Rachel Notley: Don’t overvalue diffidence

Alberta’s new Premier can’t bank on an extended honeymoon just because she’s the first un-conservative to take office since the Great Depression. There’s nothing especially  attractive about watching yet another social democrat mature in office. The conventions on dancing to the left of Conservatives and Liberals without being too “socialistic” are time-tested and tiresome.

It’s all so Canadian: They grow politically when they accept that most of their time will be spent graciously—and promptly—addressing other people’s messes.

The Alberta electorate was emphatic. Abacus Data’s survey of post-election attitudes confirms that the vast majority of Albertans are pleased that they have a new government. That same majority, however, doesn’t want to change Alberta very much, nor downsize its expensive expectations as tax-paying workers and clients of her government.

Alberta’s economic circumstances are far less certain than the demands of its people. The foundation of its exceptional wealth hasn’t been low taxes, seasonal tourism, superior public infrastructure and a flexible labor force—but robust external demand for its abundant fossil resources. Right now, the profitability and access to continental and world markets of those resources are deteriorating. "Next Year Country" isn’t inspiring much hope right now.

It’s smart in opposition and in think tanks to blue-sky the other side of the road; diversifying resource economies is always desirable. But that isn’t what landlocked Prairie governments are first obliged to do. And telling oil executives, developers, investors, and staff to not be afraid of Notley and her cadre of Eastern sophisticates is presumptuous. They have much bigger things to worry about.

Performance metrics for the Notley government are settling in against a decade of lower prices.

The urgent challenge for Notley is not to strike the proverbial right balance as a social democrat but to embrace the bracing legacy of Peter Lougheed and reassert the Alberta and the Prairie’s core imperative: equitable support for, and treatment of, its landlocked resource industries. 

To be taxable, to be able to afford cleaner technologies and standards and to be able to pay off waves of white-collar lobbyists, ravenous "social license" holders and NIMBYs of various stripes, the Alberta oil industry must make a handsome profit selling crude oil at prices buyers set thousands of miles away.

It was harmless politics in the campaign for Notley simply to shrug that the Keystone oil pipeline and the Gateway Project had been fatally mishandled by insensitive right-wingers.  Being stoical about past failures, however, isn’t what Alberta Premiers are elected to do.

Without Keystone, the most advanced and economic line to meet new oil production already approved, Alberta will stop being a competitive place to invest and that means lower employment and personal as well as public income.

There is no doubt that powerful and influential shallow forces in Washington, BC, Ontario, and Quebec would find it less displeasing and less politically expensive to burn another barrel of “Notley Alberta Oil” than another barrel of Stephen Harper’s. Fair or not, that’s the Alberta “advantage” today—and she’s obliged to play it.

Notley can surely get a second hearing of Alberta vital interests. The only question is where she is prepared to assert them.

New York Times’ Foreign War on Climate Change

When George Bush went into Iraq to ferret out weapons of mass destruction, the New York Times had his back.

Almost 10 years later to the day, its Editorial Board has decided that, “in good conscience,” Barack Obama should launch his campaign—this one against global climate change—on the icy black marshlands of that fledgling democracy to the north.

The Times pegs its advice on Obama’s recognition—in his last two long speeches—that climate change is a “pressing danger.” He said he’d do something as President, and unilaterally stopping the Keystone XL oil pipeline would certainly be something. It's nice for the forests and streams in one region of northern Alberta and, as a bonus, it gives a few more years for Canadian democracy to re-decide how and whether Western Canada should exploit its oil sands reserves.

(Canadians usually say “oil” sands. Critics prefer “tar” sands. Apparently, “tar” is more provocative.)

It will all be for the good, Mr. President: if we slow down those money-crazed Canadians, they might just decide to opt out of the fossil fuel boom that’s got everyone so excited down here. Hey, Canada might go back to demonstrating to us—especially fellow Democrats in Congress—how to be international moral leaders again.

The world would be dimmer without the New York Times. However, the permission of its editorial board to do something stupid won’t protect a President in the history books. Imperial swagger won’t look presidential because Manhattan decides its fashionable. Ask George Bush, please.

We should reach for our wallets when opinion makers preface their recommendations with the expression “mainstream scientists are virtually unanimous.” Climate science doesn’t single out one source of CO2 emissions—on the horizon or over the last hundred years—as the culprit or salvation.

Mainstream economics—a profession that also deals in numerical probabilities, as well as human behavior—wouldn’t sign off on a plan to fight a global production and a consumption problem by singling out one producer.

Economics and American diplomatic interests scream out for a rationale for stopping Keystone XL. Other than using up half his second honeymoon teasing American environmental lobbyists, why single out Canada’s fossil fuels? Americans buy oil and electricity from dirtier suppliers, domestic and foreign. Furthermore, oil tax and royalty revenues in Canada are not spent to subsidize excessive fuel consumption, as they are by shaky autocrats in Venezuela, Africa, and throughout the Middle East. 

The Times would better serve its conscience—and the climate—by actually analyzing Obama’s recent assertions on climate change.

In effect, by saying he’d act if Congress won’t, Obama graciously freed Congress to not do what must be done—legislate a tax on carbon.

Apparently, The Time’s editorial board would only have puffed up his State of the Union Address by declaring to America: “A burden must be shouldered and, for now, that burden should be shouldered by Canadians.” 

Keystone XL Project: Ambassador Jacobson’s little lambs in Canada

You could argue that being a real US ambassador to Canada is impossible, that America’s Ambassador David Jacobson doesn’t truly represent a foreign power because he doesn’t have an independent host to worry about.

Canada’s business leaders, diplomats, and most accomplished politicians have little influence in Washington, but they do know what’s going on. When Jacobson speaks publicly in Canada, he’s addressing public affairs audiences that already know as much about Washington affairs as audiences in Seattle or Tampa.

When he’s speaking in private, he can spice up the gossip, but needn’t worry about hurting anyone’s feelings or about ever having to pass along unpleasant or alarming messages from Stephen Harper to his President.

Ottawa is a G-8 capital, but it isn’t Jerusalem. Can you picture Barack Obama ever wrestling with a Jacobson aide memoire after the kids have gone to bed?

Nevertheless, Jacobson is mighty powerful up north. His President is more liked, trusted, and respected by Canadians than their own prime minister and parliament. So, in effect, as Obama’s man in Ottawa, he knows that he has the backing of millions of Canadians when he tells Harper what Obama wants to hear.

The ambassador’s key job isn’t to represent widely known American interests, but to coach—to tell Canadians how they can most pleasingly present their interests in Washington. About a month ago, in a major speech, he told Canada’s government and business establishment how to help Obama feel more comfortable about approving the Keystone XL Pipeline.

He admonished Canadians and their governments to communicate their concerns about the environment more effectively and to more concretely address the environmental concerns of American environmentalist.

There was no explaining why Obama was taking an eternity to decide. Everyone knows. No imagining what saying “no” could do to Canada’s economic recovery or their relationship. He only told them what they needed to hear: “What do they say to influential Americans?”

Nevertheless, his advice was unanimously accepted as “deft”. So, right now, Harper’s government and a wave of Canadian lobbyist ministers, executives, and premiers are being watched—and judged—by Canadian voters as they scramble to live up to Jacobson’s’ instructions.

Getting past Canada’s mediocre environment rhetoric—and talking about its somewhat superior performance in actually addressing CO2 emissions and its policy initiatives in both cap-and-trading and carbon taxing—will not impress US climate-change activists or their experts and friends in Washington. They know that neither Canada nor the US has a comprehensive plan to mobilize businesses and consumers to do their part to solve the problem.

Environmentalists have decided to concentrate on Canada’s shortcomings rather than America’s—for old-fashioned tactical reasons. Concentrating on Alberta’s oil sands is economically illiterate and scientifically trivial. Still, doing it makes news, does not scare liberals in swing states, raises money for public education, and keeps Hollywood activists on side.

In following the Jacobson line, Canadians and their Washington allies seem compelled to say silly things.

Claiming that the pipeline isn’t important environmentally (because the oil in question will get to the market anyway) shamelessly understates the damage that a negative decision would do to Canada—and the prospects of building an indispensable climate change consensus amongst North Americans and inside their capitals.

Unquestionably, killing Keystone XL would hurt capitalists in both countries. And it would provide a dramatic victory for those selling the suicidal idea that the free markets and conservatives and climate change and progressives must be in conflict.

Nevertheless, stopping this pipeline—even turning Alberta into a New England meadow—wouldn’t cut growing global demand for fossil fuels, diminish the longer-term profitability of the fossil fuel industry, or convince representatives in Congress to save the planet by doing in their districts what their government is agonizing about doing to Alberta.  

Harper’s courtesy Waltz with Chinese State Capitalism

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.”