INDEPENDENT ALBERTA?
Worst. Idea. Ever.
Two weeks ago, former Conservative cabinet minister Jay Hill delivered a surprise endorsement of Alberta separatism in the Calgary Herald.
“I’ve been encouraged by several to rationally consider the case for western independence,” he wrote, arguing that equalization, the carbon tax and other outrages were fuelling a belief that “Confederation is no longer working in the best interests of the West.”
The National Post sympathizes with Western alienation. It was a mere 17 years ago that a young activist named Stephen Harper used those pages to publish the famous “firewall letter” urging Alberta to seal itself off from an “aggressive and hostile federal government.”
Nevertheless, while it might briefly feel good to tell Ottawa to shove it forever, Alberta separatism is empirically one of the dumbest ideas in Confederation. Below, a quick guide to why a sovereign Alberta is a really, really bad plan in almost every way.
NO COASTLINE
This is a big one: Alberta is landlocked. The province is so unfamiliar with the ocean, in fact, that Albertans can often be heard curiously referring to it as “tidewater.” If Alberta became independent, it would be wholly dependent on foreign countries for exports, imports and even tourism (not even a planeload of Germans would be able to visit Calgary without getting permission to pass through U.S. or Canadian airspace). With Canada having an effective veto over Albertan affairs, this would significantly kneecap the new country’s ability to chart its own destiny. “But what about Switzerland and Luxembourg? They’re landlocked and they’re also two of the world’s richest countries,” you might say. Fair point, but Luxembourg and Switzerland also have economies built upon light, specialized tasks such as banking and watchmaking. Alberta, by contrast, makes most of its money from extremely heavy commodities that need to be schlepped to market at great expense. Both Luxembourg and Switzerland also straddle multiple nations that they can play against each other. But an independent Alberta would be an island in the middle of NAFTAland utterly subject to their whims. This might be why there aren’t too many landlocked countries that have decided to secede from a coastal mother country. To date, the club only includes Kosovo and South Sudan.
GET READY FOR A LAYER CAKE OF BREXITS
For two years and counting, the efforts of the U.K. government have been almost completely monopolized by the diplomatic odyssey of exiting the European Union. An independent Alberta would face the challenges of Brexit and much, much more. In an instant, Alberta would instantly lose access to generations of Canadian diplomatic work: Free trade agreements, treaties, alliances and membership in international organizations such as the World Trade Organization, NATO and the United Nations. In a nightmare scenario, Alberta would celebrate its first independence day without trade agreements of any kind. Overnight, hundreds of commodities that used to flow over Alberta’s borders absolutely free would be slapped with a web of baseline tariff rates in both Canada and the U.S. “Alberta already has a huge issue with trade costs ... the idea that these costs would fall (after independence) is preposterous,” said University of Calgary economist G.K. Fellows.
IF CANADA IS DIVISIBLE, SO IS ALBERTA
This was the chief comeback thrown at Quebec separatists in the 1980s and 1990s. If Quebec could break up Canada, went the logic, then Canada could break up Quebec and keep Gatineau, Nunavik and any other part of La Belle Province that didn’t want Rene Levesque on their postage stamps. Canada has become pretty dependent on military bases like CFB Cold Lake and CFB Suffield in order to maintain its NORAD and NATO commitments. Alberta’s various national parks are all on land owned by Her Majesty the Queen in Right of Canada. The Government of Canada inked five treaties to acquire the land now constituting Alberta, and the province’s 45 First Nations may not be down with having those treaty commitments handed over to some arriviste Alberta nationalists. There’s the distinct possibility that latte-drinking, Liberal-voting Edmonton wouldn’t want any part of a glorious new Alberta republic, and might opt to become a West Berlin-style enclave under the maple leaf. In short: It’s very unlikely that an independent Alberta could expect to retain the neat pentagon shape it enjoys today. This is also the most dangerous factor in all this: The U.S. Civil War, of course, was ultimately sparked by a disagreement over control of federal military bases.
LOSS OF LABOUR MOBILITY
Alberta’s economy has always been heavily dependent on stealing workers from the rest of the country. To wit, here’s a not-at-all comprehensive list of well-known Alberta politicians who were not born in Alberta: Stephen Harper, Brian Jean, Ernest Manning, Jason Kenney, Don Getty, Derek (Alberta Patriot) Fildebrandt. Even after the recent downturn, Alberta still faces a niggling labour shortage, particularly in the skilled trades. That’s only going to get worse if Canada’s Cape Bretoners and Newfoundlanders suddenly have a border between them and the oilsands. In a best-case scenario, an independent Alberta could conceivably strike a deal with Canada that leaves both countries with relatively open borders, similar to the frontiers between countries in Western Europe. But by leaving Canada, Alberta would lose any say over Canadian immigration policy, and subsequently wouldn’t be able to control who’s coming over that open border. Right now, Calgary MP Michelle Rempel is one of the chief critics of federal government responses to the thousands of illegal border crossers that have entered Quebec since last year. Canada wouldn’t have to listen to Rempel if she was merely a foreign diplomat.
THE DEBT PROBLEMS WOULD BE INCREDIBLE
Canada is not letting Alberta out the door without first paying its share of the federal debt. As of press time, that share is equal to roughly $71 billion. University of Calgary economist Trevor Tombe noted that Canada pays an interest rate of 2.27 per cent on this debt, while Alberta pays a much higher rate of 3.05 per cent. Thus, the mere act of transferring the debt would result in an extra $600 million per year in debt servicing costs. And as an independent country, Alberta’s interest rates would almost certainly go up. Canadian provinces currently benefit from relatively low interest rates because they’re part of a stable, wealthy G7 country with three coasts and a diversified economy. An independent Alberta wouldn’t be any of those things: It would be a landlocked petrostate desperately trying to build whole sections of its government from scratch. “Our debt service costs increases alone would eventually be measured in the billions,” said Tombe. The committed Alberta patriot might counter with “screw Canada, tell them to pay off their own debt.” This might be a good plan if Canada was some weak and distant colonial power that could be reasonably told to buzz off. But again; a sovereign Alberta would be almost completely dependent on Canadian trains, Canadian highways and Canadian markets in order to maintain its economy. If Alberta tries to run out on the bill, Canada could simply throw sanctions and tariffs at the new country until the debt was paid. Meanwhile, good luck forging a trade relationship with the United States when one of your first actions as a country was to engineer a bad faith secession from one of their closest allies and trading partners.
REPLICATING A FEDERAL GOVERNMENT WOULD BE UNBELIEVABLY EXPENSIVE
Who would do the rural policing in the Independent Republic of Alberta?
Hiring the Mounties is off the table, so does Alberta build its own federal police force from scratch or leave policing to individual municipalities? Who’s going to inspect the food? Who’s going to care for the veterans? Who’s going to collect the taxes? Who’s going to run the airport security? Canada has more than 200 federal agencies, and not all of them are as easily discarded as the National Film Board or the Bank of Canada Museum. And whatever you may think about Ottawa’s spendthrift ways, it’s a virtual guarantee that an Albertan federal government would be way more expensive than the Canadian one. Pound for pound, Alberta is already home to the country’s costliest public sector. It has the highest paid premier, the highest paid mayor (Calgary’s Naheed Nenshi), and the highest paid teachers.
To deliver comparable services, Alberta spends 30 per cent more than B.C., 40 per cent more than Ontario and 15 per cent more than the Canadian provincial average, according to a 2012 study out of the University of Calgary. Part of this is due simply to high wages in the Alberta private sector. It takes more coin to hire bureaucrats when they can easily earn six figures at an oil company desk job. Either way, Alberta’s shiny new federal government would feature a lot of $65,000-a-year Edmontonians doing a job that was previously done by a $40,000-a-year New Brunswicker.
KISS ANY FUTURE PIPELINES GOODBYE
A lot of Alberta’s rage at the rest of Canada has been fuelled by the fact that it can’t get an export pipeline built. Quebec has reaped billions in federal spending funded in large part by Albertan petrodollars, but then did everything in its power to block Energy East. B.C. has no problem with expanding its own carbon-intensive coal and LNG sectors, but has decided that stonewalling the oilpatch is an environmental imperative. And this is how fellow provinces act in a country where Albertans sit in cabinet, get appointed to the Supreme Court and occasionally spend 10 years as prime minister. There’s every reason to believe that the relationship would become even icier if Albertans became foreigners. A particularly far-fetched belief among certain Alberta separatists is that building pipelines would actually get easier if Alberta seceded.
They point to the preamble of the United Nations Convention on the Law of the Sea which guarantees “freedom of transit ” to landlocked states. These optimistic separatists might be advised to check out Canada’s own British North America Act, which carries the explicit guarantee that any and all trade goods from one province should “be admitted free into each of the other Provinces.” If Canadian provinces are willing to bend the rules with their country ’s own founding document, it’s a fair bet that they won’t be quick to return the UN’s calls. And, as noted above, Alberta isn’t a UN member.
JOINING THE UNITED STATES HAS ITS OWN PROBLEMS
So why not become the 51st state? The United States has ocean access, a ready-made federal government, a strong currency and the largest market for oil on the entire planet — not to mention cheap cheese, White Castle and the second amendment. One of the chief complaints from separatists is that Alberta pays way more into Confederation than it gets back. This is indeed true: Thanks in large part to a rich population that lands in a higher tax bracket, Alberta annually sends $22 billion to the federal treasury that it doesn’t get back. But Washington fleeces its rich states just as enthusiastically as Ottawa. On a per-capita basis, California, North Dakota, Connecticut and Massachusetts, among others, all rank higher than Alberta in seeing their tax dollars disappear. Meanwhile, joining the Americans certainly wouldn’t solve the debt problem: Albertans would find themselves the proud owners of a share of the U.S. national debt roughly equal to CDN$340 billion — a figure more than half as large as the current Canadian federal debt of $657 billion. Alberta’s relative influence would also wane considerably by joining a superpower.
Alberta would become only the 28th most populous and the 25th richest state in the union. As a part of Canada, Alberta has produced three of the country’s 23 prime ministers. Oregon, the state which most resembles Alberta in population and GDP, hasn’t even managed to produce a single vice-president. Meanwhile, it’s not at all clear the Americans would take Alberta. A Republican-dominated Washington may not like the idea of handing two senators and a handful of electoral college votes to a place that just elected a government full of social democrats. And if Puerto Rico has taught us anything lately, it’s that being a non-state territory of the United States has its drawbacks.
AN ALBERTA CURRENCY ... MIGHT NOT BE ALL THAT BAD ACTUALLY
Several sources contacted for this article expressed the view that an Alberta currency would be an unhinged disaster. Alberta is relatively small and heavily subject to the booms and busts of the oil market: Both of which are ingredients for an incredibly volatile currency. But this might not be a bad thing, according to Trevor Tombe.
“Better a volatile exchange rate than a volatile real economy,” he said, adding “during this past recession, non-oil sectors would have probably done better with an Alberta dollar than they did with the Canadian dollar.” The currency would have tanked in line with the Alberta economy as a whole. This, in turn, would have spurred a wave of investors and tourists rushing in to capitalize on a rock-bottom exchange rate. It would have been similar to what happened to Iceland: Their kroner plummeted by half in 2008, and then suddenly everybody was a booking a vacation to Reykjavik. However, when times are good Alberta would suffer Dutch Disease on steroids: As another oil boom drove the Alberta dollar (or Alberta peso or franc, whatever) into the stratosphere, everything from agriculture to manufacturing would go into a tailspin as it struggled to find buyers willing to eat the exchange rate. This is generally a bad thing if Alberta has any intention of building a country able to survive in a post-oil era. Of course, Alberta could avoid the whole currency thing altogether and simply peg its currency to the Canadian or U.S. dollar. But by doing this Alberta would surrender any semblance of control over its monetary policy — which sort of goes against the whole “declaring independence” plan.