The Sixth Estate

Try this one on for size. The Canadian media, which for the most part hasn’t met a Canadian corporation they think shouldn’t be sold to foreign interests, has latched on to what they claim is evidence of Chinese “hard-ball” with respect to the purchase of our Nexen oil company by the government of China. The Leader-Post explains the details, but there’s been similar speculation in all the major papers over the last few days:

If you’re a Viterra shareholder, you’re probably wondering why it’s taking so long to close the $6.1-billion takeover of the Regina-based grainhandling company by Glencore International… China is holding up the $6.1-billion deal to take over Canada’s largest agriculture company over Viterra’s half-interest in a canola crushing facility in that country… The Chinese government… is waiting for the Harper government to make up its mind about the proposed $15.1-billion acquisition of Nexen Inc. by China National Offshore Oil Company (CNOOC).

It doesn’t seem entirely logical. Let me just follow the thought process on this one. The Chinese government wants to buy one of Canada’s largest oil companies. But the Canadian government is dragging its feet, mainly because of massive public opposition to the deal.

So, the Chinese find another major Canadian company up for sale to an international consortium, this one Viterra, and they try to block that sale to punish us for not selling them Nexen. They can do this because Viterra has a minority stake in a plant in China. Here’s the message: if you don’t agree to sell your major corporate interests to us, we will try to block you from selling major corporate interests to other countries, too.

In this particular case, it’s a pretty silly conflict. Ironically, at least with respect to Viterra, the Chinese government appears to be defending Canada’s economic interests better than the Canadian government is. I’m a little bit confused about why anyone thinks this would be a major factor in anything. Viterra shouldn’t be sold to multinational interests, either. It will be, of course. The Canadian government says it’s okay with the deal. And it will go through. If worst comes to worst, I’m sure Viterra can find some way to sell off its interest in an unimportant Chinese plant in exchange for selling itself off to the highest bidder, Glencore International.

So, although this is a fairly bizarre scenario, it’s something I’ve predicted will happen now that we’ve decided to open our borders to the Chinese. Rising American-Chinese tensions are probably going to define the next 50 years. Canada is poised to become a site for proxy battles between commercial interests of two empires. It’s as absurd as St. Laurent or Diefenbaker deciding that large chunks of the country should have been sold off to the government of the Soviet Union at the height of the Cold War. The Americans and Chinese may not care, of course, not as long as they both think they’re getting a reasonable share of the proceeds from the fire sale.

It doesn’t bode well for Canada, though. Welcome to Poland, 1939.