Keystone Pipeline: Dare Harper simply wait for Obama’s Okay?

A quirky element in the neurotic power relationship between Canada and the United States remains the uneven significance of saying “no” to the other side. Globe-preening Canadian governments profit inordinately when they can say “no” to the global power next door. On the other hand, saying “no” to Canada can be devastating—whether Washington notices or not.

Last week, former Prime Minister Jean Chretien and his senior Liberal colleagues gleefully reminisced in the national media over the 10th anniversary of their un-bidden public declaration that Canada would reject any request by George W. Bush to support the US-British invasion of Iraq. That decision to not act stands above all the other things Jean Chretien didn’t do during his 10 years in office.

Within as many weeks, Stephen Harper could receive from Washington a “no” of devastating consequences—to his relationship with the US government, his vision of Canada’s future, his reputation in Canada, and his chances of surviving another election.

The theatricality of Obama’s pending Keystone decision is appropriately noted.

There is, in fact, little American substance at stake in the decision. The thousands of US jobs that wouldn’t happen along the pipeline will soon be found elsewhere in America’s dirty fossil fuel Renaissance—and, in any event, their fate pales against the jobs being killed each month by Washington’s symbolic campaign to fix Washington’s balance sheet by the mid 2020s. The environmental movement and its latest campaign recruit, hedge funds magician Tom Steyer, sees the oil sands entirely in marketing terms. 

The lack of showmanship on the Keystone Project by the Harper government, however, crises out for greater attention.

With enemies circling, there’s no way Jean Chretien would have sat still and relied on opposition Congressmen and Congresswomen and dull Canadian lobbyists to make his case in Washington.

The Prime Minister will not be credited for playing by Queensbury Rules in Canada and will enjoy no quarter if he loses like a gentleman in Washington.

(Those of you who think you have deep inside knowledge that the President has Harper’s back can ignore what I say next. Those of you who remain nervous might appreciate the following rather aggressive advice from an Obama Canadian to a quintessentially Canadian Prime Minister standing in the headlights.)

If you’ve got Goliath on your side, Mr. Harper, don’t look for your own David; coach Goliath.

The Prime Minister has the confidence of a big majority in Canada’s Parliament and, as reported by Politico, also has majorities in both the US House of Representatives and the US Senate. It needn’t be repeated that Keystone also has overwhelming support among US business leaders and the technocrats the President relied on to fight the recession. 

Don’t wait to mobilize their support after Obama turns you down. They won’t go back to him after he’s decided. Why not secure a resolution now from Canada’s Parliament, supplementing what passed last week in the US Senate?

The Prime Minister should be able to ask his Parliament to be clearer and more aggressive. Conservative and Liberal MPs, at least, should be able to remind Washington, and the President, of the support they’ve enjoyed since their economy tanked in 2008; of the fragility of the present recovery in both countries; and of Canada’s open hand to jointly tackle climate change, continental security, and economic recovery.

Canadians don’t expect you to need the same face time with the President that the Prime Minister of Israel has enjoyed. However, they wouldn’t think it too pushy if you literally went to Washington to make your case directly to the President—and let it out that you’d be pleased to spell out politely what’s at stake, before a joint session of Congress.

There is no value in downplaying the economic consequences of a “no” simply to bolster jobs and housing starts this spring.

The capital markets, more likely, would probably appreciate the candor; and Americans would definitely listen if the Prime Minister argued: killing Keystone now could abort economic recovery in Western Canada and that could spread across Canada—the United States economy’s best customer. 

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.”

Canada’s Keystone Pipeline Project: Al Gore’s “Big Bird”

It used to be easy for Republican politicians to warn that runaway government spending would destroy the American Dream and global progress too. Then, along came the awkward elections of 2010 and 2012, when the whole country started to take them seriously. Churchillian rhetoric found itself at war.

During his first debate with that appeaser in the White House, Romney announced with fatherly finality that he’d fire “Big Bird.” An illusion of children and a yellow body costume would have to be sacrificed.

In not asking anything from voters with any propensity to vote Republican, he trivialized his campaign and made fiscal probity a laughing matter.

Stopping the Keystone Project that proposes to transport crude oil from Alberta’s oil sands to under-utilized Texas refiners is the environment movement’s “Big Bird.” Opposing the project generates great visuals, but it offers no strategic value in the fight to stabilize greenhouse gas emissions.

On behalf of the young science of climate change, the project’s opponents ignore nearly three centuries of science on how economies work. They insist the globe’s health is at risk and then aim their guns at Canadian enterprise that won’t alter global prices or fossil fuel consumption, neither globally nor in the US.  They single out a high-cost producer of fossil fuels rather than the cheaper sources of oil that actually allow for excessive consumption.

They say politicians have to start acting globally, in concert, while lobbying the President to divide the continent’s energy market and, in effect, abrogate trade agreements with Canada. They say corporations are polluters and that the middle class is innocent, while complaining that their adversaries are ideological.

They tell Washington politicians to take extreme action against Canadian interests and Albertans who can’t vote and look the other way as US swing states undertake a “renaissance” in fossil development.

There is nothing wrong with playing politics to save the world or, for instance, just a piece of Western civilization. Al Gore and the chief strategists of the climate-change movement, however, appear no smarter or more sincere than Mitt Romney.

Ultimately, we’ve got to do something about entitlements, hard-faced Republicans insist. But first let’s cut off PBS. Ultimately, we have to put a significant price on carbon, Al Gore concedes in the Guardian. And first let’s threaten to burn Barack Obama in effigy if—after all the proper environmental reviews are complete—he doesn’t kill the Keystone pipeline project.

Cynicism doesn’t make climate change or public debt smaller problems. It can, however, crowd out constructive discussion and serious problem-solving.

Opposing Canadian oil: Another “ugly American” with a lovely cause

Pushing smaller countries around isn’t only an evangelical conservative vice. It’s just that liberals do it on behalf of different gods.

The New York Times editorial board yesterday urged Obama’s State Department to stop being so squeamish about the dangers of the proposed Keystone oil pipeline from Alberta. It should interfere directly in how Canadians develop their energy resources while meeting their responsibilities to address climate change. In “Canada’s Oil, the World’s Carbon,” they insist that the new project impact hearings ignore the Canadian border.

“What is less certain is whether it will ask an essential global question that transcends borders: What is the pipeline’s likely effect on the climate?

“But the climate question must be addressed, if only to give a full accounting of the range of consequences of developing the tar sands, an effort in which the United States will be complicit if it allows the pipeline.”

Click on: www.nytimes.com/2012/07/30/opinion/canadas-oil-the-worlds-carbon.html?_r=1

The Times and the American environment movement, of course, claim they know the answer: the Canadian oil sands are pivotal to the fight against climate change and, therefore, hobbling their development must be an American priority.

Wouldn’t it be lovely to stop climate change at the Canadian border?

Wasn’t one little war to democratize the entire Muslim world worth stretching international law?

Iraq hasn’t revitalized the American right. Fixing northern Alberta will not compensate for the impotence of climate change policies in liberal Washington.

Those who understand commodity markets better than the behavior of clouds know beyond any reasonable doubt that mitigating the growth of CO2 emissions will depend—above all else—on what consumers do, not on how oil producers produce to meet consumer wants.

Oil sands production will not alter the competitive price of oil in the energy market and, thereby, the propensity of people to use it and invest in it. Oil sands production, in any event, will be out-paced by the extraordinary expansion of fossil fuel production in the United States, let alone in Asia.

Of course, it’s an election year. Environmentalists see themselves as far too sophisticated to ask their liberal allies to talk about carbon taxes and consumer practices right now. They believe they can raise people’s awareness—and raise money—by supporting politicians willing to stand up to Canada.

Liberals will promise to tax the millionaires, but not gasoline. In swing states, they will support investments in clean energy, not dis-investment in coal.

These evasions aren’t free. They entrench their own climate denier mentality. They are reality-based about the dangers and Pollyanna about the solutions.

And, by the way, they disguise the fact that climate mitigation plans in Canada are in better shape than in the US—and they delay cost-effective collective action with Canada that could impress the world.

Pipeline politics: de-legitimizing a majority Government

One of the noisy consequences of fixed terms in US politics and majority governments in parliamentary democracies is the rhetorical freedom they provide to the losers—the unfettered expression of extravagant hostility and near-paranoid accusations.

Obama’s opponents can—for four years—raise tens of $millions questioning his provenance, love of country, respect for the constitution, and entry-level competence as president without having to convince the general electorate.

In Canada, Harper’s opponents know they have another three years now to say whatever they want without worrying about whether they can make it stick in an election. They are joyously stretching their wings.

(With minority governments, opposition forces must always be careful. If they say the prime minister is an autocrat, for instance, who’s transforming the country into toxic dump or neo-conservative work camp, they can fix the problem: they can vote no confidence and liberate the country in a national election.)

There are no “birthers” in Canada; we’re too cosmopolitan. Instead, Canadian activists eagerly adopt the language of those with truly desperate claims against the state.

We are urged to “resist” the Harper government. Thousands claim to be unable to sleep not knowing “where he’s taking our country.” The most ubiquitous accusation, however, is the insistence that his government and many of its recent initiatives are “illegitimate.”

The charge has a mainstream ring. It doesn’t go so far as to say the government has no right to govern or that its proposals are illegal—just tainted. However, being tainted, there is no need to even consider swallowing what it says.

Legitimacy is a subtle, subjective term, but it’s derived from that blockbuster word "illegal." Consequently, it’s used to get attention by white-collar consultants as well as street demonstrators. 

Judy Tanguay, a former public servant and now an Ottawa public affairs consultant, reportedly said this about the National Energy Board’s (NEB) hearing on the highly contentious Northern Gateway project.

"The whole process has been delegitimized. We know what the decision will be; [Prime Minister Stephen] Harper has made it clear that he desperately wants this project to proceed."

Click on: https://secure.globeadvisor.com/servlet/ArticleNews/story/gam/20120530/RBNEBINDEPENDENCEMCCARTHYATL

This is newsworthy nonsense.

Tanguay prizes the “court-like” integrity of the NEB and, at the same time, prejudges the outcome.

Does she suggest that the 4,000 organizations and individuals who have registered to speak at the hearings release their consultants and lawyers?

Nevertheless, Tanguay claims that the prime minister will move Alberta oil to market “whatever it takes”—that the NEB can’t do its job unless it is left with sovereign authority to decide on whether the proposed pipeline across British Columbia will be built.

The Harper government has set itself up for serious trouble in its political base in British Columbia. However, it is unfair to imply that it has corrupted the NEB or that it is proposing legislation to “gut” either the NEB or the Canadian environment. Proposing to Parliament in Bill C-38 that the government take the final decision on proposals of strategic importance is not inconsistent with regulatory practice or theory—in clean democracies, including Canada.

Sometimes economic regulators have the last word; sometimes Cabinets do. So long as the regulator is required to come to a conclusion publicly and its processes remain subject to court appeals, either model can elicit rigorous, balanced deliberation.

Harper and the pipeline proponents, however, may discover that he’s asking for powers that will be too painful to exercise.

Indeed, the pipeline’s prospects might, in fact, get a more favorable verdict from the NEB than from Harper’s Cabinet on the eve of the next election. (Ask the Keystone Pipeline proponents what they think of President Obama’s authority to approve trans-boundary pipelines.)

Danielle Smith’s climate change faux pas

Yesterday, the woman who may soon lead one-half of the Alberta-China pollution axis made two statements on carbon emissions. The first one got the headlines and is causing hearts to race in central Canada.  

“We’ve been watching the debate in the scientific community, and there is still a debate,” Smith said. “I will continue to watch the debate in the scientific community, but that’s not an excuse not to act.”

Click on:http://news.nationalpost.com/2012/04/19/wildrose-leader-booed-during-alberta-leaders-debate-for-doubting-climate-change-science/

Albertans may not appreciate the harm Danielle Smith may be doing.

Substantively, she hasn’t turned herself into a “denier” by Alberta standards. They’ve long accepted that sacrifices by Albertans must be made without dead certainty on what exact share of the problem—and the solution—can be assigned to human activity. Furthermore, they must know that no conservative on either side of the aisle in the Alberta legislature or in Ottawa has a plan for oil sands development that is credible with serious climate change advocates.

In any event, it goes without saying that every serious candidate for premier of Alberta must first appear to be able to sell Alberta oil and natural gas to whomever will burn it—whatever their local emission standards might be.

Nevertheless, the actual sentiments of the next premier of Alberta on the science of climate change is of dire importance to the management of the climate change issue in the rest of Canada—and elsewhere in North America as well.

Consensus climate change policy in Ottawa, in Washington, and amongst environmental groups that participate in coaxing governments to vigorously regulate polluters insists that we know what we’re doing, that the biggest polluters, China and Alberta, in particular, get it and are taking effective action.

The less this policy asks of people in consuming jurisdictions the more it must imagine will be done upstream.

That’s why it’s more important to not think out loud on the subject in Calgary than to have any opinion at all in Toronto.

Alberta’s new pan-Canadian energy illusion

Pique and fear can make history in politics, and that’s what’s going on in Premier Alison Redford’s new Alberta Government.

The creation of a North American energy market has driven investment and politics in Alberta over the last four decades. It was the vision that guided Alberta’s push for a more decentralized Canada and for better constitutional protections for provincial energy projects. It was at the heart of the Free Trade Agreement of 1988, which established Canada-US investment protections. Undoubtedly, it has helped make Alberta the youngest, most prosperous urban region in Canada.

However, two immediate—if not permanent—challenges to the status quo have emerged.

This continental vision is the brand of a 41-year-old Alberta government. And its new leader, Alison Redford, feels compelled to make “sweeping changes” before the next election. Further, continental integration has been made to look naïve by its American partner. The Obama government has temporarily blocked Alberta’s oil export expansion by delaying the Keystone Pipeline project—a project that is necessary for the expansion of Alberta exports, at world prices, to Americans and Asians as well.

In responding to these two challenges in Tuesday’s Alberta Throne Speech and in various interviews, Redford and her ministers have outlined an east-west pan-Canadian energy alternative that should make retired Central Canadian nationalists blush.

Click on: www.theglobeandmail.com/news/politics/throne-speech-leaves-vague-timetable-for-reshaping-alberta/article2330092/

Behind Redford’s rhetoric, however, is a long-shot proposition: in order to escape the whims of Washington, other Canadian provinces and the federal government will support the creation of an east-west energy grid and make federal government subsidies available for strategic provincial energy projects.

At the center of her “Canadian energy strategy” is an ambitious, dollars-and-cents dream: the Harper government of Canada and the Clark government of BC will do whatever it takes, and use all necessary political capital, to get the alternative to The Keystone Project—the Northern Gateway project—approved and promptly built across British Columbia. The Globe and Mail reports:

Click on: www.theglobeandmail.com/news/politics/alberta-seeks-way-to-pay-for-bc-support-of-pipeline/article2330389/

Unsurprisingly, federal government sources are not volunteering any federal monies to sweeten Redford’s pitch to British Columbia.

Possibly, both oil pipelines will be built and, possibly, if environmentalists have their say, neither will. However, the idea of throwing untold billions at building an east-west energy grid simply to be “free” of the Americans makes no more practical sense for Alberta now than it did when it was championed in the East and rejected in the West by previous Alberta governments.

Doing what makes the most sense continentally still makes the most sense for Alberta.

A pipeline down the Midwest to the Gulf has more commercial champions along the route, would give Alberta reliable secure access to Asian markets, and, most likely, would entail far fewer environmental, regulatory, and NIMBY risks as the proposed route across British Columbia and along is exquisite coast.

When continentalists in the West have been thwarted by politics elsewhere, historically, they’ve upped their game rather than switched sides. That’s still what the interests of the West deserve.