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Aaron Gasch Burnett: Like it or not, Canadian resources are exactly what the free world needs during today’s geopolitical upheavals

Commentary

Since Russia tried to take over all of Ukraine two years ago, Europe has made major strides in gradually weaning itself off Russian gas.  But, its appetite for Canadian natural gas hasn’t gone away, whatever the Trudeau government might like to think.

This March, Greek Prime Minister Kyriakos Mitsotakis himself said so during his Canadian visit. He even made it clear his country was “very interested” in Canadian liquefied natural gas (LNG), and not simply for geopolitical reasons, but environmental ones too.

“As fast as we go in terms of our renewable penetration, we will still need a reliable source of electricity and for us, for  Greece, we don’t have nuclear. We’re moving completely away from coal so that leaves natural gas for the foreseeable future as a significant source of energy for the production of electricity,” he told CTV’s Question Period.

“Canada is a country with which we share so many values,” he added, confirming that Greece and other European countries would much rather buy their energy from a fellow liberal democracy like Canada, rather than the world’s autocrats.

Yet buying energy from dictators is precisely what Germany was left to do after Chancellor Olaf Scholz returned empty-handed from a frantic trip to Canada two years ago, looking for replacements for Russian gas. 

“As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice,” Scholz said at the time. “For now, this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this.”

Yet Prime Minister Trudeau rebuffed Scholz, claiming there was no “business case”—even as countries like South Korea, Japan, Ukraine, Poland, and Latvia all contradicted his conclusion. For Japan and Poland in particular, these calls for more Canadian LNG came from the very top.

Instead, Canada sold Scholz some hydrogen. The current federal government, along with environmental groups like the Pembina Institute, view a long-term commitment to fossil fuels like LNG as worsening climate change significantly. Supporting LNG exports to Europe would also require infrastructure investments into ports on the east coast – matching the one in Kitimat, B.C. Such support is unlikely to play well politically with the Liberal Party’s environment base.

Meanwhile, the German chancellor signed an LNG deal with autocratic Qatar instead of democratic Canada. Having bought 55 percent of its gas from Russia before Ukraine was invaded, Germany has now quit Kremlin gas cold turkey – but still has to buy from authoritarian states and Norway, rather than Canada.

Today, the Liberal government looks to be making the same mistake on another crucial resource file—the critical minerals the free world also needs.

Canada has got the minerals

It’s not that the government hasn’t been thinking about the minerals it could sell to its allies.  Natural Resources Canada actually has a strategy document listing the critical minerals and rare earths Canada has in abundance and how they could be a part of new global supply chains. Many of these are minerals Canada’s allies either don’t have at all or have in short supply—including aluminum, copper, nickel, potash, tin, lithium, and zinc. Prime Minister Trudeau has even expressed some willingness to export them.

Canada is among the world’s top five producers for nine of the 31 critical minerals named in the strategy–with the US taking the vast majority of Canadian critical mineral exports at $37.6 billion in 2022. China was in a distant second with just $3.9 billion. Europe meanwhile, takes even less from Canada–and currently remains dependent on authoritarian China to a large extent for many of these minerals.

Beyond the Canadian LNG  other countries require for their present energy needs, these Canadian critical minerals represent what the world—and particularly the free world—needs for the energy of the future. 

Many of these minerals are found in solar panels—a market China currently has cornered.  Almost 90 percent of the world’s solar panels come from China—leaving Canada and the rest of the democratic world dangerously exposed to the geopolitical whims of an authoritarian adversary, as we choose to rely more on solar power. Should China ever attack Taiwan, our ability to respond decisively as the free world could be held hostage to our energy transition needs. That is if free societies don’t bring key elements of it back home.

Canada plays an integral role in this “friendshoring” of the democratic world’s critical mineral supply. European Commission vice-president Margrethe Vestager told German business newspaper Handelsblatt as much in 2022, calling for Europeans to be ready to pay a “national security premium” to buy less from aggressive, authoritarian countries, and more from allies and friends sharing liberal democratic values.

“Canada has almost all the raw materials we need. But the companies there need a long-term perspective from us in order to invest,” she said.

As Vestager suggested, it takes two countries to do the critical mineral trade tango—and European money is clearly needed. 

“We now face a rapidly changing world, with supply chains pushed to breaking point. We can only ensure security and prosperity through decisive action from governments to support the industry to navigate these challenges,” said Bernd Schäfer, the CEO and managing director of EIT RawMaterials in Berlin, in an interview with The Hub in Berlin.  His organization attempts to secure the supply of critical raw minerals for the European industry and is largely funded by the EU.  “We see an enormous need for innovative funding solutions for partnership projects between European and Canadian businesses and mechanisms to identify and fast-track projects of mutual strategic importance,” he said.

Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz speak as they walk along the water front, Tuesday, August 23, 2022 in Stephenville, Newfoundland and Labrador. Adrian Wyld/The Canadian Press.

Yet even if Canada has a strategy on paper, experts say high political buy-in—and a sense of how urgent the problem is—is still missing on the Canadian side. That political buy-in is especially needed to secure European investment.

“It could take Trudeau coming to Europe and specifically saying ‘Hey, I have minerals,’” said Loyle Campbell, a Canadian research fellow in the Center for Climate and Foreign Policy at the German Council on Foreign Relations, in Berlin. “The Trudeau government needs to take political leadership over this and keep driving it forward aggressively.”

Campbell compared the Canadian government’s efforts on critical minerals with its recent pet project to export hydrogen. He said while there has been movement on the hydrogen file, the mineral file leaves much to be desired.

“Hydrogen has gotten quite a lot of support and a lot of attention and a lot of promotion among the [Canadian] diplomatic staff,” he said. “Hydrogen and critical minerals both started from a baseline of zero. There wasn’t much activity going on and we needed to get them both going much faster. So why are there MOUs coming out now on hydrogen, and much less action between the countries that need critical minerals and Canada?”

Campbell points to what he calls Canada’s “special responsibility” to help the rest of the democratic world with its energy and mineral needs—particularly in light of Canada shirking its global responsibilities in other areas, including defence spending that remains well below NATO targets.

“The scope and scale of the energy transition and the energy security crisis really require you to be all on board for more than just your favourite [resource],” he said. “You also need to be realistic about what your allies are asking for. You need to say, ‘What do you need and how can I help?’  rather than saying, ‘This is what we want to promote.’” “Rather than having political favouritism towards hydrogen, really go in on what’s strategically necessary.”

On critical minerals, as well as LNG, Canada is punching well below its potential. As Heather Exner-Pirot recently pointed out in these pages, collapsing energy and resource investment has stymied Canadian economic growth. The responsibility for that lies at the Trudeau government’s feet.

Without a government that will change course on its indifference—or even antipathy—to Canada’s resource sector, these domestic economic mistakes will soon become wider geopolitical ones.

The Weekly Wrap: Canada’s out-of-touch public sector unions are taking their entitlement too far

Commentary

In The Weekly Wrap Sean Speer, our editor-at-large, analyses for Hub subscribers the big stories shaping politics, policy, and the economy in the week that was.

Union reaction to Ottawa’s back-to-work rules is an opening for Max Bernier

A minority parliament is usually the subject of regular election speculation. But we haven’t seen much of that since the Liberals and New Democrats announced a supply and confidence agreement in the months following the 2021 election. 

This week, however, we heard calls from public sector unions for the NDP to abandon the parliamentary agreement and precipitate a federal election due to the government’s new policy that federal public servants must be in the office at least three days per week. 

It seems like a rather odd issue over which to plunge the country into a summer election. Especially since most Canadians have returned to the office. While remote and hybrid work reached as high as 40 percent of workers in April 2020 and then remained constant at about 24 percent between May 2021 and May 2023, the percentage was cut in half to just 12 percent as we entered 2024. 

The remaining share of Canadians still working from home is by far disproportionately comprised of public servants. A late 2023 poll, for instance, found that four in five federal employees were still working remotely in part or in full. 

From this perspective, the federal government’s three-day-per-week policy is far from punitive or radical. It remains more flexible and generous than a lot of other Canadian workplaces. 

Yet one wouldn’t know it from the reaction of the public sector unions. They called it a “slap in the face” and obliquely warned of a “summer of discontent.” One union representative even bizarrely described the physical workplace in terms typically reserved for third-world prisons: 

Bedbugs. Bats. Mice. Cockroaches. Mould. Odours. Poor air quality. Missing or broken equipment. Trash littering workstations. These aren’t conditions fit for federal employees.

The unions’ extraordinary reaction strikes me as a misread of the Canadian public’s appetite to affirm their members’ asymmetric workplace arrangements. This isn’t a Norma Rae moment. It’s an expression of out-of-touch entitlement. 

We’ve previously warned about the growing divide between private and public sector workers. The sizeable gap in wages, benefits, job security, and broader perks already seemed unsustainable. Calling for an election and threatening work action to avoid having to show up to the office three days a week risks blowing the fault line wide open. 

The only question is whether there are any political voices prepared to confront these issues. It’s not a big surprise that Prime Minister Trudeau has been silent or NDP leader Jagmeet Singh has promised to “put pressure” on the government to reverse its back-to-work policy. It is however more notable that Conservative leader Pierre Poilievre has stayed clear of the debate. As an Ottawa-area MP, he may be reluctant to provoke the large number of public servants who live and vote in his riding. 

If so, this issue could represent a big opportunity for Maxime Bernier and the People’s Party. The party has lacked an identity since the repeal of the pandemic restrictions and Poilievre’s own political ascendancy. Polls currently put its public support at just 2.5 percent. 

Coming out firmly in favour of returning public servants back to the office, including threatening to terminate those employees who refuse to comply, would presumably be popular with a silent majority of Canadians—particularly, one assumes, among conservatives. 

As Conservative leader, Poilievre has carefully protected his right flank. He would be wise to avoid letting Bernier outflank him on getting public servants back to the office.

Protesters gather outside of the White House in Washington, Monday, March 4, 2024, while Vice President Kamala Harris is meeting with Israeli war cabinet member Benny Gantz. Susan Walsh/AP Photo.
We’ve made the Israel-Hamas war about Western domestic politics

A lot of domestic and international news this week was marked by the opposition of Western governments, including the Biden administration and the Trudeau government, to Israel’s pending ground invasion of Rafah, a Southern Gaza city which is believed to be the last holdout of Hamas militants, including possibly its leader Yahya Sinwar. 

Most Western commentary and reporting on the topic has tended to focus on the growing tensions between Israel and Washington and the individual role of Israeli Prime Minister Benjamin Netanyahu in prosecuting the war. There’s been little discussion about the case for such an offensive or the role of the Israeli war cabinet and broader public opinion. 

In Monday’s forthcoming episode of Hub Dialogues, I put these questions to Dan Senor, a leading American foreign policy thinker and practitioner with strong connections in Israel. His answers are illuminating. I’d encourage The Hub community to check it out. 

As he explains, Israel has thus far “dismantled” 20 of Hamas’ original 24 battalions. The remaining four, which are estimated to represent about 15,000 soldiers, are believed to be in Rafah. If the goal of Israel’s overall military operation is to seriously degrade Hamas’ capacity for terrorist offensives, then it must push on to neutralize these remaining fighters and their accompanying infrastructure. 

It’s also hugely important as a matter of deterrence and a sign of strength. Israel’s military response to the October 7 attacks cannot be merely understood as short-term retribution against Hamas. It’s also directed at Iran, Hezbollah, the Houthis, and others that aspire to do harm to the state of Israel, as well as its new partners in the region who have come to the negotiating table due in part to Israel’s perceived strength. Abandoning the operation at this point would represent a huge victory for Sinwar and Hamas and a sign of weakness to Israel’s regional enemies and prospective friends. 

As for the tendency to personify the Israeli war effort through the figure of Netanyahu, Senor reminds us that the war cabinet is comprised of senior figures like Benny Gantz and Gadi Eisenkot who are among the prime minister’s chief opponents. His point here is that the ongoing military operation—including the Rafah offensive—cannot be understood as merely a reflection of Netanyahu’s unilateral decisions or his own domestic political calculations. Reports in fact indicate that the war cabinet has unanimously endorsed the invasion into Rafah.  

Yet a lot of these basic details have been excluded in the public debates in Canada, the U.S., and other Western countries. It’s as if we’ve collectively subordinated the facts on the ground in favour of our own domestic considerations. Diaspora politics or the election cycle have gradually come to trump everything else. 

Regular Hub contributor David Frum anticipated these developments as early as the next day after the October 7 attacks. As he presciently put it

Israel will need time to do its work. In the first shock of horror after a Hamas terrorist outrage, Canadians light up their national symbols with blue and white. Then a week passes, and Canadian politicians with an eye on domestic anti-Israel voters get impatient. They condemn violence on “both sides” and interpose to protect the terrorists from the consequences of their own aggression. Let’s not repeat that pattern that only perpetuates violence. Hamas started the war. Let Israel finish it.

Indeed. His assessment was right then and it’s still right today. 

Toronto Maple Leafs’ Mitch Marner speaks to the media in Toronto on Monday, May 6, 2024, after his team’s season-ending loss to the Boston Bruins in the first round of the NHL Stanley Cup playoffs. Chris Young/The Canadian Press.
Could a little regional competition save the Leafs?

Yesterday the Toronto Maple Leafs’ executive brass held a year-end press conference to defend another disappointing season and discuss what comes next.

Fans were unironically promised major changes from team president Brendan Shanahan, who has presided over every personnel and roster decision for the past decade. One can understand if they’re a bit skeptical.

One Leafs analyst tweeted: “Brendan Shanahan completely missed the mark. No answers, no transparency, no authenticity, no conviction.” A member of my hockey chat put it this way: “[I’m] just not sure how someone can have a job like this for 10 years in a ‘results business’ and have such crappy results and still be around.”

An underrated explanation is that the Toronto Maple Leafs have a monopoly over the most hockey lucrative market in the world. The organization generates significant annual profits regardless of the product on the ice. Demand for corporate sponsorships and rink-side tickets simply outstrips supply.

We know from basic economics that this can create a perverse set of incentives. It blunts the inherent impulse towards efficiency and improvement. It can diminish ambition and foster complacency. It can contribute to only winning one playoff round over the past decade.

If a key source of the Maple Leafs’ problem is a lack of market competition, then perhaps the solution is a new NHL team in the Greater Toronto Area. We know that there’s more than enough demand in the region to sustain another team. That’s demonstrated each time the Maple Leafs play in Buffalo and the arena is full of Leafs fans who traveled across the border for affordable tickets. It seems self-evident that of the possible expansion options, the GTA is most viable choice.

There’s only one problem: the Maple Leafs believe that they have a veto over the establishment (or relocation) of a NHL franchise within 50 miles of Scotiabank Place. The team cites section 4.3 of the NHL constitution that states: “No franchise shall be granted for a home territory within the home territory of a member, without the written consent of such member.”

Yet a 2008 review by the Canadian Competition Bureau judged that this provision was “anti-competitive” and only a majority vote of the NHL board of governors is needed to establish or relocate a franchise. The NHL has not since tested the ruling with a specific case.

Maybe now is the time. Not only would it significantly boost league revenues (including a massive, one-time expansion fee), but it would impose some much-needed competition on a Maple Leafs organization that has consistently let me and other long-suffering fans down.