently is). Further, Mr. Trudeau will have to articulate and defend well thought out policy positions if he is to succeed in the longer term, particularly when the real political battles start opposite the prime minister and the leader of the opposition. In my view Mr. Trudeau stumbled at the starting gate of his leadership bid, but he should be able to recover knowing that a federal election battle is still a few years off, so the question becomes: when will he start showing leadership qualities that embrace the Liberal Party’s aims and objectives and when will he start to generate public confidence by demonstrating that he can lead and manage a political party, never mind a country if called upon – he has got to show that he is more than a pretty face with a large fan club? In the first week in his campaign to be a leader of his political party, he has admitted to be “impulsive.” He has admitted to saying things that maybe he shouldn’t have said. To him his impulsiveness is a reflection of his “authenticity,” a character trait that has gotten him into trouble in the past and he thinks will get him into trouble in the future – being impulsive is a refreshing trait for most of us but for a politician it is very dangerous territory. So the Trudeau drama continues to unfold and it is only week one of a long journey, so Justin Trudeau; “Where’s the beef?” Where’s the Water? In early July, 2012 I wrote a piece about the confusion and the lack of political transparency surrounding the water supply issue in the region and why water was not flowing through constructed pipelines into at least two communities in the Smoky Lake area. Two months earlier Councillor Hennig from Fort Saskatchewan (and a member of their local water commission) said: “Until we get sufficient grant funding to provide the Highway 28/63 water commission with the supply they need, we won’t sign any supply contract.” Mr. Hennig went on to say: “That means Smoky Lake won’t get any water from us for at least another year.” I’m starting to think there is a cover up somewhere and nobody wants to step up to the plate and explain. To add further confusion to an already confusing situation a water conservation group has just released a report asking for a better water licensing system and urging the Alberta government to “….protect river health [because] without rivers that are healthy, everything else falls apart.” I’m getting really confused as to what’s going on and I’m starting to think that I’m mixing apples with oranges. Is the Alberta government procrastinating in its funding decisions because it lacks a well thought out water strategy for the province (and its communities) or is it simply a contract dispute between two greedy, unknowing water commissions in northeast Alberta? When all is said and done is it time for Smoky Lake to look at its current and quite adequate water supply system; a system that only needs upgrading and proper maintenance?

update

Smoky Lake Signal Article No. 239 (October 3, 2012) Whispering in the Wind Two political stories are unfolding that in my mind are good examples of how politics works in this country and the need for a lot more clarity and transparency from our elected politicians. First is the arena issue in Edmonton and the obvious dilemma Edmonton’s City Council is facing opposite Katz’s group. Second story is Justin Trudeau and the leadership of the Liberal Party of Canada. Daryl Katz Playing Hardball and Wants to Win Big Time – An agreement was reached about a year ago to keep the Edmonton Oilers in Edmonton for a long time – or so everybody thought. All that had to be done; a new arena would have to be built in downtown Edmonton, for an estimated $450 million - $125 million would come from the City of Edmonton; $100 would come from the Katz Group; User Payers would cough up $125 million and the federal and provincial governments would somehow contribute $100 million. Since then things have changed and the question is; has Daryl Katz been caught with his hands in the political cookie jar taking out far too many cookies? Mr. Katz is now asking the City of Edmonton to come up with more money – something like $25 million – he also wants a $6million a year subsidy for his operations in the arena and he wants to locate a casino in the new facility. Mr. Katz is refusing to meet publicly with City Council to answer questions regarding the recommended changes to the 2011 plan – he is also quite secretive about the financial performance of his hockey operations in Edmonton. To add some sweetness to his urgings for more public money, Mr. Katz recently went down to Seattle to talk about their $490 million arena – and to add some icing to his cookie grab he took along hockey icon, Wayne Gretzky – a real pompous threat if I ever heard one. So, as the National Hockey League season dwindles and millionaires continue to fight billionaires; will Daryl Katz stop playing hardball with City of Edmonton politicians and start cooperating with his prime stakeholder partner, or will the councilors draw a line in the sand and say that’s enough, that’s it! Justin Trudeau in the Race, No Meat but a Lot of Sizzle On November 3, 1948 the Chicago Tribune ran the following headline, “Dewey Defeats Truman” and the next day the newspaper had to write a retraction because the paper mistakenly declared Dewey the winner of the Presidency in the United States prior to the votes being counted. Well here I am about 24 hours prior to any announcement so I’m going to declare that Justin Trudeau announces that he is running for the leadership of the Liberal Party of Canada – tune into next week’s column should I have to print a retraction. I’m also willing to predict that Mr. Justin Trudeau will end up winning the leadership campaign and will be declared leader of the federal Liberals on April 14, 2013. From the bits and pieces of information coming from Trudeau’s handlers here is what’s going to happen over the next few days. On Tuesday, Mr. Trudeau declares his candidacy at a community center rally with about 500 of his closest friends in his Montreal riding of Papineau, then he is off to Richmond B.C. and then to Mississauga Ontario. Not much of an itinerary for someone that wants to follow in his father’s footsteps, but I think there is a lot of calculation in the strategy – for the next few weeks he is just trying to measure the mood of the country’s Liberals (particularly amongst the younger crowd, both Liberals as well as non-Liberals). We are also told that for the moment he is going to express his personal values without going into any meaty issues. That might work for the first few weeks but sooner or later he has got to show some meat and what he stands for.