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If you’re a true-blue free-market conservative, this moment could not have been better engineered to make your head explode.
At some point before Dec. 10, Prime Minister Stephen Harper and his cabinet will have to choose between less-free markets or more government involvement in the economy. Mr. Harper will have to decide whether Ottawa will accept or reject two foreign purchases of Canadian petroleum companies, Nexen Inc. and Progress Energy Resources Corp.
This will be a test of the long-accepted principle, articulated by Brian Mulroney in 1985 and broadly accepted by all Canadian governments since, that “Canada is open for business” and welcomes foreign investment.
In the three decades since, Industry Canada has received 1,664 applications for foreign takeovers of Canadian companies, leading to a foreign-ownership stake of $915-billion. So far, it has formally rejected only one.
What complicates things is that the buyers in the Nexen and Progress Energy cases are state-owned corporations: China’s giant oil company CNOOC, and Malaysia’s Petronas.
So it will also be a test of another three-decade-old principle: that Canada doesn’t want the state to have a major ownership stake in the economy.
We tried that in the postwar decades, with Canadian state-owned corporations, and it didn’t work out too well, either for the Crown corporations themselves or for private-sector competitors.
Would it be different this time? If Asian governments own a large chunk of the Canadian oil patch, is it really private enterprise? If Ottawa blocks them because they don’t provide a “net benefit” to Canada (as the Investment Canada Act stipulates), and if we start applying that principle more rigidly, will we face protectionist retaliation from other countries? Either way, this will be a political, not an economic, decision, based on a calculation of national interest.
Suddenly, everyone’s an economic nationalist.
Just listen to Preston Manning, the man who, as founder of the movement that became Mr. Harper’s Conservative Party, built his career opposing economic nationalism. “Takeovers by state-owned enterprises, especially those owned by a government whose values are at fundamental variance with our own, should be opposed on principle,” he wrote in The Globe last week.
For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/commentary/suddenly-everyones-an-economic-nationalist/article5858413/