Stephen Harper respects the status quo. In fact, he’ll pay
$billions to keep it under control. In return, however, he likes to change the
future.
Last year, he gave the provinces five years of real increases
in health-care funding—$billions more than they yet know how to spend—in return
for indexing future financial transfers to economic growth. By giving the premiers tens of $billions, he doesn’t have to go to any more of their fundraising
meetings—and just may have secured a long-standing conservative dream:
returning accountability for the operation and reform of public health services
to the provinces, to be settled in provincial elections.
Most politicians we call pragmatic favor “balanced” policies
that keep all vested interests reasonably hopeful, if not entirely satisfied.
Harper’s tradeoffs are dynamic: You can keep what’s yours right now, but I’m
taking the future.
Last Friday, Harper took one step back and two forward on
foreign investment policy with China. The Chinese government’s oil giant (CNOOC)
will be able to complete its $15.1-billion purchase of one significant Oil Sands
producer in Alberta. In the future, however, only joint ventures or minority
participation by China’s SOEs will be welcome.
Canada, Harper declared, will remain open for business but
not for sale to foreign governments.
They danced together well enough. At the end of a lovely
evening, however, Harper went home as a conservative free enterpriser.
His new foreign investment policy framework allows for
exceptions, in “exceptional” circumstances. That caveat will keep lawyers, intergovernmental
officials, and the deep pockets of prospective investors busy. However, it’s
silly for the editorial board of the Globe and Mail
to complain that the policy isn’t “very enlightening.”
Harper has replaced the “net benefit” test for future oil sands takeovers by SOEs with a criterion that no Chinese SOE can reasonably
count on passing. Remember, the test has to be passed by—and defended by—
elected Canadian governments. When the recipient province is happy, Ottawa almost
always finds a “net benefit” in a foreign direct investment proposal. Under
what likely circumstances, however, could an imitation commercial oil giant,
controlled by the government of China, offer anything exceptional about oil
extraction that wouldn’t be bad politics?
Almost all speculation has concentrated on how Harper is
resetting Canada’s now-precious relationship with China. Harper’s supposed to be
looking for win-wins and may have secured one on oil development and marketing.
Nevertheless, a much larger, also fraught, relationship was
also in play in designing Harper’s new policy regarding oil sands takeovers by
Chinese SOEs. Canada’s relations with the US government, political elite, and vast
financial pools were clearly well served by what Harper decided.
Chinese money may be easy. But the capital markets of North
America are flush as well. (Together, there’s approximately $2trillion of
corporate cash looking for things to do.) By making it clear that America’s global
strategic competitor is not going to secure a dominant place in Alberta’s
energy sector, Harper has bolstered the odds for further rational market-driven development
of North America’s energy resources.
The oil sands industry already has enough problems with
environmentalists and nativists in the United States. Harper has, at the very
least, eliminated the possibility of facing the slogan: “Boycott China’s Tar
Sands Oil.”
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