If Canadians are asking themselves whether Canada will "play the energy card in a U.S.-China world" (Globe and Mail, Jan. 20), we also need to ask: "Just what kind of a game are we getting into here?" Because it could become a dangerous one as the geopolitical stakes get higher.
Gao Xiqing, the president of China Investment Corp., now opening its first foreign office in Toronto, says that his company is not a spearhead of Chinese state economic interests. He's probably perfectly sincere in that. As he has said, China is not monolithic even within its ruling structures. But as sincere as Mr. Gao may be, he's still playing China's stake, and if he's playing in strategic resources, then the stakes are high indeed. "Strategic investment" means exactly what it says.
The world is evolving from the one-hyperpower state that the collapse of the Soviet Union left by default. It is unnecessary to postulate an American decline to accept that other great powers would arise to fill the vacuum. China is just the first. All are "regional" only as seen through our perceptions of the United States as "global." In fact, all potential players have global interests.
A balance-of-power system resembling 19th-century Europe may be evolving, but this time truly worldwide. A major difference between last time around and today are the concepts of "sovereign wealth" and "strategic investment." Before 1914, investment was private. This time, the involvement of sovereignties is more direct.
The problem is that the model has not been worked through thoroughly, and there are some very uncomfortable geopolitical implications underlying it for everyone.
Before 2008, Russia experimented with another form of strategic investment through selected entrepreneurs, not using sovereign funds but capital borrowed on international markets. That ended abruptly in September, 2008, when the international financial system imploded and the "oligarchs" defaulted massively, leaving the Kremlin holding the bag. Oleg Deripaska's misadventure with Magna International is the example most familiar to Canadians.
The Russians overlooked a basic truth: strategic investment cannot be left exposed - financially, politically or, in the crunch, militarily.
China is investing with its own money. But it is also not neglecting the political and military facets. If strategic investments are truly strategic, then they have to be defended at all points. You can trade freely for 20 years and lose it all in a month if the shipping lane goes sour or the supplier has a revolution.
That is why China is intensifying its naval presence in the Indian Ocean, much to India's discomfort - to secure supply routes from Africa and the Middle East. In recent months, tensions have also risen in the Western Pacific - although at this point, "tensions" is probably an overstatement since China does not yet have the naval force-in-being to project power into the Pacific. Nonetheless the intent is there. Japan, Korea, and Taiwan have felt the pressure, and the United States is concerned about the rise of a challenger.
What this means for Canada is: Watch carefully whom we are playing with and for what stakes. Trade with China in strategic commodities such as oil is politically fraught, especially if the level of trade gets to a point where losing the supply would be a serious inconvenience. The United States already views Alberta oil as one of its few safe sources of supply because for them, it is conducted on 'internal lines of communication' - one of the touchstones of grand strategy.
There have already been echoes of concern from Washington over Chinese interest in Canadian oil. They are nothing to what we will hear if and when there's a West Coast pipeline in operation - and the Chinese Navy decides that the flow demands a projection of "presence" into the North Pacific. Were it ever to come close to that, Canada's interests would matter very little to the two adversaries.
Canada traditionally views itself as a moderator among great powers. There is some truth to that, but it works best when the great powers are ready and willing to be moderated. In a straight fight over core strategic interests, we may find to our dismay that the position of a smaller power between two great ones is that of a walnut between two rocks.
Eric Morse is a former Canadian diplomat and is vice-chair of the security studies committee of the Royal Canadian Military Institute in Toronto.