Canada for Sale
UncategorizedIf I have to be fucked over by capitalist boneheads I’d prefer them to be local. According to this thats going to be to much to ask.
source: lifestyle.sympatico.msn.ca
Is Canada for Sale?
Bestselling author Diane Francis explores the pros and cons of foreign investment in Canadian companies.
Diane Francis’s bestselling Who Owns Canada Now takes an in-depth look at the movers, shakers and moneymakers controlling Canadian business. In this excerpt, Diane explores both sides of the foreign-ownership debate and asks a very poignant question.
Is Canada for Sale?
Besides taxation, another perennial policy concern has been Canada’s relatively high degree of foreign ownership. On one side are economic nationalists who believe that foreign ownership undermines sovereignty and removes control over a country’s economic destiny. They endorse ownership restrictions.
On the other side of the debate are capitalists who say that sovereignty is about laws, not ownership, that capital has no passport and that Canadians cannot be free to invest elsewhere unless they offer others the opportunity to buy Canadian assets.
But ownership does matter. Head offices employ more people, use more local suppliers and contribute more to national charities than do branch plants. They also require more skilled employees and put Canada first in terms of both their attention and their investment focus. A nation’s global “champions” are ambassadors and rainmakers for their native countries. And only big, successful entities have sufficient scale to fully take advantage of world-class talent and technology in order to enhance productivity.
The foreign-takeover debate reached a crescendo in 2006 and 2007 after a rash of massive buyouts picked off some of Canada’s greatest and biggest corporations and resource companies. In the summer of 2007, Abu Dhabi became the straw that broke the camel’s back. One of its holding companies had bought three oil companies for US$7.5 billion and announced it was on the prowl for another US$12.5 billion of energy assets in Canada.
The idea of the Arabs bidding for Canada’s energy business forced the federal government to wade in. It also signalled that the gigantic petrodollar funds generated in Abu Dhabi, Saudi Arabia, Iran and Russia could lead to the takeover of Alberta’s oil industry in short order. So Ottawa’s industry minister cobbled together an announcement that new restrictions would become law in 2008.This imposed an immediate chill.
The new rules may beef up the “national interest” definition for Investment Canada, probably similar to what the Americans used to repel China’s bid to buy Unocal Oil or to stop Dubai’s bid for port operations in New York City and other cities. Then again, they may not, and a committee will study the issue in 2008.
The situation in 2006 and 2007 involved different “predators” than those in the 1970s that led to the restrictive Foreign Investment Review Agency. These were not big American multinationals but were often from developing countries, either arms of their governments or their countries’ favoured, subsidized global champions. The possibility that they may harbour hidden political agendas was, and should be, worrisome to open economies like Canada’s.
There was also the issue of investment reciprocity, which I pointed out in my Financial Post columns in 2007. Abu Dhabi companies could buy out Canadian ones, but Canadians could not invest in Abu Dhabi enterprises, nor could they even buy oil lands to drill there. Another issue that disturbed me was that these foreigners were sometimes subsidized, which meant that they had unfair advantages over their Canadian investment rivals in terms of bidding for assets.
Before Ottawa or anyone knew what hit them, every one of Canada’s steelmakers had been bought by different foreign groups. The same cherry-picking happened in nickel and then aluminum mining. Falconbridge and Inco (Canada’s 36th- and 70th-largest corporations were snapped up within weeks by foreigners. So were Alcan and Novelis (Canada’s 7th- and 30th-largest companies).
In July 2007, the country’s sixth-largest corporation, autoparts global champion Magna Corporation, succumbed. Half of its control block was sold to a Russian oligarch who confirmed, in U.S. Securities and Exchange Commission filings, that one day his Magna stock may be owned by Moscow if the Kremlin so requests.
All these deals upset the business community more than they did the public or politicians. All had different reasons for concern. Some blamed sleepy managements for losing takeover fights. Others blamed coddled managements for not becoming global consolidators themselves, for huddling here only to be picked off by smarter, more aggressive players from abroad.
From Who Owns Canada Now: Old Money, New Money and the Future of Canadian Business. Published by HarperCollins Publishers Ltd. copyright © 2008 by Diane Francis. All rights reserved. Reprinted by permission of HarperCollins Publishers Ltd.
