Prime Minister Stephen Harper is catching flak from both sides of the political spectrum as Canadians ponder the implications of his decision to let Chinese and Malaysian state-owned companies buy $20 billion worth of our oilsands industry. On the left, New Democrats complain the Tories have recklessly “rubber-stamped” a deal with no great benefit to Canada. Critics on the right fret that Ottawa will scare off investment with its murkily “incoherent” policy on acquisitions.There’s truth to both criticisms. The Conservatives haven’t yet articulated a credible energy strategy, for all their obsession with the sector. They are making it up as they go, in back rooms, without benefit of Parliamentary debate or public input, as the Star noted on this page on Saturday. In this case they tossed a sop to China and Malaysia, without getting much in return, then decreed the rest of the oilpatch off-limits to other similar actors.
In Parliament on Monday Harper struck a populist pose, positioning his Tories as careful stewards of the public interest, as against the Liberals, who in the past reflexively waved through foreign investment, and the New Democrats who reflexively opposed it. It was a clever, if disingenuous posture. In reality, after ragging the puck for two years, the Tories took the path of least resistance.
At the end of the day Canadians are still left looking for a coherent energy strategy. The Tories have yet to enunciate a credible plan to develop the oilsands in a sustainable manner, and to address climate change. We have unresolved political issues with U.S. President Barack Obama’s administration over the stalled Keystone XL pipeline. We’re still captives of the U.S. energy market. And we are saddled with domestic pipeline wrangles of our own.
That’s the broader context in which to assess Harper’s handling of China National Offshore Oil Corp.’s $15-billion bid for control of Nexen Inc., and the $6-billion bid by Malaysia’s Petronas for Progress Energy Resources.
On Monday New Democrat Leader Tom Mulcair accused the Tories of “colossal arrogance” by redefining the “net benefit” test without Parliamentary input, and of making up the rules as they go along. He’s got a point.
While Harper retorted that Ottawa had provided much-needed “clarity” on foreign investment rules, his remarks to reporters on Friday night when he gave the green light to CNOCC and Petronas suggested just the contrary. He voiced “concern and discomfort” at foreign state enterprises snapping up assets, and promised that “we will watch carefully other sectors of the economy to ensure this situation does not develop.” What is an investor to make of that? It’s anything but clear. Ominous, perhaps. But not clear.
Harper did vow to ring-fence the oilsands by stating that further CNOCC-style takeovers will be deemed of “net benefit” only in “an exceptional circumstance.” Canada still hopes to raise much of the $650 billion that will be needed to develop the oilsands from foreign investors. But foreign state-owned enterprises will have to be content with a joint venture or a minority stake, rather than full control. Still, some wonder what the exceptions might be.
Beyond the oilsands, the Tories intend to “strengthen scrutiny” of purchases by foreign state-owned enterprises elsewhere in the economy. They plan to raise the threshold for private investment to $1 billion over the next four years. But the bar will remain $330 million for foreign state-owned firms. Moreover, in deciding “net benefit” Ottawa will weigh the degree of control that a foreign firm would exert on the firm here and on the industry sector. And it will weigh the extent to which the foreign government might meddle. This sounds tough, but much will depend on how robustly Ottawa enforces those rules. Here too, clarity is hard to discern.
The point of this mixed messaging seems to be: We’re open for business, but we’re on our guard. Whatever Harper may say, that isn’t clear. At best, it’s creative ambiguity. At worst, it’s not all that reassuring.
Original Article
Source: the star
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