The Harper government’s long hand-wringing over the proposed Chinese takeover of one of Canada’s top 10 energy corporations in the Alberta oilsands was never really about rejecting or approving the $15.4-billion deal.
The main problem gripping the Harper government for months has been how to say yes without opening the door to a Chinese shopping spree in the Alberta oilsands.
The government’s solution is now clear, announced Friday by the prime minister in a flourish of tough talk rarely aimed at Canada’s trading partners, least of all directly and bluntly at the Chinese.
As expected, the government has approved the sale of Calgary-based Nexen to China’s state-owned energy giant CNOOC.
The deal is China’s largest foreign takeover of any company in any country.
But after Nexen, that’s it. No more. Other state-owned raiders of the oilsands will be stopped at the tailings pond.
The prime minister told reporters that future takeovers of Canadian oilsands companies would be allowed "only in an exceptional circumstance."
The government is deliberately not defining what an "exceptional circumstance" might be, reserving for itself full powers of political discretion.
But the underlying message in the prime minister’s announcement is clear enough.
"To be blunt," Harper said, "Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead.
"It is not an outcome any responsible government of Canada could ever allow to happen.
"We certainly will not."
If that weren’t clear enough, the prime minister went on to say: "Foreign state control of oilsands development has reached a point at which further state control would not be of net benefit to Canada."
Public opinion against Nexen deal
Harper acknowledges the government’s moves announced Friday will not satisfy everyone, starting with a large segment of the Canadian population opposed to the Nexen takeover by the Chinese.
Geo-politically, this was an offer Harper could hardly refuse, the prime minister’s having gone cap-in-hand to Beijing repeatedly since 2009, all but begging the Chinese to invest in the Canadian energy sector.
On the other hand, polls have shown Canadian public opinion running against the deal, putting the Harper government between a rock and a hard place — risking votes at home or saving face with China, Canada’s great new trading hope.
Harper was asked why the government is OK with the takeover of Nexen, but not at all with future similar transactions in the oilsands.
The Nexen deal, he said, "does not raise our fears this transaction is transforming the oilsands."
Transformational it is not.
Nexen represents less than three per cent of the total current production from the oilsands, and almost three-quarters of the company’s operations are not even in Canada.
CNOOC is already a 35 per cent partner with Nexen in the oilsands, and a majority of the Alberta industry is already in foreign hands.
The problem being flagged by the government is the fact that at least three other major Canadian energy companies are potentially ripe takeover targets, especially for a cash-rich and increasingly energy-hungry China.
After the Nexen deal, for instance, the Chinese will be potentially only one more takeover from control of Canada’s iconic Syncrude consortium, a dominant player in the oilsands and which, among other things, has received billions of dollars in support from Canadian taxpayers over the past three decades.
On Friday, the Harper government also gave a green light to the $5.2-billion purchase of Alberta-based Progress Energy Resources by the Malaysian state-owned oil company Petronas.
The new vague
Like the Nexen takeover, the Progress Energy deal on its own isn’t going to change life in the Canadian oil patch much, either.
Petronas and Progress Energy are already partners in a B.C. shale gas operation, and their deal would have gone virtually unnoticed had it not been sucked into the political maelstrom around the CNOOC-Nexen brouhaha.
While the Harper government’s near ban on foreign state-owned takeovers applies only to companies operating in the oilsands, similar deals in other sectors will be affected by some broad new guidelines.
The Harper government has been under pressure to clarify all of Canada’s foreign takeover rules after it seemed to make them up on the fly in blocking the sale of Saskatchewan’s PotashCorp to Australian industrial conglomerate BHP Billiton in 2010.
In particular, corporate Canada has been pressing for a clear and predictable set of rules, if not a set formula, that would allow any business to assess its chances of getting government approval for a takeover before starting down that road.
But that hasn’t happened.
As the prime minister told reporters, the government can’t be more specific in its new rules than it was in its old ones because "each case has to be evaluated on its own terms."
Think of it as the Harper government’s new vague.