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Harper’s capricious, one-man policy shop

By Susan Riley      
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GATINEAU, QUE.—Is Prime Minister Stephen Harper a rigorous ideologue, or just a right-wing grump? Or is he a clever pragmatist, like Liberal prime ministers before him, whose only principle is clinging to power?

Fair questions, given the Prime Minister’s growing dossier of abrupt policy reversals. Add to that his seemingly impulsive, bad-tempered, comments on the venality of the Commonwealth, say; or his suddenly sharp tone with the Obama administration over Keystone; or periodic attacks of moral outrage against a rotating list of smaller countries with evil governments (and important domestic constituencies). 

Sri Lanka this month; Iran, just weeks ago. And, under Harper’s watch, China has morphed from thuggish autocracy, to valued trading partner, back to sinister interloper. 

Even Cabinet ministers are regularly caught off guard by some new prime ministerial pet peeve, or sudden enthusiasm.

The overall impression is a government that is improvising, not very artfully, based on the whims of one man. This is especially obvious with foreign investment policy.

For months, we were told that selling Canadian resources to Asia—particularly, China—would fuel an economic renaissance and protect us from over-reliance on the American market.

Then, a year ago, China’s state-owned energy company, CNOOC, offered to buy Calgary-based energy company, Nexen, for $15-billion. At the same time, Malaysia’s national energy company, Petronas, made a $5-billion bid for another domestic company, Progress Industry.

Harper approved both takeovers last December, but issued a warning—not in the form of detailed policy, but in a brief statement.

Canada, Harper said, would no longer welcome investments by state-owned enterprises (SOEs) in the oil patch, apart from “exceptional” cases. The threshold for reviewing private sector takeovers was to be increased to $1-billion; for state-owned enterprises, the benchmark remains at $330-million.

“Canadians have not spent years reducing the ownership of sectors of our economy by our own governments, only to see them bought and controlled by foreign governments, instead,” Harper said.

But apparently not all state-owned enterprises are equally evil. Last week the prime minister announced, at the APEC summit, that Petronas (Malaysia’s state-owned energy powerhouse) will be investing $36-billion in liquified natural gas production in British Columbia over 30 years.

Did this massive investment get the green light because it doesn’t involve the takeover of a Canadian firm, or because Malaysia is a constitutional monarchy and not an authoritarian Communist dictatorship?

Similarly, Norway’s national energy company, Statoil’s, plans to develop a significant light crude find in the waters off Newfoundland met with nary a peep of protest in Ottawa. Statoil is a state-owned enterprise (although it functions like a private company), but the state in question is a democracy.

Clearly, Harper’s latest foreign investment tweaks are aimed directly at China—and they are working. Foreign direct investment in the oil patch has dropped off the map: $2-billion this year, compared to $27-billion at the same time last year. Not quite in Pierre Trudeau’s league, when it comes to discouraging foreign money in the oil patch—and Trudeau was concerned over American, not Chinese, domination—but it raises tantalizing comparisons.

Former Harper minister Jim Prentice, now a senior executive with CIBC, fretted about this decline recently, blaming a lack of pipeline capacity to export Canadian bitumen and China’s own economic slowdown, as much as Harper’s crackdown. 

Prentice said he agrees with the stringent new rules—reflecting widespread fear of a Chinese takeover of Canada’s oil sector—but, he added, “I think we have to reassure foreign investors” that the door isn’t entirely closed.

Confusion abounds when it comes to foreign investment, generally. Last week, Industry Minister James Moore abruptly rejected a proposed takeover of Manitoba’s Allstream telecom by an Egyptian company, citing “national security” concerns.

“Not only do foreign investors not know what the rules are, companies in Canada don’t know, either,” complained Pierre Blouin, a Manitoba Telecom Services executive.

For a government that declares itself open for business, it is slamming a lot of doors. For a government that frets about national security, it apparently tolerates Canada’s intelligence agency spying on Brazil’s mining sector. (“We’re talking about the kind of behaviour we reproach other countries for,” said Tom Mulcair.) 

Finally, a prime minister who deplores government interference in the market, has been interfering a lot—in a capricious way that is discouraging at least some foreign players.  

This may have an unintended benefit, however, for the environment. There is a rapidly receding window for exploiting expensive, dirty tarsands oil as other energy alternatives emerge—from shale gas and oil, to liquified natural gas, to renewables—and as China begins to embrace sustainability.

If the Harper government succeeds in further stifling foreign investment, that oil may never leave the ground. And who would have predicted that?

Susan Riley is a veteran political columnist. 



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