Canada’s PM might be somebody’s tool, but he’s nobody’s fool.
Given the tar sands’ iffy prospects, Stephen Harper faced limited choices when he allowed the sale of Calgary-based Nexen to China’s state-owned CNOOC (China National Offshore Oil Corporation).
Still, it was trippy: Alberta’s oil barons gave birth to Canada’s new brand of neo-conservatism back in the 1980s because they were ticked at PM Pierre Trudeau for creating a national energy policy and a publicly owned national oil company, Petro-Canada.
And now they must cheer on their political creation as he opens the oil sands to a national oil company owned by a foreign power that describes its economy as “Communism with Chinese characteristics.”
The most carnivorous conservative leader in Canadian history signalled that the thumbs-up wasn’t easy for him. We did not spend decades getting rid of government control in order to see foreign power control instead, he said. By way of penance, he promised not to do it again. Foreign state ownership of the tar sands will only be allowed “on an exceptional basis,” he said.
Watch for the exceptional to occur again. When oil extraction from our tar pit is so expensive that we’ve rolled out the red carpet for a behemoth owned by a corrupt tyranny, things will not end nicely.
Even some high up in Conservative circles fret about offering Canada’s primo geological asset to a country that spends $76 billion a year spying on and jailing its critics. In China, corruption and cutthroat cost-cutting are so rampant that they can’t package milk without poisoning it with melamine, let alone tap oil and gas without leaks and explosions. That’s what happened in the Penglai oil fields last year, according to Tim Armstrong, Ontario’s former agent general for the Asia-Pacific area, and a critic of the deal.
It will never be possible to have oversight of Chinese government oil plans and intentions, since that government has virtually no mechanisms to provide transparency. I’m curious to see if China, in future projects, might be able to get around the PM’s promised scrutiny of foreign government investment of over $325 million per purchase.
I wonder, too, if the Chinese admin can make use of a clause in the new Chinese-Canadian Foreign Investment Promotion and Protection Agreement indicating that Chinese companies already operating here can expand without limits. The horse has left the barn.
Alas, the neo-conservative fantasy no longer describes any new world order identifiable by Stephen Harper. While travelling through Asia this fall, he was frank. The world has changed, he told reporters. Many industrial powers are retreating to protectionism, the WTO is a dead duck, and that explains Canada’s aggressive record of bilateral trade deals – 60 launched and nine consummated so far – and the urgency of a deal with China, he said plainly.
Harper said nothing about the most obvious new trend in the changed world since 2007 – what The Economist calls “state capitalism on the march.” Two-thirds of Asian companies listed on the Fortune 500 are state-owned, a reflection of the fact that state agencies are the fastest way for economies to grow and to keep the coercive power that “bureaugarchs” like – one reason why states are key actors in land grabs around the world. Tar sands, of course, are the crown jewels of land grabs.
Nor did Harper say anything about Alberta Big Oil being landlocked – a tough break for anyone who only has oil and gas, and not things manufactured from oil and gas to sell – and facing opposition to pipelines from every direction, not to mention the fact that the U.S. is heading for energy self-sufficiency in the near future and has less use for Canuck oil.
But the business model of the 15 global giants that control Alberta’s tar sands is primarily based on control of a resource “rent,” as the economists put it, not manufacturing. Tapping into renewable energy – which is dispersed and requires hundreds of thousands of small investments rather than a few massive ones – does not appeal to those who have a better way to make easy money.
When landlocked tar is all you’ve got, you have to suck up bitter pills like neo-conservatism with Chinese characteristics.
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