Embracing China as the next American Empire

In the last paragraph of Lament for a Nation, 1965, George Grant sums up his contempt for the elites that would sell Canada out to the dazzling American juggernaut. He concentrated his fire on their vapid insistence that what’s next must be for the better.

“Beyond courage, it is also possible to live in the ancient faith, which asserts that changes in the world, even if the be recognized more as a loss than a gain, take place within an eternal order that is not affected by their taking place. Whatever the difficulty of philosophy, the religious man has ben told that process is not all. ‘Tendebantque manus ripae ulterioris amore.’”

(Virgi, Aeneid, Book V1: “They were holding their arms outstretched in love toward the further shore.”)

Grant believed that American liberalism, in practice, was inferior to the British conservative ideals that young men of his time mimicked in Upper Canada and English-speaking Montreal. He was too hard on America; it’s still the essential champion of Western conservative and liberal values. 

Nevertheless, if Grant was alive today, imagine the wonderfully cruel things he would say about today’s leaders who argue that we have the finesse, the leverage, and the treasure to turn China into Canada’s 21st-century elixir.

Certainly, he’d feast on yesterday’s National Post. There, conveniently on one page, was a position paper by leadership candidate Justin Trudeau and a London speech by Vice-Chairman of the Canadian Imperial Bank of Commerce Jim Prentice—both endorsing a $15-billion acquisition of a private Canadian energy company by CNOOC, an energy giant owned almost entirely by the Government of China.

Prentice asserted the commercial banking half and Trudeau asserted the can-do government half. Together, these two strategic thinkers took a very tricky issue about how to do business with a giant company owned by a superpower operating outside of Canada’s alliances and valves, and made the issue bigger and simpler at the same time.

Being squeamish about China is silly, even dangerous; after all, it’s the future.

Trudeau declared, without any elaboration, that the CNOOC offer is good for Canada because it’s a “foreign investment” and that “foreign investment raises productivity, and hence the living standards of Canadian families.”

Having logically disposed of the need for the foreign investment "net benefits" test, originally introduced by his father, he enthused that relations with the world’s second-biggest economy should be deepened, not tested, certainly, nor feared.

“We deceive ourselves by thinking that trade with Asia can be squeezed into the 20th-century mold. China, for one, sets its own rules and will continue to do so because it can. China has a game plan. There is nothing inherently sinister about that. They have needs and the world has resources to meet those needs. We Canadians have more of those resources — and therefore more leverage — than any nation on Earth.”

Trudeau writes like one of those WestPoint generals that knows how to seduce politicians into undertaking terrible risks: above all, sound incredibly tough.

Prentice doesn’t bother to sound tough. Instead, he finds comfort in the semantic possibilities of getting SOEs to sign protocols to promise to act like ordinary commercial business. He can’t resist, however, warning his old boss, Stephen Harper, that turning down CNOOC would cause offense.

“The fundamental point is that the Canadian government should not be – and, in my view, won’t be – concerned about the so-called “ethnicity of money.” We can’t and shouldn’t try to force China or other countries to be like us. Closing doors to investment is no way to open minds.”

Canadian nationalist politicians and deal-hungry commercial bankers wear the same blinkers.

They’re loathe to think about the power of their friendly neighbor or the power of China. Doing business with the SOE of a superpower can’t be "squeezed" into a business model might work for publically owned investors from technically competent and politically harmless countries like, say, France and South Korea.

No wonder Harper is taking so long.

Brad Wall and “strategic” conservatism

Nobody lost an election in Canada this week. But, as in the US, change is afoot.

Stephen Harper lost his most competent minister, Jim Prentice, and his most trustworthy political ally, British Columbia’s Liberal Premier Gordon Campbell. And most importantly, he was publicly out-talked, out-campaigned, and successfully cornered by a rising political star in his own political base and partisan home—Premier Brad Wall of Saskatchewan.

Looking at the bald facts of the issue—should the Government of Canada reject a $40 some billion hostile bid for Potash Corp of Saskatchewan—you’d imagine that everyone would carefully play their fated roles. (Most people in Saskatchewan didn’t like the idea; Premier Wall would have to oppose it, and Harper also needs Saskatchewan to stay solidly Conservative in his next election.) However, Premier Wall doesn’t seem to play “damage control.” Using all means available to him (provincial alliance-building, speech-making, media interviews, and public lobbying in Ottawa), he set out to redefine how we treat foreign investment. He cut off efforts to sweeten the bid and forced Harper to mutely do what his logic and his principles could not embrace.

The impact of Wall’s short, dazzling campaign brings to light important public policy and political issues.

Brad Wall isn’t bilingual but he uses the English language wonderfully. And seemingly, he has the ambition to take a national leadership role in setting national conservative economic policy. With or without silk ties, Thomas Friedman’s one-liners, or conscious intent, he’s pushing conservatism back to a more interventionist approach. This is well within the political traditions of western Canada. As events this week reveal, Harper’s more rigid laissez-faire approach is extremely vulnerable to populist challenge.

Of course, for now, Wall may have put more wind in the sails of Michael Ignatieff than his own brand in the Conservative Party. Nevertheless, what Canada’s cosmopolitan business leaders thought was a national consensus on foreign investment has turned out to be not much more than an agreement to talk about other things, for now.

It’s refreshing to see a politician enjoying a honeymoon with the national press. However, the attacks on BHP Billiton’s bid by Wall and his allies received precious little effective scrutiny. For instance, on October 26^th, Wall volunteered in a letter to the Financial Post that “if forced into this merger, we will use our resource-taxing authority to recoup losses that occur.”

Then, what power over the people’s resource was in jeopardy? Wouldn’t the new shareholders want to maximize the value of this resource?  What is “strategic” anyway about rocks that the people own and can’t physically be smuggled out of the province without being taxed? If rocks are “strategic,” then why not finite reserves of conventional natural gas and oil? Since people are our most precious and mobile resource, should we raise the bar on foreign takeovers across the high-tech sector?

It is ironic that Wall captured the support of the other western Canadian premiers, except Gordon Campbell. For forty years, western leaders argued that the West’s development and diversification demanded both clear provincial ownership of resources and free trade in capital, as well as people. They won both arguments and the West has led Canada’s development since.