In theory and in law, the Harper government has the right to approve the foreign takeover of Potash Corp. of Saskatchewan. In the real world of politics, it can't - and almost certainly won't - allow the bid by BHP Billiton Ltd. of Australia.
This refusal, of course, can't be explained in terms of politics. The Investment Canada Act requires that an application be judged against the "net benefit to Canada" test, so something more substantive by way of explanation will be required next week when Industry Minister Tony Clement reveals Ottawa's decision.
The explanation must also be a bit ingenious, since the Investment Canada Act has been used only once to deny a takeover application. Moreover, the Harper government's view of foreign investment has been red carpet all the way, including for previous takeovers of big resources companies - takeovers, it should be said, that were approved on the nod by a former industry minister, Maxime Bernier.
Mr. Clement and his Prime Minister are staring at very strong opposition to BHP's offer in Saskatchewan, where the federal Conservatives dominate the province. Opposition to the deal had been rising from the start, but it became overwhelming - 85 per cent opposed by some reckonings - after Premier Brad Wall slammed it. Mr. Clement, in particular, needs a win after the drubbing he took over the government's almost universally condemned decision to end the long-form census, for which he was the front man to whom Statistics Canada reports.
So the politics of the deal would be all bad for the Conservatives in one of their bastions. They could assume that their position is so overwhelmingly strong that a hit over Potash wouldn't damage them politically, but parties don't usually confront their own supporters on something as important and emotional as the Potash takeover has become in Saskatchewan.
Politics aside, there are other reasons why a takeover wouldn't be in the interests of Saskatchewan or Canada - and these reasons are resonating at the highest levels in Ottawa.
Canada has watched many resource companies slip away, a rather sad state of affairs for a country that's supposed to be a treasure trove of natural resources. It could be argued that national flag ships don't matter in industries such as oil that are global, where Canada is only one provider among many.
But, by a fluke of geography, Canada enjoys a dominant market share of potash, a commodity set to become even more important as demands for higher food production increase around the world. It would sacrifice a dominant position on the altar of ideology to let the Potash takeover proceed, for it's very likely that, were the positions reversed, most other countries wouldn't allow such a valuable asset - owned, we must remember, by the people - to become managed as a sideshow by a foreign-based multinational.
Although advised against saying it, Prime Minister Stephen Harper insisted in the House of Commons that the Potash deal was simply a case of a U.S.-controlled firm (Potash) being taken over by an Australian one (Billiton). Inferentially, he was saying: So what's the big deal? This unfortunate intervention must now be circumvented if the government refuses the takeover on grounds of failing the "net benefit" test.
A refusal should also enjoin Saskatchewan to reflect on Potash Corp. and the government's relationship to it. After all, if Saskatchewan were really concerned about local control, it would've never sold the Crown corporation or, later, the remaining shares it retained.
It could have privatized it but insisted on conditions that would have changed the nature of this takeover battle. And it should certainly tell Potash Corp. that, having helped to block this takeover, it expects - no, demands - that the corporation beef up its presence in Saskatchewan, including ending the optically injurious situation whereby the CEO works out of Chicago. If a company is going to wave the flag, it should plant it more securely in home territory.