Spouting off to Americans

Canadians are allegedly irked at the highhanded behaviour of Washington on softwood lumber. This creates the potentially dangerous situation that Ottawa may feel inclined to do something stupid in order to demonstrate that it is “ addressing” the issue. In fact, it already has.

Yesterday, John McCallum, Canada’s pro tem National Resources Minister, headed off for two days of discussions with Chinese counterparts, ostensibly about expanding energy exports to that country. His visit is being clearly linked to the “tough” speech Prime Minister Paul Martin gave in New York last week, in which he called U. S. handling of the softwood lumber dispute “nonsense” and a “breach of faith.” Mr. Martin may well have been right on that score, but the linkage of softwood lumber to energy is fraught with pitfalls. Meanwhile, the potentially most significant — and controversial — part of Mr. Martin’s speech, concerning drilling in Alaska’s Arctic National Wildlife Refuge (ANWR) seems hardly to have registered north of the border.

If Mr. Martin did make any direct threats in New York, they were certainly veiled ones. He mentioned how U. S. hysteria and border closing after the BSE scare had led to the “ unintended result” of Canada expanding its meat-processing facilities in competition with the United States. But it’s not certain how this might be relevant to softwood lumber, much less energy. Nevertheless, we should certainly take to heart Mr. Martin’s concern about the iron laws of unintended results.

In now appearing to promote the deliberate diversification of Canada’s energy markets, the Liberal government may be pursuing a strategy that is not merely provocative, as it is intended to be, but potentially disastrous.

Even were there no issue over softwood, the notion that the Canadian government should be leading negotiations on energy exports is deeply flawed. Canadian oil and gas is explored for, produced and exported by private companies. It is up to them, and energy pipeline companies, to determine if further diversification outside the biggest traditional U.S. market is justified.

Government-promoted business tends to be bad business, but it carries particular dangers in a state such as China, where the rule of law is slowly and painfully being established. Even peddling softwood — another part of Mr. McCallum’s selling job — to the Chinese is a bad idea. If Canadian softwood producers can’t find alternative markets by themselves, then a former academic and bank economist who needs a personality transplant is hardly the man to get new business.

When asked to clarify the purpose of his trip, Mr. McCallum spoke in tongues. “ This is not a threat, and there is no linkage,” he was quoted as saying, before suggesting that U.S. flouting of NAFTA rules on softwood could have ramifications for energy. He declared that he was concerned with the “ best price and the most secure markets” for energy. But in that case why didn’t he suggest that producers send more to the United States? Or better still, why didn’t he just say nothing at all?

Meanwhile, as noted, the most controversial part of Mr. Martin’s speech wasn’t any threat to curtail energy supplies. It was his contribution to the debate over whether to permit drilling in the ANWR, which is still high on the White House’s agenda.

Canada has long been against drilling in the ANWR, but this part of Mr. Martin’s speech appeared to have been written by the Suzuki Foundation or the Sierra Club, since it regurgitated environmentalist arguments that are either overblown or themselves nonsensical. Into the overblown category come alleged “threats” to wildlife and native culture. Into the nonsense slot comes the notion that since the resources of the ANWR are finite — “ only” perhaps equivalent to 200 days of U.S. oil consumption — then it really isn’t worth all that alleged environmental risk. “ If you’re looking for a long-term solution,” Mr. Martin said, “ this isn’t it.” But no individual exploration area could ever be a “ long- term solution” to ongoing demand for oil and gas. Was Mr. Martin suggesting the United States just sit and wait for some breakthrough in alternative energy? Was he recommending that no field smaller than Saudi Arabia’s largest is worth exploring for?

His most ridiculous suggestion was that Canada might be able to somehow make up the potential output from the ANWR. Somebody in his office should have run the numbers for him. ANWR might produce “ only” 200 days of U. S. demand, but that figure also amounts to around seven years of Canada’s current record exports to the United States. And then there’s the prospect of replacing imports not merely from the Middle East but from countries such as Venezuela, which, in case anybody hasn’t noticed, happens to be run by a sabrerattling fidelista nutbar. Under those circumstances, the opening up of ANWR doesn’t sound so trivial. Moreover, by vociferously opposing it, Mr. Martin is unlikely to promote any more understanding of the Canadian position on softwood.