Prime Minister Stephen Harper has been incessantly slagged by political opponents as a hardline ideologue, wedded to a free-market mindset.
His government’s potash decision this week turns that impression on its head.
It’s clear that power, not policy, really drives Harper.
Weeks ago, when the prospective takeover of Potash Corp. of Saskatchewan Inc. began making headlines outside the business press, Harper shrugged it off dismissively as “an Australian company taking over an American company.”
Potash Corp. is an American-led company, headquartered in Chicago. A slim majority of its shares are held by American investors.
It used to be a Crown corporation, owned by the people of Saskatchewan, but was badly managed and privatized in 1979.
On Wednesday, Harper’s Industry Minister Tony Clement announced in the House of Commons that he had rejected a US$38.6 billion offer from the Australian mining giant BHP Billiton Ltd. to buy all the shares of Potash Corp.
Clement said the offer provided no net benefit to Canada and the decision to reject it was his alone.
Clement also said that Investment Canada, which is routinely tasked to analyze major corporate takeover bids, made no recommendation on this prospective sale.
In Harper’s tightly controlled caucus, where MPs almost need permission to visit the bathroom, the notion of even a front-bench minister like Clement flying solo on such an important decision is laughable.
Before this week, Investment Canada investigated the prospective sale of about 1,500 Canadian companies to foreigners, made recommendations on all of them — and rejected only one.
If Investment Canada didn’t offer an opinion on the net benefit of this deal, Clement must have expressly asked them not to.
BHP Billiton, Clement said, has one month to come back with a better offer to buy Potash Corp.
Maybe the company will do that but it seems unlikely that even a few billion dollars more would do the trick.
In the end, the only number that mattered was 13.
That’s how many Saskatchewan Conservatives sit in the House of Commons. (The only non-Tory Saskatchewan MP is Liberal Ralph Goodale.)
Every one of Saskatchewan’s 14 seats would have been a lost cause if Harper’s government had endorsed the BHP Billiton offer.
Premier Brad Wall has done a fantastic job of swaddling himself in the Saskatchewan flag in opposing the Potash Corp. sale to BHP Billiton.
Saskatchewan is the world’s largest potash exporter and owns more than half of the world’s known supplies.
Wall made the case that potash is a vital provincial resource and selling to BHP Billiton would be disastrous. This despite a study he commissioned from the conservative Conference Board of Canada rejecting that premise.
Wall also recruited Alberta Premier Ed Stelmach, Quebec’s Jean Charest and Manitoba’s Greg Selinger to oppose a BHP Billiton buyout.
More importantly, he brought the vast majority of Saskatchewan voters firmly into his camp.
In the past month, Wall has become to Saskatchewan voters what Danny Williams is to Newfoundlanders: a relentless crusader for their interests.
Any Conservative MPs from Saskatchewan who didn’t back Wall in this fight would have found themselves kicking stones down dusty Prairie roads after the next election.
By siding with Wall on this issue, Harper also cut the federal opposition parties off at the knees. Michael Ignatieff, Jack Layton and Gilles Duceppe would have loved to take on the federal Tories on potash.
They know that economic nationalism is always popular among their core constituencies, and has even broader voter appeal in the wake of the worst global recession since the 1930s.
The fact that BHP Billiton wants to massively expand Potash Corp.’s mining capacity and ramp up production east of Saskatoon is an underplayed element of this story.
So is the fact that Saskatchewan owns all the potash in the ground, has full control of the royalties it charges and the pace of mining it permits, in the same way that Alberta owns and manages most of the oil and gas under our ground.
If BHP Billiton bought Potash Corp., its proposed expansion would create billions of dollars of new investment and thousands of new jobs in Saskatchewan.
But that would also hinge on BHP Billiton taking Potash Corp. out of the Canpotex marketing cartel.
Potash Corp is part of a “marketing alliance” with two other fertilizer firms, Mosaic Co., an American company, and Agrium Inc., a Calgary-based firm that is now seeking to expand its holdings in Australia. (Good luck with that.)
Canpotex is designed to manage global potash production and drive up prices in the same way that the Organization of Petroleum Exporting Companies (OPEC) tries to ride herd on oil supplies and prices.
Out here on the Prairies, where prosperity hinges on exporting our natural resources, we pledge fidelity to free enterprise.
But we love the profits that accrue even more when free markets for scarce resources are constrained.
Alberta is not a member of OPEC, but we are a quietly enthusiastic backer of its production quotas for others.
Manitoba would never expand its government-controlled hydro-power exporting capacity in a way that would threaten prices.
Now Saskatchewan is fighting successfully to block a sale that might one day expose its potash exports to the vagaries of an open global market.
As an economist by training and a free-market conservative by nature, Steven Harper knows the intellectual dishonesty in all of this.
As prime minister, he has come to believe that holding power is more important than ideology or personal preference.
Joe McLaughlin retired last year after 25 years as managing editor of the Red Deer Advocate.