The Goldilocks recovery

Strict financial regulation and a new commodity boom have turned “boring” Canada into an economic star

THEIR economy is so intertwined with their neighbour’s that when the United States plunged into recession, Canadians assumed they would be dragged along for the ride. Newspapers took to illustrating their economic stories with pictures of Depression-era bread lines. Yet whereas the United States has still not officially declared its recession over, Canada is nine months into recovery from its mildest and shortest downturn in recent history. Unemployment has been falling since last August, and proportionately fewer jobs were lost than south of the border.

Jim Flaherty, the finance minister, attributes Canada’s strong performance to its “boring” financial system. Prodded by tight regulation, the banks were much more conservative in their lending than their American counterparts. Those that did dabble in subprime loans were able to withdraw quickly. This prudence kept a lid on house prices while those in America were soaring, but it paid off when the bust hit. The volume and value of home sales in Canada are now at record highs. In some areas the market looks downright frothy: a modest house in Ottawa listed at C$439,000 ($435,000) recently sold for $600,000. “A lot of homes are selling in one day, and often for over the asking price,” says David Cullwick, a local estate agent. Rising prices have bolstered the construction industry and sellers of furniture and building materials.

True to form, the authorities are moving to halt the party. During the recession the Bank of Canada cut its benchmark interest rate (to 0.25%), injected extra liquidity and bought up mortgage-backed securities. At its April policy meeting the bank withdrew its pledge not to raise rates. Analysts expect an increase in June. The government has ended tax credits for first-time house buyers and for renovations, which were granted in 2008 to stimulate demand.

For the other component of the country’s resilience—resurgent appetites for its exports of oil, gas, and minerals—Canadians have to thank policymakers in Beijing more than those in Ottawa. At their low point, prices for Canada’s commodity exports were still 50% higher than in previous recessions. Since then, they have rallied strongly. The impact is illustrated by the fortunes of Teck Resources, a Vancouver-based mining firm. It staggered into the recession loaded with a $9.8 billion debt taken on to buy the assets of a coal-mining company. For a while its survival was in doubt. Last month Teck not only announced that it had repaid the debt but also that it would pay a dividend.

The energy industry is coming back to life, with new investments planned for in Alberta’s oil sands. Last month Sinopec, a Chinese oil company, announced it would pay $4.65 billion for a 9% stake in Syncrude Canada, the largest operator in the sands. Such investments are controversial because of their environmental impact. But they are welcome in Alberta, where the government posted an unprecedented budget deficit last year.

“Our regional economies are so diverse that there is always something leaning against the wind,” says Philip Cross, the chief economist at the government statistics agency. But the combination of commodity revenues and investors seeking safety in Canadian assets has caused the currency to take off. After falling as low as 77 American cents during the recession, the Canadian dollar has now returned to rough parity with the greenback.

That is a tribute to the country’s success. But the central bank warns that a strong loonie, as the currency is known, will slow the recovery. It would be particularly harmful to manufacturing exporters, who were battered by the recession (car production fell by 31% in 2009). That might lead to further specialisation in natural resources. For now, concern about the loonie is muted, because most companies adapted to a stronger exchange rate during its previous run-up in 2007. Many of those that did not went bust. But if the currency continues to rise, the squeals will surely grow.

The government of Stephen Harper, the Conservative prime minister, might have expected to receive more praise for the economy’s robust performance. If it has not, that may be partly because it insisted that the recession was imported from the outside world. Much of the country’s resilience stems from policies—such as bank regulation and sound public finances—which predate Mr Harper. The Bank of Canada can share some of the credit too. But Britons might note that Mr Harper has managed to govern for four years without a parliamentary majority, and that this has not prevented Canada from sailing through the recession.


Full article and photo:


Get out of our canoe

When a Canadian is not a Canadian

THE dozen chiefs who make up the Mohawk Council of Kahnawake expected criticism when they began presenting eviction notices this month to 25 non-natives living on their 13,000-acre (5,260-hectare) reserve just south of Montreal. They hoped Canadians would understand their desire to protect a threatened language and culture, and refrain from interfering in internal Mohawk affairs. But many saw their action as a racist and illegal denial of Canada’s constitutional Charter of Rights and Freedoms. Despite centuries of coexistence, the First Nations, as Canada’s indigenous people call themselves, and other Canadians still live in mutual incomprehension. For a start the Mohawks do not see themselves as Canadians.

The council passed a bylaw in 1984, supported by the majority of the reservation’s 8,000 residents, which stipulated that a person must have at least four Mohawk great grandparents to live or own property there. Any Mohawk who marries a non-native must leave. “Everyone knows the law: if you marry out, you stay out,” says Joe Delaronde, a spokesman for the council. “If we don’t protect who we are, we will become Canadian citizens.”

Not such a terrible fate, you might think. But the leaders of many First Nations have been fighting assimilation for centuries. The Kahnawake reserve was originally set up by the French in 1716, when the Mohawks were their allies against the British. Shortly afterwards, some French traders were asked to leave. There have been many evictions since. A more prosaic reason is that First Nations receive federal money for social services only for officially registered natives. Yet there has also been a long history of intermarriage and adoption of non-natives. “Everyone in the community has mixed ancestry,” says Matthieu Sossoyan, an anthropologist.

Canada’s minister of Indian affairs admits the evictions make him “uncomfortable” but says he can do nothing because First Nations have the right to say who lives on reserves. The chiefs say that rather than the Charter of Rights and Freedoms, their relations with non-natives are governed by the Two-Row Wampum Treaty, agreed with Dutch traders in the 17th century. (The wampum, or beaded belt, showed two parallel lines on a pale background.) This called for mutual non-interference. “We stay in our canoe and you steer yours,” says Mr Delaronde.


Full article:

Lobbyist Trial Could Embarrass Political Establishment

Dodgy Deals and Slush Funds

Schreiber was extradited to Germany from Canada in August 2009 following a long legal battle.

The trial of the former arms lobbyist Karlheinz Schreiber, who is connected to a major German political scandal of the 1990s, began Monday. Schreiber’s testimony could shed light on dodgy dealings in German politics and may prove very uncomfortable for Bavaria’s conservative Christian Social Union party. 

Karlheinz Schreiber still has friends in Bavaria, but no longer among the highest circles. Nowadays, the senior members of Bavaria’s conservative Christian Social Union party, agents with the German foreign intelligence agency BND and defense industry executives he once counted among his friends barely give Schreiber the time of day. 

But Schreiber, a jovial 75-year-old from the small Bavarian town of Kaufering, is very popular among the employees at the correctional facility in the southern German city of Augsburg. While in detention awaiting trial, Schreiber made himself popular, telling the guards exciting stories from the world of international business. He knows the names of their children and even remembers their birthdays, and is on a first-name basis with some of the staff. 

Schreiber’s engaging manner even helped to convince the prison administration to refurbish the shabby latrine in his cell. His new facilities, according to prison gossip, are everything but standard issue. Schreiber knows how to inspire people, and he’s an excellent negotiator. “I’m one of the best salesman in the world,” he once said. 

In the coming weeks, Schreiber’s powers of persuasion could become very important for him — and very uncomfortable for some of his former associates. On Monday, his trial on charges of tax evasion, bribery and accessory to fraud began in Augsburg District Court in Bavaria. Schreiber’s attorney Jan Olaf Leisner read out a written statement by his client in which Schreiber categorically rejected the charges against him. 

High-Profile Scandal 

It’s 15 years since the Augsburg public prosecutor’s office first initiated an investigation against Schreiber and a number of his associates in the business and political worlds who were suspected of taking bribes from the lobbyist. It’s also 10 years since Schreiber, who holds dual Canadian and German citizenship, fled to Canada because of the investigation against him, marking the beginning of a seemingly endless extradition battle. That ended in August 2009, when Schreiber was extradited to Germany.

Back in 1999, the investigation triggered one of the biggest scandals in postwar German political history. It involved political contributions to the conservative Christian Democratic Union (CDU) and led to the resignation of the then-party head Wolfgang Schäuble, who is now Germany’s finance minister, as well as tarnishing the reputation of former Chancellor Helmut Kohl and helping Angela Merkel in her rise to power. The trial could now be the source of further explosive revelations involving party funding. 

Schreiber, a former arms lobbyist, has threatened several times to expose the sources of millions of German marks he received in commissions, some of which point to the CSU, the CDU’s Bavarian sister party and a partner in Angela Merkel’s coalition government. Schreiber resents the leaders of his former party for not having put a stop to the investigation against him in Bavaria. “If someone challenges me, they shouldn’t be surprised if I shoot back,” he said a few years ago, in a remark clearly directed at the CSU. 

Where Did the Cash Go? 

The Augsburg court has scheduled 26 days of hearings for the mammoth trial, which will revolve around the sale of helicopters and Airbus aircraft to Canada and 36 Fuchs armored personnel carriers to Saudi Arabia. Between 1988 and 1993, Schreiber is alleged to have received about 46 million German marks (€23.5 million), paid via front companies, in return for his brokering services. 

Aircraft manufacturers MBB and Airbus are believed to have paid commissions for the Canada deal to a firm called International Aircraft Leasing (IAL). In the case of the armored vehicles deal, investigators believe that large sums of money were paid to a Panamanian firm called ATG. Schreiber is believed to have owned both companies. 

The prosecution alleges that Schreiber never paid taxes on the money. It also alleges that some of the money was used to make contributions to political parties in Germany, via Swiss bank accounts, in the hope of securing political influence — a charge Schreiber denies. 

What can’t be denied, however, is the fact that millions were paid into the Swiss accounts by IAL and ATG. To determine how much Schreiber owes in back taxes, the court will have to find out what happened to the rest of the money. Did Schreiber keep it? Or were there others who benefited from the cash? 

Illustrious Group 

Over the next few months, the court will hear testimony from witnesses who are well known to the public from other trials involving the Schreiber affair. The familiar faces will include Max Strauss, who was acquitted, and two executives from the German company Thyssen, who were given prison terms. Then there is the convicted former CSU senior official Ludwig-Holger Pfahls and Walther Leisler Kiep who, during his tenure as CDU treasurer, accepted a briefcase filled with 1 million German marks from Schreiber during a clandestine meeting at a shopping center. Other witnesses will include former sales managers at Airbus and MBB, negotiators for Arab consortiums, Swiss bankers and trustees. The illustrious group is hardly likely to offer much in the way of additional information, however. 

The defendant’s testimony, on the other hand, could shed new light on the affair. While still in Canada, Schreiber had spoken about a fund for the CSU, a war chest of sorts, which he was supposed to set up on behalf of the then-party chairman Franz Josef Strauss. Schreiber was supposed to pay money from commissions into the fund, which was set up in the 1980s with upcoming election campaigns in mind. After all, as Schreiber pointed out, campaigns “cost a whole lot of money.” 

Schreiber claims that the only people who knew about the fund were Strauss, his son Max and the later CSU Chairman Edmund Stoiber — and, of course, the party’s powerful donations administrator, Munich attorney Franz Josef Dannecker, who died in 1992. 

Under Financial Pressure 

In addition to being the only person who was fully informed about the flow of funds and donations in and out of the CSU, Dannecker was a close adviser to the Strauss family. Strauss had authorized Dannecker to collect contributions to the party and deposit them in suitable locations. 

An account for the “election campaign” fund was allegedly set up in the tiny Alpine principality of Liechtenstein. By Nov. 25, 1994, according to Schreiber, the account had accumulated a balance of the equivalent of 4.82 million German marks. “As I recall, sums were withdrawn from this fund twice,” said Schreiber. 

Stoiber, Max Strauss and the CSU consistently dismissed such reports as pure fantasy, but now Schreiber is supposedly able to provide account statements to back up his claims. The Augsburg judges will only reduce the immense sum Schreiber presumably owes in back taxes if he can prove who actually received the money. Besides, things could become so tight financially for Schreiber that his former cronies can not expect to be spared. 

Close Friends 

New evidence has emerged that reinforces Schreiber’s description of illicit CSU accounts. The trail leads to Liechtenstein, and there is also a connection to Dannecker. For about the past year, the public prosecutor’s office in the western German city of Bochum has been investigating a businessman from Munich, who has ties to the CSU, in connection with suspected tax evasion, as the defendant’s attorney has told SPIEGEL. Information about a foundation ascribed to the businessman was found on DVDs containing data from the Liechtenstein-based private bank LGT Treuhand, which the German foreign intelligence agency, the Bundesnachrichtendienst (BND), purchased in 2007. The man was a close friend of CSU contribution manager Franz Josef Dannecker, as well as the executor of his estate. 

The foundation in question also played a role in a fraud trial in Switzerland. The Zurich District Court suspected that it was being used as a depository for funds stemming from questionable investment transactions. During the trial, one of the witnesses testified that he was convinced that the foundation was also used for transactions involving the CSU. Prosecutors have so far been unable to prove the claim. Nevertheless, the Bochum investigators believe that there are parallels between the Swiss case and Schreiber’s claims about the Liechtenstein party fund. 

A Memorable Visit 

At the beginning of 1996, there was an incident at LGT Treuhand in the Liechtenstein capital Vaduz that employees there remember to this day. On Feb. 7, just after it had been revealed that Bavarian prosecutors were planning to conduct new raids relating to the Schreiber affair, an attorney from Munich appeared in person at the bank. 

The man, who had only notified bank officials of his upcoming visit at the last minute, identified himself and demanded the immediate surrender of all documents relating to the foundation in question. 

The request seemed odd to the LGT employees, particularly as their customers normally had no interest in removing potentially incriminating documents from the premises. The scope of the documents was also unusual. According to bank employees, the attorney left LGT with six to eight thick, gray files filled with copies relating to a wide range of financial transactions. Other foundations generally limited themselves to a few pages of rudimentary information about assets and beneficiaries. 

Were LGT’s Bavarian customers worried about possible searches by the authorities? According to sources at LGT, once the files had been removed, the money in the foundation was also withdrawn and transferred to an institution in Monaco. 

Clear Message 

The businessman under investigation by the Bochum prosecutors, as well as his attorney, claimed that they were unaware of any of this, and that there had been no ties between the foundation and the CSU or Karlheinz Schreiber. The attorney, for his part, said that he did not recall ever having paid a visit to LGT Treuhand. Officials at CSU party headquarters in Munich said that they had no knowledge of the Liechtenstein foundation. 

The Augsburg prosecutors are aware that they will be unable to use all of the evidence from Schreiber’s past to support their case. Much of the information that could emerge in the trial in the coming weeks is likely to be statute-barred and, therefore, will only be of political relevance. 

Besides, the prosecutors are not intent on putting Schreiber, who is in poor health, behind bars for the rest of his life. For them, the fact that the trial is taking place at all is a success, because it will send the message that “no one will be able to escape prosecution in the future by fleeing to another country.” 

Schreiber’s attorneys have so far remained silent on their trial strategy. It is clear, however, that the defendant has been spending much of his time in his Augsburg prison cell diligently sorting through documents relating to flows of funds, and that he will be well-prepared by the time he enters the courtroom. When it comes to defending his honor as a businessman, Schreiber isn’t the kind of person who is likely to take things lying down. 


Full article and photo:,1518,672504,00.html

Halted in mid-debate

Canada without Parliament

Stephen Harper is counting on Canadians’ complacency as he rewrites the rules of his country’s politics to weaken legislative scrutiny

THE timing said everything. Stephen Harper, the prime minister, chose December 30th, the day five Canadians were killed in Afghanistan and when the public and the media were further distracted by the announcement of the country’s all-important Olympic ice-hockey team, to let his spokesman reveal that Parliament would remain closed until March 3rd, instead of returning as usual, after its Christmas break, in the last week of January.

Mr Harper turned a customary recess into prorogation. This means that all committees in both houses are disbanded and government bills die, no matter how close they are to approval. The prime minister, who heads a Conservative minority government, clearly reckoned that giving legislators an extra winter break, during which they might visit the Winter Olympics (in Vancouver between February 12th and 28th), would not bother Canadians much.

He may have miscalculated. A gathering storm of media criticism has extended even to the Calgary Herald, the main newspaper in his political home city, which denounced him for “a cynical political play”. There are plans for demonstrations on January 23rd, just before Parliament would have reconvened. “Parliamentary democracy is in danger,” declared Peter Russell of the University of Toronto, who was one of 132 political scientists who signed a letter condemning the prorogation and calling for electoral reform.

Past Canadian prime ministers have normally asked the governor-general (who acts as Canada’s head of state) to prorogue Parliament only after the government has completed most of its legislative business in order to start afresh with a new speech from the throne outlining new priorities. But nothing has been normal in Canadian politics since 2004, when more than two decades of majority government ended with voters electing a Liberal minority government. They then returned Conservative minority governments in 2006 and 2008.

Far from completing its work, Parliament was still considering important measures, including bills that are part of Mr Harper’s crackdown on crime, as well as ratification of free-trade agreements with Colombia and Jordan. All must now be reintroduced. So why shut down Parliament? Breaking six days of silence, Mr Harper said this week that it was a “routine” move to allow the government to adjust its budget due on March 4th. His spokesman claimed that the 63-day gap between sessions was less than the average prorogation of 151 days since 1867. However, the average in the past three decades has been just 22 days.

Opposition leaders claimed Mr Harper’s real reason was to end an embarrassing debate on the government’s apparent complicity in the torture of Afghan detainees, and in particular to avoid complying with a parliamentary motion to hand over all documents relevant to those charges. They also claim that the prime minister wanted to name new senators and then reconstitute the Senate’s committees to reflect the Conservatives’ additional representation, something that could not be done if Parliament was merely adjourned.

Having prorogued Parliament last winter to dodge a confidence vote he seemed set to lose, Mr Harper has now established a precedent that many constitutionalists consider dangerous. No previous prime minister has prorogued the legislature “in order to avoid the kind of things that Harper apparently wants to avoid,” says Ned Franks, a veteran political scientist and historian of Parliament. Although other prime ministers may have had ulterior motives, they were less blatant, he says.

The danger in allowing the prime minister to end discussion any time he chooses is that it makes Parliament accountable to him rather than the other way around. Some of Mr Harper’s critics are also affronted by his high-handedness in not bothering to call on the governor-general personally to ask for prorogation, as tradition demands, but instead making his request by telephone. “That was gravely insulting to the governor-general and the country,” says Mr Russell.

Whether Mr Harper gets away with his innovative use of prime ministerial powers depends largely on whether the protest spreads and can be sustained until Parliament reconvenes in March. Mr Harper is doubtless counting on the Winter Olympics to reinforce Canadians’ familiar political complacency. But he has given the opposition, which is divided and fumbling, an opportunity. It is now up to it to show that Canada cannot afford a part-time Parliament that sits only at the prime minister’s pleasure.

The Economist


Full article and photo:

Home-owning nation

Canada’s Nisga’a

An Amerindian experiment with property rights

THE Amerindian peoples of Canada, where they are known as First Nations, like those in Bolivia, have traditionally held land in common. So the decision by the Nisga’a First Nation of north-western British Columbia to grant private property rights to its members, insignificant though it might seem to most Canadians, has potentially revolutionary implications.

Who owns the land is unfinished business in British Columbia where, unlike in the rest of Canada, only a few treaties covering small areas were signed in colonial times. The First Nations lay claim to most of the province. In 1998 the Nisga’a, after more than a century of negotiation and litigation, were the first to sign a modern treaty. The 6,400 Nisga’a gained ownership of almost 2,000 square km (770 square miles) in the Nass valley, plus powers of self-government comparable to a municipality, some control over language and cultural issues, ownership of forestry and mineral resources, a share of the fisheries and a C$190m (then worth $280m) development fund. This deal has served as a benchmark for leisurely talks involving 60 other native groups. Earlier this year the Tsawwassen, one of the smaller ones, became the second to conclude a new treaty.

Now the Nisga’a are pioneering the idea of private property among First Nations. Their new law grew out of three years of discussion about how to get richer, in which they identified restrictions on property ownership as a big obstacle, according to Kevin McKay, the acting head of the Nisga’a government. Under Canada’s Indian Act, natives on reserves are given certificates of possession for their homes which they rent, but do not own. They cannot use them as collateral for a loan. Their new law allows Nisga’a to obtain freehold title to their homes, and to mortgage, transfer, lease or sell these to anyone, including outsiders. In the future, Mr McKay says, the law might be extended to commercial or industrial property.

In their treaty, the Tsawwassen opted for a compromise: the nation keeps the freehold while individuals have the right to buy and sell homes but only to fellow-Tsawwassen. Their chief, Kim Baird, said that many native people fear unrestricted individual freehold has the “potential to leave them worse off than now”. The Nisga’a think the opposite, that property rights may help them start businesses and become better off.

Change is certainly needed if the First Nations are to escape the poverty, unemployment and welfare dependency in which they have long languished. If the Nisga’a prosper, they may also calm the fears of some Canadians that the First Nations are bent on creating separatist enclaves. So the leaders of other First Nations will not be the only ones watching the Nass valley with interest.


Full article and photo:

The oil sands have been Gored

Apparently they jeopardize the very survival of our species

Well, it was a very calm and totally unexceptional week, nothing to ruffle the nerves or agitate the conscience. Things rolled demurely along and, in words that Pierre Trudeau borrowed from an inscription that ornaments many an old hippie dish cloth, the universe was very placidly “unfolding as it should.” Everything was normal, predictable and just so right.

Mr. Al Gore came to Toronto (there will be deep sales on winter parkas as a result, I am sure – as being no longer necessary, you understand) and was his ever and delightfully cheerful, buoyant self. I took in a headline concerning his visit from one of The Globe’s sister dailies in this great and occasionally cold city and smiled back at the paper. “Oil sands threaten our survival, Gore warns” – that was the valentine from our Earth’s very own climate plenipotentiary. From the headline, I mistakenly thought he was merely talking about the survival of the physical planet – boiling core, tectonic plates, crust, oceans, mountains, plains, prairies, cities and outports – the lot, but the sentence under the headline offered a heartening expansion. The oil sands jeopardize “the survival of our species.”

It was us, the Homo sapiens crowd, our climate Jeremiah was speaking of. We were doomed, all of us. And it was Alberta’s fault. He made it very clear. Further on in the article, the “jet-hopping environmental activist,” as he was described therein, noted his words would not make him popular in Alberta, but no mind, speak out he must because “the future of human civilization [is] at stake.”

I received this as very encouraging news. For what I took from both headline and story was that the great science-is-settled climate crisis has been drastically foreshortened. It’s been localized. It has, as the bard put it, a local habitation and a name: It’s the oil sands and it’s Alberta.

On prior visits, Mr. Gore had set alarms off in all directions. The threat was variegated and multipronged, a great cabal of nature-haters and conscienceless tycoons. It was a combination of slope-browed naysayers – the Harper government, the U.S. Congress, a gaggle of Exxon-zombies and the oil plutocracy, packs of renegade scientists, anarchist meteorologists, perverse columnists and mischievous statisticians that were holding the world to ransom, and leading us all down the rosy humid path to a sauna-bath of an Armageddon.

Mr. Gore backed up his new more limited prospectus, by the way, with a terrifically engaging disquisition on the differences between a gas tank of a Prius and that of a Hummer but this got far, far too technical for me. I can take off a hubcap but classification systems, taxonomies make me dizzy. As between genus Prius and genus Hummer, well I give up – it would take an advanced degree in Detroitology to sort out the subtleties. Besides, when Al goes technical, I lay off the Sominex.

But, if the calm declaratives of the headline and the lead sentence were anything to go by the range of agency, what’s causing all this menace, has been strictly delimited. It’s the oil sands that threaten the survival of our kind. It’s not every day that we are simultaneously faced with a threat to the very survival of our species and told almost in the same breath that it comes from – in global terms – so picayune a cause.

The oil sands may be a deep gouge in Alberta’s northern earth, but in comparison with the frantic industrialization of all of China with its 1.3 billion people and its coal-fired plants going on line every week, or the great leaps that India and its population of 1.2 billion is making toward a modern economy – the oil sands are a mere pit stop on the broad raceway to our ecological doom.

But carbon entrepreneur Gore put it out as an equation that the oil sands are the problem. “Oil sands threaten our survival, says Gore.” You can see why I was reassured. If that’s the only problem, the solution is at hand. Another equation. Stop the oil sands. All of us survive.

It is very refreshing when the possible extinction of the human race can be reduced to such manageable practicalities.

But, you know, I had a very naughty thought. Mr. Gore was, after all, speaking in Toronto. Was it even slightly possible he villainized the oil sands during his Toronto visit – not quite the same thing as doing it in Fort McMurray – knowing it was both safe and provocative. Were we seeing a little of that famous political guile that almost – almost, mind you – brought him victory over the wily, deep-thinker George Bush coming into play here? As I say, it was an unworthy thought and I repent it.

What I now take away from all this is very simple. The oil sands are the problem. Cancel them. We’re saved. Civilization is saved. Global warming over. And Al can rest.

It was such a calm and reassuring week.

Rex Murphy, Globe and Mail


Full article and photo:

Don’t turn up the heat on the West

By making Western provinces pay for adventures in global warming policy we will be playing with Confederation.

An article on The Globe’s front page carrying the headline “Canada can meet its climate goals, but the West will write the cheques” raises, among many others, two very interesting points. The article is about a study, conducted by two ardent environmental advocacy groups – the Pembina Institute and the David Suzuki Foundation – and was sponsored by the Toronto Dominion Bank.

The headline has the virtue of capturing the first point I want to underline. In our new green-genuflecting age any substantial, purely Canadian effort to curb greenhouse gases – any policy, economic or otherwise – will have a massive and negative impact on Alberta and Saskatchewan.

If there are taxes on oil development, if we introduce carbon penalties on industry, if there is a deliberate brake put on the oil sands, or an effort to shut them down altogether – this latter not an unthinkable proposition in certain quarters – whatever is done will, sooner or later, take revenues and jobs, take enterprise, out of Alberta in particular. For purely projected and speculative benefits to the world’s climate a century hence – and, despite the unctuous insistence of many to the contrary, speculative they remain – people are seriously considering policies that will penalize the West for its success as an energy producer now.

This is reckless. The oil industry of some Western provinces has been Canada’s dynamo these past few years. It has been our major shield during this recession. It has given the dignity of jobs to tens of thousands of Canadians. It is all that. But if “Central” Canada, as the political and economic axis of Toronto, Ottawa and Montreal is still known in some quarters out West, now – under the impetus of the green craze – is seen to be setting limits, placing penalties, or bleeding disproportionate taxes, particularly in Alberta’s case, it will churn a backlash that will make regional hostilities set loose by the national energy program a few decades ago seem like warm-ups for a yoga class.

It will shape a whirlwind of political discontent, set the West against East, and far from incidentally have deep repercussions in the many other provinces that have their citizens working in one capacity or another in the oil patch. The fury over the national energy program may be spent, but its memory – pardon the word – is green. That fury, I reiterate, will be as nothing compared with the political fury of a second attempt to “stall the West.” Should some global warming action plan attempt to put the oil sands and Western energy development at significant disadvantage, or draw taxes out of the economies of the Western provinces to pay for adventures in global warming policy, we will be playing with Confederation.

That is a prediction it takes no computer modelling to make. If Alberta in particular, and the Western provinces more generally, come to be portrayed as villains in the global warming morality play, more than the climate a century hence is at stake.

Secondly, I would urge a caution to all people working in the oil sands in particular. The TD study – farmed out to the economic specialists of the David Suzuki Foundation and the Pembina Institute – should be seen as a loud, low shot across the bow. The oil sands project, already castigated by every green-blooded organization on the planet, featured in a full-blown National Geographic hit-job some months back, is going to be the great emblem of a world “toxifying” itself, and paving the way for global warming Armageddon. It is now boilerplate in news stories as the “dirtiest project on the planet.” It photographs vividly – as National Geographic’s glossy toss-off demonstrates – because of its scale and makes for wonderful anti-energy posters. The oil sands are a target.

Environmentalists are very good at what they do. They play the news media better than Glenn Gould doing a Bach prelude. They know how to sell their point of view, how to build a villain, how to shortcut an argument. Big Green – and there is a Big Green as much as there is a Big Oil – knows the game. Find a symbol. Find one project that, superficially, can stand for all others. The oil sands, despite the hundreds or thousands of less scrupulous and governed energy projects all over the world, despite China’s spectacular use of coal, or the accelerated developments all over the Third World, will be the emblem of choice for the eco-warriors. The media-smart apostles of Al Gore, the Sierra Club and hundreds of other NGOs and eco-lobbies will turn the oil sands into the blight of our time.

It’s only a number of weeks ago, remember, that the great crisis in the auto industry called forth billions to rescue the great manufacturing base of Central Canada. The West will note the contradiction. Spend billions to save an industry that runs on petroleum – it’s here in Ontario – hit the source industry to “save the planet” – that’s in the West.

Pursue this course and things will get warm. And I’m not talking about the climate.

Rex Murphy, Globe and Mail


Full article: