Zero Sum Game: Putin's Imperial Crusade

Russian troops in Crimea

Things have moved very fast in Crimea.  Following the results of a widely condemned referendum in the Crimea where results showed that over 97% of voters chose to secede from Ukraine and instead join the Russian Federation.  While the results were almost immediately disavowed by a large majority of the international community, claiming that the referendum was conducted under intimidation and suppression by both Russian troops and the Crimean (as well as those from other nations) militias loyal to them, that did little to stop Russia from recognizing it.  Since then, Russia has solidified its de facto control of the region, with Ukraine withdrawing its 25,000 troops from the peninsula in an implicit sign that Kyiv recognizes its rather limited ability to assert control over the breakaway region.  The very next day, Russia’s lower house voted in favour of formally annexing it.  With Crimea in the Russian camp for the long term at the very least, what implications does it have for the rest of the former Soviet sphere?

Putin’s obsession with empire building is well documented.  Reasserting control over the former Soviet sphere has been an increasingly prominent policy goal of the Kremlin over the past decade.  But any doubts that remained should have been dispelled by Putin’s March 18th address to Parliament.  Denouncing what he deemed a centuries-long conspiracy by Western powers to suppress Russia, Putin heralded the dawn of a new era of Russian dominance, which was later christened by the Duma the very next day, who voted in favour of annexing the Crimean peninsula.  With its new doctrine of intervention on behalf of ethnic Russians that worked so successfully in the Ukrainian crisis, where will Putin go next?  Many point to Transnistria, a heavily industrialized breakaway region of the ethnic hodgepodge that is Moldova.  In response to the Duma vote to annex Crimea, the Transnistrian Parliament in turn passed a motion  to join the Russian Federation.  Some speculate that Russia may turn to Estonia and Latvia, both countries with substantial Russian populations in hopes of bringing them into its orbit or at the very least carving out Russian exclaves within them.  Regardless of whatever move the Kremlin does make, it’s fairly certain they will not stop with the Crimea.  Despite drawing strong condemnation from the international community and potentially alienating UN ally China, the biggest provocation in recent memory drew little in the way of firm consequences for Russia, and damaging sanctions do not seem likely any time soon.  Europe is heavily reliant upon Russia for energy, and that will not change anytime soon especially as many European countries move away from nuclear energy.  Russian-American trade is so diminutive that sanctions would have a rather limited impact.

So how do the events of recent weeks affect Moscow’s geopolitical ambitions?  The Russian dominated antithesis to the EU, the Eurasian Union, is set to become reality on New Year’s Day next year, with membership currently consisting of Belarus, Russia and Kazakhstan, with Armenia, Kyrgyzstan and Tajikistan all potentially joining as well.  While Russia’s annexation of Crimea provides it with the framework to take over other so-called “frozen” conflict zones, it also runs the risk of alienating other former Soviet states who may have been eyeing the union with wary interest.  While some states such as Poland and Lithuania voiced their desire to remain outside of any sphere of Russian influence by forging closer ties to NATO and the EU, countries such as Moldova and Armenia that could be compelled to join may look elsewhere, as evidenced by the rather lukewarm statements they issued in response to the annexation vote.  Russia’s newfound aggression is not the spontaneous combustion of a cocktail of nationalistic fervour at home and instability abroad but rather the culmination of a decade’s worth of meticulous planning.  Putin orchestrated various factors to create “the perfect storm” that would enable him to push his foreign policy agenda of restoring Russian domination in the region.   Harnessing the influence that the Russian Orthodox Church wielded over the population  in order to stoke nationalistic sentiments, rebuilding the Russian military as an effective fighting machine with a global reach, and influencing the affairs of other states in the post-Soviet sphere were all elements which enabled what unfolded on the peninsula to happen.  Putin took a calculated risk by invading Crimea, as its capture was an easy sell to the international community due to its traditional history as part of Russia as well as a litmus test of western appetites for Russian provocations.  It could not have hoped for a better result, and now count on the consolidation of Russian interests in the region to accelerate.

The picture does look particularly bleak, but what should the west do?  Sanctions may not be as effective as they have been in Iran (until recently), but the U.S and its allies do have a unique asset in NATO.  While it has seen a decade of general neglect, the 28-member military alliance is maybe the one tool in the U.S’s arsenal that Putin does fear.  When Poland, Latvia and the Czech Republic joined in 1999, Russia was wary of what it perceived to be creeping western influence beginning to encroach upon its own sphere of influence.  The U.S has dispatched naval forces to the Black Sea and a few days ago along with France announced it was sending sending air assets to Poland.  John McCain has stated that he wanted to see military equipment sent to Ukraine, and with leaders of former eastern bloc states becoming increasingly nervous about Russian activities, such a move would be easily defensible.  In fact, it might be prudent as ten day old Russian military exercises have led to a military buildup that NATO’s top commander described as “very, very sizable and very, very ready."  While it is desirable to avoid a “hot war”, it should not be avoided at all costs, lest the dovish policies of blind appeasement that failed spectacularly in the 1930s make a return.  While the situations are in no way parallels, there are some disturbing similarities that offer insight into how a potential conflict could be avoided.  

While on paper NATO countries (excluding the U.S and Canada) spent $269.736 billion on military expenditures and account for a significant chunk of global military spending, this is set to change with cuts to the militaries of most members.  The United States accounts for 70% NATO spending, and with some European members cutting spending up to 40%, it isn’t exactly unusual to hear some of the more fiscally conservative members of Congress complaining about how their European allies have been shoving the burden of defending them increasingly on the United States.  In the meantime, Putin has gone ahead with a vast and sweeping modernization program for the military that is estimated to cost somewhere in the neighbourhood of $770 billion dollars and will oversee the expansion of the air force, navy, special forces and intelligence capabilities.  While there has been some criticism about the realisticness of such an ambitious plan, such as the effect of corruption that is almost synonymous with massive projects in Russia, it nevertheless demonstrates the sincerity of Putin’s pledge to pursue a more aggressive foreign policy.  Hearkening back to 80 years ago, one of the biggest draws of the upstart Nazi Party was its goal of restoring Germany to its former stature as a world power.  While illegal rearmament had begun from almost the moment that the Treaty of Versailles was signed, it was ramped up in the 30s under the direction of Hjalmar Schacht (notably never a member of the Nazi Party and later jailed at Dachau), the Reich Minister of Economics at the time.  Schacht successfully managed to create dummy companies that shielded rearmament efforts from prying Allied eyes.  From a force that was limited to a 100,000 ground army with no tanks, no air force and a navy of just 6 ships with no submarines, it was transformed in short order into a well oiled military machine that 20 years later would roll across Europe in a deadly “lightning war”, or Blitzkrieg.  

Now there are some stark differences in these situations (namely the Treaty of Versailles), but remaining oblivious to the military buildup occurring to the east is not a plausible or realistic plan of action for European countries seeking to avoid conflict.  While placing boots on the ground would be an obvious provocation and carries the risk of spilling over into armed conflict, NATO allies should begin by pledging to immediately provide Ukrainian forces with both arms and training in how to use them, as well as signing contracts for modern naval and air assets that could be paid for at a later date.  Although a UN mandate seems unlikely thanks to Russia’s status as a veto-wielding power in the Security Council, NATO forces should be deployed under its banner nonetheless with the sole purpose of securing the borders and maintaining the territorial integrity of countries who specifically have requested its assistance.  It may be met with protest from countries such as India who seem content to be willfully blind to the realities in the region, but ensuring that current tensions do not spill over into wider conflict demands that a principled stand against a Putin regime that has set its sights on nothing less than restoring the clout its old Soviet empire wielded be taken.  If Ukraine is further divided, it does not bode well for Eastern Europe at large. 

Bill S-7 & What it Means for the NDP

Earlier this week it was discovered that the RCMP had foiled a plot in which two individuals had planned to destroy a New York bound VIA train across the border.  In light of this revelation, the Harper government moved to introduce a bill in parliament that it was said would assist law enforcement officials unearth and disrupt such plots.  WIth nerves still raw following the Boston Marathon bombing and the ensuing manhunt, it’s no surprise this controversial piece of legislation was....controversial.  The Liberals, who had actually passed an earlier incarnation a decade earlier in response to the 9/11 attacks, wholeheartedly supported this Conservative bill.  This of course, led to the NDP landing the sole dissenting role.  While there are genuine concerns with Bill S-7, and very valid criticisms, there has also been very saddening politicking and partisanship on the NDP’s part, with some MPs making very dubious arguments, namely that Prime Minister John Diefenbaker would have “rolled in his grave” should he have known his own party was proposing such a law.  

While many point to the general deterioration in the NDP’s political capital, hastened by an ill-advised move to the centre, defections, and Thomas Mulcair’s generally abrasive attitude as reasons for a decline in its electoral fortunes, I’d say it’s just the petty, dumb, unhelpful and small-minded criticisms and comments that we’ve seen their MPs make in recent months. (Not to mention some pretty dumb policy wonks as well.)

In the last election, they won 103 seats, with 59 of those in Quebec.  Many heralded this “Orange Wave” as the beginning of an NDP resurgence that could down the road lead them to the PMO.  In reality, this shift to their party by Quebecers was generally fuelled by discontent with the Bloc, who had done a terrible job in Parliament pushing both a rather leftist agenda, and soft sovereignty.  First one must realize that what happened in Quebec was very similar to what nearly happened in the last Albertan elections, with the upstart and markedly more likeable Wildrose Party, a carbon copy of the ruling Conservatives minus the social conservatism, nearly capitalized on general discontent with the job the incumbents were doing.  The untested Wildrose did not really put anything too radical on the table, such as a comprehensive (and realistic) plan to diversify the economy.  Instead what happened was that they won seats and took on opposition status in legislature by doing what the NDP did; making themselves into a conduit by which the people could express dissatisfaction with the status quo.  When the people are satisfied, their electoral fortunes will fall.  When things aren’t going so great, it will rise.  The thing is, people who stumbled into the NDP fold looking for change in 2011 are increasingly shifting their support back to the Liberals, who emerged from a disastrous period in which they contemplated merging with the NDP.  With a young, charismatic leader, powerful political organizing machine and polls that say they are making headway across the country, Harper knows his greatest threat lies not with the Official Opposition, but with the party he decimated two year ago.  

But Stephen Harper doesn’t have much to worry about.  The Liberals’ upswing has generally been fuelled by NDP voters who are returning to the party they fled in droves.  The recent BOC economic outlook for the next two years was more optimistic than even Mr. Flaherty’s own prediction, and if they hold true, Canada is in a position to return to be back in the black by 2015, which is the current target, and an election year.  Jim Flaherty has said he is contemplating introducing income splitting should he eliminate the deficit on schedule.  Although this would cost roughly $1.5 billion, implementing something so politically popular going into an election would make it toxic for any party to try and repeal it.

The NDP rode a wave of discontent to (almost) the top.  And now that same wave will bring them back down to earth.  In an attempt to keep the voters they wooed in 2011, they dropped the most overtly socialist sections of their party manifesto, moving to the centre left, traditionally Liberal territory.  People who vote centre-left would much rather trust the party that’s been doing it for over a century, especially now that it’s found its mojo again.  Bloc voters, generally very leftist (explains the absence of a Conservative Party provincially and general scarcity of Conservative MPs from the province) and a significant chunk of the seats they lost in the last election should return.  Combined with a lack of anything that would compel the populace to vote NDP, there isn’t really anywhere for them to go except down.  FIPA notwithstanding, the Conservatives generally have pulled the right strings with regards to foreign policy, and when there is some unforced error that does come to light, the NDP sound like a bunch of whining teenagers, content to complain and just point blame instead of working towards a genuine solution, something that should be the hallmark of any opposition party.

The African Enigma: Aid (Part 1)

Africa is a perplexing case study for even the most seasoned economist.  Home to over a billion people, and tremendous growth in recent years (Ethiopia posted GDP growth upwards of 11% in 2012),the continent is also home to its fair share of troubles.  The birthplace of humanity is now it's laggard, subjected to centuries of harsh colonialism that has left the continent drenched in blood to this very day.  There is, however, change afoot.  Opportunities abundant, in this multiple-part series, we'll delve into just what Africa presents investors with.

Take a look at global GDP growth in 2012, and you may notice that the biggest movers were African. (Not always in the good way, South Sudan's infantile economy contracted a whopping 55%)  Libya's recovering economy, subjected to a damaging civil war in 2011, experienced 121.9% growth last year, and war-torn Sierra Leone posted a 21.3% increase in GDP.  Now just what do these numbers mean?

  Observing, and ultimately forecasting economic data about Africa is an exercise in economics, but one must also take into account various geo-political factors, history, and tribal allegiances that still play such an important role in day-to-day African life today.  It's mainly been a lack of understanding of this (as well as the lingering traumatic aftermath of colonial rule) that has caused Africa to remain "the final frontier" of economic development.  Why has African development over the last 60 years generally been sluggish at best?

From the establishment of JFK's Peace Corps in the early 60s, most Western attempts at development of Africa revolved around a smaller, grassroots humanitarian effort.  This is great when faced with sudden disasters, (man made or otherwise) such as wars, famine or floods, where immediate short term help is required.  The problem arises when either 1) this short term aid becomes extended into an annual event which donor countries end up budgeting for, or 2) the projects become so large/unsustainable that they turn into "white elephants", accomplishing nothing while just wasting everyone's money.  For a great example of this we turn to 1970s Tanzania.

In 1976, President Julius Nyerere, despite horrible stewardship of the economy (By the time he left office in 1985, Tanzania was one of the largest recipients of foreign aid in the world, and a substantial portion of it's budget was funded by foreign donor states), he made significant strides in healthcare and education, mostly by way of his pledges to make both accessible to every Tanzanian.  In a bid to help Nyerere out with his education plan, the World Bank thought they could kill two birds with one stone by building a pulp refinery that could create paper upon which textbooks could then be printed, in essence creating a new industry, and making the education reforms instituted by the government beneficial in the short term as well.  All fine and well on paper, but the reality was much different in that the suits back in Washington chose to overlook one key detail; The Tanzanians had no idea whatsoever about how to run such a plant.  The one thing that might have provided the greatest long term benefit, funding for training and education programs, was not even budgeted for in the project, for fear of the project being deemed too costly by executives across the Atlantic.  To make a long story short, the project blew up in their faces, and Tanzania was left paying the bills for this disastrous exercise in aid that for some reason it seems nobody (except maybe the Chinese) learnt from.

So just what needs to be done?  In Canada, when the CIDA, the Canadian government's aid agency, was rolled into the Foreign Affairs department, people were outraged, with German media conglomerate Deutsche Wells bemoaning the "top down control" the Harper government maintained on just about every aspect of Canadian domestic and foreign policy, and how it would negatively impact people desperately in need of aid.  Despite the perceived negative reaction by certain news outlets, this may have been the smartest thing done by a developed country when it comes to foreign development in decades.  By tying foreign aid to Canada's foreign affairs and trade department, it'll ensure that Canadian aid dollars are spent more effectively, where they can do the most good.   In announcing the move, the government touted aligning our aid and foreign development policy with trade and foreign policy goals would slash bureaucracy, reduce administrative costs and mean that the agency would now be better placed to provide long term development assistance to places that require it, more so than continued food aid, or large sums of cash that often end up unaccounted for.  Countries such as Myanmar, Afghanistan, Nigeria, Egypt and Indonesia are countries that require help, whether through expanded guest worker programs, loans, grants or training.  Coincidentally these countries that Canada has determined present potential trade partners, with explosive growth opportunities.  Some people say that this signals the onset of a new type of foreign aid policy, one where the government is motivated by profit.  To those people, I propose a question; Is there anything inherently wrong with making a profit, so long as it doesn't overtake administering aid as the primary goal?  Now of course these same people will clamour that commercial interests would surely do just that, but a legislative framework, something lacking before, is soon to be put in place, which should allay those fears.  

800 million people have been lifted out of poverty globally since 1990.  The amount of people without access to clean drinking water halved.  Great progress has been made in the fight to eradicate global poverty.  What is interesting to note about these statistics, however, is that very little, if any, of this can attributed to the billions of dollars poured into countries over the same period.  rather, trade liberalization, wider proliferation of development loans, and greater availability of productivity-enhancing technologies.  Government aid agencies must retool and refocus on ensuring that these enablers of progress are within reach of countries that need them.  It is only then when the world can once and for all end rampant poverty, and move toward a new era of shared, sustainable prosperity.

Lose the Countdown: Why the talk about the "Fiscal Cliff" is overblown

One only has to look at CNBC or CNN to see these apocalyptic "Countdown to the Fiscal Cliff" timelines that pretty much distort the picture.  What should have been a simple re-adjustment of fiscal goals in light of economic conditions has suddenly turned into a giant proverbial partisan volleyball game, with the President and Democratic Senate pitted against the Republican-filled house, lobbing the ball of public opinion into the others' corner.  Last night's dramatic finish saw the Senate passed an emergency set of laws to sort of delay the fiscal cliff and soften the landing should they go over. There wasn't much anyone could do except sit close to their T.V and pray that Speaker Boehner would cut the brinkmanship and actually work towards avoiding plunging the United States into what could be a long and protracted recession, and an extended period of slow growth that could put a cap on the economy for years.  But the vital thing to keep in mind here is that this whole circus is a MANUFACTURED crisis, and really is only a a question because of the partisan bickering of both houses in the wonderful Bicameral system the United States has been blessed with.  What should have been a simple fiscal decision to stagger spending cuts and lower taxes has been hijacked by ideology and a certain pledge named after the always charming Grover Norquist.    

To understand the Fiscal cliff one must roughly understand the economy.  A rough but easy way to look at it would be to visualize the economy as a bucket, with taps injecting water, or economic activity into the economy, and drains, leaking economic activity out of it.  The "injections" would basically include investments, exports, consumer spending and the golden ticket in our case, government spending.  On the flip side, there's savings, imports, and the other key word, taxes.  In biology they teach you about an ecosystem's "carrying capacity", or just how much a population it can hold.  Well the economy works in a similar way.  There's an equilibrium where economic growth is sustainable and that is where fiscal and monetary policy combined come together to strive for this equilibrium.  The "Fiscal Cliff"  has the potential to be a destabilizing force in the economy because now government injections in the economy because what it would've done was hiked taxes, "draining" more economic activity, and lowered government "injections" into the economy moving the economy below the desired equilibrium.  But in economics everything is related, and  this would have the effect of curtailing business investment as profits are squeezed which would spin-off into other business sectors that rely on corporate investment which would cause layoffs reducing consumer spending as purchasing power declines, etc.  As you can see, the ripple effect could have serious effect on the economy that Ben Bernanke and the Fed would be pretty much useless to try and stop, considering the huge balance sheet it's accumulated through previous stimulus measures.

So things seem pretty dire judging from the economics of it all, and as a result CNN wouldn't be too far off the money with that countdown to the cliff would they?  Nope.  Congress had the option, not to mention the time to deal with this all the way back since they, characteristically like the 112th Congress, they agreed to raise the debt ceiling in yet another 11th hour deal.  And keeping with the indicators, Congress did not disappoint.  They had about a year and a half to talk about an important issue that would effect possibly millions of Americans.  Instead they resorted to a policy of brinkmanship, confrontational showdowns and concocted dumb rules they ended up breaking anyways like the unrealistic "Boehner Rule".  Not to mention making pledges that then held them hostage to the whims of one very partisan group, something that runs against the very nature of democracy itself.  Those countdowns served no purpose other than to panic political pundits and the general public, and maybe expose just how gridlocked Congress is.

At midnight when the ball dropped in Times Square there wasn't a magic switch that went off that all of a sudden plunged the United States into a recession and wiped out trillions of dollars from the global economy.  Only when businesses and people would be forced into paying more taxes and the government tap squeaked shut would we have seen any substantial real reaction.  That would've given Congress about a month to hammer out a deal. The important thing to note is that they should not have needed a month, as this was something that could have been solved by the time the Republican caucuses were taking place.  Things that had been politicized heavily such as a tax hike on the top 2% and defense and medicare spending held up negotiations and negotiations are still ongoing as the relatively over hyped sequesters, which don't cut spending but decrease projected increases in spending and find savings through "inefficiencies".  The deficit is still projected to increase by a large amount, although this is a good start.  It's been more than a decade since America has seen a surplus, and years of fiscal irresponsibility and financial imprudence have taken their toll on the country.  Of course markets may have dropped should Congress have failed to reach an agreement by the time markets had opened on the 2nd, but that's controlled by two of the worst  human emotions:  Fear and Greed.  The stock market cannot be used as a barometer of the health of the economy immediately following an event of mass economic hysteria.  Last night the Nasdaq Futures index was up around 400 points, an indicator of the bull market that took hold today.  And yet the American and global economy are not in much of a safer position now than they were 72 hours ago.  So CNN, lose the hysterical pundits and doomsday clocks, because sure catastrophe is fully possible, but this isn't the Dark Knight Rises.  There's no nuclear bomb sitting in the back of a truck with a timer saying when it's going to go off.   

Why CNOOC wants Nexen

Ever since the CNOOC deal for Canadian oil company Nexen has come to light, debate has raged on about selling the company.  While most of the arguments have been based on a distrust of the Chinese government, as well as a state owned company owning highly coveted Canadian resources, I looked into the economic reasons as to why it would be bad not only for Canada but every oil producing nation in the world.

Firstly, let me say the point that a CNOOC purchase would be a security threat to North America is moot.  An oil producing company, employing Canadians, with the majority of it's executive positions in Canada, filled by Canadians, would pose not much of a threat to Canada, and with Nexen likely to axe all operations in the U.S, that problem is solved.

Now firstly, CNOOC is aiming for Nexen because China has a voracious appetite for resources.  In the immediate short term, the oil sands are means to meet China's growing need for energy to keep pace with it's economy which has grown at an astonishing rate over the past 20 years.  The primary argument from proponents of the deal has been that when south of the border growth is a measly 1-2% annually, and increasing calls for more protectionist policies are being heard across the country, the future lies across the ocean in  Asia, and Prime Minister Stephen Harper, despite a belated start, has taken these calls to heart.  China is now a priority for trade with Canada, along with India, the European Union and South America.  Initially this has consisted primarily of Chinese injections of capital into Canadian companies, primarily in the resource sectors.  Recently, however, there has been a flurry of acquisitions of projects and entire companies, not just in Canada, such as the McKay River oil sands project and Talisman Energy by state-owned Chinese firms.  Nexen is the biggest oil company yet that the Chinese government wishes to acquire, and it is a major player in the Athabasca oil sands, a title that is the cause of all the debate surrounding the potential sale of the company.

With all that said, this is all the public line, what everyone is being told.  Chinese capital, through Chinese companies, will create jobs because they will fund infrastructure to ship resources out of the country to Asia. Now the one glaring hole in all of this is that Nexen has two primary projects in the Alberta Oil Sands, the Long Lake and Horn River projects.  After this what is left to be done?  Nothing in the Gulf of Mexico seeing there is no appetite for Chinese investment in the U.S, at least when it comes to resources.  The answer is at home.  The proven reserves in all of Nexen's current projects equates to a measly 6% of proven oil reserves within China.

Now this is why the CNOOC, and by extension the Chinese Government need Nexen.  China already has one of the largest middle classes in the world, and their ranks are due to be vastly increased as more and more Chinese are lifted out of poverty and into a consumer class with voracious appetite for cars, consumer electronics and generally things that require power.  In a world with more people competing for rapidly dwindling resources, it's only natural that China would move to secure plentiful energy supplies in stable regions where acquisition would face little risk of expropriation (Argentina and the Repsol fiasco) or disruption (Syria, South and North Sudan).  All of this is great, but not many countries (stable ones at least) are not so willing to give up energy assets they view as strategically important, and China would prefer to keep money at home if possible, and this is where the domestic reserves come into play.  Large shale gas fields, sizable offshore reserves, and oil in the north of the country all account for what is a sizable energy play in China, in the hands of what essentially is a government backed oligopoly between three state owned company.  Now the Chinese have little if any experience in extraction of resources, while that seems to be an age-honoured tradition in Alberta, so who better to learn from?  Essentially the game plan is to buy an under performing Canadian company with projects that will be able to satisfy China's short-term energy needs while providing domestic companies such as  CNOOC but also Sinopec and China National Petroleum Corp. the expertise that they require to extract China's vast resources.  While yes, CNOOC has promised to keep it's current staffing numbers as well as expand jobs at the head office, which will remain in Calgary, not to mention list stocks on the TSX, is that really of net benefit to Canada?  That's all arbitrary stuff that while yes important, are things prerequisite to getting the deal approved by shareholders, plus a healthy premium of course.  Compare all this to what we are giving away, and then all of the offerings pale in comparison to the potential loss.

 Now don't think for one second I'm saying that Nexen as a company is of strategic value to Canada, but what it does enable China to do once it is out of our hands is not to great benefit to us.  Sure, they'll be exporting the oil produced by Nexen in the Oil Sands to China, but not for long, maybe even as short as 10 years.  proponents of the deal argue that the exporting of oil will create jobs, but will they increase Nexen's levels of investment in the Canadian market? No, they've promised to maintain current levels, all because they can afford to do so, despite it not really being in their long term interests.  And where does all this profit go?  Straight into the coffers of China's Energy Ministry, from which it will be put into their sizable war chest to fund their acquisition spree, and the development of domestic reserves so that China will not depend on countries like us for oil.  That is like saying Wal-Mart opening up shop in India is for the net benefit of the majority of India.  Yes, it's good business for the suppliers, real estate developers and other retailers set to benefit from the droves of people streaming into these new Wal-Mart anchored shopping malls, but the multitude of small business owners that India is home to suffer, and the benefit to consumers is negligible considering how cheap most consumer products in the country are already.  Back to Nexen, one must notice that the loudest proponents of the deal are the ones who will walk away with fatter wallets after or soon after the transaction is completed, including shareholders, executives, and other oil companies who view this case as being the signal to open the floodgates when it comes to foreign investment in our Oil Sands.  What I'm concerned is that will Canadians be ensured access at a reasonable price to their own resources?  Will Canadian values be maintained and respected?  Will this deal be beneficial to the average Canadian?

These are questions we must leave to the federal government to decide, and I'm not too sure either as to whether it will get passed or not.  What I do think we should do is this;  If this was our water we were selling, under these very same conditions and promises, would it be good for us?  In a world reliant on fossil fuels, and one where we will probably depend on it for years to come, it is essential we do exactly what the Chinese are doing and ensure we have a reliable supply to fossil fuels while we work on solutions and alternatives which are beneficial to everyone.  And this doesn't only mean we protect our oil reserves and ensure they remain in Canadian hands, we ensure the necessary infrastructure is in place to refine, ship and distribute it.  Whatever the government decides, I hope it's in the interests of EVERY Canadian and not jsut a select few people.  

Quebec's special status is no invitation to depose of Canadian values

After having talked about some stuff far from home in my last two posts, I want to take the time to talk about a issue closer to home.  Well, MY home that is. :)

I was reading a National Post article about the elections in Quebec, specifically about a mayor who took offense to a PQ candidate's suggestion that the crucifix displayed in legislature didn't fit in with the Parti Quebecois' vision of a secular Quebec.  There is so many things wrong with what politicians of every stripe in this election are saying that is mind numbing, and I will list all I can think of, but after the story.  This mayor, an ultra conservative, who held prayers before every council meeting, took this remark as an invitation to question her trust worthiness because she was "from Africa" and "I can hardly pronounce her name.". He concluded by ruefully saying "These people think they can come here and tell us what to do.  They will destroy our culture!" (A note of irony here, because the French seemed to have destroyed plenty of cultures shortly after arriving here themselves.) Now, apart from being complete misinformation (She was born in Europe, although her father is Algerian.) this blatant and public display of xenophobia, from an elected official nonetheless is shocking and completely wrong.  But the sheer ridiculousness of these elections doesn't stop there.  In response to the tirade, Pauline Marois called for an apology, calling Quebecers "Open, tolerant and respectful of all cultures.  I think she forgot the "when its politically convenient" part.  The aforementioned PQ candidate, not so surprisingly, isn't exactly a tolerant embracer of all faiths like Marois painted her.  She's a hardcore anti-islamist, and the public face of the PQ's pledge to make Quebec "secular" (Catholics notwithstanding).  This takes a page from French law in which objects expressing religion are banned from the public realm, and this encompasses anything from crucifixes to prayer hats worn my Muslims and Jews.  In departing from French law, however, what really is a two tier system emerges.  The only objects that have been confirmed as banned are hijabs, head scarves worn by Muslim women as a sign of modesty.  Nothing has been said about other faiths, but it has been confirmed that crucifixes have been excepted, as they supposedly a part of Quebec's culture because one has been hanging in Quebec Legislature.  A little history lesson: in the mid thirties, Maurice Duplessis, upon arrival in the chambers, hung a cross in the room to show his government's commitment to Catholicism, understandable since the majority of Quebec at the time was church-going, God fearing Catholics.  But times have changed and while I feel religion, especially Catholicism, has played a major role in the history and culture of the province, but if the PQ is so eager to banish religion from the public realm, it should do it across the board, and not with this flimsy legislation that is essentially thinly veiled racism.  And do I need not mention the muted response to these travesties from the public?  In the rest of the country, such open denouncements of minorities would quickly be followed by public outcry to the point where its almost overreacting.  But this mayor's unfair denouncement was met with little resistance and even a few "hear hear!"s from nationalists.  The only statement that seemed to elicit any emotion from pretty much anyone was one where Francois Legault said that Quebec teens generally were lazy and unmotivated, and that they should "work harder, like Asians."  Firstly I don't know what is it with people, but "Asian" seems almost like a dirty word in this country, with that mess with the $100 bill, but it's no secret that Asians, and by this definition I think he means Asia as a whole, work very hard.  Look at China, India, Japan.  School is a drudgery that I would be horrified to have to participate in, but they take it with no qualms.  I attribute this outcry to Quebec's surprising unwillingness to address it's shortcomings if it involves drastic change, hence the animosity to multiculturalism, English instruction in school and futile programs to "breed" more Francophone children.  Regardless, blatant xenophobia and intolerance is rife in Quebec, something that for the most part would be met with denouncement in the rest of the nation.  I don't know if it's Quebec's "Nation within a Nation", but it is no excuse to go ahead and peddle values many would view as "Uncanadian."

The Sino-Russian Situation

What Would and Israeli-Iranian War mean for the World?

Talk is heating up of an Israeli confrontation with Iran is heating up fast, not to mention what could blow up into a regional conflict with players all over the globe.  Hilary Clinton has admitted that enforcement of a "no-fly zone" in Syria is on the table, similar to one that was in place in Libya, whilst Israel has given the United States memo after memo detailing a potential Iranian threat.  It came to light yesterday  that Israel had detailed a scenario for any conflict with Iran, and it encompassed a large scale cyber-attack on Iranian nuclear facilities, followed by a missile barrage, then a further wave of  jet fighters.  All this was to be accompanied by a massive mobilization of Israeli defense forces on the ground in anticipation of what could be retaliatory attacks  from Iran proxies such as Hamas and Hezbollah from Sinai and the West Bank.  All this, of course, would be carried out in conjunction with the U.S.  All though it seems as though Israel has covered all the immediate bases, for some reason or another the implications this conflict could have on ones throughout the region and for countries all around the world.

China and Russia are two countries that have vehemently refuted any attempt by any country to intervene, and I would agree with them if their motives had been as innocent and kind-hearted as they try to make it seem.  Russia has been the primary source of nuclear expertise and equipment, while China, along with India and many other emerging economies, has continued to buy Iranian oil, inadvertently funding a government that has incited genocide, a crime in itself,  against the Jewish people on multiple occasions, all while developing an arsenal of nuclear weapons that will allow them to carry out their threat to "wipe Israel from the map."  Both these countries opposed any form of support for various insurgent groups throughout the Middle East in the Arab Spring, and China even shipped weapons to Qaddafi during this conflict.  Why would they do this in the face of international pressure to do the complete opposite?   I'll outline it below.

China's rise on the world stage has been meteoric; annual growth numbers that make the rest of the G8 finance ministers green with envy, and even the numbers put up by Brazil and India, two other emerging economic powerhouses pale in comparison.  With it has come increased political clout for Beijing, and the politburo is determined to harness this to outdo not only the U.S, but every other western power, primarily Japan, through what we'll call "soft power."  American culture is everywhere, and everyone knows the good ol' US of A, and you only need to turn on news channels from Russia to China to Ethiopia to catch up on what's going on stateside.  American music and movies are loved across the globe, and China seethes at the sight of this.  It should be their culture in the spotlight, and so they set out to do that.  Although they do use the traditional avenues such as cultural attaches and expositions, not to mention the Olympics, they've realized that creating a sphere of influence outside of traditional American allies will help establish China as a rival superpower to the Americans.  They've invested heavily in African countries, building dams, roads and factories that the West, bloated with bureaucracy, and held back by red tape, has been unable to build.  This efficiency has impressed many in Africa, who now prefer doing business with the Chinese, rather than us.  But what does Africa have to do with the situation in the Middle East, you may ask.  Well, if you noticed, many African leaders haven't been too impressed with the West, however unfair their judgement may have been.  In the Middle East, Iran and now Syria are both countries with and adamant hatred for America, as well as the West at large.  With these countries in a sphere of influence centered around Russia and China, they are now all nations allied against the U.S and it's allies,  not in a militaristic sense, but an ideological sense.  By protecting these countries, and this is where Russia comes in, they are defying a group of countries they view as a tired old boys club, interfering in their affairs.  

So with that out of the way, if Israel and the U.S do go ahead and launch a preemptive strike against Iran, it would go without saying that Canada, most of Europe, South Korea and the Philippines would pony up on their side, although I feel only maybe the U.S, Canada and possibly Great Britain would actually put down boots on Israeli soil should Iran attempt a land invasion either directly.  More likely, Iran, which has threatened to do so, would fire multiple ballistics towards major cities in Israel, followed by terrorist attacks by Iranian proxies, which would probably result in a higher casualty count than the predetermined 500 dead. I doubt that China and Russia would actually attack Israel, but Russia especially would supply money and arms to Iran while China would make a lot of noise in the security council and denounce the U.S and it's allies, and it could plunge U.S-Sino relations to new lows, as well as hurt Chinese relations with South Korea, Taiwan, Japan and the Philippines.  

China and Russia have repeatedly irritated the West, ignoring sanctions and blatantly funding the war machines of autocratic states that sponsor terrorism and intentionally building diplomatic relations with countries that are a proverbial thorn in America's side.  While much ado has been made about the immediate consequences, I feel that the U.S feels reluctant to attack primarily to avoid upsetting China, whom's actions it is frustrated by, but who at the end of the day is America's largest single foreign creditor, and a major trade partner.  A case can be made for the war-weary American public as well.  After having been led through that rabbit hole we know as Iraq in search of WMDs, and a increasingly impossible situation in Afghanistan, a conflict with Iran, however justified it is, will not be very popular with the public, and popular with the public is one thing President Obama must be if he is to win this election.

On a side note, in regard to the ongoing civil war in Syria, international support for the rebel FSA is picking up steam, but Saudi Arabia and the U.S, two primary backers of the opposition, have been in this all to familiar situation before.  In the 90's, Iran had warned the U.S about the growing prominence of a Islamic fundamentalist group, backed by the Saudis, called the Taliban, and a clan of essentially a group of religious zealot mercenaries, a group we know as the Al Qaeda, and the threat they posed to the U.S.  Alas, blinded by the need to eliminate their immediate foe, they not only  paid no heed to the inner workings of these organizations but went forward and funded their crusade against the "infidel invaders" from the north. Now years later, with the Soviet Union dead and gone, these same fundamentalists, painted as revolutionaries and freedom fighters by the media, much in the same way that the fighters in Syria are, set their sights on America. It seemed to tolerant, too "morally bankrupt" (oh horror, women in the army!) for their taste, and lacking any better enemy, set out to wage "jihad" against them. Prior to this though, the American and international media, primarily the Saudis, had given people the impression that the people actually fighting the Soviets were for the most part actually Afghan. As it turned out, that was the opposite. The majority of these glorified militia men were actually from across the Middle East, but primarily from Saudi Arabia, come to wage a holy war to "liberate" their Muslim brothers, much like the steady flow of mercenaries now flowing into Syria from Lebanon and Jordan to fight a battle against a bloody tyrant in the name of freedom. Iran has warned that the opposition is not much better than the Assad regime, and this is clearly exemplified in its indiscriminate use of IEDs, suicide bombs and liberal application of extra judicial justice, not to mention brazen attacks on UN observers for no apparent reason. Iran correctly warned the U.S against supporting a group that would go on to become public enemy number 1 once, and it isn't much of a stretch to imagine that they could be right again. Replacing tyranny with tyranny is not a recipe for success and is a situation ripe for disaster.