Stephen Harper, China, And Canadian Resource Sovereignty

When a politician delivers a major policy announcement late on a Friday, be wary.

It tells you that they are trying to bury it.  To minimize the damage. That they realize what they are about to say and do will be very unpopular.  Perhaps even viewed as wrong.  So they unload it right before a weekend. The regular news cycle avoided, no House of Commons to be faced the next day.

By Monday, the press has moved on to something else. (and indeed, they have)

I was therefore, not surprised when Canada’s Prime Minister, Stephen Harper, appeared before the cameras late on a Friday afternoon, to announce that his government will allow two foreign, state-owned energy companies to plant their flags right in middle of Canada’s oil patch. The most controversial of which is the Chinese takeover of Nexen.

Because there is plenty of detail on the deal available elsewhere, let me just point out a few key points:

  • Alberta’s oil sands are the second largest proven oil reserves in the world
  • Nexen is one of the top ten players in Alberta’s oil sands.
  • China’s CNOOC already owns 35% of Nexen
  • It is China’s largest takeover ever, of an enterprise within a foreign country
  • The majority of oil sands ownership and profit may already be in foreign hands

Mr. Harper delivered the news with what will go down in political history as one of the greatest twists of spin ever devised.

The premise is simple. A politician who knows he is about to do something wildly unpopular and against the will of the majority must find a way to assure people that he knows best.  That he has thought it through. That he has a plan.

So, with his best face of concern on display, Mr. Harper delivered the following head-shakers:

“When we say Canada is open for business, we do not mean that Canada is for sale to foreign governments”

And yet, these approvals indicate otherwise.

“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.”

And yet these approvals indicate otherwise.

“It is not an outcome any responsible government of Canada could ever allow to happen. We certainly will not.”

And yet they just did.

Finally, my personal favorite:

“I think the government is being as clear as we can be that except for [...] exceptional circumstances, we should not expect to see future transactions involving controlled interests in the oil sands approved”

Yes, as clear as bitumen Mr. Harper…

This reminds me of the child who tells his parents “if you let me do it this one time, I’ll never ask to do it again!”  Sure, until the next time.  Until the next “exceptional circumstance” arises.

But the spin is brilliant.

Come out and say you are the defender of Canada’s resources, while letting them slip deeper under foreign control.  This time under state-owned foreign control. Did he have his fingers crossed the whole time?


And the press, perhaps longing not to miss Friday night happy hour, played along.  Headlines proclaimed that Mr. Harper had “slammed the door” on future takeovers and stated that “Ottawa toughen rules”.  All of which should have included the end phrase “next time” or with an asterisk – *unless exceptional circumstances exist.



Mr. Harper 1, The Press 0. Canadians less than 0.

Canadians are overwhelmingly against this deal, for reasons that vary from preferring energy sovereignty, to a distrust of the Communist government in China. Both reasons have validity, but the first example is most troubling.

Sovereignty is defined many ways.  Simply put it means “ having controlling influence while free from external control”.

For years, Conservative governments in Canada have been whittling away that sort of controlling influence from the resource sector.  Brian Mulroney started the trend with the Canada-US Free Trade Agreement. Mr. Harper continued when he raised the threshold for official review of foreign takeovers from $330 million to $1 billion, offering open arms to potential foreign investors with an eye on mega projects like the Alberta oil sands. (As part of this announcement, that threshold was just returned to $330 million for state-owned enterprises – um, next time)

The truth is, that one move could be looked back upon as the catalyst for this whole deal.  Now that the horse is out, he has closed the barn door. Until next time…

Mr. Harper’s caveat here is that it is a foreign “government” and not a foreign “company” or foreign “investors” causing concern.  And this concern, albeit feigned on his part, is one with dire ramifications for the future of Canada.

Mr. Harper should be wresting control from high foreign ownership of such a long term vital resource back to Canada, not allowing it to trend even further the other way. What’s next, water?

Be warned Canada. While liberal foreign investment rules have been the free market’s way of infringing upon the sovereignty of the state in areas of national interest like banking and natural resources, this deal goes a whole step further. While the free market can be expected to behave in the interest of profit, in what interest will a foreign country act?

And trusting a man who announced such a landmark decision late on a Friday afternoon to keep his word regarding future decisions is pure folly.

As Cicero famously said, “An enemy at the gates is less formidable, for he is known and carries his banner openly”

The Wary Lemming says, beware the enemy within.