Different Approaches to US/Canada Relations

I, like many, watched Mark Carney's speech in Davos. I am not going to address the specifics of his speech but I am going to attempt to put it into a broader context.

Many believe that it was just a rebuke of Donald Trump, which it certainly was, but it was much more than that. It was a very articulate and rather extreme expression of one of the two approaches that have dominated Canada's relations with the United States for decades.

The first approach is the one PM Carney expressed rather forcefully. That is, the United States is our neighbour and our friend but they are so large there is an ever present threat that they will swallow Canada just by its very existence. Therefore, there needs to be a constant effort to push back on that to maintain our sovereignty and our distinctiveness.

The second approach is to be somewhat more subordinate to the United States. They are the dominant country on the planet, financially, militarily and culturally, so trying to fight that is futile and besides making us more like them can only be beneficial to Canada and its people.

Of course, that is a simplification of the complex interplay between the two approaches. No government has ever chosen to follow one approach over the other but all governments have chosen to give one more weight in their dealings with the US.

The Liberals tend to choose the first approach. Think of PM Pierre Trudeau and his much more conciliatory approach to relations with the Soviet Union and Communist China of the 1970s and 80s. Think of Jean Chretien telling George W. Bush that Canada would not participate in the second invasion of Iraq in 2003. 

The Conservatives tend to favour the second approach. Think of the Diefenbaker government giving into pressure from the Kennedy Administration to scrap the Avro Arrow and buy the Bomarc Missiles, missiles that were obsolete before we bought them. Think of the Canada/US Free Trade Agreement or think of the trial balloons, from both Brian Mulroney and Stephen Harper, of adopting a common currency with the US. Only to see both never to mention that idea again when those balloons were shot down by Canadians with extreme prejudice.

Again, that is not to say they exclusively follow these approaches. The Chretien government negotiated the NAFTA and sent troops to Afghanistan after 9/11. The Mulroney government took the lead in negotiating the treaty that banned CFCs and they took the lead in the efforts to bring down Apartheid in South Africa, breaking with the Reagan Administration in both cases.

So Mark Carney's speech was just another example of the first approach and it was consistent with the Liberal's preferred approach to Canada/US relations. What was remarkable about it was how extreme of an example it was of that approach. As someone who has followed Canadian foreign policy for over four decades I was shocked by that speech, not because what he said was wrong but because I never believed a Canadian PM would articulate such a position in public.

Then again, Donald Trump, and his actions towards Canada, has created the conditions where the Canadian government would have to go to extremes to defend our sovereignty. The corollary to that is if we were being governed by the Conservatives they would probably have to go to extremes in their preferred approach.

That prospect scares the hell out of me as I have always preferred the first approach. This is not a partisan dig at the Conservatives by the way. I have always appreciated that governments of every stripe have balanced the two approaches in such a way that we have had decades of peace and prosperity with our southern neighbours. I have often disagreed with specific policies and decisions but overall I have been satisfied with how governments have handled the Canada/US relations.

Unfortunately, Donald Trump has eliminated the balanced approach as an option. He demands complete subordination from Canada, either as the 51st or a vassal state so we are left with having to choose a single approach. Therefore we either have to push back on that hard, as PM Carney is doing, or we have to give in to his demands. I am glad that PM Carney has chosen the approach he has chosen.

Well the Canadian Auto Industry Is Not Up to the Task

In a previous post I asked if the Canadian business class was up to the task of taking advantage of all of the new opportunities being presented by Mark Carney's efforts to expand and diversify markets for Canadian goods and services. I expressed doubt they would be and it would appear I am correct with regard to the Canadian auto industry.

My reasoning is they are beginning to make noise about having the government eliminate or at least delay the requirement to eliminate the sales of gas powered cars by 2035. That requirement has been in the books for over a decade and the Trudeau government gave the industry a couple of decades to meet it.

Those calls have become a little more louder with the Americans eliminating a large number of green house gas emissions requirements in the US, including measures that impact the US auto industry.

The reasoning I have heard is that with the US eliminating the requirement Canada no longer needs them and that pretty much sums up my distain for the Canadian business class.

As usual, they are falling on the old habit of depending on the US market for their business even though the actions of the Trump Administration is disintegrating the North American auto industry. They just cannot help themselves. The evidence is mounting, almost daily, that the US market is no longer a reliable one and will become increasingly unreliable as time goes on. As well, even if Donald Trump were to drop dead today it would not change much because his ideas about tariffs have been embraced by MAGA and will not go away quietly even after he is gone.

Therefore, if the Canadian auto industry wants to continue to be a viable industry they are going to have to expand their access to markets in Europe and Asia. The problem is those countries are toughening environmental requirements, not loosening them. So if the Canadian auto industry fails to meet those requirements they will not be able to sell their cars in those markets. They will be frozen out on environmental grounds. To be clear these will not be tariffs they will be bans on Canadian made automobiles on environmental grounds, i.e. no sales at all.

So the Canadian auto sector should be looking to accelerate their efforts to replace the sale of gas powered cars, not asking the government to loosen requirements. 

It is almost a state of nature that governments trail behind private businesses. There are many examples of that. However, we are seeing an exception. The Canadian government has embarked on a quest to completely change who Canadians can sell their goods and services to and our industry appears to be oblivious to this, falling back onto old but increasingly nonviable habits. 

It is both sad and infuriating.

Polls and Election Speculation

Liberals are celebrating great polling recently and some are speculating that we will be having a spring election.

Some will remember that when the CPC were 20 points up on the Liberals that I expressed profound doubt in the veracity of the polls because there was no election speculation to go along with the lead. After all, when a minority government, with less seats than the current minority government, goes 18 months without an election despite being down by that much then the polls were obviously untrue. It's true that Pierre Poilievre has no political acumen but even he would have finally figured out how to take advantage of great polling, given the amount of time he had to do so, if the polls were right. They were not and the fact the polling gap was closing before the election of Donald Trump, the resignation of PM Trudeau and the election of Mark Carney as Liberal leader pretty much proves that.

Which brings us to the great polling the Liberals are enjoying. The interesting thing is they are being accompanied by the media speculating about the Carney Liberals calling a snap election to take advantage of them. Does this mean we can assume the polls are correct this time? 

No.

Polls in between election campaigns are hopelessly unreliable. Hell they are only slightly more reliable during election campaigns but that is only because the polling companies use their polls as marketing tools so they have to be as close to the final election results as possible to maximize their effectiveness. So no campaign means the polls are garbage that can be safely ignored.

So why is the media speculating about an early election? 

First, because it sells. The media care about nothing more than clicks. It has been like that for quite some time. It is also why news media outlets are always skating near the edge of doom. No one wants to actually pay for that shit and they are increasingly acting on that lack of desire.

Second, the main stream media gave up actually informing consumers of their products on substantive issues a long time ago. And I mean before the internet became all pervasive. So if the media has to choose between election speculation and actually providing us real information about government programs and policies they will take speculation 100% of the time.

Third, the media does not have the best interests of the Liberal Party of Canada in mind. It has been like that since Jean Chretien was PM. They have been actively working to undermine the party since then and the election speculation is all about that. Right now Canadians are concerned about the orange blob who occupies the White House. They are also impressed with how Mark Carney is handling that situation. That is leading to his personal polling numbers being quite impressive and they are the only ones I actually believe, although they are probably overblown. The reason is I actually have conservative members of my family indicating they like him and what he is doing. These are the same relatives who never said a good thing about the Liberals for decades.

So something needs to be done to try to bring those numbers down. Telling Canadians that Mark Carney is planning on calling a snap election is one way to do that. No one wants an election and if the Liberals were to actually call one they would see their polling advantage evaporate very quickly. So a way to take advantage of that is to say the Liberals are planning to call a snap election, although not in so many words, which is why it is all speculation right now.

So my advice to you is to ignore it. It is all noise.

Is Canada's Business Class Up To The Task?

I have written in this space before that Canada is a first rate country with a fourth rate business class. Their way of making money is to establish branch plants for the big US multinationals and to pull stuff from the ground to sell as raw material. They rarely process that raw material into a value added product, being content to sell the raw material to another establishment, usually in the US, and buy back the finished product at a markup.

The actions of the US administration and the actions of the Carney government are putting big monkey wrenches into that approach to making money. The US is no longer reliable and even if Donald Trump were to drop dead tomorrow, it will not be reliable ever again. At the same time, Mark Carney is traveling around the world making trade and investment deals with anybody who is interested and judging by the number of deals he has announced it would appear that many are interested in what Canada has to offer.

So now our business class is going to have to step up. The government is creating the conditions for them to make money a different way than in the past. They just need to have the business acumen and courage to take advantage of them.

I am not holding my breath that they will. The old approach is too ingrained in our business class for them to change. However, they could surprise me.

We will have to wait and see.

The F-35 or the Gripen?

Personally I would prefer Canada buy the Super Hornet but that is not an option.

In all of the arguments around which aircraft to buy the key issue is always, "which aircraft has the greater capabilities?" Proponents of the F-35 indicate that it is the more capable aircraft of the two and they are correct.

Unfortunately, that is the wrong question. The question is which aircraft can best meet all of the operational needs the Canadian Air Force? 

The F-35 cannot meet all of the requirements. This particular airframe was developed for a specific mission, namely the deep penetration of hostile airspace, to take out high value targets, and return alive. For this it is very well suited but for other tasks not so much. Which is the reason that most users of the F-35 have other 4th generation fighter and strike aircraft to back them up. Hell, even the US has not even suggested retiring any of the F-Teens aircraft and the cost of the F-35 is not the only reason why.

So can the Gripen meet the requirement? Not completely. It is a capable aircraft but it is still lacking, although if Canada is only going to buy one type the Gripen comes closest to being able to meet all of the operational needs of the Air Force.

Then you have to look at the politics. The simple fact is the US is no longer a reliable ally so buying aircraft from them is a huge risk, particularly when said aircraft requires the frequency and intensity of maintenance the F-35 requires. It is true that part of the deal to purchase the F-35 is the maintenance of them and that the supply chains for the manufacture and maintenance of them include Canadian companies. However, watching the current administration trample all over agreements when it suits them does anybody really believe the maintenance deals and supply chains are safe? If they are not then the Canadian Air Force would be left with a large number of useless pieces of junk very quickly.

On the other hand the Swedes have made all sorts of promises regarding the manufacturing of the Gripen here in Canada. It all sounds great but one of the reasons why they have made these promises is because they want to build the Gripens for the Ukraine war away from the combatants. The problem is, if the deal goes through, the first Gripens would not roll of the assembly line until the late 2020s, maybe early 2030s. By then the war in Ukraine will probably be concluded one way or another and that could change plans really quick.

So what is the answer? As I stated above most F-35 users have other aircraft to complement them and that is the approach the Canadian Air Force should take. We have already agreed to buy 16 F-35s from the US and that agreement should be honoured. However, Canada should not agree to buy any more, instead filling out the balance of their requirement with the Gripen. 

This approach would best meet all of the operational requirements of the Air Force while mitigating the risks associated with buying both airframes. It would provide the Canadian Air Force with its own deep penetration capability, which is very important in the changing geopolitical landscape, while better meeting all of the other requirements as well.

Some would argue that maintaining two aircraft would lead to logistical issues but I am old enough to remember when the CAF had the Voodoo, Starfighter and CF-5 and they had no problems with logistics. They can do it again and with the big influx of money going to the CAF maintaining two logistical chains would be a good way to spend that money.

I do not know how this will all finally shake out but I am hoping that someone in authority will start thinking outside of the self-imposed box they seem to have put themselves in and consider the idea of buying both types.

A short note on why I prefer the Super Hornet. We already use an earlier version of the Hornet so the transition would go alot smoother. As well, I remember when Canada purchased the Hornets. It was a competition between the F-16 and the F-18 in the early 80's. Canada eventually settled on the F-18 and one of the reasons was it has two engines. When we have to send a couple of fighters up to the Arctic to play with some Russian Bears they have to cross some of the most forbidding terrain in the world. If an aircraft loses its engine there you not only lose the aircraft but the pilot also has a very low chance of survival even if they successfully and safely eject from the plane. Having two engines mitigates that risk. If one fails the other will allow you to limp home. Of course, the instances of engine failures in modern aircraft is very low so it is not a huge issue but it is not negligible and it would only take the loss of one Gripen or F-35 to engine failure to create all sorts of questions of why we did not buy aircraft with two engines.

Will Pierre Poilievre Quit?

No, he will have to be pushed out, in January, by gaining less than 50% of the vote at the Conservative Party leadership review. If he wins more than 50% he will claim victory and hang on.

In all of the talk about the troubles in the CPC one thing is missing. The Liberals only had a 50/50 chance of winning the last election going into it. If it were not for the actions and words of the current US president, before and during the election campaign, the Liberals could very well have lost.

They did not and Mark Carney is enjoying a rather extended honeymoon, although the Liberal Party is not. That honeymoon will end. It is as inevitable as the sun setting tonight and when it does the Liberals will likely lose any subsequent election to the CPC. You see, the Liberals have been governing on borrowed time for a couple of years and historical voting patterns will make their loss virtually inevitable next time.

Pierre Poilievre knows this. I have questioned his political acumen and instincts in the past but even he has to see that the leader of the CPC will likely be PM after the next election. So if he is that leader he will be that PM. So he is going to hang on as hard as he can, despite the short term negative impacts that will have on the CPC. As an aside, others in the CPC, who have Prime Ministerial ambitions should know the same thing which is why I am surprised that campaigns to oust him have not been more prevalent.

Of course, his hanging on could shake loose more CPC MPs who decide to cross to the Liberals, giving them a majority government. While this would hurt Mr. Poilievre in the short term it would actually allow for more time for the positive aura around PM Carney to become tarnished. Or to put it another way, if we have an election within the next 12 to 18 months the Liberals still have a 50/50 chance of winning it. If the election takes place 4 years from now they have virtually no chance. So the short-term pain would actually be to his advantage in the long run.

I am not saying that Mr. Poilievre is play 4D chess and letting all of this happen as part of some master plan. He just wants to hang on because he likes the perks and he believes, rightly, that if he does he has a very good chance of becoming PM someday. 

There is the wildcard of CPC members not deserting to the Liberals but quitting the caucus and attempting to form a conservative alternative to the CPC. Perhaps an attempt to resurrect a progressive conservative party within Canada. I do not believe this is likely to happen or whether they would be successful if they attempted it but it cannot be discounted and if they do succeed then the next election could be very interesting.

So if he receives even a small majority of the vote in January he will claim victory and stay on as leader of the CPC. He will then try to rehabilitate his image. Incidentally, assuming he is able to do so or he just decides to wait until PM Carney's popularity starts to slide it will take time so I would not expect the CPC to bring down the government anytime soon. He will find a way to allow this government to continue until he believes he can win.

The Federal and Alberta Governments Make a Deal

Or more accurately the two governments have settled on a framework that could potentially lead to a new pipeline being built to the BC coast.

When I first read about it I asked the question: WTF is Mark Carney doing? 

Then I read the agreement, or Memorandum of Understanding (MOU) and I have concluded that no pipeline will ever be built. The reason for that conclusion is the MOU specifically states that the funding for such a pipeline has to come from the private sector and that those very same companies will have to come to an agreement with all of the potentially impacted indigenous peoples to build it.

At this time I can confidently state that this is not going to happen. The biggest reason is there is no business case for a new pipeline. There has not been one for over a decade, whether you are talking about one to the Pacific, Churchill or points east. Most oil and gas industry analysts, who do not work for the industry, are indicating that oil and gas demand, and therefore prices, will permanently decrease by the end of this decade. So considering it will take at least that long to have a pipeline approved, even with the new approval process in the Build Canada Act, and built, that the pipeline will never show a profit. No profit, no business case, no pipeline.

The MOU also holds out the possibility of revoking the tanker ban, although the language around the conditions to do so is quite convoluted, but again private interests will make that meaningless. The waters that the tankers would have to go through to pick up the oil are very treacherous and no insurance company would insure a tanker going through them. Without insurance the tanker company would be on the hook for the entirety of the liability for any accident and they will not accept that risk.

So in the end the MOU is virtually meaningless.

Of course, there has been alot of talk about how the MOU has put the ball into Danielle Smith's court, taking away a bone of contention that she could use to fire up her base and hang on to power. I am not going to repeat all of that here, although I will disagree on two points.

The first point is the peace between Ottawa and Alberta will be short lived. The next battle will be Alberta demanding that Ottawa put up a substantial amount of money to build the pipeline. Danielle Smith promised her voters a pipeline, the private sector is not going to step up to build it, which will leave governments to foot the bill. Alberta does not have the financial wherewithal to do it alone so they will eventually get around to demanding Ottawa to kick in, which means most of the cost. 

The second point is this MOU will not help the Liberals in any way with Alberta voters during an election. During the next election the Liberals will most likely lose seats in Alberta instead of gain any. That was true before the MOU was signed and it is still true.

So in the end it is status quo. There will be relative peace between the two governments for a short period but the Alberta government will go back to blaming Ottawa for all of the ills in the province because that is what provincial governments do when they shit the bed. No pipeline will be built, without governments paying for it. The Liberals will lose seats in the next federal election. 

Who Cares?

With that question PM Carney voiced the frustration that most Canadians are feeling with regard to Donald Trump and his administration. 

Then he followed it up by stating that it was a poor choice of words.

I do wonder if it was as much an off-the-cuff question or whether the whole thing was calculated. 

That sentiment would resonate with most Canadians. The Conservatives, ever predictable, decided to try to make political hay from it and then he walked it back making them look kind of silly and reminding Canadians that when it comes to Donald Trump there is some doubt the CPC can be trusted to fight for Canadian interests.

Or the put it another way the Conservatives failed to read the room yet again. That should come as no surprise. After all there was a poll that came out a few weeks ago that indicated that a large majority of Canadians are very unhappy about what Donald Trump is doing. It indicated that over 80% of non-Conservatives were unhappy but only around 50% of Conservative were unhappy. That is, around 50% of Conservatives are quite happy with what Donald Trump is doing. The Conservatives appealing to their base at the cost of appealing to the broader electorate has become the MO in the last few years. Maybe they believe it will eventually win them an election, and they could be right, but I do know that appealing to a broader audience would almost guarantee them a victory. However, as a Liberal supporter I hope they keep doing what they are doing. It decreases their chances of winning.

The old "elbows up" never meant that the government would fight the Trump administration on everything. It was always going to be about picking their spots. The PM did just that in South Africa this week.

Nicely done.