Mark Wiseman is a Canadian investment manager and business executive serving as a senior adviser to Lazard Ltd., Boston Consulting Group and Hillhouse Capital, and the chair of Alberta Investment Management Corp. He was formerly the chief executive officer of Canada Pension Plan Investment Board and a senior managing director at BlackRock and chairman of its global investment committee. Follow Mark on Twitter.
As Vladimir Putin’s actions violently reshape the international world order, the tragic situation in Ukraine has caused countries to rethink their strategic priorities and, in many cases, work tactically to position themselves advantageously. Like it or not, realpolitik is alive and well, and Canada cannot afford to be left behind.
Focusing on our self-interests (economic and otherwise) is not immoral in the current circumstance. Doing so will ultimately align with our altruistic values and ensure we are not comparatively weaker to other more unscrupulous actors when the dust settles. Canada’s strength has always been its values, but that doesn’t equate to being naive and not taking advantage of favourable circumstances. We need to act quick and nimbly – something that recent governments have only rarely demonstrated.
Canada needs a coherent, long-term economic growth strategy, but even in the absence of one, we should be tactical when opportunities arise. Amid the current crisis in Ukraine there are three clear areas where we can purposefully and aggressively utilize our comparative advantage in the market: human capital, agriculture and energy.
First, we should be welcoming those displaced by this conflict to Canada as quickly as possible. Not only is it the right thing to do, it also will bring incredible long-term benefits to our economy.
In the global competition for talent, Canada holds an attractive offering. A multiethnic, multicultural hub, we benefit especially from immigration and investments in human capital. Home to Ukraine’s second-largest diaspora, we should be doing everything we can to integrate refugees.
These investments pay dividends. Data from the Century Initiative show that increasing our population to 100 million by 2100 will make annual GDP growth a whole percentage point higher than if we maintain the status quo.
While welcoming Ukrainians, we should also be shrewder and capitalize on the exodus of skilled Russians, both hurting Mr. Putin as he loses valuable economic assets and strengthening Canada.
We must move quickly and decisively to bring talent to our country instead of muddling through bureaucracy while others attract it. To start, let’s grant any multinational that wishes to relocate Ukrainian and Russian employees automatic work visas, so they can instantly add to our GDP and pay taxes to Canadian governments.
Think of the brain drain from Nazi Germany that brought to the West Einstein and the scientists who completed the Manhattan Project. Disdain for Russia’s regime must not allow us to forget it is also the country of Tolstoy and Tchaikovsky, and as its best and brightest minds look to build their future elsewhere, let’s make it here.
Second, we need to ensure that the value of our agricultural produce is being maximized and we are selling as much of it as we can, for as much as we can. It’s vital to the Canadian economy and all signs indicate this conflict will compound global shortages.
Experts are sounding the alarms, especially over global wheat supplies, of which Ukraine produces 8 per cent. With Russian forces prohibiting access to key shipping ports at the Black Sea and with Russia producing more than 18 per cent of global wheat exports themselves, the danger is very real.
This is a chance for our farmers to literally, and proverbially, make hay. To do so they will require support from the government.
Last year, because of lower production and poor harvests in the Prairies, Canada’s wheat production fell by more than 38 per cent. What’s more, the fertilizers that are essential to production are currently priced at a historic high.
Now, as markets look to our farmers to supply them with wheat amid shortages and unprecedentedly high prices, we should help Canadian farmers capitalize. The government must work with the chemical industry to ensure it can get the potash and nitrogen it needs, so we can feed ourselves and our allies while bolstering our agriculture sector. For instance, we should ensure farmers get access to the fertilizer, equipment, transportation and labour even if it means that we are not supplying other parts of the world with these inputs. We need nimble tactics to win and to maximize Canada’s benefit from the current circumstances and this requires the government to assist the private sector and to have both put Canada first.
Finally, we must deploy our strongest asset – our energy – as effectively as possible and get it to market where we can, now. This pragmatic and tactical move will also help mitigate our allies against the influence of other autocrats.
Take Saudi Arabia and Venezuela, who, before the conflict erupted, were out of favour with the Biden administration in the United States but are now exploiting the situation to further their own strategic objectives.
The Saudis and Middle Eastern oil producers are hesitant to let the shackles off their production to lower prices at the pump without concessions from the U.S. on Iran and other issues. And Venezuela, after years of ostracization, is exploiting the courtship, lobbying to lift the sanctions imposed on the diabolical Maduro regime.
No long-term strategy, and years of political underinvestment in our energy sector, mean we can’t capitalize on this moment as efficiently as we should be. Nonetheless, the opportunity is nigh, and our government should be convening urgently with the private sector to figure out how to cash in on our abundant resources.
How do we get more energy to market quickly while high prices persist? What longer-term concessions should we require for doing so? Should the nixed Keystone XL pipeline expansion be back on the table? If it’s critical to our country’s economic future, now is the time to demand it.
Each of these areas provide a route for Canada to espouse its values and pursue our interests. With autocrats and everyone else playing the game of realpolitik, we should have no reservations about taking part on our own terms.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.