No Nukes
September 26, 2012
Media coverage of Premier Wall’s recent trip to China was “dumbed-down”. It takes courage to criticize an economy that is “doing well” in conventional terms. Conventional terms are exclusively about economic growth; not health, or justice, not human rights or the environment.
Once the global market becomes the political “be-all and end-all”, market-dependent politicians are inclined to simply follow the money, without a balanced consideration of outcomes, domestically or abroad. Surely governance and its reporting should involve more than cheerleading the hitching of our economic wagon to China’s totalitarian economic growth.
FLIP-FLOPS
Politicians can be so fickle. In the 1980s Brian Mulroney told us we had to hitch our wagon to the U.S.’s economic growth; without free trade with America we were economically doomed. How quickly the tide turns; now Prime Minister Harper is trying to convince us that we must tie our prosperity to China.
This only addresses half of the new reality. China’s economic growth has been driving the global economy. But why, and is that a good thing? Should we passively accept that our fate is to flip-flop from one economic superpower to another! Don’t we have our own political and social objectives?
CHINA’S EXPANSIONISM
China’s investments in Western Canadian oil have risen sharply since the 2008 recession. In 2009 PetroChina invested $1.9 billion to get 60% share of the Athabasca Oil Sands Corporation. In 2012 it bought the other 40% interest. In 2010 Sinopec invested $4.6 billion to get 9% control of Syncrude, the largest player in Alberta’s four tarsand mines. In 2011 Sinopec paid $2.9 billion for Daylight Energy, which does energy exploration and production in Alberta and BC. Encana is already in a joint venture with the China National Petroleum Corporation doing shale gas extraction in BC. Now China’s CNOOC Ltd. has offered $15 billion to buy Nexen, which is involved in offshore oil and gas as well as Alberta’s tarsands.
Having approved the Syncrude sale and promoting free-trade with China, will the Harper government dare not approve the sale of Nexen? The sale requires approval under the Investment Canada Act so Harper faces the dilemma he did when the Australian firm BHP Billiton wanted to purchase the Potash Corporation. Then Premier Wall successful called for a ban on the sale because it was a “strategic resource”. Why don’t we hear Alberta’s Premier Redford calling for a ban on the Nexen sale?
FOLLOWING GROWTH
In the zero-sum world of “peak oil” one country’s increase in consumption comes at the expense of others. After the 2008 recession most of the drop in oil demand came from Europe and the US. China’s demand barely dipped and it recovered fairly quickly to its 10% annual rate of growth in oil consumption.
China isn’t less sensitive to oil prices because of state subsidies. Hidden corporate subsidies exist everywhere; there are $ 1.3 billion in annual subsidies to fossil fuels in Canada. Rather, in The End of Growth, Rubin argues that oil consumption is more sensitive to growth in income. While incomes have remained static in the West, economic growth in China is creating a new class of consumers who will be looking to buy their first car. China’s rising oil demand also has to do with it still using diesel-fuel as a back-up when it has difficulty importing coal for its electricity plants.
STRUCTURAL INEQUALITY
The US remains the world’s biggest “oil hog”, consuming 19 million barrels each day. But the shift of the oil market to the rising economies such as China continues. This will have a similar effect of creating structural inequality; the poorest countries will remain poor as China spreads its state-run energy corporations into resource rich regions like Saskatchewan and Alberta. As the head of the African Policy Forum said, referring to China’s $20 billion investments in Africa, “We should treat Chinese capitalism as we do any capitalism. It is state capitalism but it is still in it for the profit.”
Selling Canadian oil isn’t about loyalty or the public interest. It’s about selling to the highest bidder to make the greatest return on investment. And with its stockpiled cash from its trade surplus with the West, China is on a spending spree and willing to pay $20 a barrel more for Alberta’s oil than would be received from US refineries.
NATIONAL SECURITY
Loyalty to our neighbours and allies only goes so far in the commodity market. It matters little that Calgary became Canada’s most Americanized city through the oil boom. The oil industry and Harper government aren’t loyal to any particular country; they’re loyal to the market itself. If environmental protection gets in the way of the Keystone pipeline bringing more Canadian oil south, it will go elsewhere. Then there was the quick flip of the Harper government to supporting fast-tracking Enbridge’s Northern Gateway pipeline to get bitumen oil to China.
Neither place nor people are sacred in the commodity market; collateral damage falls where it may. Ironically it has taken CSIS to warn us that corporation sales to China can threaten national security. China’s Huawei now wants to buy into Canada’s telecommunications market, where they already have agreements with Telus, Bell and Wind Mobile. Last year Australia banned a Huawei takeover because of national security and the US bans commercial agreements with Huawei because it could become a “freeway for Chinese espionage”.
SASKATCHEWAN “AHEAD”
Meanwhile Sask Tel just negotiated a joint-venture with Huawei. Unbeknownst to many, China is already Saskatchewan’s second largest trading partner and this trade grows 20% annually. First it was potash, then crops, then telecommunications, and now uranium. And it’s all about business, without any regard for China’s abuse of labour or the environment. Japan’s big uranium market disappeared with its decision to phase out nuclear power after the Fukushima disaster. Japan will now turn the corner to sustainable energy. Without any qualms of conscience the Wall government simply looks to shifting uranium sales to China. As Cameco’s VP says, it provided “great help in gaining better access to the Chinese market for Canadian uranium”.
Why bother about China’s connections to Iran, Pakistan or North Korea and the dangers of proliferation? Why bother about future nuclear melt-downs and further radioactive contamination? Or about China’s build up of nuclear wastes? Selling 50 million pounds of uranium over the next 15 years at a value of $3 billion to Cameco is “the bottom line”, right? Wrong! Economic growth can no longer be the bottom line.
Climate change is the biggest reason. Fossil fuel exports are more likely to expand on a straight upward line if China gets much control of Canada’s huge oil resources. Then we will more surely move towards the 450 ppm of carbon in the atmosphere that scientists say will bring irreversible climate change. What value will oil profits, royalties and jobs have then? The UN’s projections about reaching this biospheric threshold are “extrapolations” of continued economic growth. So if we want to prevent irreversible climate change we have to collectively get off the present economic growth curve we are on. Resource rich regions like West Canada must play a responsible role in this transition.
It’s so revealing how Premier Wall played the “populist” card to stop an Australian take-over of the potash industry, while working to further integrate the Saskatchewan economy with China’s. Rather than simply cashing-in on China’s desire to control more of our resources to perpetuate its economic growth, we need to have a development plan that makes us less not more dependent on the unsustainable global economy.
Next time I’ll look at the dangers of Canada becoming an Energy Superpower.
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