Author Topic: Government Can Stop Sale of Canadian Companies on Grounds of National Security  (Read 19354 times)

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Offline GAP

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Canadarm maker fetches $1.3-billion
JANET MCFARLAND AND WENDY STUECK Globe and Mail Update January 8, 2008 at 9:13 PM EST
 Article Link

MacDonald Dettwiler and Associates Ltd., the company behind the iconic Canadarm, is selling its space and satellite business to a U.S. buyer, betting its future on the far more terrestrial but profitable world of real estate data.

Although best known as a manufacturer of space products for NASA, the company says its lower-profile software operations – which track land titles, insurance and mortgages – are faster growing and have greater global potential.

MDA said it agreed to sell its space and satellite operations to Alliant Techsystems Inc. of Edina, Minn., for $1.325-billion in cash, and said it will use most of the proceeds to invest in acquisitions in the United States, Europe and Canada to build its now core information systems business.

Based in Richmond, B.C., MDA has been Canada's premier space manufacturing company for almost 30 years and is a granddaddy of Vancouver's high-technology scene, whose alumni have gone on to start and run other noted Vancouver technology companies. MDA co-founder and former chief executive officer John MacDonald, who left MDA in 1998, has called the company “the epicentre of the Canadian space industry.”

Tuesday, Mr. MacDonald said the sale was the right decision, “but emotionally, it was very difficult for them.”

He said the space group needed a new owner to keep playing in the big leagues in the huge U.S. space industry. “There is more work to be done, but not in Canada. Canada's a small economy. You can argue until hell freezes over about whether Canada should be spending money on a space program.”
More on link
« Last Edit: July 22, 2009, 22:36:05 by Bruce Monkhouse »
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Offline S.M.A.

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MDA may move major Canadian defense/space assets to the States
« Reply #1 on: March 09, 2008, 21:11:55 »
The possible sale/move of MDA to the States and its effects on the Canadian defense/space industry as well as on Canadian sovereignty, as one person stated in the article said, may not be a surprise to some of you, but it certainly continues to attract the attention of the House of Commons. :o
« Last Edit: February 10, 2011, 12:02:05 by Mike Bobbitt »
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Offline stevenstaples

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #2 on: April 03, 2008, 09:23:59 »
We are arguing that Canada needs this satellite for national security reasons (see our legal opinion on www.rideauinstitute.ca). All concerned about our national security and the safety of CF personnel should put aside their differences and oppose this deal.


Col. Pierre Leblanc (ret.) (former commander of Canadian Forces Northern Area)
(CTV Question Period)
March 23, 2008
"The Prime Minister talks about sovereignty - use it or lose it. And yet we have a tool that is excellent for Arctic surveillance, monitoring of our internal waters that are contested by the Americans and other countries, and now we're going to sell this asset to an American company."

Prof. Rob Huebert (Center for Military and Strategic Studies, Univ. of Calgary)
(Globe and Mail)
March 24, 2008
"We've never thought strategically and it just astonishes me that we're probably the only country that we know of with this type of technology, and we [don't] understand its significance,"

Calgary Herald
Tuesday, March 25, 2008
“It is wholly Canadian technology, for which there is no substitute elsewhere. Given Canada's surveillance needs, this alone would justify every cent Canadians have invested in MDA.”

Steve Staples
sstaples@rideauinstitute.ca
613 565-9449


Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #3 on: April 03, 2008, 09:41:28 »
A few factors, in no particular order of importance:

•   Mature companies change hands on a regular basis;

•   Technology companies tend to need the US DoD at least as much as it needs them;

•   The corporation (any corporation) has an overriding fiduciary responsibility to its shareholders; and

•   Contracts are enforceable, including those we may have with MDA if or when it changes hands.

 MDA was a jewel Canada’s R&D crown but our R&D efforts are best pursued in:

•   Universities – which do almost all the Research; and

•   Private companies – as often as not the most productive Development takes place in immature (small, start-up) companies. As a broad generalization (which are most often wrong) large, mature companies do less and less R&D and focus more and more on production.
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Offline Thucydides

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #4 on: April 03, 2008, 10:53:08 »
It is very interesting that Mr Staples now sees the need for enhanced defense expenditures, since there is little or no private market for building and operating RADARSATS.

What other critical national security issues need funding as well Mr Staples? Perhaps a fully manned, well equipped, general purpose military establishment would do the job and provide those national security measures?
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #5 on: April 03, 2008, 21:01:54 »
Quote
All concerned about our national security and the safety of CF personnel should put aside their differences and oppose this deal.

Mr Staples,

You will have to forgive me, given your posting history and TV/Radio/Newspaper interview style, of just being the least bit skeptical of your concern for the well-being of me and my compatriots.  Now, I don't think for a second that you actively wish any of us harm.  It's just that, you think you know better than everyone who has ever worn a uniform.  You positively ooze superiority over soldiers, sailors and airmen- all without any detectable training, education or experience in military or defence matters.  You are, of course entitled to your opinion, just don't expect me to give it much weight.

Now, to the matter at hand.  I feel like disagreeing with you, just as a reflexive response, but to be honest, I don't know enough about the deal, it's background or implications to offer an informed opinion.  See how that works?

Thanks for your time.

Offline George Wallace

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #6 on: April 03, 2008, 21:11:58 »
I am of the opinion, Steven Staples left his Army.ca account logged on and some Military supporter played an April Fool's joke on him and posted using his name. 

I actually see the sale of MDA to a US company as a serious matter of concern.  As this is the best technology of its type in the world, we would loose all control of it, as well as be limited to accessing it through another nations Military.  This would mean that it could likely be denied us, or censored.

A rather interesting predicament.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #7 on: April 03, 2008, 21:29:36 »
Where is the satellite control element located?  At MDA in Vancouver?  In a Government Office building somewhere?  In the US?

I don't know the answer to these questions.

 I am well aware that US security regulations apply to US companies and their subsidiaries- and that can have strange effects on technology and info transfer.  It is just not clear to me in this case how much concern about the sale is over-blown Canadian Nationalistic, I-hate-the-evil-Americans-and their-arms-merchants tm rhetoric and how much is legitimate concern about control over a satellite we paid a bunch of money for.  The "taxpayer funded" bit is a bit of red herring.  It would be like criticizing the sale of GM Diesel division of London to GDLS after we bought 651 LAVs from them.  We paid money, MDA delivered a service. A business transaction, not taxpayer largess.

Honestly, part of me wants to say "block the sale", but, I have to ask, what are the second and third order effects if we do?  Are they worse than the sale itself?  Don't know...

Offline George Wallace

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #8 on: April 03, 2008, 21:36:03 »
It boils down to the access to our own technology for satellite imagery and surveys if it is controlled outside of the country, and is denied us for some reason as FOUO by the US military. 

Where it is controlled from in Canada, is irrelevant to the matter at hand, and may be OPSEC at the very least.
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Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #9 on: April 03, 2008, 23:17:23 »
Everything you need to know about the RadarSat2 ground segment, including control station locations, is here.
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Offline MarkOttawa

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #10 on: April 04, 2008, 00:42:30 »
George Wallace: I'm pretty sure it was St Steve himself--see his comment at this post at The Torch:

RADARSAT-2: Sound and fury...
http://toyoufromfailinghands.blogspot.com/2008/04/radarsat-2-sound-and-fury_02.html

If the Canadian government needs the capability, then it should buy it itself.  If the sale is blocked that effectively guarantees that MDA in the current situation will make no further such satellites for anyone.  So does the government create its own company for future work?  In any event the sovereignty-related capability really may be needed (if then) only a decade on, by which time RADARSAT-2 will likely be on its last legs.

And a more fundamental point: supposing the Government of Canada has the imaging capability and discovers a US  (not another country's) vessel doing  something we do not like; what does the government do?

Mark
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Offline MarkOttawa

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #11 on: April 04, 2008, 14:18:51 »
More here.:
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080403/Radarsat_080403/20080403?hub=Canada

To expand on my previous comment, note that RADARSAT-2 has only an expected seven-year life span, so it will cease operating before there is likely to be any significant maritime traffic in the Arctic that might raise sovereignty concerns for Canada. If Canadians want control of any further such satellites there is a simple answer: have the government buy MDA's space operations. And see how effectively and efficiently it can run things (there would seem to be no private Canadian interest in the radar satellite business). Simply preventing the current sale will do nothing to makes the business commecially viable in the future for MDA--unless, instead of an actual government purchase, there are continuous and probably large government subsidies.

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Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #12 on: April 10, 2008, 12:05:09 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is the latest:

Quote
Ottawa rejects space firm's sale to U.S.
No 'net benefit' for Canada if MDA Corp. is sold to foreign owners, Prentice says of unprecedented stand against Alliant takeover
 
BRIAN LAGHI and CAMPBELL CLARK AND JOHN PARTRIDGE

Globe and Mail Update
April 10, 2008 at 11:41 AM EDT

OTTAWA — — Federal Industry Minister Jim Prentice confirmed Thursday morning that he has taken the unprecedented step of rejecting the planned $1.3-billion sale of Canada's leading space company to U.S. interests, concluding that the deal would not be in the best interests of the country.

Mr. Prentice's office issued a brief statement acknowledging that, as The Globe and Mail reported, he wrote to Alliant Techsystems Inc. (ATK) on April 8, to advise them that, "based on the information received at this time, he is not satisfied that the proposed sale of MacDonald, Dettwiler and Associates Ltd. (MDA) to ATK is likely to be of net benefit to Canada."

Under Canada's investment-review law, the company has 30 days to make new arguments to the minister, and Mr. Prentice must then confirm his rejection. But Mr. Prentice's move signals his intention to take the unprecedented step of blocking a major corporate takeover, in an issue that has been fraught with controversy as opponents argued that the sale of MDA could impair Canadian sovereignty.

A spokesman for Mr. Prentice, Bill Rodgers, confirmed Wednesday that the note had been sent, but he was unable to provide further details. When contacted by The Globe and Mail Wednesday night, Alliant officials responded with a two-sentence statement that indicated that they are not willing to declare the deal dead.


The proposed sale of MDA Corp.'s Information Systems Unit has raised fears that Canada could lose control of the data from Radarsat-2 in a dispute over Arctic sovereignty.

"We have been in discussions with the minister's office. Your information is not consistent with those discussions," the Edina, Minn., company's statement said.

MDA officials could not immediately be reached for comment Thursday.

ATK spokesman Bryce Hallowell would only say that "discussions with the Canadian government continue."

One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.

"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.

"If I had bought those shares yesterday, I would be miffed," he added.

MDA's share price rocketed to $49 from $42.51 on the Toronto Stock Exchange on Jan. 9, the day after its announced the deal to sell its space business, also known as MacDonald Dettwiler and Associates., to ATK.

Since then they have slipped back, closing yesterday at $46.85.

They fell sharply at the opening bell Thursday and as midday approached in Toronto were trading at $42.80, down $4.05 or 8.6 per cent, up from a morning low of $42.

Mike Prior, director of market surveillance at Market Regulation Services Inc., said in a voicemail message that the regulatory agency is talking with MDA "to determine if there is any disclosure that they should be making." He added, however, that he "cannot say right now whether or not the company will be making any disclosure."

Much of the controversy surrounds the company's Radarsat-2, a remote-sensing satellite that allows observation of Canada's Arctic.

The satellite can see through clouds and nighttime cover and spot any vessel larger than three metres in length.

MDA is also the builder of the iconic Canadarm, the robotic limb used on the space shuttle and the International Space Station.

Opponents of the sale expressed deep concerns that it would violate Canadian sovereignty.

The federal government has never rejected any takeover in thousands of foreign-investment reviews since the Investment Canada Act went into effect in 1989, although it has sometimes extracted concessions before it approved a deal.

Alliant could use its 30-day appeal period to provide new information to Mr. Prentice. And the companies could restructure the deal to meet government concerns.

The proposed sale of MDA Corp.'s Information Systems Unit has raised nationalist sentiment and fears that Canada could lose control of the data from Radarsat-2 in a dispute over Arctic sovereignty. Alliant, also called ATK, is a U.S. weapons and space contractor. The systems unit is responsible for most of MDA's operations and 1,900 employees.

MPs from all parties have also questioned whether a jewel of the Canadian high-tech space industry should be sold into U.S. hands, and the Canadian Auto Workers union has raised concern for the impact on the industry.

Some of the staunchest criticisms came from within the Conservative Party. Tory MP Art Hanger voiced sharp concerns, and Conservatives on the Commons industry committee treated the sale with skepticism.

One Conservative MP, speaking on condition he not be named, said the sale had raised a surprising backlash among Canadians, who saw it as a point of pride being peddled to the United States — which might possibly use it against Canada's claim to Arctic waters.

The Radarsat-2 satellite, developed in large part with the guarantee of a $445-million federal contract for satellite data, will be Canada's only eye-in-the-sky capable of spotting a U.S. sub, for example, sailing through the Northwest Passage.

The United States does not recognize Canada's Arctic claims.

Opposition politicians have expressed concern that U.S. security laws could force MDA to withhold satellite images from Canada, or allow U.S. agencies to obtain such data even if Canada banned its transmission.

Officials with MDA and ATK insisted Canada would retain control of the satellite data, but the Rideau Institute, a foreign-policy lobby group, issued a legal opinion arguing that the U.S. law might trump Canada's.

Through it all, MDA president Daniel Friedman insisted that the company could not survive if it did not have contracts from the U.S. space program, and that only a U.S. owner could ensure that access.

Union locals and employee associations at MDA plants in Brampton and Montreal were just gearing up a campaign to push Ottawa to approve the sale, arguing that the best way to save their cutting-edge Canadian jobs is through a sale to a U.S. buyer.

They had bought an advertisement scheduled to run in a Parliament Hill newspaper and written to MPs.

Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry, said Janine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant.

I see two key points:

”One Conservative MP, speaking on condition he not be named, said the sale had raised a surprising backlash among Canadians, who saw it as a point of pride being peddled to the United States — which might possibly use it against Canada's claim to Arctic waters.” and

”Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry, saidJanine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant. ”

There is now a thirty day period during which ATK can make a “better” case. If the unnamed Tory MP is correct, however, no case, no mater how good, can win the case.


Edit: last paragraph of the Globe and mail article updated from the G&M web site.
« Last Edit: April 10, 2008, 13:55:20 by E.R. Campbell »
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
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Offline Bruce Monkhouse

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #13 on: April 10, 2008, 12:10:44 »
Quote,
One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.
"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.
"If I had bought those shares yesterday, I would be miffed," he added.


Does anyone else just want to punch him/her in the squash? >:D

I, for one, am happy, albeit suprised, that this decision has been made.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #14 on: April 10, 2008, 12:14:30 »
Quote,
One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.
"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.
"If I had bought those shares yesterday, I would be miffed," he added.


Does anyone else just want to punch him/her in the squash? >:D

I, for one, am happy, albeit suprised, that this decision has been made.

No, (s)he's 100% correct. Companies have a responsibility to publicly, even loudly, announce news that might effect share price as soon as that information is known. MDA did a disservice to investors - bad management. Management's overarching duty, above all else, it towards the shareholders; MDA's management failed.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Bruce Monkhouse

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #15 on: April 10, 2008, 12:18:17 »
Oopsy......I thought I read 'MND" not 'MDA".

I thought this person was blaming Mr. McKay.

Pay attention, Monkhouse
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #16 on: April 10, 2008, 14:07:39 »
I see one dilemma for government in this statement by Janine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant:

Quote
Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry.

At $1.3± Billion MDA is not an especially big player in the global space industry but it may be an important Canadian company and, if its sale to a US firm is blocked, a Canadian company with some claim for support from the Government of Canada which will have denied it a chance to grow and prosper in the USA.

How does Canada keep a space company busy if some substantial share of its market is denied to it by US laws? Do we put the CSA into the space business à la CNES? Do we start building a military space based surveillance/warning/control system, which, in my opinion, we need?
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #17 on: April 11, 2008, 07:05:20 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is an on point editorial:

My emphasis added.

http://www.theglobeandmail.com/servlet/story/LAC.20080411.EMDA11/TPStory/Opinion/editorials
Quote
THE RADARSAT-2 SALE
Canada holds on to a place in space

April 11, 2008

In an unprecedented move, Industry Minister Jim Prentice says that he is not convinced that the sale of Canada's most sophisticated space technology firm to an American arms manufacturer would be a net benefit to Canada. The buyer, Alliant Techsystems Inc., now has 30 days to provide information that might change his mind. Otherwise, Investment Canada will likely disallow a foreign investment for the first time in its history. Canadians have the right to ask how we reached this impasse with a U.S. purchaser when that nation is a defence ally, and why - if so critical - such taxpayer-funded technology was left in the hands of a publicly owned Canadian firm, MDA Corp., in the first place.

The answers are not reassuring. MDA's key asset is Radarsat-2, a state-of-the-art observation satellite that can peer through clouds and night skies, alert to intruders or environmental problems, particularly in the Northwest Passage. Sent into orbit last December, it is a brainchild of the former Liberal cabinet, which in 1994 asked the Canadian Space Agency to find a private sector partner to follow up its successful Radarsat-1 launch.

Ottawa wanted to create a competitive satellite operation, and pass its business of Earth observation to the private sector. MDA won that contract. Ottawa privatized its satellite operation functions and transferred Radarsat-1 ground systems to MDA.

The taxpayers, in turn, put up more than four-fifths of the cost of Radarsat-2, roughly $445-million, in return for access to the data, which the Canadian Space Agency now sells to other government departments.

The deal was full of buzzwords, such as public-private partnerships, with little tough analysis of the long-term consequences. MDA kept the rights to data that the space agency does not need, and can market it internationally. With feeble foresight, Ottawa is now relying on the firm for its vital intelligence. Though MDA officials told the Commons industry committee last week that Radarsat-2 operates under a Canadian licence, so Canada retains control over the satellite and its use, Mr. Prentice is likely unconvinced.

His hesitation is perhaps understandable. The U.S. government almost certainly has the power to refuse to let Alliant transfer photos to Canada, even if Alliant vows to do so. The industry committee should pursue this point. Investment Canada does not have an explicit national-security test - unlike the United States, which toughened its ability to block sales of U.S. firms to foreigners on national-security grounds last fall. Nor do the Americans allow foreign firms to bid on space-program contracts, even though Canada is an ally in North American air and space defence. The U.S. would almost certainly not allow a comparable sale.

So far, however, the reasons for Mr. Prentice's objections remain unclear. Canada has six grounds for assessing sales, such as the effect on technological development. The minister should explain his decision, and answer the bigger question of how Ottawa let a private firm take control of an asset thought to be so important to the public interest.

As people with an interest in national security we, Army.ca members, should share the Globe and Mail’s concerns.

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Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #18 on: April 11, 2008, 07:52:27 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post, is a contrary view by Terence Corcoran that focuses on the lack of focus in Canadian space policy and programmes and the distinctly anti-American bias evident in the most public opponents of he MDA sale:

http://www.nationalpost.com/news/story.html?id=436521
Quote
Canada's expensive buy-in into the space game
Forget national security, Ottawa is blocking MDA's sale for another reason

Terence Corcoran, National Post  Published: Friday, April 11, 2008

Backed by the usual nationalist suspects -- i.e., out-of-office Liberals, unions, special interests, Canada Research Chair profs, the Toronto Star, even a National Post columnist - the Harper Tories appear set to relaunch Canada's space rocket.

That's just a metaphor, of course. Canada has never had any rockets for space work. It also has never had much of a space program to speak of, outside the Canadarm, a $1.4-billion contribution to the U.S. space station that, while a source of pride to Canadians who respond to collectivist icons, will disappear as a meaningful space venture when the U.S. space station program comes to an end soon.

Then there's the Canadian Space Agency. Starved of cash and drained of motivation by the Liberals, the CSA dried up as a source of funds and creative energy more than a decade ago, largely under the neglectful eye of the Chrétien government.

But now comes Jim Prentice, Tory Industry Minister, with what is shaping up to be a plan to get the government of Canada back into the space game. What he may also do at the same time, however, is bury the shareholders and private enterprise players who have given Canada the only genuine space outfit it has: the space systems group of MacDonald, Dettweiler and Associates (MDA), of Vancouver.

MDA plans to sell the system group to Alliant Techsystems of Edina, Minn., for $1.3-billion, a price that would deliver a big payoff for MDA shareholders. But in a move that knocked $160-million off shareholders' value in MDA Thursday, Mr. Prentice fired off a potentially deal-killing letter to Alliant. In a classic 1970s-style Canadian government stealth missile, Mr. Prentice tells Alliant that "I am not satisfied that your investment is likely to be of net benefit to Canada."

Note the first person power trip. Quoting language from the Investment Canada Act, Mr. Prentice then ties the company up in legal circuitry. Alliant, Mr. Prentice told the company, has 30 days to "make representations and submit undertakings." What kind of undertakings? The ego doesn't say. "At the end of this time period, I will notify you forthwith that I am satisfied that your investment is of net benefit to Canada or confirm that I am not satisfied that it is of net benefit."

We can only assume that when Mr. Prentice adds up the net benefit to Canada, he is taking into account the $1.3-billion in value that Alliant will transfer from Minnesota to the largely Canadian shareholders of MDA, including many MDA employees. That money would be in the pockets and treasuries of Canadians who could - as MDA certainly plans - invest in other business ventures that bring even greater benefit to Canada's economy.

Given the history of the Alliant-MDA takeover bid, however, it is not likely Mr. Prentice has investors at the top of his mind. From the very day Alliant announced the $1.3-billion bid, the voices of nationalist doom rose over the transaction.

First came concern that the revered Canadarm, symbol of national space prowess, was going to end up in U.S. corporate hands. That lasted a few days, before the realization that the Canadarm isn't worth anything as the U.S. kills its space station program.

With no traction on the Canadarm, Buzz Hargrove's Canadian Auto Workers - which represents MDA workers - cooked up a moral case against the takeover. Alliant also made land mines. How could Canada, world anti-land-mine crusader, tolerate a such a corporate monster? The CAW even managed to plant a story about a possible "revolt" among MDA employees, although only one made the news. "There's no way I would work for them," said Paul Cottle, a 31-year-old engineer who worked on satellite systems at MDA.

That story fizzled, and Mr. Cottle was soon replaced by bigger guns who fired up what has become the major focus of the MDA takeover fight: Radarsat 2. Lining up to protect Radarsat as a national treasure that cannot possibly be sold to Americans we find Michael Byers, Canada Research Chair in Global Politics at UBC; Marc Garneau, former astronaut and Liberal candidate; Scott Bryson, Liberal industry critic; the Toronto Star; John Polanyi, Nobel laureate and Univerity of Toronto professor.

Lauched earlier this year, Radarsat 2 is reputedly something of a miracle, a high-tech eye in the sky that can record and send images of the Earth back from space, at a scale as fine as three metres. The commercial, military and practical uses of the technology are apparently vast - and lucrative.

The glue that holds the Radarsat story together as propaganda is a conceptual fabrication that each of our celebrity activists foisted on Canadians. They claim that Radarsat was funded with $485-million in government money. They call it "an investment" by the government, a "taxpayer paid" satellite. As Mr. Byers slyly put it, the government actually paid for "85% of the total cost of the satellite."

But the government didn't actually pay for the satellite. Radarsat 2 is controlled by MDA, which put it up under its own effort, orchestrating complex rocket deals and other schemes far from the role of government.

The government of Canada paid $445-million for priority rights to satellite images over a period of many years into the future. It was an advance on the product, not an investment in the satellite. The satellite is a private, commercial satellite service that collects revenues from many governments all over the world. It is, in fact, a great private-sector space success story. MDA developed the satellite, moreover, when it was controlled by another American company, Orbital. Why did the CAW not object to U.S. ownership in 1998?

If MDA's satellite systems were sold to Alliant, Alliant could use its U.S. base to sell products to U.S. buyers, thus expanding the company's Vancouver-based core of satellite expertise.

But Mr. Prentice apparently has a better idea. We don't know what that idea is, but he appears to be preparing to get the government back in the space business. Will the MDA satellite system - and MDA shareholders - pay the price?

National Post

A couple of points:

First: I agree with Corcoran that, absent some huge changes in Canada’s national science and space policies and programmes, MDA’s shareholders are being condemned to the destruction of their assets in order to satisfy the ignorant, knee-jerk anti-Americanism of the economically illiterate majority;

Second: There’s nothing wrong with Minister Prentice’s first person language. He is taking ownership of the file – simultaneously shielding he PM from criticism from he US administration and strengthening is own leadership position in the Conservative Party of Canada; and

Third: While it is (sadly) true that Canada abandoned its (very tentative) rocketry programmes back in the ‘70s, we were a space pioneer – we became the third space-faring nation when Alouette (designed and built by the Defence Research Telecommunications Establishment (DRTE) (now the Communications Research Centre thanks to a power grab by Trudeau’s Communications Minister Gérard Pelletier in 1973) was launhed in 1962 – and we remain an important space-faring nation today, despite inept government policies that, consistently, sacrifice the national interst on the alter of the pogey and our “sacred trust” social programmes.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
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Offline Flip

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #19 on: April 11, 2008, 13:47:57 »
I know it's usually bad form to disagree with the smart kids in the class, but sorry Edward.

Quote
First: I agree with Corcoran that, absent some huge changes in Canada’s national science and space policies and programmes, MDA’s shareholders are being condemned to the destruction of their assets in order to satisfy the ignorant, knee-jerk anti-Americanism of the economically illiterate majority;

I gotta' disagree.

As a small technology business owner I have had a front row seat to the "musical chairs" of foreign  buyouts.  I've seen many of my colleagues and friends suddenly find themselves unemployed when the technology enterprize (many supported with public money) they work for gets acquired and run into the ground or simply disbanded. As this history has repeated itself over and over in the past 25 years, I have a very hard time believing in a happy outcome if MDA were sold.

We've had a large number of these repeats of history in Edmonton.
And it has NEVER benefited Edmonton or my business.

I'm not Anti-American in the least.  I just don't like how corporations handle technology assets.

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #20 on: April 11, 2008, 15:04:07 »
I know it's usually bad form to disagree with the smart kids in the class, but sorry Edward.

I gotta' disagree.

As a small technology business owner I have had a front row seat to the "musical chairs" of foreign  buyouts.  I've seen many of my colleagues and friends suddenly find themselves unemployed when the technology enterprize (many supported with public money) they work for gets acquired and run into the ground or simply disbanded. As this history has repeated itself over and over in the past 25 years, I have a very hard time believing in a happy outcome if MDA were sold.

We've had a large number of these repeats of history in Edmonton.
And it has NEVER benefited Edmonton or my business.

I'm not Anti-American in the least.  I just don't like how corporations handle technology assets.



With respect, I cannot see how blocking this sale benefits MDA's shareholders. As far as I know - and I may well be very wrong - MDA doesn't have any irreplaceable technology that the US must have. It needs the US market more than the US needs MDA. In that situation, if MDA's access to the US market is limited, as MDA's CEO suggested it will be, then 80% of its potential market is gone. That cannot be good for business. Life would be better for MDA's shareholders if there was a Canadian space science/technology programme that would provide a steady stream of contracts, but there isn't.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #21 on: April 11, 2008, 16:55:47 »
Maybe I'm missing something, or don't truly understand what's going on here.

If the US truly wants and needs this high flying spy cam, why don't they just buy one from the company.

If they don't want to do that, my other thought is that they were going to buy the firm, close the company and shelve the techology, to protect their own interests.

Am I being too simplistic? Or do I need to wrap the tinfoil tighter.

My other bother is, that after all the caterwalling from the left about the sale. The CPC agrees, stops it and then the liberal mouthpiece Mop & Pail complains about the CPC doing exactly what the outspoken nationalists wanted. Damned if you do, damned if you don't.

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #22 on: April 11, 2008, 17:57:48 »
       I think the rub here, as was already mentioned by some, is that if RADARSAT 2 is so important to Canada's security why was it built and owned by a private company.  This is what happens to private sector assets; they get bought and sold.  This should have been from the outset a wholly government owned piece of hardware with options for the Fed's to sell image data to the private sector, not the other way around.  This, of course, is all clear with the magic of hindsight.  I believe, as it was mentioned in several news articles, that MDA has one month respond on the ruling and offer counter arguments/proposals, it is possible that RADARSAT will be taken off the table while the rest of the deal proceeds as was intended. 

My other bother is, that after all the caterwalling from the left about the sale. The CPC agrees, stops it and then the liberal mouthpiece Mop & Pail complains about the CPC doing exactly what the outspoken nationalists wanted. Damned if you do, damned if you don't.
I don't think this is simple a lefty-righty issue and to characterize it as such is not really useful in any way.  The government shot itself in the foot a bit in on this one; they have allowed many top tier Canadian firms to be scooped up by international buyers without so much as a peep (fine, they are private firms).  All of a sudden they turn protectionist for a relatively minor (money wise) deal.  With all do respect to them they were put in a very tricky situation and it was unlikely that this was going to turn out with everyone hugging.

      As to why they wanted to buy the space ops part of MDA.  My guess is that they wanted the capacity to build R2 like satillites or some of the specific technologies that went into it, not just the ownership/capacity of one SAT.  With that, a simple purchase of MDA would be seen as easier and cheaper than a greenfield investment, you also swallow a potential competitor at the same time.  I'd imagine Alliant's thinking is the same logic that drives most M&A, and not tinfoil hatty. 
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #23 on: April 11, 2008, 19:07:53 »
...
If the US truly wants and needs this high flying spy cam, why don't they just buy one from the company.

If they don't want to do that, my other thought is that they were going to buy the firm, close the company and shelve the techology, to protect their own interests.

Am I being too simplistic? Or do I need to wrap the tinfoil tighter.
...

According to ATK and MDA, or at least what I think I heard (read) ATK and MDA say, ATK wants to become a bigger player in the US space field and the fastest, easiest way to do that is to buy MDA - which already is a player. MDA has some technology (patents) that ATK needs; simple as that. My guess is that ATK would, fairly quickly, 'hollow out' MDA.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #24 on: April 11, 2008, 19:52:49 »
I believe, but could well be wrong, that one of the issues was potential loss of the data to be provided by RADARSAT should it be taken over by a US company.  Given American institutional xenophobia about things security-related, this was a real danger, IMHO.  I've seen enough "no foreign" US caveats in my time to know how it works.

MDA is also a defence contractor and let us not forget that.  If the shoe were on the other foot, do you think that the US government would permit the purchase of a major American defence contractor by a Canadian company, particularly if that contractor provided sensitive security data?  I don't think so, and it makes the accusations of "unfair" stemming from Minnesota politicians seem rather hollow and contradictory.
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Offline Flip

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #25 on: April 11, 2008, 20:34:16 »
Quote
With respect, I cannot see how blocking this sale benefits MDA's shareholders. As far as I know - and I may well be very wrong - MDA doesn't have any irreplaceable technology that the US must have.

I think the rub is, Shareholders are not the only stakeholders.  In a free and fair marketplace foreign ownership is fairly benign - but the field has always been tilted and without a "Canada first" attitude we can disadvantage ourselves unnecessarily when dealing with "America first" or "China first" trading partners.

I suspect that the point of the acquisition is more about eliminating a competitor than how unique the technology is.  We see this in oil related technology circles all the time.  A small start up shows great promise and is bought out, only to have the R&D department be closed or relocated to Houston or somewhere.  Purchasing market share or reducing technical uncertainty are part of the strategy too.

To assume that the market will take care of our interests if we just leave it to it's own devices is a little naive in my opinion and I think we have placed a little too much expectation in the goodwill of others.

Quote
In that situation, if MDA's access to the US market is limited, as MDA's CEO suggested it will be, then 80% of its potential market is gone.

MDA hasn't always been a defence contractor - And I think this comment highlights the split between how business people and technology people see the world.  To me, MDAs value is not limited too the stock value of it's existing business in it's current markets. To me, MDA's value can be related to what that body of people can accomplish in current and future markets.

To put it another way, In my own business the revenue is small and earnings have been growing but slowly.  If I had a venture-cap partner (who would naturally demand control) he would likely determine the sale of my building would provide him a tidy return and I could go flip burgers.
Or he could wait..........My interests are best served by staying in business.  I doubt he would see the point of  taking the longer view.

Just my civvie perspective. $.02


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Re: MDA may move major Canadian defense/space assets to the States
« Reply #26 on: April 11, 2008, 21:04:06 »
I think Teddy Ruxpin's point is the key one, but: see this technical note on the ground segment which shows that the key TT&C (tracking, telemetry and control) and satellite stations are all in Canada (Richmond, Prince Albert, Saskatoon, Gatineau and St. Hubert). It is pretty hard for the US to control the data when it is being downloaded into Canadian sites.

MDA’s responsibilities are towards its shareholders. If the Government of Canada wants to be one all it needs to do is buy in.

If MDA is to survive as a space company (it’s not really much of a defence contractor, in my opinion) then it needs access to space markets. If it cannot access the US market then it must find enough work to survive and prosper in the rest of the world. There isn’t much purely Canadian work right now. But: I believe Canada needs a space based, non-geostationary orbit based, surveillance, warning and control system – which will need to be renewed every seven to ten years – that’s enough work to keep a company bigger and better more capable than MDA busy enough to make good profits for a long, long time.
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Offline retiredgrunt45

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Posted with the usual disclaimers.

All I have to say is, "It's about time someone stood up and said NO" to the selling of all our technology to foreign buyers!

http://news.sympatico.msn.ctv.ca/TopStories/ContentPosting.aspx?feedname=CTV-TOPSTORIES_V2&showbyline=True&newsitemid=CTVNews%2f20080410%2fradarsat_prentice_080411

 [quote]Industry Minister Jim Prentice said Friday that decisions about foreign takeovers will now be viewed with the goal of ensuring that Canada retains sovereign control of its technological toolbox.

Speaking in St. Hubert, Que. at the Canadian Space Agency, Prentice offered his clearest statement so far on how business will be done.

"We need to own our technology and the intellectual property that comes with it,'' the prepared text of his speech reads.

"If we do not do this, we will not reap the benefits of our work and our investments; we will not build for the future in a way that keeps us at the forefront of innovation in a knowledge economy."

The speech came one day after Prentice rejected a deal that would have seen Canada's largest space technology firm sold to an American arms maker, saying the proposed deal wouldn't provide net benefits to Canada.

Prentice has sent a formal rejection letter to Alliant Techsystems Inc. (ATK), a U.S. company that has been trying to purchase a division of MacDonald, Dettwiler and Associates, the Canadian firm responsible for the Radarsat 2 satellite, Canadarm, and the space robot Dextre.

Prentice told ATK the sale will not be allowed unless the company can offer new and compelling information.

Officially, ATK has 30 days to come up with the evidence. But Prentice's speech on Friday made it sound like the decision was final.

Prentice undertook efforts this week to tighten the regulations around foreign takeovers. And he said he would apply a "national security test" that would ensure companies with foreign ownership would be required to operate under the same standards as those that are domestically owned.

A foreign competition panel has also been established under Lynton Wilson, former head of BCE Inc. The panel has a tight timeline, commissioned to report on the issue of foreign takeovers by June 30.

The government seems determined to put a stop to the trend that has seen once-proud Canadian companies bought out by U.S. investors, such as Inco, Falconbridge and Hudson's Bay Co.

But some who are directly affected by Prentice's decision to block the sale felt his speech Friday was short on good news for workers whose jobs may have depended on the deal.

Robert Quintal, CAW local president for MDA, told CTV's Mike Duffy Live he wanted to hear the government commit to ensuring MDA remains competitive.

"We were hoping to hear there would be a reasonable amount of money spent from the Canadian government into providing business for MDA and work -- new developments, new projects. And some sort of guarantee that the amount of money the Canadian government spends on space in general is adequate to keep the employees employed, basically," Quintal said.

Janine Symanzuik, of the employees' association at MDA's Brampton, Ont. facility, agreed Canada's space industry requires an investment to remain competitive and sustainable.

"The U.S. is 81 per cent of the world's space budget and we believe that to have access to those opportunities we need this sale to go through," she told Mike Duffy Live.

On Friday, Prentice extolled the strength of Canada's space industry, especially the value of Radarsat-2 -- the satellite owned by MDA. Prentice said it will help protect Canada's claim over the Arctic.

If the U.S. deal were to go through, critics have warned, Canada could lose control and access to that technology, which Prentice said produces clearer, faster images and can "survey an area more precisely, which makes it a superior tool for tracking ships navigating our waterways."

Even opposition critics have applauded the unprecedented decision.

"When the Canadian taxpayer puts $445 million into a satellite that launches on Dec. 14 and the company seals the agreement to sell it to the Americans on the next business day, that's an extraordinary case,'' Liberal industry critic Scott Brison told The Canadian Press.

"As well, the satellite was developed to protect Canadian sovereignty (in the North) that the Americans don't recognize, so to sell it to the Americans would be perverse."

But not everyone agrees. Jim Ramstad, a Minnesota congressman representing the area where ATK is based, told The Globe and Mail he was troubled by the move.

"I find the blocking of the MDA takeover by the Canadian government outrageous. It's a slap in the face from one of our closest allies," Ramstad told The Globe.

Paul Cellucci, former U.S. ambassador to Canada, told Mike Duffy Live he feels it's premature to cancel the deal. Cellucci said he's confident a compromise could be reached that would benefit all the parties involved.

[/quote]
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Duplicate thread, since subject already covered below:

http://forums.army.ca/forums/index.php/topic,71783.0.html

Mods, please merge.

« Last Edit: April 12, 2008, 01:11:28 by CougarDaddy »
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #29 on: April 12, 2008, 10:43:44 »
So- now that the Gov't has created a stranded Canadian market for the space industry, a multi-billion dollar spending package on space technology bought from MDA and a few other Canadian companies should be forthcoming any day now to keep them in business, right?

Right?

 

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #30 on: April 12, 2008, 17:50:02 »
So- now that the Gov't has created a stranded Canadian market for the space industry, a multi-billion dollar spending package on space technology bought from MDA and a few other Canadian companies should be forthcoming any day now to keep them in business, right?

Right?

That’s it; exactly right!

But see this, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post:

http://www.nationalpost.com/news/canada/story.html?id=440245
Quote
Support, but no cash for space
Prentice On MDA

Jan Ravensberge, Canwest News Service  Published: Saturday, April 12, 2008

LONGUEUIL, QUE. - Industry

Minister Jim Prentice drove what appears to be the last spike through the heart of a controversial $1.3-billion takeover bid by which a U.S. firm would have acquired sophisticated Canadian surveillance-satellite technology.

Under the deal, Alliant Techsystems Inc. would have been permitted to acquire surveillance-satellite and other space technology from MacDonald Dettwiler and Associates Ltd. of Richmond, B.C., the company behind the iconic Canadarm.

"We need to own our technology and the intellectual property that comes with it," Mr. Prentice said in a speech at the headquarters of the Canadian Space Agency, which is on the south shore of Montreal.

"The government," Mr. Prentice pledged yesterday, "will continue to foster a vibrant, high-tech space industry right here in Canada."

However, he later responded to reporters trying to pin him down on specifics: "I'm not going to announce anything today for MacDonald Dettwiler or other companies" in the cash-hungry space business.

During his speech, Mr. Prentice went further in explaining Ottawa's decision on Thursday to veto the sale. "We will not accept a loss of jurisdictional control to another party or another country," he said.

However, he would not say the MacDonald Dettwiler deal is dead. Discussions will continue between his department and Alliant while the clock ticks down on the 30-day waiting period triggered with Mr. Prentice's letter declaring the deal has no net benefit to Canada.

All aid short of help will be forthcoming, it appears.


It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Online SeaKingTacco

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Yes.  Far better to slowly kill MDA than let those stinky Americans own it...   ::)

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From today's Userfriendly comic :


Offline E.R. Campbell

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Even a broken clock is “right” twice a day so, now and again, even Prof. Michael Byers must be “right.” Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is an example of that phenomenon:

 http://www.theglobeandmail.com/servlet/story/RTGAM.20080423.wcomda23/BNStory/specialComment/home
Quote
Commentary
Space fallout: We need an explicit security test
In the post-9/11 world, foreign investors want our rules to be clear
 
MICHAEL BYERS

From Wednesday's Globe and Mail
April 23, 2008 at 8:04 AM EDT

The Canadian government was right to block the sale of MacDonald Dettwiler's space division to Alliant Techsystems of Minnesota. But the way the deed was done has created the need for some additional, urgent work by federal Industry Minister Jim Prentice.

Instead of having Mr. Prentice use the Investment Canada Act, the blocking of the MDA sale should have been left to Foreign Affairs Minister Maxime Bernier.

Under the 2005 Remote Sensing Space Systems Act, a foreign affairs minister may deny any transfer of a satellite licence that imperils the "national security or defence of Canada" - as the sale of MDA's Radarsat-2 would have done. Since the remote-sensing legislation is very specific, using it to block the sale would have avoided any collateral consequences for other foreign investment.

The Investment Canada Act, in contrast, has very wide application. It sets out a "net benefit" test and directs the industry minister to consider a number of economic factors, but makes no mention of national security. As a result, Mr. Prentice had to read national security into the legislation as an implicit consideration.

This exercise of ministerial discretion has created uncertainty for foreign investors, and not just in the space industry. Which Canadian assets and companies are protected by the new, unwritten national security test? Are shipyards that build navy and coast guard vessels off limits? What about the companies that train pilots for the Canadian Forces? What about ports and railways, and the companies that operate them?

An implicit national security test creates unacceptable political risk for potential investors. But now that the test exists, Mr. Prentice would only sow more confusion if he reversed the MDA decision and handed the matter to Mr. Bernier.

The solution is to recognize that free trade and foreign investment are compatible with an explicit national security test. In our post-9/11 world, foreign investors are accustomed to the fact that security sometimes trumps trade. What they want - quite reasonably - is for governments to spell out the balance as clearly as possible.

Other countries do so already. The United States has an explicit national security test that includes the protection of critical infrastructure in the energy, communications and transportation domains. Britain, France, Germany and Japan all have explicit national security tests. So, too, does China - one of the largest recipients of foreign investment and a full-fledged member of the World Trade Organization.

Most trade agreements include explicit national security exceptions. Both the WTO and NAFTA allow a country to deny "access to any information the disclosure of which it determines to be contrary to its essential security interests" - a provision that covers at least some of the imagery produced by Radarsat-2 and perhaps even the technology behind it.

Mr. Prentice, who clearly understands his portfolio, has been preparing for an explicit national security test since becoming Industry Minister last summer. In December, he introduced guidelines on how the "net benefit" test would be applied to foreign state-owned enterprises such as national oil companies or sovereign wealth funds. This move was prompted by concerns that Chinese state-owned oil companies might buy into the Alberta tar sands.

The proposed sale of MDA was not covered by these guidelines, because Alliant is not a foreign state-owned enterprise. It is a foreign private enterprise that conducts most of its business with a foreign government. Among other things, the MDA saga shows that the difference between public and private is not always clear cut.

To his credit, Mr. Prentice was already moving on this front, too. In November, he said the cabinet would "be examining the necessity for an explicit national security test for foreign investment. In doing so, we will examine what other G8 countries have done."

But the examination was made contingent on the conclusions of the Competition Policy Review Panel, a group of industry insiders convened by the government last July and expected to issue recommendations this summer.

The uncertainty caused by the MDA precedent needs to be addressed sooner than that. Mr. Prentice should put amendments to the Investment Canada Act before Parliament this spring. The recommendations of the Competition Policy Board can be dealt with when the bill is in committee.

The amendments should include an explicit national security test, clear guidelines, and an independent body to review foreign takeovers expeditiously and provide reasoned recommendations. Such a review mechanism would reduce uncertainty and help guard against the politicization of rulings on proposed sales.

Big decisions often necessitate further decision-making. In Mr. Prentice's case, blocking the sale of MDA has created an urgent imperative. It's time to modernize the Investment Canada Act.

Michael Byers, Canada Research Chair in Global Politics and International Law at the University of British Columbia, testified before three parliamentary committees on the proposed sale of MDA.


Prof. Byers has missed one key issue: trade, including trade policy and “tests” does not belong in the Foreign Affairs domain. We need to return Trade and Commerce to the Industry domain – as it was, explicitly from 1969 until 1983. It was, maybe still is fashionable to play let’s pretend ‘realpolitik’ and assume that we are a cheerfully  mercantilist state – that’s not true. We are a laissez faire economy in a confused world – an unhealthy mix of old fashioned mercantilists, protectionists and laissez faire free traders.

But, he is right in saying that we can and must establish clear, defensible ‘tests’ of the national good in trade and investment matters. Even laissez faire free traders are entitled to protect themselves but they need to do so in an open and honest manner.

Being a lawyer, Prof. Byers cannot resist going a step to far. We do not need  “an independent body to review foreign takeovers expeditiously and provide reasoned recommendations.” We already have too many of them. The Minister of Industry Trade and Commerce could rule, advised by his own, expert civil servants, and explain his rulings clearly.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline MarkOttawa

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E.R. Campbell: Quite.  I almost fell off my chair after reading a piece by the good professor that did not leave me seething.  But I don't see that ever happening with his evil twin, Steve Staples.
http://toyoufromfailinghands.blogspot.com/2007/12/prof-byers-self-psychotherapy.html
http://toyoufromfailinghands.blogspot.com/2008/02/conference-of-defence-associations-vs.html
http://www.rideauinstitute.ca/site/c.doIELOOuGnF/b.3348215/

Mark
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Offline E.R. Campbell

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post, is MDA’s response:

http://www.financialpost.com/story.html?id=483007
Quote
MDA sale ban would cost Canada jobs

Nathan VanderKlippe, Financial Post

Published: Wednesday, April 30, 2008

VANCOUVER -- MacDonald Dettwiler and Associates Ltd. will be forced to hire hundreds of new U.S. workers, with a corresponding "erosion" in Canadian jobs, or risk having its technology stolen by U.S. companies if the sale of its space division to a U.S. munitions maker falls through, a senior executive with the Richmond, B.C.-based company said Wednesday.

For weeks, MDA has maintained a stony silence in the face of Canadian opposition to the $1.33-billion sale to Minnesota-based Alliant Techsystems Inc. The deal has provoked strident criticism among those who see it as a give-away of critical Canadian technology.

It also provoked a landmark decision from Industry Minister Jim Prentice, who ruled that it provided no "net benefit" to Canada, and as such could not proceed. Under the Investment Canada Act, Alliant has 30 days to convince the minister to change his mind.

But that period ends May 8, and with the deadline looming, MDA has requested a meeting with Mr. Prentice -- although it has no legislated right to, and has so far not received -- and set out on a last-ditch charm offensive to convince Canadians that the sale is the best of all possible options.

If the sale is blocked, MDA executives have sketched out three contingency plans, Karel Vanturennout, MDA's senior vice-president of strategic development, said in an interview Wednesday.

It could buy a larger U.S. space company to boost its presence in the world's largest space market, but that would deny MDA shareholders an expansion of its fast-growing real estate information business. Or it could partner with U.S. defence companies, but risk having its technology stolen.

Or, in what Mr. Vanturennout called the most favourable option, MDA could bolster its U.S. presence by hiring hundreds of U.S. workers and moving a "fair amount of export work" across the border so it can bulk up its presence there enough to access U.S. contracts.

"You cannot do that unless you have a pretty sizeable company there," he said.

Still, he would far prefer the current deal go through.

His argument? That MDA has been U.S.-owned before, in the late 1990s under Orbital Sciences Corp., and experienced none of the doomsday predictions made by opponents of the deal.

Orbital "didn't rape and pillage us, they made us successful," said Mr. Vanturennout. "During the Orbital ownership, that is the period in which MDA became Canada's space company .... Employment doubled and our revenues quadrupled. So we have been through that whole experience with a lot of positives and no negatives."

What MDA has run into this time, Mr. Vanturennout suggested, is an image problem. Under Orbital, MDA kept its name. Under Alliant, it would change to ATK Canada.

"It is a bit of a branding issue," he said.

Critics of the deal have offered far different arguments. When MDA was sold to Orbital, it was a small player in Canadian aerospace. Today, after swallowing up many competitors, it is the domestic heavyweight, which could dramatically change the consequences for Canada's industry if it is sold.

Others have also argued that Alliant's plans to use MDA's Canadian engineers for classified U.S. defence projects could be blocked by legal issues on both sides of the border.

Alliant has said it intends to use MDA to build cheap, quickly-launched battlefield surveillance satellites as it pursues so-called "operationally responsive space" contracts.

Experts in Canadian trade and employment law say it will not be possible for MDA engineers to do that work without breaking domestic human rights laws, since the licences required for classified U.S. work require Canadians to discriminate against people born in some countries.

In addition, the bureaucratic hurdles to bringing classified U.S. defence work to Canada could eventually push Alliant to cut Canadian workers out of important projects, or at very least prevent them access to "the juiciest contracts any more, because the American parent has found it more convenient to deal with those things in the U.S.," said John Boscariol, a Toronto-based trade lawyer and expert in cross-border defence issues.

Mr. Vanturennout acknowledged that getting Canadians access to classified work "may be a bit of a nuisance."

But, he argued, Canadian employees under Alliant should still be able to work on U.S. defence contracts by building sophisticated space technology sub-systems, but being kept blind to their classified uses.

"It certainly doesn't inhibit the business model, as people try to make us believe," he said.

There is a precondition, I think for a spacefaring nation – and Canada is one of the pioneers in that field – to have (a) national champion company (companies): a national space programme.

I think there are some military requirements in the surveillance, warning and control domain.

Just as it is conventional wisdom amongst engineers to say that “you cannot manage what you cannot measure,” so should it be for politicians, bureaucrats and soldiers to say “you cannot control what you cannot see” and the way we ‘see’ our vast, lightly populated territory and the contiguous waters and the airspace over both is from space – specifically from satellites in non-geostationary orbits.

Meeting that requirement, if politicians, bureaucrats and solders agree that it is a valid requirement, would be a neat, Canadian ‘fix’ for MDA’s dilemma.

(You may recall that some satellites are put in orbit about 35,000 km above the earth where they orbit the planet at the same speed as the earth rotates thus being ‘parked’ above a point on the ground – on the equator, actually. The problem is that the footprint of these satellites ends, for Canada, at about Eureka (80o13’ N/86o11’W) and there is a bunch of Canada beyond that footprint.)


It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Flip

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ER!
Now we agree!

A Canadian, "Canada First" space program would be exactly what I would want to see.

An desirable alternate would be a change in US law to allow for CANADIAN suppliers.
I would prefer not to reward Americans for this particular law by selling off MDA.

As Canadians we do have seperate intersets and something to offer in world of technology.
Better to offer what we have on our terms.

 


 
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Offline Thucydides

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There is a precondition, I think for a spacefaring nation – and Canada is one of the pioneers in that field – to have (a) national champion company (companies): a national space programme.

I don't normally disagree with your points, but what you are suggesting is dangerously close to the protectionist cult of corporate welfare that gave us such "national champions" as Bombardier

Quote
I think there are some military requirements in the surveillance, warning and control domain.

You are absolutely correct there, but in the absence of a well defined and well funded Canadian program to do so, there is no need to hamstring MDA. Indeed, the real danger is the best and brightest who work at MDA will migrate to real companies which are able to offer challenging and ongoing projects, leaving behind a hollow shell which will not even be able to meet the goals you suggest. (The claim that we are preserving intellectual property is irrelevant, you need an actual intellect at the wheel to make it function. The loss of critical skills due to the team disbanding and atrophy will cancel out any perceived benefit from holding on to the files; technologies which can be replicated in any event by competitors who have an eye on the prize).

Quote
(You may recall that some satellites are put in orbit about 35,000 km above the earth where they orbit the planet at the same speed as the earth rotates thus being ‘parked’ above a point on the ground – on the equator, actually. The problem is that the footprint of these satellites ends, for Canada, at about Eureka (80o13’ N/86o11’W) and there is a bunch of Canada beyond that footprint.)

One interesting footnote is satellites can be in "inclined" equatorial orbits. Seen from the ground, the satellite will make a "figure eight" pattern in the sky every 24 hours, crossing the equator at the same point and thus observing both the northern and southern hemispheres. Other types of orbits are possible, perhaps the most useful being the very eccentric orbit pioneered by the former Soviet Union where the satellite was timed to reach maximum altitude, visibility and dwell time over the target area and minimum altitude on the opposite side of the world.

Of course all this is moot without the desire to do so, the will to make it happen and the ability to react to the data such satellites (or other means of surveillance like UAV's or Canadian Rangers) provide.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline E.R. Campbell

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I don't normally disagree with your points, but what you are suggesting is dangerously close to the protectionist cult of corporate welfare that gave us such "national champions" as Bombardier

You are absolutely correct there, but in the absence of a well defined and well funded Canadian program to do so, there is no need to hamstring MDA. Indeed, the real danger is the best and brightest who work at MDA will migrate to real companies which are able to offer challenging and ongoing projects, leaving behind a hollow shell which will not even be able to meet the goals you suggest. (The claim that we are preserving intellectual property is irrelevant, you need an actual intellect at the wheel to make it function. The loss of critical skills due to the team disbanding and atrophy will cancel out any perceived benefit from holding on to the files; technologies which can be replicated in any event by competitors who have an eye on the prize).

One interesting footnote is satellites can be in "inclined" equatorial orbits. Seen from the ground, the satellite will make a "figure eight" pattern in the sky every 24 hours, crossing the equator at the same point and thus observing both the northern and southern hemispheres. Other types of orbits are possible, perhaps the most useful being the very eccentric orbit pioneered by the former Soviet Union where the satellite was timed to reach maximum altitude, visibility and dwell time over the target area and minimum altitude on the opposite side of the world.

Of course all this is moot without the desire to do so, the will to make it happen and the ability to react to the data such satellites (or other means of surveillance like UAV's or Canadian Rangers) provide.

I don't think we are disagreeing.

There's nothing inherently wrong with national champions so long as there is sufficient useful work, which they win on a fair, businesslike basis, to sustain them. There is none, or, at least very little, in Canada today so you are right, we should not hamstring MDA by subjecting them to the death of a thousand cuts.

If we want to control our territory, contiguous waters and airspace then we need to be able to 'see' it all - all the time. But, at the current rate of growth, around 2% per year, year after year, the defence budget will be unable to sustain the current forces in being - there is not enough money for what we have now, there is none for new capabilities.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline MarkOttawa

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Bad decision:
http://www.theglobeandmail.com/servlet/story/RTGAM.20080509.wradarsat0509/BNStory/Front

Quote
Hours after issuing his final veto on the proposed $1.3-billion sale of MacDonald Dettwiler and Associates' space division to an American defence contractor, Industry Minister Jim Prentice said Friday his government will work hard to gain full access to U.S. markets on behalf of MDA and other Canadian firms.

“Lack of market access should not be a reason for Canadian firms to move to other countries or for Canadians to sell their business to foreigners,”  [emphasis added--but it may well be an unpleasant reality] Mr. Prentice said at a news conference.

He also announced Friday that the Canadian Space Agency had signed a four-year, $109-million contract extension with MDA, of Richmond, B.C., to continue its support of the International Space Station.

MDA's leading-edge technology, developed in Canada with the support of the federal government, was a key factor in Ottawa's decision to block the sale of MDA's space and satellite division to Alliant

MDA had struck a deal to sell its space and satellite division to Alliant in part, it said, to gain access to the lucrative United States space and defence markets.

However, early Friday, the Canadian government reiterated its earlier decision to block the sale because it did not want to lose jurisdiction over the Canadian-developed technology – particularly the state-of-the-art Radarsat-2 satellite and the Dextre space robot.

This rare decision to block a foreign takeover should not affect the market for Canadian-made products, Mr. Prentice said.

“We have a symbiotic relationship with the United States. They benefit from our technology; we benefit from their markets. That's the basis of a very good relationship,” he said.

“We will work hard to gain full access to those markets for Canadians and Canadian firms.”

Mark
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Ça explique, mais ça n'excuse pas.

Offline Thucydides

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How it will end:

1. One branch of the American Military or Intelligence will realize that a RADARSAT would be just the thing to meet their needs.
2. US Aerospace companies will scramble to create some version of the technology. MDA may be approached for patent rights, but radar is radar, so most companies will be able to create a comparable system without infringing on any patent or technology rights. MDA is unable to enter the competition since they are not a US company and have difficulty ramping up to meet ITAR and other restrictions.
3. US RADARSAT becomes operational
4. Some future Canadian government decides a RADARSAT of their own would be nice
5. MDA is underbid by an American Aerospace firm, "our" satellite is a dumbed down version of the one used by the CIA, NSA, US Navy, NOAA or US weather service, and launches uneventfully from Vandenberg AFB.
6. MDA declares bankruptcy and closes.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline George Wallace

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How it will end:

1. One branch of the American Military or Intelligence will realize that a RADARSAT would be just the thing to meet their needs.
2. US Aerospace companies will scramble to create some version of the technology. MDA may be approached for patent rights, but radar is radar, so most companies will be able to create a comparable system without infringing on any patent or technology rights. MDA is unable to enter the competition since they are not a US company and have difficulty ramping up to meet ITAR and other restrictions.
3. US RADARSAT becomes operational
4. Some future Canadian government decides a RADARSAT of their own would be nice
5. MDA is underbid by an American Aerospace firm, "our" satellite is a dumbed down version of the one used by the CIA, NSA, US Navy, NOAA or US weather service, and launches uneventfully from Vandenberg AFB.
6. MDA declares bankruptcy and closes.

How it will end?

Well, there are some flaws in you statements.  Lets see what happens if we change a word or two.

1. One branch of the American Military or Intelligence will realize that a RADIO would be just the thing to meet their needs.
2. US Aerospace companies will scramble to create some version of the technology. MDA may be approached for patent rights, but radio waves are  radio waves, so most companies will be able to create a comparable system without infringing on any patent or technology rights. MDA is unable to enter the competition since they are not a US company and have difficulty ramping up to meet ITAR and other restrictions.
3. US RADIO becomes operational
4. Some future Canadian government decides a RADIO of their own would be nice
5. MDA is underbid by an American Aerospace firm, "our" satellite is a dumbed down version of the one used by the CIA, NSA, US Navy, NOAA or US weather service, and launches uneventfully from Belarus as previous ones were.
6. MDA declares bankruptcy and closes.


It isn't the Radar spectrum or Radio spectrum that is in question.  They will never change, and everyone on the planet who wants can utilize them.  What is in question is the Hardware and Software developed to use these Waves to make a "Product" that is useful for a client.
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Offline Thucydides

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It isn't the Radar spectrum or Radio spectrum that is in question.  They will never change, and everyone on the planet who wants can utilize them.  What is in question is the Hardware and Software developed to use these Waves to make a "Product" that is useful for a client.

Since MDA Canada will have few options or resources available to exercise or extend its intellectual capital, they will gradually fall out of currency. This is the same as putting real capital in a mattress; even a bank account generates some interest and more aggressive investments of capital have the potential to generate much greater return on investment.

The United States has a much larger intellectual, technological and financial resource base than we do, and lots of systems which are conceptually similar to RADARSAT, J-STARS and AWACS are two simple examples and much of the technology developed for Ballistic Missile Defense is also applicable (imagine using these sensitive sensors and processing algorithms in space and pointing towards the Earth to see what I am getting at), so the argument that MDA has some sort of unbeatable advantage only applies if the MDA team is continually working and launching satellites, which I think we all agree will not be the case.
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline MarkOttawa

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The USA (NRO) has had radar (SAR) Lacrosse intelligence satellites for quite some time:
http://www.globalsecurity.org/space/systems/lacrosse.htm

Quote
It is difficult to assess the resolution that could be achieved by this radar in the absence of more detailed design information, but in principle the resolution might be expected to be better than one meter. While this is far short of the 10 centimeter resolution achievable with photographic means, it would certainly be adequate for the identification and tracking of major military units such as tanks or missile transporter vehicles. However, this high resolution would come at the expense of broad coverage, and would be achievable over an area of only a few tens of kilometers square. Thus the
Lacrosse probably utilizes a variety of radar scanning modes, some providing high resolution images of small areas, and other modes offering lower resolution images of areas several hundred kilometers square. The processing of this data would require extensive computational power, requiring the transmission to ground stations of potentially several hundred mega-bits of data per second.

Sure beats RADARSAT-2.  More:
http://www.satobs.org/spysat.html

Mark
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Ça explique, mais ça n'excuse pas.

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MDA sale caused unlikely alliance of opponents
Esprit de corps military magazine. June 2008, Vol 15 Issue 5. p 12.
by Steven Staples

Members of the Canadian Forces have a lot to celebrate in the government’s decision to block the sale of a large part of Canada’s space industry to a U.S. firm last month. The government’s intervention ensured that crucial satellite technology, vital to the conduct of CF missions at home and abroad, will remain in Canadian hands.

On April 10, 2008, Industry Minister Jim Prentice announced that he would use his authority under the Investment Canada Act to disallow the acquisition of the MacDonald, Dettwiler and Associates Ltd. (MDA) space division by U.S. arms maker Alliant Techsystems (ATK).

The $1.3 billion deal would have handed over to ATK ownership of the iconic Canadarm and Canada’s remote sensing radar satellite RADARSAT-2, a satellite that can take very high resolution images of any place on Earth through clouds or even at night. 

“I don’t get it,” proclaimed a clearly perplexed Daniel Friedmann, CEO of MDA, after being grilled by Members of Parliament concerned about the deal. Indeed, MDA completely underestimated the amount of controversy the sale would generate when, in January this year, it was announced, and began to move through the government’s approval process for foreign take-overs of Canadian firms.

Looking back over the debate of the past few months, one can feel some sympathy for MDA, given the rather unusual positions taken on the deal by those inside and outside government.

First, let’s consider opponents of the deal. The sale of MDA’s space division to ATK was opposed by an unlikely group of people: MPs from all parties, editorialists, former military leaders, employees, scientists and space experts, nationalists and peace advocates.

The Rideau Institute, for instance, which has been accused of being “anti-defence” by Jack Granatstein and others, argued that the sale should be opposed on the basis of national security.

“The sale of MDA assets to ATK will seriously weaken or defeat Canada’s ability to achieve the objectives of the Remote Sensing Space Systems Act which are explicitly to ‘ensure national security, the defence of Canada, the safety of Canadian Forces, Canada’s conduct of international relations, and Canada’s international obligations,’” I wrote to Industry Minister Jim Prentice and Foreign Affairs Minister Maxime Bernier in March.

UBC Professor Michael Byers is a frequent critic of defence policy. Writing with Liberal Industry Critic Scott Brison in the National Post, Byers argued, “What could be more important to Canada’s national security than our ability to monitor all of this vast country, especially in emergencies? What foreign investment could be of less net benefit to Canada than selling our eyes?”

Second, and just as unusual as defence policy critics decrying the loss of sovereignty and defence capability, traditionally small government, free-enterprise Conservative Party members were urging that the government block the sale.

“It is a waste of your money and a betrayal of the public interest,” Calgary MP Art Hanger wrote regarding the hundreds of millions of tax dollars invested in RADARSAT-2 that would be lost through the sale. “It’s about time Canada stop playing the nice guy at the expense of our own security and sovereignty – not to mention our own research and development capacity.”

The prospect of losing control of Canada’s premier land-monitoring satellite was untenable for the government. Blocking the sale conflicted with the Conservative Party’s traditional free enterprise principles, but the satellite played a key role in fulfilling the government’s priorities of defending Canada’s national security and Arctic sovereignty.

Third, and more unusual still, was the silence from organizations and commentators who typically advocate strongly for maintaining and greatly expanding defence capabilities. There were no opinion articles in the Globe and Mail from Jack Granatstein, and no press releases from the Conference of Defence Associations. Even the Canadian Council of Chief Executives, which is always concerned with improving relations with the White House, said nothing.

The political significance of this decision is hard to overstate. It ranks among the most important decisions made by the Canadian government, including the decisions not to join the U.S. missile defence system or the U.S.-led invasion of Iraq.

Minister Prentice’s decision marks the first time that a minister has used the Investment Canada Act to prevent a foreign take-over of a Canadian firm. Out of 10,000 foreign take-overs since 1985, nearly 1,600 have been reviewed and approved. None have ever been denied – until now.

Supporters of Canada’s space industry and capabilities are now rallying to win more government attention and support to their cause. Canadians have been reminded how important our satellites are for our national interests; now it is up to the government to respond in kind.


Steven Staples is President of the Rideau Institute on International Affairs, an independent research, advocacy and consulting group based in Ottawa. He is a researcher, writer, frequent commentator on defence matters, and author of Missile Defence: Round One (Lorimer: 2006).

 

« Last Edit: June 06, 2008, 09:05:11 by stevenstaples »

Offline Thucydides

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And our friend completely missed the point that preventing the sale of MDA simply means the design team and skillsets will either atrophy with disuse or leave Canada, rendering the entire "national capabilities" argument moot.

Once again, it does not pay to try to arm wrestle the "Invisible hand" of the market.....
Dagny, this is not a battle over material goods. It's a moral crisis, the greatest the world has ever faced and the last. Our age is the climax of centuries of evil. We must put an end to it, once and for all, or perish - we, the men of the mind. It was our own guilt. We produced the wealth of the world - but we let our enemies write its moral code.

Offline E.R. Campbell

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The much publicized RIM “bid” for NORTEL’s wireless division gives Industry Canada a new dilemma.

The jewel in the crown is NORTEL’s LTE technology that may be the “solution” to many of the would-be 4G service providers. Whoever owns 4G may do very, very well in the next few years.

It is a bit much to say that 4G is Canadian intellectual property but there is no doubt that NORTEL – including many, many people in NOTREL’s Ottawa campus – pioneered it. Certainly, some of LTE is uniquely Canadian and Canadian taxpayers, indirectly (through R&D tax breaks), contributed to it.

Should that make Tony Clement do for RIM/to NORTEL what Jim Prentice did to MDA? RIM sure hopes so. The very threat of government interference may be sufficient to drive either Nokia Siemens or MatlinPatterson out of contention or drive the bankruptcy courts to delay or revise the process.

It appears to me that the same nationalist sentiments – never too far below the surface when Canada/US issues are involved – may drive the politics again. For many, many Canadians anything is better than “selling out” to Americans. That, far more than any business or legal considerations, may be the “driver” here. Tony Clement need not move too soon; he can, at the arbitrary stroke of a pen, disallow any sale, no matter which courts approved it, on national security grounds.

--------------------

Mods: could we re-title this thread as “Government can stop sale of Canadian companies on grounds of National Security”? That will allow us to discuss MDA and NOTREL in the same thread. 
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline E.R. Campbell

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is the latest on the Nortel/RIM saga:

http://www.theglobeandmail.com/report-on-business/ericsson-makes-plans-but-rim-wont-give-up/article1231786/
Quote
Ericsson makes plans, but RIM won't give up
BlackBerry maker again calls on Ottawa to intervene as Swedish telecom company gains larger toehold in North American LTE market
 
Karim Bardeesy and Paul Waldie

Toronto — Globe and Mail
Monday, Jul. 27, 2009

Telefon AB LM Ericsson's successful bid for Nortel's wireless assets gives it a new advantage in the North American mobile marketplace, locking out a key competitor as carriers begin the transition to more data-intensive technology.

Ericsson's $1.1-billion (U.S.) bid beat out offers from Nokia Siemens  Networks and MatlinPatterson Global Advisers, a New York-based private equity fund, in an auction that ended early Saturday morning.

BlackBerry maker Research In Motion Ltd. (RIM-T82.50-0.79-0.95%) also said it was interested in Nortel's assets and made an unofficial offer of $1.1-billion for the auctioned assets plus other wireless patents, but did not participate in the proceedings, arguing its bid had been blocked by Nortel. Yesterday, RIM said it hadn't given up and called on Ottawa to intervene.

“Now that the auction is completed, the government has the authority and responsibility to get involved to protect vital Canadian interests,” the company said in a statement yesterday.

In outbidding Nokia Siemens for the right to license Nortel's fourth-generation long-term evolution (LTE) patents, Ericsson has consolidated gains made when it won a major contract to supply Verizon Communications Inc. with 4G technology. The company plans to roll out LTE service in 20 to 30 centres in 2010.

“ Now that the auction is completed, the government has the authority and responsibility to get involved to protect vital Canadian interests. ”— Research In Motion statement

LTE, which has yet to be introduced commercially, promises mobile download speeds into the hundreds of megabits per second.

The fastest Canadian home Internet access currently available is Bell's 16 Mbps, while Rogers promises a 50 Mbps service in August.

Nokia Siemens, which kicked off the bidding contest on June 19 with an offer of $650-million, has been losing market share to Ericsson. Ericsson's networks unit increased sales by 4 per cent in the last quarter, while Nokia Siemens dropped by 21 per cent.

“Every vendor has been developing LTE in isolation from one another. Ericsson's move gives it a larger slice of the patent pie,” technology analyst Carmi Levy said yesterday. “Less of its potential revenue will be siphoned off in paying licensing fees to others.”

Ericsson CEO Carl-Henric Svanberg said the acquisition would add 2,500 employees to the firm, about 400 of whom will be focused on LTE research and development. Some jobs are expected to be cut due to the transaction, but both companies have said they want to preserve as much employment as possible.

Under the deal, Ericsson will get CDMA, or code division multiple access, contracts with North American operators, including with Nortel's former parent company Bell Canada, as well as Verizon, Sprint, U.S. Cellular, and Leap. Ericsson also gets LTE assets and certain patents and patent licences relating to CDMA and LTE.

CDMA is a rival standard to the dominant cellular standard GSM, or global system for mobile. LTE, or long-term evolution, is a next-generation wireless network technology that promises to be much faster and allows cellphone operators to stream video and other advanced services on their devices.

“Nortel has clients on the board who have plans to migrate from CDMA to LTE over time. Nortel was ahead of anyone else in that regard, and that was a key advantage to any suitor,” Mr. Levy said.

The deal is subject to approval by bankruptcy courts and government regulatory authorities in Canada and the United States. RIM still has an opportunity to block Ericsson's purchase or reopen the bidding, but a source familiar with the auction said it won't be easy.

A joint hearing is scheduled for Tuesday in Ontario and Delaware, and RIM could file an objection. However, the objection could only be filed in Ontario court, the source said, because the deadline for objections in the U.S. court has passed. That could make it difficult for RIM.

RIM will have a hard time convincing the court to reopen the auction or overturn the sale because the bidding process was approved by both courts weeks ago and RIM had not filed a formal objection within the stated deadline, the source said.

There had been speculation RIM was planning to team up with a bid from MatlinPatterson. However, a source familiar with the auction said there was no sign of RIM at the auction. “They didn't participate,” the source said. “We plan on going forward.”

In a statement on the weekend, Nortel said it would “work diligently” with Ericsson to close the sale later this year. It also said it would work on finding the right buyers for its other businesses, including a division that makes phones and other telecom equipment for businesses and another that provides network technology and infrastructure.

With files from The Canadian Press

I don’t know what two (one American, one Canadian) bankruptcy courts might decide to do if RIM argues that it was unfairly excluded from the bidding and its offer provides the best value for creditors – what bankruptcy courts aim to accomplish.

I am sure that the government “regulators” (AKA Stephen Harper) will be bombarded with petitions – some from powerful Tory insiders – to block the sale on national security grounds.

One might wonder how LTE, or most other Nortel patents, might be matters of national security but I can assure readers that it (national security) is a huge “blanket” which can be used, in international law, as a major and bomb-proof protectionist measure. Our good friends and neighbours to the South use it constantly to restrain trade in a manner that would be quite improper if anything but “national security” was invoked.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline E.R. Campbell

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Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post, is a pretty fair assessment of the Nortel situation:

http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/07/28/john-ivison-intervention-argument-is-as-bankrupt-as-nortel.aspx
Quote
John Ivison: Intervention argument is as bankrupt as Nortel

July 28, 2009

John Ivison

If the Harper government bows to pressure from opposition parties and Dalton McGuinty’s Liberals to block the sale of Nortel’s wireless assets to Sweden’s Telefon Ericsson, would the last conservative to leave Canada please turn out the lights.

To be fair to the government, there are no serious indications that Tony Clement, the Industry Minister, is set to nix the deal. He has said that he is reviewing the takeover proposal but under Canadian law, he is obliged to do so.

Still, the government’s response will determine if the Prime Minister’s fine words on resisting protectionism were just so much hot air. 

There have been suggestions that, since the government bailed out GM and Chrysler, it should intervene to prevent Nortel’s wireless technology from falling into the hands of what one columnist called “absentee owners”. The answer should be that the government has learned from its mistakes.

The Conservatives have been justly criticized for betraying some of their most deeply held principles. Yet, they have also introduced changes that are more closely identifiable with the type of government they purport to be -- namely cuts to corporate income tax and liberalization of some investment restrictions in industries like air transport and uranium mining. The fruits of these policies are already apparent -- Tim Hortons said last month it was coming home and would move its registration to Canada to take advantage of lower corporate tax rates.

Knee-jerk nationalists argue that the government should intervene because the result of the sale would be a brain drain out of Canada and the loss of another “iconic” Canadian company, in the wake of Alcan, Inco, Falconbridge and Hudson’s Bay Company. One supposes that Nortel resonates as an enduring symbol of corporate Canada, in the same way that the Titanic is held as an icon of British shipbuilding. 

There is a seductive, if superficial, logic to this “hollowing out” argument that the facts entirely fail to support.

A detailed study by the Conference Board last year showed that corporate takeovers are, in fact, of net benefit to Canada. The study concluded that there was no longer-term trend toward greater foreign ownership in the economy -- with levels remaining stable at around 30%, well below the peak of the 1970s. In the decade between 1994 and 2004, foreign companies made 92 major acquisitions, with an average value of $2.9-billion, which compared to the acquisition of 133 foreign companies, with an average deal value of $2.1-billion, by Canadians. 

The Conference Board said that corporate transformation is the norm -- only 71 of the top 200 companies in 1990 are still present in the same form.

Those foreign takeovers have provided shareholders with an average premium of 28%, money that was presumably re-invested elsewhere in the economy. Alcan shareholders received US$101 in cash for their shares in the summer of 2007 -- many times what the company would likely be worth today.

As for the brain drain argument: “There is no empirical macro evidence that supports the view that takeovers lead to fewer quality jobs or reduction in the quality of jobs,” said the report’s author, Dr. Michael Bloom.

Canada already has a more protectionist investment regime than many countries -- whole sectors of the economy from financial services to telecoms are off-limits for foreign companies. Manulife Financial paid $11-billion to acquire Boston-based insurer, John Hancock, in 2003, yet Canadian investment rules mean Hancock would not have been allowed to buy Manulife. 

Are we now prepared to send out signals that Canada is closed for business when it comes to technology too?

The government has tightened investment rules in one important area. There were legitimate concerns that state-owned entities -- mainly from China and the Middle East -- were intent on buying up large swathes of Canada’s resources sector. As a result, the government introduced a national security test to block purchases by companies with “non-commercial objectives and unclear governance”.

But that description hardly fits Ericsson, which is already a good corporate citizen in this country, with operations in Toronto, Montreal and Vancouver. In fact, its research and development centre in Montreal is the company’s largest outside Sweden and it claims to have invested $2-billion in R&D over the past 10 years.

The government’s own panel on competitiveness, chaired by former BCE chairman Red Wilson, recommended liberalizing many of the barriers to foreign investors, in part by increasing transparency and predictability. The government has moved to implement many of those recommendations but that good work would be undone with the stroke of a pen, if it intervenes in the Nortel case.

Stephen Harper, an avid student of Adam Smith, used to agree with the great economist that little good has ever been done by those who claim to trade for the public good. Let’s hope he still does.

National Post

jivison@nationalpost.com

There is another, political, factor: Ontario vs. Québec. Nortel is, for a wee while more, an Ontario company. Its head office is in Toronto and its Canadian, wireless, R&D is in Ottawa. Ericsson Canada’s HQ is in Montréal, so is its (very small) R&D facility. Ontario wants to keep those good, high paying R&D jobs in Ottawa; Québec would love to move them to Montréal.
 
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline E.R. Campbell

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See: here for some background.

According to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail the government’s problems (and the Liberal Party’s opportunities to capitalize on them) are growing:

http://www.theglobeandmail.com/report-on-business/ottawa-guidelines-for-state-owned-investors-get-first-test/article1271106/
Quote
Ottawa guidelines for state-owned investors get first test
PetroChina's $1.9-billion investment in Athabasca Oil Sands is not expected to meet much resistance

Shawn McCarthy

Ottawa — Globe and Mail
Tuesday, Sep. 01, 2009 08:22AM EDT

When Ottawa acted in late 2007 to erect a new screen for state-owned companies looking to invest in Canada, the clear target was an expansionist China, whose ravenous resource companies were gobbling up assets around the globe.

But that was before the great thaw.

Putting behind it three years of frosty relations, the Harper government this year has sent a parade of senior ministers to Beijing with the express intent of luring Chinese investment to this country.

The message appears to have been received. PetroChina Co. Ltd.'s (PTR-N109.75-3.44-3.04%) $1.9-billion investment in Athabasca Oil Sands Corp.'s development projects represents the first large Chinese investment in the Canadian oil sands – and the first major test of the new federal guidelines for state-owned enterprises, which lay down a series of factors Ottawa will consider when reviewing an investment from such a company.

Despite some concerns about PetroChina's ultimate control resting in the hands of senior mandarins of China's ruling Communist Party, the company will likely face little opposition from the federal government on this deal.

Just two weeks ago, Finance Minister Jim Flaherty was in Beijing and told officials that Canada welcomed commercial investments in resource development from Chinese companies, so long as they are subject to proper corporate governance.

Among the new guidelines, which fall under the Investment Canada Act, PetroChina would have to commit to export the oil sands production in a commercial manner, rather than pursue any unprofitable project to ship the oil to resource-hungry China.

Federal officials would also examine PetroChina's ownership structure to ensure it does not operate as an agency of the central government. Under the guidelines, adequate governance includes commitments to transparency and disclosure, independent members of the board of directors, independent audit committees and equitable treatment of shareholders.

The major Chinese oil companies – PetroChina, China Petroleum & Chemical Corp. (Sinopec) and China National Offshore Oil Corp. (CNOOC) – have international subsidiaries that trade on public stock exchanges, employ outside directors, and run their operations like any global oil company.

Those subsidiaries “largely do operate like other oil companies overseas,” said Steven Lewis, who studies Chinese oil companies at the James Baker Institute at Rice University in Houston.

“Overseas, they do seem to be working to international market conditions.”

Mr. Lewis said Chinese companies operating in Africa sell their crude on international markets – the oil that they produce in Sudan is marketed in Europe, for example – rather than shipping it back to China.

However, he added, there is some question of transparency in the corporate governance of PetroChina's parent company, China National Petroleum Corp., the wholly owned state enterprise that is Asia's largest oil and gas producer.

“It's not really clear about the leadership of any of the Chinese national oil companies – the degree to which the heads of them still have to be appointed by the party and approved by the Central Committee,” he said, adding that traditionally the top echelon of management have been Communist Party members.

“It does seem that, in the end, the Chinese government does have a say. It does have some strings to pull that are distinctly political.”

Still, the political rapprochement between Ottawa and Beijing has served to reduce the level of mistrust between the two governments.

“I think you have to look at the specific investment to make a final conclusion, but there is a very good understanding with the Chinese with regard to the extent and nature of the investments we would welcome,” said Peter Harder, chair of the Canada China Business Council and former deputy minister of foreign affairs in Ottawa.

Conversely, a decision to block the PetroChina deal would seriously set back Canada-China relations, at a time when many Canadian firms desperately need the investment dollars that China has to offer.

Last month, China Investment Corp., the country's sovereign wealth fund, agreed to invest $1.74-billion to become the largest class B shareholder in Vancouver's Teck Resources Ltd., Canada's largest base metals producer.

Athabasca Oil Sands had sent clear signals to the market that it was looking for a deep-pocketed partner to help finance the development of its bitumen deposits. And the PetroChina investment is likely the first of several as long as there is no political resistance.

It remains unclear how the U.S. government would view a growing Chinese presence in the oil sands.

When it approved construction of a pipeline to bring oil sands bitumen to American markets, the U.S. State Department said in was in that country's strategic interest to have a secure source of oil supply from Canada.

Former U.S. vice-president Dick Cheney had said it would not be in the U.S. interest to see a major Chinese presence in Alberta. But President Barack Obama's administration has so far been silent on the issue.

Rice University's Mr. Lewis said the Obama administration so far seems to be welcoming any investment that will produce more oil for world markets.


This is not the same as the government’s duty to review some acquisitions to ensure that they have “value” for Canada.

The so called Sovereign Investment (and/or Wealth) Funds are ways for governments, rather than corporations, to “invest.” There is considerable worry, especially in the USA, about them. They are popular in Asia and are used by such capitalist bastions as Singapore.

American “worries” about Chinese “investments” in Canada are another delicate problem. It is, probably good politics and certainly good policy to welcome increased Chinese investment, even by government controlled entities, despite some US reservations. In fact, the occasional bit of harshly expressed angst from America Firsters is “good” for whichever Canadian political party (government) is on the receiving end.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline E.R. Campbell

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More on the China/oilsands issue, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail:

http://www.theglobeandmail.com/globe-investor/chinas-move-into-oil-sands-irks-washington/article1272498/
Quote
China's move into oil sands irks Washington
Alarm bells are sounding in the U.S. capitol over PetroChina's $1.9-billion investment in Alberta projects
 
Shawn McCarthy

Ottawa — Globe and Mail
Wednesday, Sep. 02, 2009

PetroChina Co. Ltd.'s (PTR-N109.15-0.60-0.55%) $1.9-billion investment in the oil sands is raising alarms in Washington, with thehead of a congressionally-appointed China watchdog saying the company is clearly a vehicle of Beijing's Communist government.

Carolyn Bartholomew, chairwoman of the U.S.-China Economic and Security Review Commission, said Tuesday that Ottawa should subject the proposed investment to a thorough review that would include sensitive national security issues.

And she rejected the contention by PetroChina and its supporters that the state-owned enterprise acts like any other commercial oil company in its international operations, professing concern about a growing Chinese presence in America's “backyard.”

“I think that an acquisition like this should raise national security questions both for the government of Canada and for the government of the United States,” Ms. Bartholomew said in an interview from Washington.

With reserves second only to Saudi Arabia, the oil sands have been recognized as an important component of U.S. energy security. The State Department explicitly cited the benefits of a secure, non-Middle East source of oil when it issued a permit last month to Enbridge Inc.'s $3.3-billion Alberta Clipper project, which will carry oil sands bitumen to U.S. refineries.

Ms. Bartholomew declined to say whether Ottawa should block the deal, saying that is a decision for the Canadian government to make.

Under the Investment Canada Act, Ottawa reviews foreign takeovers worth more than $600-million to ensure they represent a net benefit to Canada, and has recently added a national security test that requires input from departments responsible for Canadian security.

In December, 2007, the Harper government introduced guidelines for state-owned enterprises looking to invest in Canada. It said it would approve deals that are made on a commercial basis from companies that have transparent and commercially oriented corporate governance.

Prime Minister Stephen Harper Tuesday acknowledged that PetroChina's investment in the assets controlled by Athabasca Oil Sands Corp. is more controversial than a private sector, foreign investment in Canada would be.

“I will just say that there are laws in place to review foreign investment transactions when they meet a certain threshold and our government has strengthened those reviews by including a clause that allows officials to examine issues of national security,” he said.

Ms. Bartholomew said PetroChina and China's two other major state-owned oil companies –Sinopec and CNOOC – are key players in the Asian giant's drive for energy security.

“The evidence is that they aren't commercial companies. Some people believe they function a little independently, but the reality is they are controlled by the government, and for that matter, they are controlled by the Communist Party, which of course controls the government,” she said.

The bipartisan commission that Ms. Bartholomew heads was created by Congress in 2000 to monitor China's economic expansion and provide advice on its implications for U.S. security interests, and it has influence with the so-called “China hawks” among both Democrats and Republicans on Capitol Hill.

Ms. Bartholomew was originally appointed to the commission in 2003 by Nancy Pelosi, then minority leader in the House of Representatives and now Speaker of the House. Before joining the commission, Ms. Bartholomew served as Ms. Pelosi's foreign affairs adviser.

PetroChina is the international operating arm of China National Petroleum Corp., the country's largest oil and gas company. The subsidiary has shares listed in New York, Hong Kong and Shanghai, and employs some independent directors on its board.

Wenran Jiang, a China expert from the University of Alberta, said PetroChina's investment in the oil sands appears to be commercial in nature.

Gordon Giffin, a former U.S. ambassador to Canada, said he doesn't expect the Obama administration to oppose the Chinese investment in the oil sands.

“While the leases involved are pretty substantial, in the scheme of things, it's not that huge,” said Mr. Giffin, now a lawyer who now works with several Canadian energy firms.

But the deal will certainly raise the profile of the strategic value of the oil sands at a time when U.S. environmentalists are pushing for punitive measures that would discourage development in order to limit emissions of greenhouse gases.

“I think it's good in the sense that it's an event that should bring about some turning of attention by American energy thinkers to the value of the assets sitting in Alberta, and not enough thought is given in Washington to the strategic value of the assets that sit in Canada,” Mr. Giffin said.


If, and it’s still a very BIG IF we are going towards a fall election then Ms. Bartholomew’s “suggestion” that ”Ottawa should subject the proposed investment to a thorough review that would include sensitive national security issues” is almost a 100% guarantee that the sale will go ahead with only the most cursory review. Most Canadians are, broadly, anti-American and they love nothing more than to ”pull the eagle’s feathers” when that can be done without fear of reprisal.

Giffin gets it. The proposed deal is not, in and of itself, a “big deal” and it might, finally, provide a wee tiny bit of logical thinking in Washington – something that has been sadly lacking for nearly 20 years.

Caveat lector: I have a pretty long record of advocating a sharp turn in Canadian foreign policy – away from Europe and towards Asia. I do not regard China as a military threat to the West, in general, and to America in particular. I know some (many?) US officials want to make China into a threat but, in most cases, the real “enemy” they are battling is in Washington and it consists of people who want to cut budgets for defence projects that “need” a big, sophisticated “competitor” like China. I am, additionally, a philosophical free trader. I oppose trade restraints, including those based on “national security” grounds. I thought the government’s decision to block the sale of MDA, for example, was entirely unjustified and, mainly, was a reaction to the “knee jerk anti-Americanism” (of too many “ordinary” Canadians) that drives too many decisions made by Canadian governments.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline GAP

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Well your comments yesterday regarding the US sitting up and taking notice has come to fruition.....was it not Japan/China that was investing heavily in infrastructure inside the US not more than a decade ago? Strange how that works....it's OK for us, but not you....
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MacDonald Dettwiler back in the news--will gov't do anything?
Quote
MacDonald Dettwiler to buy satellite imagery firm DigitalGlobe for $3.1-billion
...
DigitalGlobe’s satellites supply high-resolution images to its customers such as the U.S. Department of Defense and companies including Facebook Inc. and Uber Technologies Inc...
http://www.theglobeandmail.com/report-on-business/macdonald-dettwiler-to-buy-digitalglobe-for-about-31-billion/article34126606/

MacDonald, Dettwiler head office may move from Vancouver to U.S.

...given the highly sensitive nature of the technologies involved and the number of approvals required on both sides of the border, the deal has hurdles to jump.

Asked if MDA has received any objections from the Canadian government, [MDA CEO Howard] Lance told The Canadian Press: "Not that I'm aware of."

Lance said he thinks the administration of U.S. President Donald Trump will see the deal as positive "based on our ability to bring the U.S. government [NGA, NRO, Pentagon] enhanced solutions to their missions."..
http://www.ctvnews.ca/business/macdonald-dettwiler-head-office-may-move-from-vancouver-to-u-s-1.3299449

Mark
Ottawa
Ça explique, mais ça n'excuse pas.