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Front Page » Archive » Vol
2 No 47 » here
What's Klein's cut of the action?
Clues accumulate about what Alberta Premier Ralph Klein and US Vice
President Dick Cheney talked about in secret last fall
by Kevin Potvin
The Republic
In an earlier issue of The Republic, we wondered what might have comprised
secret discussions last fall in Washington between US Vice President Dick Cheney and
Alberta Premier Ralph Klein. This meeting took place after September 11 2001, and
just before Cheney announced a sweeping new US national energy policy--the first
reform of this vitally important industrial sector in three decades.
Something shading close to an answer was revealed two weeks ago. US and Canadian
military defence officials announced a new treaty whereby each country may now send
active military troops across the border without specific permission in times of national
emergency.
The arrangement is, on paper at least, reciprocal, but the notion of Canada sending
active troops into America without specific permission is laughable enough to dismiss
as anything more than an add-on to help Canadian defence officials placate questioning
Canadians.
The key to unraveling the mystery about what Klein and Cheney discussed lay in the
fact that it was Klein, a provincial premier, who met with Cheney to discuss the new
American energy policy, and not the federal minister of energy or the federal minister
of industry. The other key lies buried in recent Canadian history, specifically, the
1980 National Energy Program, unrolled by then-Prime Minister Pierre Trudeau in the
wake of an overnight doubling of the world market price of crude oil caused by the
Iranian revolution.
Seven years earlier, the 1973 Arab-Israeli war inspired oil-exporting Arab states--in
particular Saudi Arabia--to attempt to win a seat at the war's settlement negotiations
by nationalizing their oil fields, applying an embargo on oil exports against Israel's
main backer, America, and raising oil prices and, hence, state revenues, through a
new oil cartel called the Organization of Petroleum Exporting Countries, or OPEC.
Overnight, crude oil prices on open markets spiked to four times their previous rates,
causing a widespread economic recession first in America and then throughout the western
industrialized world.
OPEC became an instant heavy-hitter on the world's biggest field of play, and Saudi
Arabia's oil minister, Sheik Ahmed Yamani (aka Sheik "All of Your Money"),
became one of the most powerful people on the planet.
Although average Americans fretted (and lined their cars up around the block at gas
stations and drew guns on each other), the emergence of OPEC and the consequent spiking
of world crude oil prices was not wholly unwelcome in higher circles of American power.
In a recent interview, Yamani revealed that then-American Secretary of State Henry
Kissinger, in the Nixon administration, not only secretly assured OPEC oil ministers
that the US would not take any actions against an oil embargo, but was in fact the
originator of the idea of an embargo, and actively encouraged Yamani to pursue it.
Possibly the huge windfall available to American oil producers with oil prices quadrupling
overnight played a role in the Nixon administration's thinking.
That logic was certainly not lost on then-Alberta premier Peter Lougheed, who saw
Alberta, home to most of Canada's copious oil reserves, instantly transformed from
a struggling, mostly farming province into a major player in the world economy, and
a huge benefactor of OPEC's plans. The beneficence of OPEC to Alberta can be measured
in the bulging accounts held by the Alberta Heritage Fund, which came to hold by 1987
$12.7 billion, or about 130% of the annual total Alberta government budget in that
year.
That fund would have expanded much faster and would have become a great deal bigger
had Trudeau not put an end to seven years of squabbling between Edmonton and Ottawa
over sharing of oil revenues and price controls by intervening and establishing the
National Energy Plan. The NEP forced Alberta to "export" oil to Ontario
manufacturers at far below prevailing market prices. Albertans to this day are raised
on the knees of their grandpas who recite to them chapter and verse of this unforgivable
sin, and every Albertan can provide to the penny the estimate of how much Alberta
was forced to subsidize Ontario--thought to be around $20 billion.
The US entered another oil-price induced recession in the early 1980s, but Ontario
manufacturers and workers were spared the worst that struck their brethren across
the border in the northeastern US industrial belt because of NEP-mandated under-market
Alberta oil prices available to them. The partially nationalized domestic oil industry,
and the resulting benefits to the nation's industrial base in Ontario, provide most
of the explanation for Canada's currency then achieving values at or above par with
the American dollar.
Conservative Prime Minister Brian Mulroney won crucial western Canadian support in
the 1984 election by promising to dismantle the NEP. Canada's manufacturers, once
again without shelter from frequent and unpredictable global oil price shocks, despite
being a major net exporter of oil, probably explains in large part Canada's currency
decline to about .66¢ to the American dollar today.
Among the most serious of crimes for which Iraqi President Saddam Hussein stands
accused by successive American administrations is the one least frequently mentioned.
In 1972, Hussein nationalized all of Iraq's oil industry, and threw out of the country
all foreign oil companies, which meant mostly American companies.
By contrast, when Saudi Arabia nationalized its oil industry the same year, it formed
a consortium that prominently included American oil companies, called Aramco. Hussein
proceeded to modernize Iraqi society, investing substantial oil revenues in health
and education programs, as well as an independent defence establishment. By contrast,
Saudi Arabian leaders largely pocketed their oil revenues, investing nothing in their
society, and purchasing their defence from the US. As a result, by the late 1980s,
Iraqi citizens enjoyed the best health and education in the entire Arab world, and
Saudi Arabian citizens suffered the absolute worst, as measured by World Health Organization
blindness and literacy statistics.
Access to foreign supplies of oil is as crucial to American industry, and therefore
US government power, as air is to a breathing human. The enormous expenditure the
US government makes for defence, which is three times the expenditure made by the
average of all other western industrialized nations, when measured as a portion of
the nations' gross domestic product, is entirely predicated on the importance the
US attaches to the security of foreign lines of oil supply. Most of US foreign policy
begins and ends with questions of oil security.
At a time when US business leaders question every nickle and dime of US government
expenditures, that bloated portion spent on defence is not only unquestioned, but
its growth is actively encouraged. Every US industrialist and investor knows that
US militarily-protected supplies of foreign oil is the sine qua non foundation of
the American economy.
Foreign and military policies largely define what the US government is. The forcefulness
of these policies is a measure of the degree to which the US government is the exclusive
tool of American corporate boardrooms, oil company boardrooms most especially.
Any foreign nationalization of oil industries, and especially the subsidies an oil-producing
nation can thus provide to its domestic manufacturing plants, are anathema to US foreign
and military policies and its formulators, US corporate owners. The huge investment
the American government has made in its military, and its global deployment, is precisely
intended to prevent foreign nationalization of oil industries and consequent oil subsidies
to non-US manufacturers.
Today, the security of US supplies of foreign oil has been again severely threatened
by the prospect of war in the heart of the world's biggest oil reserves, found in
a relatively small region encompassing northern Saudi Arabia, Kuwait, Iraq, Iran,
and the new "-stan" states of the former southern Soviet Union. The huge
US war machine, now cranked up for active engagement around the world for the War
on Terrorism, requires a healthfully-chugging US domestic economy to generate enough
government tax revenue to cover daily operational costs. Big spikes in the market
price of crude oil brought on by war-related temporary disruptions to oil supply lines
threaten to plunge an already teetering US economy into deeper recession, which runs
the larger risk of the US war machine running out of operational revenues.
Thus, the security of US supplies of non-Middle Eastern oil is of paramount importance
not only to the health of the American economy, but to the US government's successful
prosecution of its War on Terrorism. The Americans thus believe that huge new US imports
of non-Middle Eastern oil will be required to offset oil price spikes, and hence to
avoid serious US economic recession, and by extension, to avoid a serious threat to
key US national security interests.
Ottawa once before partially nationalized the Canadian oil industry. It did so precisely
the last time America experienced a serious oil supply crisis. The Canadian government
also then subsidized Canadian manufacturers with below-market oil prices, much to
the disadvantage of American manufacturers, and thus to the disadvantage of US government
tax collectors. It did so under the Trudeau regime--the current Chrétien
regime's protégé. In fact, Canada's current Prime Minister was the Minister
of Energy in 1980, and was in charge of the NEP.
American industrialists remember Canada's NEP as though it were only last year. And
American oil industry executives remember it as though it were just yesterday. These
American oil executives now occupy the White House and all key senior US government
cabinet positions, a noteworthy fact made all the more poignant as the US marches
off to a world-wide war.
And now the answer to the riddle: If Ottawa ever hints again at a plan to protect
Canada's industrial base from severe global oil price shocks (such as those caused
by active war in the Persian Gulf), such protection would immediately trigger the
American perception of a threat to vital US national security interests serious enough
to be labeled an "emergency," which would now legally justify the US deployment
of active troops across the US-Canada border. It is worth keeping in mind that Alberta
is today a bigger supplier of oil to America than Saudi Arabia.
Naturally, the overnight appearance of armed US soldiers camped around Alberta oilfields,
bristling with antennae and artillery, and covered overhead by swarming and fully
armed US F-16 fighter craft, would potentially be a large enough affront to Ottawa,
and to Canadians, as to occasion the rapid fracturing of the country along its perennially
active fault lines. What happens to Canada (outside of Alberta) is of no concern to
America--which is why no federal minister (including the Prime Minister) or any
other Canadian premier besides Ralph Klein has ever met with US Vice President Dick
Cheney, widely understood to be the power behind the throne occupied by the universally-acknowledged
moron, Bush.
What happens to Alberta (and specifically its oil) is the question that preoccupies
the American administration. It is therefore not beyond the terrain of the reasonable
to conclude that the substance of Ralph Klein and Dick Cheney's meeting was the details
of Alberta's succession from Canada and its annexation to America, should the worst-case
scenario (an Ottawa plan to nationalize the Canadian oil patch to help subsidize beleaguered
Ontario manufacturers) come to pass.
This future is likely not negotiable. Canada is but Belgium to America's Third Reich
Germany.
On the bright side, Canada, a self-admitted sleepy country, is about to go on an
exhilarating and hair-raising ride of its life. Canadians will likely at long last
discover their country's true identity during this tumult. It's a shame it's got to
happen just when the country ceases to exist.
But don't blame the lovable and rotund Ralph Klein when it all comes down. His "discussion"
with Cheney was likely one-sided--it's doubtful Klein would have managed to negotiate
much in return, given the highly-charged emotional environment of Washington at the
time, still coping with the September 11 attacks, and in no mood, as Bush keeps saying,
for negotiations.
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