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.

Harper's Challenges

Smoky Lake Signal Article No. 238 (September 26, 2012) Whispering in the Wind I have often offered the opinion that NATION BUILDING is a must for Canada and should be a priority policy thrust for all of Canada’s political leadership – whether they are the premiers of the provinces or the prime minister of Canada. I have also said that Prime Minister Harper is the one most responsible for the country’s nation building endeavors and must continually demonstrate that his decisions and changes will make Canada stronger and better. To start with, Prime Minister Harper has to be congratulated for his efforts and keeping Canada’s economy relatively buoyant while much of the developed world is steeped in economic uncertainty, if not chaos. At this point in time, Canada’s economic buoyancy is largely due to: its resource endowments and how they are managed; having a strong, well regulated banking system and having a “practical” prime minister running a government that is without question, in charge. Nevertheless, Mr. Harper is facing a number of important challenges for which there are no easy solutions and from my perspective; the solutions will require government intervention, something Mr. Harper does not relish. Globalization vs. Nation Building – There is no question in my mind: philosophically, politically and practically speaking; GLOBALIZATION and NATION BUILDING are polar opposites – the question then becomes, can a line be drawn in the sand where both globalization and nationhood work in harmony and where will that line be drawn? The Pipeline Debate – The debate between Alberta’s Premier Redford and British Columbia’s Premier Clarke is a complex debate that requires intervention by the prime minister. As one reader of this column expertly put it: “…. there is an ideological issue for Harper when it comes to inter-provincial barriers to trade. He really does try to put provincial jurisdiction first, so in a case like this where the national interest is involved, he is paralyzed. By rights, he should be invoking the trade and commerce power and demanding BC recognize that there is a larger interest at stake which surmounts provincial interests and overcomes petty power plays of this sort: bottom line, BC does not have the right to prevent the sale of commodities in international markets, and it is Harpers duty to enforce that perspective, even to the extent of putting a reference to the Supreme Court.” The Nexen Inc. Factor – The proposed purchase of Nexen Inc. by the state owned China National Offshore Oil Corporation (CNOOC) for $15.1 billion is awaiting a “likely net benefit” decision by Canada’s Investment agency and Mr. Harper’s cabinet. Weighing in on the discussion is another arm of the Canadian government, Canada’s spy agency which issued a general warning in its annual report; suggesting that it unwise (I would say risky) for Canada to allow a foreign, state owned company to own the operations of a major Canadian company involved in one of Canada’s strategic sectors.. From my perspective, and I’ll repeat what I said a month ago – Canadian resources should be developed and traded in the international market place and that is why the pipelines going to the west coast and into the US are so important; but CANADA IS NOT FOR SALE! Secondly, it is time that Mr. Harper and the federal government got off their high horse and give its full support for the development of a national energy strategy that protects Canada’s interests, rather than sharing them.

Tribute to a Good Man

Smoky Lake Signal Article No. 237 (September 19, 2012) Whispering in the Wind Over the past week, tributes for the late Peter Lougheed have dominated the local and national media, with politicians and broadcasters describing the former premier as one of the greatest provincial leaders in Canadian history. A number of pundits have also labeled Mr. Lougheed as the Father of Modern Alberta and the province’s most important political leader in living memory. These accolades are well deserved and largely based on Mr. Lougheed’s strong conviction toward cooperative federalism and his passion for consensus building – two beliefs that are a must for political leadership in Canada today; although not always followed. For me personally, I was touched by Mr. Lougheed’s unique leadership qualities in the 1970s and 80s and along with working for a number of outstanding ministers (like Hugh Horner and Horst Schmidt); I enjoyed the exceptional experience, an experience for which I will always cherish. Redford’s Wants Consensus – Something Harper Rejects? Six months ago Alison Redford was on the campaign trail fighting for her political life and for another Progressive Conservative mandate, at that time it looked like a losing battle – remember the polls predicting a minority, if not a majority win for Danielle Smith and the Wildrose Party. Enter the big gun Peter Lougheed giving strong support for Premier Redford and her call for a national energy strategy. Well the election is now old news and Premier Redford is enjoying a strong majority government, largely due to Peter Lougheed’s support; but the national energy strategy wished for by both Alison Redford and Peter Lougheed, continues to be resisted by Steven Harper and his government. Last week, Joe Oliver (Mr. Harper’s Natural Resource Minister) opined that Premier Redford’s call for a Canadian energy strategy is redundant, unnecessary and that everything that needs to be done is already being done. In my view, Mr. Oliver is like the proverbial ostrich with its head in the sand – does not Mr. Oliver (no, does not Mr. Harper) realize that one province (British Columbia) is capriciously holding another province (Alberta) hostage when it comes to the movement of product (bitumen) to overseas markets – sounds a lot like blackmail and unless Alberta coughs up a lot of royalty money Alberta will not be able to transport its bitumen to Asian markets. In the meantime Premier Redford is continuing to gain a consensus amongst the provinces with hopes to present an consensus (for at least nine provinces and three territories) to the nation next year. In the meantime Mr. Harper’s government continues to say that everything that needs to be done is already being done. It’s time for Mr. Harper and his government to get more active and do some “cooperative federalism” and a lot of “consensus building” amongst the provinces. And as I’ve said many times before, it’s time that Mr. Harper did some NATION BUILDING. What’s Next for the Liberals? The Liberal Party of Canada has been relegated to third place in the federal parliament’s pecking order and that’s a long, long way from the top. That pecking order is not going to change next April 14 when so-called liberal supporters, through a kind of “free vote” system will have chosen a new leader of the Liberal Party of Canada. How the press handles the work-up to the selection and how they handle the April 14 convention is going to interesting and very telling – will the press write-up the political event as an obituary or a renewal for the Liberals of Canada? Well I’m not going to keep you in any suspense and I’m no seer, it’s that obvious – Justin Trudeau is going to enter the Liberal leadership race and he is going to win. If he decides not run, which is highly unlikely (it should be known within a month or so) then the press can start writing the party’s obituary early and take the spring off. Justin Trudeau (with his youth, charisma, spunk and heritage) is already courting the youth vote with success and if it catches on he could become a formidable force in Quebec and Mulcair’s NDP. Give Mr. Trudeau a couple of years to hone up on policy and he could very well become a real threat to Steven Harper – and the telling part will be the next federal election. So we will all have to wait and see how things unfold – Trudeau has already made a serious error regarding his popularity in Alberta; he’s against the pipeline to the west coast. Nevertheless there is no question in my mind; he is the savior for the Liberal Party of Canada, but he’s a very long way off from being a savior of anything else – let’s wait five years and see.

Harper's Selling Canada?

Smoky Lake Signal Article no. 236 (September 12, 2012) Whispering in the Wind IS CANADA FOR SALE? When it comes to dealing with the Peoples Republic of China (PRC); I advised the Prime Minister of Canada a couple weeks ago that: CANADA IS NOT FOR SALE! I guess he didn’t read my article (ha-ha) because on Sunday, Prime Minister Harper and China’s President, Hu Jintao (while at the Asia-Pacific Economic Conference in Vladivostok, Russia) signed the “Foreign Investment Protection and Promotion Agreement.” After reading the reviews and the interviews with the PM, the main issues became a little clearer. According to the PM the new Agreement will better protect Canadian businesses operating in China – apparently the laws and business practices can and are being applied differently opposite foreign owned businesses – so if the Agreement reduces discriminatory practices in the PRC then that’s good news for Canada, only time will tell. As well, the Agreement will apparently offer greater reciprocity for Canada in terms of market access – for me this reciprocity element of the Agreement is by far, the most important part and possibly the most dangerous part of the Agreement. In my view, Mr. Harper’s government has been far too generous with Chinese state owned companies and how they are operating in Canada, particularly when it comes to their oversight, ownership and management practices in the resource sector. When questioned in Vladivostok about Chinese human rights practices Mr. Harper responded with: “In terms of the Foreign Investment Protection and Promotion Agreement, [it] is an instrument focused precisely on that, and I’m not aware of any such agreements with Canada or with any other countries that try and include other broader issues but those things, as I say, are part of our relationship and dialogue with the Chinese at every opportunity.” Now I’m not one to criticize politicians for evading a question and the use of political speak, but this one takes the cake – if anyone can sort out the issue and explain what Mr. Harper said or what he meant, please let me know. Apparently the prime minister did raise human rights and consular cases in his discussions with Mr. Hu – I suppose that’s some good news. If I were to sum up the present economic / political relationship between Canada and China, it would go something like this: Canada wants market access to the world’s largest centrally planned market system and to gain that access Canada has already allowed heavy investment, ownership and management by Chinese state owned companies in parts of the Canadian resource economies – without appropriate conditions. The big question for me has become; will this new Agreement address and meet Canada’s social and economic goals or are we just selling off the country?

Smoky Lake Signal Article No. 235 (September 5, 2012) Whispering in the Wind An important article appeared in last week’s MACLEANS magazine entitled “Harper v. the Judges” and well worth a read. Written by Andrew Sniderman, the article describes two lower court rulings that have gone against federally passed laws on minimum jail sentences for gun related crimes – one judge called the federal law “fundamentally unfair, outrageous, abhorrent and intolerable” another judge called the law “unconstitutional.” Prime Minister Harper defended his stance on the mandatory minimum jail sentencing law indicating that it is “essential” in the government’s getting tough on crime strategy. Mr. Sniderman’s essay also describes a number of other cases that have been “rebuffed” by the courts (i.e. safe injection sites; having a national securities regulator; Omar Khadr’s return from the US); are presently “in the courts” (i.e. mandatory minimum sentences; assisted suicides; open prostitution and brothels); and some issues that are likely to be challenged in the courts (i.e. detention of refugees; back-to-work legislation). After reading the “Harper v. the Judges” article it is my view that Canada’s elected politicians and members of the court had best come to a better, no, a clear understanding as to their respective roles in Canada’s legal system – the consequences for not clearing up this confusion could result in a major failure in Canadian democracy. The Neo-conservative Perspective: The “battle” between Mr. Harper’s government and the courts is being viewed by some neo-conservatives as a struggle between an over zealous judiciary that is establishing its own legal framework versus an elected, majority government passing laws which in its mind, reflects the will of the people. Spokespeople on the government’s side, have offered some unusual views that are particularly troubling to those who believe in a judicial system that is and remains independent from the legislative branch of government and still in full compliance with all the tenets of the country’s Constitution and its Charter of Rights and Freedoms. The former head of the Reform Party of Canada, Preston Manning suggests that the Charter of Rights and Freedoms encourages and empowers the courts to be activist and because of this judicial activism, the courts are out of sync with Canadian society. Mr. Manning also reasons that in the last federal election the Conservatives were successful in winning a majority government and that means, all Canadians generally share Conservative values. Mr. Manning concludes: “When the court goes against those [Conservative values], the court is not only going against the government, but also going against values that are alive and well in society.” Even Prime Minister Harper has entered into the fray over the role of the courts. A couple of weeks ago in Toronto the PM defended his government’s law on minimum sentencing by saying: “I think these [shooting] events in Toronto underscore why these penalties are essential, why it is essential to have tough and certain penalties for gun crime….and I certainly call on the courts to take these penalties seriously.” My Perspective on the Court Debate: Surprise, Surprise; I actually support a part of Prime Minister Harper’s political agenda, particularly when it comes to having and implementing a getting tough on crime strategy; having a single securities regulator for Canada and supporting the development of infrastructure to move bitumen to foreign markets in an environmentally sound manner – these are all good things and are all good building blocks when building a stronger, safer, more economically sound nation. But when Mr. Harper and his supporters attempt to discredit, if not destroy, the independence of Canada’s court system, then Mr. Harper and his neo-conservative advisors have gone over the top. Preston Manning, possibly Steven Harper’s most ardent supporter and a close libertarian advisor to the PM has floated some ideas that are ridiculous and without question, illogical. Mr. Manning states that because Mr. Harper won a majority government, the values of the government (the Conservative Party) have become “generally” the values of all Canadians – I sincerely hope Mr. Manning realizes that Mr. Harper won his majority government with 39.6 percent of the popular vote. In my view Mr. Manning’s inference is not only wrong, it’s ridiculous. Mr. Manning also feels that the judiciary is activist and not responsive to Mr. Harper’s government and the laws passed by his majority government. What I gather from Mr. Manning’s outrageous statements, he feels that Mr. Harper’s government, because it is a majority, is somehow supreme to all the other arms in Canada’s constitutional framework; including the country’s Constitution and the courts. The judiciary has a specific task and that is; to assure all elements of our society operate within the tenets of the Constitution and to make judgments on that operation – in my view, Mr. Manning’s opinions are not only ludicrous, they are irresponsible. Prime Minister Harper is also attempting to influence the courts when he suggests that judges should take his legislative initiatives “seriously” – it’s not up to Prime Minister Harper to tell or direct the courts to do anything; the courts are guided by the Constitution and not by some single political will or philosophy. Should the Prime Minister prevail in this debate, some observers are rightly suggesting that Canada will no longer be a democracy with its checks and balances, it will operate with a single, absolute ruler and by definition, that’s tyranny.