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Part Two – Labour and the Nation: The Changes in the Composition of the Working Class and the Fight Back Against the Deindustrialization of Canada
February 17, 2008 - Don Currie, Chair, Canadians for Peace and Socialism
The long post world war two descent of the Canadian economy from its integrated industrial-manufacturing-agricultural-east-west composition to its present stage as a north-south-energy-raw-materials-exporter is the betrayal by Canadian finance capital of the promise and potential of Canada and its working people.
Successive Federal Liberal and Conservative Governments promoted policies of US-Canadian economic and political integration. The initial plan, reflecting the dominance of the US economy following WW2, was piloted through a series of international meetings by the Liberal St. Laurent Government between 1947, 1949. The deal, known as the Abbott Plan,[1] after Canadian Finance Minister Douglas Abbott, was in fact the result of advice given by Canadian US ambassador Lester B. Pearson, later to become Canada’s External Affairs Minister and Canadian Prime Minister, to align Canada with the anti-communist cold war geo-political goals of the US imperialism.
In 1949 Canada joined NATO, the US sponsored international anti-Soviet military alliance. Joining NATO was the first time in Canada’s history that it joined a military alliance in peacetime. That fateful decision has been costly not only in hundreds of billions of taxpayer’s dollars that could have been spent on nation building, but sacrificed hundreds of Canadian lives in NATO wars of aggression and occupation.
Fundamental to the US-Canadian alliance was the allocation of Canadian natural resources to the USA in exchange for the importation of US manufactured goods, in effect the export of production jobs to the USA. During the cold war the policy was dubbed “Continentalism”.
Not to be outdone by the post-war Liberal sell-out of Canada, the Brian Mulroney Conservative Government negotiated the Free Trade Agreement (FTA) in 1988 and the North American Free Trade Agreement (NAFTA) in 1994 that not only accelerated the sell-out of Canadian resources to the USA but made it impossible to refuse to do so, even if Canadian needs were jeopardized.
For six decades successive Liberal and Conservative governments acting for finance capital gambled the entire future of Canada on the victory of US imperialism over control of world markets in its drive for global dominance. The folly of that strategy is now fully apparent as US imperialism enters the period of its historical decline taking Canada’s manufacturing and industrial sector with it.
The latest iteration in the sell-out of Canadian independence is the Security and Prosperity Partnership (SPP) dubbed by opponents as “NAFTA on steroids.” The proponents of deep integration represent a narrow separate interest, the interests of finance capital and its preferred corporate partners. The core of this cabal is the Canadian Council of Chief Executives (CCCE). These are the interests of finance capital that consider Canada, its people and its resources as a property to be exploited, traded, sold, despoiled and played as a bargaining chip in the non-elected supreme councils of NATO, NORAD the WTO the IMF and in the shady backrooms of various international talk fests such Davos and Doha.
Patriotic left democratic forces have thoroughly exposed the consequences of Canadian-US integration in which an organized fight back is emerging. It is historically overdue and urgent. The fight back will become irresistible as organized labour enters the fray. It is a struggle organized labour is compelled to undertake. At stake is not only the dignity of the nation but, in practical terms, jobs, income and standard of living for the majority of Canadians who must work to live.
The December 2007 Labour Force Survey shows 17.0 million employed Canadians of which 13 million are employed in the service sector and roughly 4 million in the goods producing sector. Of the latter about 330 thousand are employed in natural resources, 1.1 million in construction and 2 million in manufacturing. 300 thousand Canadians are in agriculture and 142 thousand in utilities. Transportation and warehousing which is integrated with the production and the movement of goods straddles both sectors. The transportation and warehousing sector employs 834 thousand Canadians.
Seventeen and half million people create and maintain an economy with a GDP in excess of $1.5 trillion and the net worth of Canadians estimated to be $5.4 trillion. Trade with the USA is running at over $1 billion a day. Why would anyone want to change it? The answer is, because the economy is unstable and vulnerable in its present dependency on the US market. Personal indebtedness of the average Canadians is at 115% of income.
The Canadian economy is integrated with the US economy in an uneven and distorted way typical of relationships between greater and lesser imperialist capitalist states. The relationship enmeshes Canada in imperialist adventures that imperil Canadian independence and the independence of others. Canadian finance capital voluntarily surrenders the Canadian market to foreign investment while simultaneously exporting capital sometimes in partnership with other imperialist states in violation of the sovereignty of other countries and peoples.
The struggle for Canadian sovereignty is indivisible from the struggle of those countries and people’s who are the victims of Canadian imperialist policy. The struggle for Canadian sovereignty can only be internationalist in content and about removing every impediment that restricts the people of any country from achieving their full potential. The struggle for Canadian sovereignty is about ending all forms of dependency on US imperialism and restructuring Canadian foreign, economic and trade relations with the countries of the world based on the recognitions of all countries to the right of self determination. For Canadians it means returning Canada to the full control of its people. That means forging an entirely new relationship with the USA that can only arise out of achieving full independence.
The mantra of the Canadian Council of Chief Executives (CCCE) is one that promotes a voluntary ceding of aspects of Canadian sovereignty. It is a program steeped in a rapid deindustrialization and deregulation of Canada. It is an agenda that if fully implemented will relegate Canada to a status of further underdevelopment in all but a few select areas of the economy.
Consider the natural resource sector that directly employs about 330 thousand. There is already a decline in the numbers employed in forestry and the trend away from value added production of construction grade materials in favour of raw log exports is well known. Coal exports from the East Kootenays remains steady due to rising demand in China. Potash from Saskatchewan, iron ore extraction of mineral resources and shipping them abroad along with lead zinc and a range of non-ferrous metals has become dependent on foreign markets. Value added secondary processing is in decline.
Corporate dominance over all agricultural inputs, equipment, fuel, seeds, fertilizer and the storage and transportation of agricultural products has been allowed to dictate Canada’s food policy. The limited control that farmers once exercised over the costs of storing and transporting their products to market (the Wheat Pools and the Crow Rate) has been lost. The limited control that farmers still maintain in the form of marketing boards such as the Canadian Wheat Board is under attack by right-wing governments. The result is a growing dependency on foreign food imports and a decline in Canadian food processing industries even as foreign markets for some Canadian agricultural products expand.
The current spike in the prices for grain driven by demand in India and China is cyclical and while it will provide temporary improvements in income for some farmers and cause others to fall further in debt as they attempt to expand to cash in on rising prices, the general crisis in agriculture continues.
The production of grains for ethanol increases the price of grains for animal feed and human food thus reducing income to food producers and rising prices for consumers. Corporate intrusion into determining Government funded agricultural science policy lowers the standards of research and development and threatens excellence in Canadian agricultural. A made-in-Canada food policy that assures Canadian food self sufficiency and helps to feed the hungry of the world is a necessity.
A diminished base industrial and manufacturing economy is resulting in changes in the role and curricula of education at the primary, secondary and post-secondary levels. Emphasis is based on teaching generic skills adaptable to a resource-service based economy. Advanced education in science and technology is geared to meet the demands of the resource sector. Government sponsored research and development is under funded and corporate funding is geared to serve corporate needs. Pure research and innovation is in decline. Applied science and research is controlled by private capital.
Canada has 39 MBA (commerce) schools and over 160 distinct MBA programs. In 1992-93 enrollment in MBA programs was 54 118 full-time and 16 571 part-time students in bachelor's programs amounting to 11.6% and 11.9% of undergraduate enrollment respectively. Full-time community college enrollment in "management and administration" in 1991-92 was 43 394, or 18% of total enrollment in these institutions. It is difficult to find figures for the current decade. However what is startling is that in 1992-93 there were more MBA students than the total number of engineering students enrolled in all engineering programs in 2004-05.
In 2004-05 a study entitled University Engineering Survey by Michael Campbell Robinson Consulting placed total enrollment in all Canadian engineering programs at 40,425.
The preference for MBA programs over science and technology is a reflection of the actual state of the economy where the buying and selling of money is the preoccupation of large segment of the employed population.
From the 1950’s until today governments allowed those functions of the state that safeguard and compel foreign investment to create jobs in Canada and strengthen the home market to be dismantled. Federal legislative support for economic processes contributing to the unity and independence of the country were weakened while economic processes contributing to its disunity and dependency were strengthened.
Liberal and Conservative capitulation to Canadian and international finance capital gave rise to a collection of regionally based economies competing within NAFTA and globally for separate advantage. The result is a weakening of the economic and political unity of the country and the federal state.
The weakening of the federal state permitted the unrestricted flow of foreign and domestic capital into provincial jurisdictions where, taking advantage of the Canadian Constitution which accords control over resources to the provinces, quickly dominated the ownership and control of natural resources affecting the whole country and undertook their rapid development for export without regard for its impact on the country as a whole.
Accompanying the inflow of capital into the resource sector was a political struggle among comprador private investor interests to dominate and control the federal and provincial legislatures and be the prime benefactors of the inflow of foreign development capital. Parliament and legislatures became battle grounds between indigenous capital dependent on the home market and cosmopolitan neo-liberal investor classes willing and eager to sell out the country for a fast buck to the highest bidder. In western Canada legislatures were either controlled outright or managed through corporate lobbies to facilitate the seamless flow of capital to resource plays.
Provincial legislatures began to operate, not as provinces but more like corporate states creating enormous political stress within the evolved federal system. Alberta, dominated by a group of US major oil companies and Canadian fast rising energy giants controlled the Provincial government and operated it as a state within the state for 30 years, finally electing the Prime Minister of Canada January 2006.
The primary activity of these provincial “corporate states” is to seek a privileged position for regional finance capitalist interests, and mould public policy, including the assignment of public funds to provide infrastructure, favourable tax regimes, and development capital to facilitate the exploitation of natural resources for private profit. State capitalism has grown regionally as it declines federally.
Canadian and foreign finance capital is encouraged to control and exploit public resources belonging to the people of Canada mainly oil, gas, minerals and electrical power. They sell them abroad, mainly to the USA for maximum profit and without regard to any long term negative consequences for future generations of Canadians. Pressure is building to gain unrestricted access to Canada’s fresh water to relieve acute water shortages in California and other US states.
The industrial, manufacturing, service and agricultural sectors of the economy that a majority of Canadians rely on for their livelihood have been neglected to survive or fail in the anarchic global market. Capitalist theories that international free market competition strengthens the economy have proven to be the opposite. Capitalist competition is destabilizing the industrial, manufacturing and agricultural sectors of the Canadian economy and at a rapid rate.
Corporate media has been assigned the role of persuading Canadians that the fire sale of their rich natural resources and industrial and manufacturing assets is the fate of a “small population”. They set out to convince Canadians that any hope for a made-in-Canada all-sided development of the economy is futile. By implication the only vision of Canadian development worthy of a people “too nice” to object is the vision of the CCCE.
Liberal and Conservative policies opened the flood gates to foreign control of the commanding heights of the Canadian economy. Stats Can reported two years ago that foreign-controlled corporations accounted for 21.9% of assets held in Canada, and 30.0% of operating revenues. Assets of foreign-controlled corporations rose to $1.1 trillion in 2004, while Canadian-controlled were $3.9 trillion. Between 2002 and 2004, foreign-controlled corporations accounted for a 38.6% surge in profits, compared with a 22.4% gain for Canadian-controlled corporations. Among foreign-controlled corporations operating in Canada, the United States continued to be the dominant force by a wide margin. American-controlled firms held 61.0% of foreign-based assets and generated 62.6% of foreign-based revenues. Since the above report was issued the situation has worsened.
One example illustrating what is happening in most Canadian flag ship companies is the takeover of Alcan by Rio Tinto a US ferrous and non-ferrous metals giant. In October 2007, Rio Tinto acquired Alcan Inc. for US$38.1 billion which created the world’s number one producer of bauxite and aluminium. Rio Tinto Alcan now owns, operates or has interests in seven bauxite mines and deposits, six alumina refineries, six specialty aluminas plants, 26 aluminium smelters and 13 power generating plants. Rio Tinto Alcan owns 120 production facilities, service centres and international network offices covering 32 countries and regions.
Rio Tinto has dictatorial power to close Canadian operations at will, close aluminum production and sell hydro power, or demand governments supply hydro power at cheap rates or face operations closure. Rio Tinto manages its international work force without considering its impact on Canadian workers, purchases its research and development from wherever it wishes and above all controls product pricing without regard for its economic affects on Canadian industry and consumers.
Consider nickel. Inco Ltd. was sold for C$19 billion to Companhia Vale do Rio Doce a Brazilian metals mining and processing giant creating the fifth largest nickel, copper and iron ore producer in the world.
Leo Gerard, President of the United Steelworkers International Union said the sale weakened Canada’s status as a progressive force in the mining sector. He accused the federal government of sitting on the sidelines while the mineral resources were decimated.
Before the ink was dry, the new owners of the Voisey's Bay nickel and copper mine called for production rates to increase. Inco had signed an agreement with the Provincial Government to develop underground mines and secondary processing of nickel at refineries in Agentia on Placentia Bay Newfoundland Labrador. Premier Danny Williams has been fighting for the benefits of the deal to come to the people of his province. Williams is concerned that the new agreement is "weak" and that he suspects Inco may have wanted to get out of a written commitment to process nickel within Newfoundland and Labrador. The government and labour are clearly in a struggle with the new owners to ensure they honour the old agreement. The agreement called for the underground mine and processing facility to be operational in 2012.
Consider Falconbridge, Inco’s cross-town competitor. Falconbridge was snapped up by Xstrata PLC a Swiss based nickel producer. The two giants are now talking about a US$90 billion merger that would make it the worlds biggest nickel producer. The first aim of the merged company would be to achieve $500 million in savings from selling off assets and achieving “synergies”, corporate baffle gab for layoffs and intensification of labour.
Consider Algoma Steel which could soon be the latest Canadian steel company to get a new owner. Algoma has been in bankruptcy protection twice in the past 15 years. Algoma for all of 2006 made C$239.6 million. The Sault Ste. Marie-based company confirmed that it was in talks with an unnamed "third party regarding a possible acquisition of the company." Rumour has been swirling that Algoma would be the next Canadian steelmaker to be targeted. Hamilton-based Dofasco was acquired by Arcelor Mittal following an acrimonious fight with ThyssenKrupp of Germany. North Carolina-based Nucor made a friendly US$1.25 billion bid for Harris Steel Group of Toronto.
Profits from the labour of Canadian workers who work in foreign-owned companies leave the country and are not reinvested in Canada. With the help of Canadian banks, foreign investors have seized control of the dominant companies in energy, metals production and advanced technology in effect the commanding heights of the productive economy.
At the end of World War Two Canada had the third largest navy in the world and the fourth largest air force and all of the scientific and engineering expertise that arose in that period. Canada was a major and diversified industrial power and had financed most of the expansion out of the savings of ordinary Canadians and without inflation. A National Housing Act made it possible to re-house returning veterans and re-educate them for re-entry into the workforce. During the war Canada had developed an advanced tool making capability and along with it a core of highly skilled scientists, engineers and technologists. In less than five years the ruling elites reverted to a raw material resources economy and prevented Canada’s advancement to the forefront of applied science and engineering.
Six decades later Canada is in decline as a major producer of tools used in the production of goods and equipment. Machine making industries are disappearing. Tools used in the production of automobiles, marine craft, aircraft, railway and mass transit equipment, heavy industrial vehicles, are increasingly supplied by imports. When tools are no longer produced in Canada it is only a small step to reduce domestic production of goods and import the finished products formerly produced in Canada.
Ferries, commercial aircraft, off shore drilling platforms, heavy lifting and excavation equipment and even steel products, plate, sheet, structural shapes, rod and bar, welding consumables, wire and industrial electrical equipment, transformers and a wide range of building materials are imported. When equipment is imported the parts and maintenance expertise that is required to keep them operational is also imported.
The decline of Canadian industrial production, metal fabrication, high tech engineering, electronics and robotics is evident everywhere. Instead of flourishing with Government help, made-in-Canada industrial producers are struggling to survive.
From a great trading nation, with the potential for all-sided country-wide industrial and manufacturing development creating domestic demand and capable of exporting a wide range of finished products and expertise to the world, finance capital has relegated Canada and its people to dependency on essentially three economic drivers, energy and raw material extraction for export, militarism requiring continuous massive expenditures of public funds to NATO, NORAD and NORTHCOM and rampant monetary and stock market speculation and the export of capital to fund foreign takeovers that contributes nothing to the goods producing sector of the economy.
Posing the greatest threat to Canada’s economic development as a modern industrialized-manufacturing economy is the loss of control over the extraction, production and processing, transportation and distribution of energy resources. Without a national energy policy serving the industrial, manufacturing, commercial, public and consumer needs of all Canadians first, before selling it abroad, condemns Canada to economic backwardness and imperils the future needs of the Canadian people.
None of the vital economic interests of workers presently engaged in the extraction, production, refining and transportation of fossil fuel energy can be assured by selling out the resource at an accelerating rate. Quite the opposite is the case. At the rate that oil and gas reserves are being developed and exported south to serve the USA at the expense of the needs of Canadians, energy sector workers in effect are being forced to participate in working themselves out of jobs, forgoing their own long term future economic interests to ensure quick massive windfall profits for a handful of Canadian and US energy investors.
North South development of Canadian energy resources to meet the needs of the USA takes place at the expense of Canadian industry, manufacturing and commercial business and farmers. The policy of accelerating energy sell out to the USA is accompanied by a growth of rising costs of living for workers and their families, urban blight, declining farm income, despoliation of the land, and a massive growth in green house gases.
High home heating costs, high gasoline prices at the pump and businesses shutting their doors because of rising energy costs are the practical outcomes of the export of all forms of energy to the US market without guaranteeing Canadian needs first. That is why the Harper Government was installed, to protect US interests at the expense of Canadian needs. The crisis in the auto sector would not be as severe as it is if cheap energy was available to eastern Canada. Canadians for Peace and Socialism exposed the Harper Government as the creation of Alberta Big Oil in our post-election analysis of January 31, 2006. www.focusonsocialism.ca : “The Federal Election Outcome and Beyond.”
Cheap energy is the basis of any viable modern economy. It is not rocket science to see that the current anarchic hodgepodge of competing provincial energy policies cannot over the long term sustain a work force of 17 million let alone the projected growth of the work force. The country cannot live and prosper on the value added work of less than two percent of the population presently employed in the resource sector. Add those who are employed in the construction of mega projects and transportation of energy, it still adds up to a small highly productive sector of the work force that is contributing enormously to sustaining all other sectors of the economy. The diversification of Canadian economic development is urgent.
The entire economy cannot float on oil exports. The current dependency on energy profiteering will not last. The massive inputs of capital into the Tar Sands at the outside have another decade before construction slow downs occur and the industry settles down to the task of sending a gusher of oil and gas to serve the USA.
Suncor Energy Inc is proceeding with a $20.6-billion expansion of its oilsands operations in northern Alberta bucking a trend where other oilsands players are scaling back their projects due to labour shortages and soaring costs. The goal is to getting the Suncor expansion into production by 2012. Suncor is aiming to increase crude oil production by 200,000 barrels a day to 550,000 barrels. Suncor expects a 15-per-cent return on capital at US$60 WTI (West Texas Intermediate) in the post-2012 period.
The movement of investment capital away from manufacturing to the mega projects in Alberta continues but will slow down. That is why there is such pressure on the Ontario, Quebec and Federal governments for subsidies to the manufacturing sector. Capital is not investing in the production of goods so long as it can continue to make windfall profits in the export of energy.
What many Americans have failed to grasp, including those on the left who give scant thought to what is happening to the resources of North America under NAFTA, is that once the pipelines are in place and the gas and oil moves freely to US markets, it is not the American people, but US big oil that will have its hand on the on off valve. US oil moguls have no more interest in the American people than does Canadian finance capital for the Canadian people. Their only interest will be to control price and they will be poised to stick it to their own consumers at will.
The Alberta Tar Sands along with eastern Canadian energy development in Newfoundland and Labrador and in New Brunswick is part of the rush to export oil and gas to the US market. Danny Williams Premier of Newfoundland-Labrador is conducting a spirited fight with Prime Minister Stephen Harper to get the maximum royalties from energy giant Exxon without losing badly needed federal transfer payments. The newly elected right wing government of Premier Brad Wall of Saskatchewan has withdrawn the former NDP Calvert government’s suit against Prime Minister Harper and meekly accepted Prime Minister Harper’s terms. Saskatchewan will not get its full share of federal government transfers with Wall in power. (See www.focusonsocialism.ca :”The Saskatchewan Provincial Elections – More Than Changing the Guard.”[3]
The Alberta Provincial election called by the Stelmach Conservatives for March 3rd 2008 centres around issues of crumbling infrastructure, lack of affordable housing and health and education systems lagging behind the growth in population. Alberta has built a Heritage Fund from oil and gas royalties of $12.6 billion compared to Norway with a population of 4.7 million creating a state owned reserve fund of $358 billion.
Alberta workers are working harder and longer, first nations and aboriginal people’s needs are ignored and there is growing dissatisfaction among farmers about declining income in the midst of massive wealth generation from the sale energy resources to the USA.
Conservative Premier Ed Stelmach has dispatched a blue ribbon delegation of oil executives to Washington to assure US oil magnates that his tinkering with the royalty fees charged to companies working in the Tar Sands is just an election ploy to get re-elected. According to Gordon Laxer of the Parkland Institute oil royalties to Albertans will not rise appreciably under the Stelmach plan.
The response of the Alberta Federation of Labour (AFL) has been to field 30 trade union candidates who will be fighting for a better deal for Alberta workers under the banner of the NDP. The growth of the participation of labour candidates in elections is new and deserves encouragement. The AFL is campaigning independently for its Show Us Plan demanding a better deal from the riches flowing in and out of Alberta. The AFL’s political action campaign is aiming to reach 280,000 Alberta households with its message to defeat the Stelmach Conservatives. www.showustheplan.ca
According to Stats Can in 2006 Canada supplied more than 2.3 million barrels of oil per day to the United States. Canadian oil represents 17 percent of U.S. imports and 11 percent of U.S. consumption. Oil sands production now exceeds one million barrels per day and is projected to be 3-5 million barrels per day by 2020. In addition, Canadian natural gas represents 16 percent of U.S. consumption. As a share of U.S. imports, Canadian natural gas in 2006 increased from 85 percent to 86 percent.
Canada is developing its large gas and coal bed methane resources, in addition to conventional reserves. Exploration continues in the far north and projects such as the Mackenzie Gas Pipeline in the North and Deep Panuke in the Atlantic offshore is currently undergoing regulatory review. All of this exploration and development is aimed at supplying the US market with Canadian oil and natural gas reserves.
Total capital investment in Tar Sands development now exceeds $100 billion and rising.
Suncor Energy Inc. reported 2007 net earnings of $2.832 billion ($6.14 per common share), compared to $2.971 billion ($6.47 per common share) in 2006. Excluding the effects of the reduction of federal and Alberta income tax rates, net insurance proceeds (relating to a January 2005 fire), unrealized foreign exchange gains on the company's U.S. dollar denominated long-term debt and project start-up costs, 2007 net earnings were $2.239 billion ($4.86 per common share), compared to $2.350 billion ($5.12 per common share) in 2006. Cash flow from operations in 2007 was $3.805 billion, compared to $4.533 billion in 2006.
Syncrude, Imperial Oil, Suncor’s cross-town rival reported profits for 2007 of $3.19 billion, beating its previous record of $3.04 billion set in 2006. Imperial Oil, a subsidiary of U.S. energy giant ExxonMobil, is Canada's largest integrated oil company. In addition to being active in oil and natural gas production and refining, Imperial also operates some 2,000 Esso gas stations across Canada.
The rising prices for home heating and the per-litre cost of gasoline to operate auto mobiles is taking a larger slice out of workers and farmers incomes. The urgent need for an expansion of low cost mass urban transit is burdened with rising energy costs. It needn’t be that way.
Canada’s life blood is draining away to serve the US market as the immediate and long term energy needs of Canadians are ignored. Canada is the only country in the world that does not have a plan to guarantee the future energy needs of its people. The fire sale of Canada’s energy resources to the USA takes place as eastern Canadian manufacturing industries, commuters, urban transit, the trucking and airline industry and the entire country, dependent on energy to survive is staggering under rising energy costs.
The Parkland Institute, in collaboration with the Polaris Institute, in a study authored by Gordon Laxer, entitled “Freezing in the Dark”[4] has made the case for Canada urgently adopting a minimum three month Strategic Petroleum Reserve (SPR). In the executive summary the report states:
“Eastern Canada is a net importer of oil, receiving up to 90 per cent of its oil from overseas much of it from OPEC countries like Algeria, Iraq and Saudi Arabia. Canadians are vulnerable to global oil supply shocks.
“The International Energy Agency (IEA) of which Canada is a founding member, requires member countries that are net importers to maintain emergency oil reserves of 90 days of net imports. It does not require net exporters, as exporters are sensibly assumed to ensure domestic oil needs before exporting their surpluses.
“Canada exports 67 per cent of the oil it produces to the United States and NAFTA’s proportionality clause prohibits Canada’s government from reducing this proportion even in times of crisis. And there is not enough east-west oil pipeline capacity to transport western oil to Eastern Canadians in times of supply shock.”
The Parkland Institute outlines a seven point program to implement a modest three month SPR that it estimates according to IEA rules would allow Canada to place in reserve 76 million barrels and by implementing the Institutes three track strategy could be reduced to 37.5 million barrels. The full report can be read at www.ualberta.ca/parkland.
Irving Oil is engaged in a massive multi-billion dollar expansion of its refinery and deep water port facilities in Saint Johns to receive Liquid Natural Gas (LNG) from Europe and Asia, process it in Canada and ship it through pipelines, subsidized by Canadian taxpayers to serve US consumers along the eastern sea board of the USA.
All energy politics is played out in a context of continuous sell out to US markets. A made-in-Canada national energy policy has been subverted by foreign and domestic investors with the active collusion of both Liberal and Conservative Governments. Today there is not a single government in the country that objects. Differences revolve only around how to get a bigger piece of the sell out pie.
The September 2007 Stats Can Labour Force Survey reported that 142 thousand Canadians work for utilities. One of the largest employers is in the field of generation, delivery and marketing of electrical energy. Hydro electrical production is the backbone of the system. Once the envy of the world because of its low electrical energy costs, and a prime reason for the inflow of foreign capital to establish branch plants, Canadian Governments promoted marketing of electrical energy from Ontario, Quebec and Manitoba and allowed its integration into US power grids to meet the demands of eastern and central USA. There is growing pressure on the BC Government to permit the sale of portion of its electrical production from the West Kootenays and Alcan Aluminum to the USA. Today eastern Canada faces a severe electrical energy shortage and is forced to spend fresh billions on expanding production.
Canada is the largest producer of electric power in the world generating 4% of the world’s electricity. It is the largest producer of hydropower and the world’s second largest electricity exporter. All of Canadian electrical exports go to the USA.
Canada also is a major producer of hydro installations, gas turbines, air cooled hydro generators and a major supplier of nuclear energy systems and the equipment for transmission and distribution.
The combination of such electrical power houses as Newfoundland and Labrador Hydro, Quebec Hydro, Ontario Power Generation, Manitoba Hydro, and BC Hydro, combined with AECL oversight of nuclear power design and construction and the rapidly growing alternative electrical generation sources such as wind power, biomass and solar energy proves that Canada is not deficient in electrical energy. What is problematic is the trend, starting with the advent of FTA and NAFTA to gear new generating capacity for sale into the US market.
The traditional role of Canadian Government as a guardian of long term electrical supply needs, of enacting Government regulations to moderate user fees, to maintain competitiveness of Canadian industries through a policy of cheap electrical power production and distribution was abandoned in favour of market access under the terms of FTA and NAFTA.
“After concluding the Canada-United States Free Trade Agreement (FTA) the Canadian Government established a new electrical policy in which the National Energy Board export regulations were changed to conform to the new trade regime.” Alexander Netherton, Malaspina University-College Canadian Political Science Review Vol.1(1) June 2007.
Under the Bush administration’s neo-con market de-regulation theories, the US Federal Energy Regulation Commission (FERC) opened up markets to Enron. Massive profiteering through corporate pricing of existing electrical power was the result. A huge speculative investment bubble grew and burst with devastating affects on Enron workers. It crippled electrical supply to US states and cities. The mad rush to profit out of market deregulation sidelined new power generation construction in the USA. The pressure to fill the gap with imports from Canada increased.
The FERC under the new deregulated market re-organized the USA electrical supply and distribution into Regional Trading Organizations (RTO’s). The FERC decisions imposed new rules on Canadian exporters and required reciprocity decisions. The FERC decisions meant that Canadian utilities wanting access to US markets had to grant access of US utilities to Canadian markets.
In practice this meant integrating Canadian power into US grids and negotiating “wheeling rights” , granting permission to use US electrical systems to transmit Canadian power to US markets with costs imposed on Canadian suppliers ”wheeling” power over US transmission lines. Not only did Canadian suppliers have to apply to sell power to the USA they had to pay for the privilege of doing it.
Most of Canadian electrical power exported to the USA comes from Canadian public utilities paid for by the Canadian people. Moreover FERC regulations demanded that Canadian power integrated into the US system was required to abide by US “time sharing data” used to determine US spot prices for electrical power. Long term agreements that would allow Canadian suppliers to plan exports at fixed prices were made more difficult.
Provincial governments overseeing the export of Canadian power are compelled to work within the FERC framework. Nonetheless US electrical power demand has caused Canadian jurisdictions to gear their planning to export rather than Canadian needs. While US-Canadian grids are growing an all-Canadian grid remains a distant dream. Alberta authorities are negotiating deals to move Alberta electrical production through BC to the California market. Nova Scotia Power along with New Brunswick is deep into negotiations to export to New England. Quebec Hydro is gearing expansion plans to the USA.
For forty years Manitoba’s surplus power has been sold into the USA. Manitoba Hydro and U.S. utility Minnesota Power have signed a preliminary electricity supply agreement to construct new multi-billion-dollar hydroelectric projects in Canada and a cross-border transmission line. The utilities announced a two-stage plan Jan. 29 in which Manitoba Hydro is to export surplus electricity to Minnesota starting in 2008. The second stage will be a 15-year purchase of 250 MW by Minnesota Power, starting about 2020. Tied to the long-term agreement, Manitoba Hydro would build either US $3.5 billion, 620-MW Keeyask (Gull) or US $5 billion, 1,250-MW Conawapa in northern Manitoba. Both sites are on the Nelson River, near Gillam. The Doer NDP Government broke off negotiations with Quebec and Ontario for a Canadian grid in favour of the deal with the USA.
All of this activity geared to supplying the US market takes place as Ontario, the manufacturing heartland, confronts a near term electrical supply crisis. Utility rates to consumers are rising across the country. This is what Prime Minister Harper means when he intones that “Canada is an energy super power.”
Consider the transportation sector employing 834 thousand Canadians. The whole transportation sector is being rapidly re-designed with generous government subsidies to create so-called resource corridors to stream line the export of Canadian raw materials, potash, coal, metal ores, timber, grains and gas and oil, to Asia and the USA. Large integrated rail, road and pipeline centres are under construction in Regina and Fort Saskatchewan and Prince Rupert and Vancouver to organize and streamline the export of raw materials west and south.
The fastest evolving form of transportation is a web of pipelines from Alaska and the Yukon Territories south along the McKenzie Valley through Fort McMurry and Fort Saskatchewan all pointing south sending an increasing volume of oil and gas directly to refineries and consumers in the USA. (See Sean Currie - Canadian Imperial Ambitions and BMD – The Energy Connection[5] http://www.CanadianPeaceCongress.ca/ )
An integrated transportation system serving the Canadian market is being abandoned in favour of resource sell out corridors serving foreign mainly US markets. When completed it will require far fewer than the numbers of people now employed in the transportation sector.
A new transportation policy is required that serves the all-Canadian development of the country not just the interests of an investor elite making huge profits our of resource exports. Federal Governments have abandoned their responsibility for state control over an east west transportation policy. This is done at the expense of an integrated transportation system serving the needs of the whole country. The rising costs of urban mass rapid transit, has been foisted on cash starved municipalities, homeowners and public transit users.
The struggle to restore control of electrical power, fossil fuel energy extraction, production, processing and transportation to the Canadian people, is the form the struggle for Canadian sovereignty and democratic renewal assumes in the 21st Century. Canada’s long term needs for low cost energy the key element in reversing the process of de-industrialization and the decline of manufacturing is impossible without public ownership and control of the resource. The reduction of green house gases and environmental degradation resulting from the wanton exploitation of the Tar Sands by powerful investor elites is impossible without public ownership and control of all energy resources. Appeals to Big Oil to reform itself are futile.
Threat of massive overuse and pollution of Canada’s northern water systems used to process synthetic crude are accelerating. Degradation of the natural environment at Tar Sands mega projects and total disregard for any concerns raised by environmentalists, First Nations and aboriginal peoples warning about the irreversible damage being done to the land, air and water is a challenge not only for Albertans but for all Canadians.
Environmental science, engineering and technological advances, enlightened sociology, urban planning, health and educational science, hydrology, geology, the science of sequestration of carbon dioxide, conservation and alternative sources of clean energy, taken together with the political will to move from “disaster politics” to “progressive politics” can be implemented now to exploit the resource for the common good. All that is required are governments with the courage to do it.
Any solution to the environmental disaster perpetrated on the country by Canadian and US energy oligopolies that is at the expense of the working people is flawed. None of the economic, social and environmental calamities created by the unbridled exploitation of the resource is possible unless all of the victims of those calamities and ordinary working people engage in a struggle to take control out of the hands of profiteers and put it into the hands of the people. That means all streams of protest over the betrayal of Canada associated with energy sell out, energy sector workers, farmers left out of the bonanza, big cities starved for funds to repair and expand infrastructure, public education and health sector labour, and environmentalists must converge on demands for nationalization of primary industry for the common good. All attempts to skirt that issue is folly. None of the foregoing issues can be resolved unless the energy resource sector is returned to the ownership and control of the Canadian people.
Private finance capitalist exploitation of Canadian energy resources is a disaster for our country and an affront to our dignity as Canadians. Canada with energy reserves rivalling any in the world has been placed in the humiliating position of becoming a net energy importer. The refusal of all federal and provincial and territorial authorities to demand that before any further export of our energy wealth is considered, Canada’s long term energy needs must be assured, is the arena of politics where a great struggle is beginning to develop.
Those who claim to love this country and refuse to consider the preservation of this vital resource are driven by greed not patriotism. The impudence of the Stephen Harper Conservatives to sully the great slogan first put forward by the Communist Party of Canada in the 1950’s “Put Canada First”, will not stand. The Prime Minister is attempting to cover up a massive betrayal of Canada’s future by posing as a defender of its sovereignty. The essence of the struggle for Canadian sovereignty is the struggle to return the control of our country’s vast resources to its true owners, the people of Canada.
The struggle for public ownership and control of energy exports is part of a global struggle for peace. The amount of Canadian energy exports to the USA that wind up as fuel for the US military is difficult to pin down. The fact that large quantities of Canadian oil wind up being used in US-NATO military operations is beyond dispute.
The US Department of Defense (US DoD) total primary energy consumption in Fiscal Year 2006 was 1100 trillion Btu that is 10 times more than per capita energy consumption in China, or 30 times more than that of Africa. Defense Energy Support Center (DESC) sold $13 billion of energy to US DoD services in FY2006. More than half of it was for the US Air Force. According to the US DoD’s Federal Energy Management Report for FY2006, the US DoD spent approximately $3.5 billion on facility energy and $16.5 billion on energy for tactical vehicles. According to Pentagon spokesman Chris Isleib a $10 increase per barrel of oil increases Defense Department costs by $1.3 billion per year. In 2006, its oil consumption was 117 million barrels (or 320 thousand barrels per day).
In 2006, for example, DESC reports in its Factbook that it sold 131 million barrels of oil to US DoD. In 2006 the US Air Force consumed around 2.6 billion gallons of jet-fuel. Over 70 percent of the tonnage required to position today’s U.S. Army into battle is fuel. The Air Force spends approximately 85 percent of its fuel budget to deliver, by airborne tankers, just 6 percent of its annual jet fuel usage. According to Michael W. Wynne the Secretary of the Air Force, in 2007 the US Air Force is buying 206,000 gallons of synthetic fuel (derived from natural gas) for testing programs. Defense Energy Support Center has been the single largest purchaser of biodiesel (composed of 20% vegetable oil and 80% diesel fuel) in the US.[6]
A June 28 2007 news release from UOP LLP a Honeywell subsidiary reported that US-NATO war planes consume 2.5 billion US gallons of JP-8 fuel annually. The report announced UOP plans to begin research on renewable energy technologies to find an alternate stream of strategic fuels for the US-NATO militaries. The report said that UOP plans to, “accelerate research and development on renewable energy technology to convert vegetable and algal oils to military jet fuels.”[7]
The market for US-NATO military jet fuels represents about $US10B+ annually. Consequently aggressive studies are under ways that seek to reduce military fuel costs for and source alternate supplies to hydrocarbon based fuels. These studies are looking to bio-fuels for the feedstock.
The canard that Canada must export resources because there is no capital to develop and expand value added production in Canada requires exposure. Domestic and foreign banks operating in Canada control assets exceeding $2 trillion. The six largest Canadian banks control 90% of all banking assets. Governments and the Bank of Canada have permitted the six major Canadian banks to escape their responsibility to fund national economic development. Banks have been permitted to gamble Canadian financial resources in global speculative market causing massive savings losses for millions of Canadians. This wanton speculation is contributing to importing a made-in-USA war induced recession to Canada.
Bank losses in the tech bubble, the Enron bubble and now Asset Backed Commercial Paper (ABCP) bubble could have provided capital to thousands of legitimate start up companies and provided a national development fund for nation building projects infrastructure renewal and urgently needed low cost housing. Instead speculation has caused massive bank losses and destabilized the Canadian dollar. More egregious has been Government allowing the banks to maintain high interest rates, while the Bank of Canada lowers interest rates, creating a spread to help the banks recover losses in the speculative market, in effect allowing the banks to dump their losses onto consumers who pay bank interest.
These criminally irresponsible actions by the banks and the captains of finance capital all point to the need for new democratic legislation and stringent controls over an out of control banking sector. It also calls for a complete revue of the policies of the Bank of Canada to make it the instrument of the people of Canada and not the instrument of the banks. The time to consider the nationalization of the banks is clearly upon us.
The weakening of the industrial and manufacturing base economy and domestic markets, removes the main defence Canada has to withstand made-in-USA and global economic crisis. To build in safeguards against global recession requires a people’s democratic challenge to the way the economy is owned and managed.
The way the economy is owned and managed is a brilliant success for investors and a complete and total failure for working people. The so-called new global economy of the 21st century was supposed to have overcome domestic economic crisis. It is all a lie. The global economy continues to be driven by the same blind anarchic laws of capitalism in its imperialist stage that has characterized world economic development since World War One. The growth in productive forces, instruments of labour plus human labour, in an era of science and technology has been adapted selectively to key branches of the economy in the service of maximum profit. This selective branch economy adaptation is causing distorted and uneven development, aggravating and deepening regional unemployment and facilitating boom and bust economic crisis.
The scientific and technological revolution led bourgeois theorists to assert that imperialism had evolved into a post-imperialist stage. Bourgeois theorists declare technology has changed production relations from private ownership of the means of production into a classless technocracy of production. These theories attempt to prove all prosper and move seamlessly from declining sectors of the economy to expanding sectors of the economy. These bourgeois economist theories are proven to be lies. Economic sectors such as auto not only decline, but begin to disappear and no new industries appear to re-employ those who have lost their jobs and incomes.
Integration with the USA Means Disintegration in Canada
The other mantra touted as rendering Canada immune from economic crisis was the so-called special relationship with the USA. During the cold war and since the counter revolutionary overthrow of the Soviet Union in 1990, the economic policies of successive Canadian Liberal and Conservative governments have been largely determined by the strategic global aims of US imperialism, the world’s largest economy. Canadian finance capital has prospered by maintaining a position of advantage for itself within the US-Canadian imperial relationship. To maintain that special relationship with US imperialism, Canadian finance capital has evolved highly flexible economic policies. It is a classic example of a lesser imperialist state, subordinated to a greater imperialist state, not as a colony or dependency but as an aggressive global partner, seeking every opportunity to elevate its own status and power within the imperialist global system while actively collaborating with US imperialism.
The role of the federal state in determining energy policy, transportation policy, and food policy, to serve the whole country has been abandoned. State functions primarily serve the cosmopolitan global interests of finance capital involved in inter-imperialist competition for global markets, natural resources, the concentration and consolidation of corporate empires, the movement of speculative finance capital, militarism and wars. The more the state abandons the home market, the more Canadian workers and farmers are exposed to the blind market forces of global capitalism.
Canada is defined by academics and commentators as a minor player globally, when in fact it has become a major player among contending imperialist states. The reach of Canadian finance capital is growing, and rapidly. It is not a member of the G7 for window dressing. It has become a rising imperialist state and beginning to assert itself globally both in terms of capital exports and militarily operations.
Downplaying the influential growth of Canadian imperialism is deliberate. It is undertaken by capitalist intelligentsias and corporate medias to maintain the façade of "liberal democracy" which remains an important card to play internationally on behalf of Canadian and US imperialism.
Is there conflict between Canadian and US imperialism? The petty bourgeois hyper left sees no contradictions between Canada and the USA. They assert that Canada is merely an obedient extension of US imperialist strategy. They consider the struggle for Canadian independence, for an anti-monopoly program, in fact anything that suggests stages in the struggle, as futile and a waste of time.
Lenin's view of imperialism, still valid in fundamentals, is that of a contradictory and conflicted system full of antagonisms resulting in its uneven and chaotic development. Lenin described imperialism as the last and final stage of capitalism. It is the era of imperialist division and re-division of global markets, of fierce competition for resources, a dominance of capital exports over the export of goods. Imperialism is the era of sharpened inter-imperialist rivalry accompanied by war and anti-imperialist struggles and revolutions where all of the conditions for the transition to socialism are overripe.
The reason that Canada's imperialist status is not discussed on the left is because it would require social democracy and the hyper left to challenge the present direction of Canadian economic development and confront corporate power. That is what all reformism, anarchism and all centrist theories avoid at all costs. Corporate power is denounced as immoral, unjust, unfair, but never what it really is, capitalism in its final imperialist stage, the eve of socialist revolution.
There can be no "post imperialist capitalist stage, no supra imperialism as Kautsky asserted and Trotsky supported. There is one contradictory, conflicted imperialist system within which there is constant crisis and the ever present possibility of socialist breakthroughs in one or a group of countries. That is what is happening in Venezuela, Bolivia and throughout South America.
Today there is no more important task confronting the Communist, revolutionary and aware and responsible left in Canada than to articulate an economic plan for the future of Canada. It must be and economic plan which is based squarely on the needs of the vast majority of working people. It must challenge current corporate wisdom that asserts, "give up on Canada, this is as good as it gets, it is futile to search for something better."
Working people reject such a bleak view of Canada and its future. Workers can articulate something better for the country and themselves than is offered by finance capital and its minions. Such a program must articulate what is immediately required on behalf of working people but also, to articulate those demands that are fought for under capitalism but that anticipate socialism and are realized in the victory of the people over corporate power, establishing new forms of people’s democratic power in which the working class achieves dominance and establishes governments in its own vital interests.
An entirely new paradigm, a new direction, a new power reality, is clearly on the political agenda for all progressive activists. To move forward from what has been a long indispensable period of brilliant exposures, descriptions, analysis and warnings about the consequences of a continuation of deep integration and reliance on a resource based economy to fighting for a program to put monopoly under control and for a new type of people’s democratic political power is overdue.
All of private finance capital and the political parties representing their interests have set themselves against Canadian society and the common good in the belief that their right to profiteer transcends the right of Canadians to the rational use of their own resources. A new direction for Canada is impossible without a challenge to the profit system and consideration of its alternative, socialism. Such a leap in thinking and action is already underway in South America. It is inevitable that it will arise in Canada. Energy has become the issue that poses in a stark manner the urgency of the need for a new economic system in Canada.
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