A Calgary billionaire. A quartet of policy gurus. An Alberta academic. Groups of oil-patch executives.
And behind them all, a Prime Minister who for months took a deep personal interest in a decision that stands to shape Canada's economy for years to come.
When Stephen Harper told Canadians how he intends to re-draw the rules around investment by foreign state-owned companies, his words were, in many cases, borrowed. They were culled from a select group whose insights were given great weight by a Prime Minister who was engaged with the problem even before a pair of oil-patch deals forced the pace.
The Harper government pledged more clarity on foreign investment guidelines two years ago, when it turned down BHP Billiton Ltd.'s takeover of Potash Corp. of Saskatchewan Ltd. It is unclear how much of that new policy had been devised by last July, when China's state-controlled CNOOC Ltd. launched a $15.1-billion bid for Nexen Inc., following what would be a $6-billion bid for Progress Energy Resources Corp. by Malaysia's Petronas. By then, sources say, the Prime Minister was already taking a personal interest.
The two takeover bids set in motion a federal drama that would feature missed deadlines, an overturned deal that was subsequently revived and a government warring internally as it sought to establish a response.
Amid the urgency, a government known for resisting outside advice reached out for counsel from a range of academics and business leaders – some not ordinarily aligned with the Conservatives. In the end, the government would arrive at a sharp reversal in its stand, placing a fence around acquisitions by foreign state owned buyers – who have accounted for more than 80 per cent of foreign oil-sands takeovers and joint venture investments since 2007.
To formulate his new doctrine, Mr. Harper called on the experience of foreign governments like Australia, as well as domestic thinking rooted to Canada's experience with Crown corporations like Petro-Canada, tying decades of this country's industrial history to a decision that could influence the decades to come.
Cabinet played an important role, too, with ministers like Jason Kenney and Jim Flaherty travelling in recent weeks to Calgary for separate meetings with oil-patch leaders, some of whom expressed reservations about allowing unfettered access to foreign state-controlled investors.
They returned to Ottawa for a debate that saw dissenters like Mr. Kenney, the immigration minister, raise concerns about national security and argue strongly against approving the CNOOC takeover of Nexen Inc. Others, like natural resources minister Joe Oliver, argued that Canada needed the billions in capital that foreign companies can bring.
(On Sunday, in an interview with the Globe and Mail, Mr. Oliver stressed that the government is not saying no to all investment from government-controlled entities. "Their capital is welcome in the oil sands provided it is in a minority position or joint venture, and we will certainly welcome state-owned investment in other sectors.")
For Mr. Harper himself, however, voices outside Cabinet also resonated loudly.
Among them was Murray Edwards, an Alberta entrepreneur who owns ski hills, part of the Calgary Flames and is chairman of Canadian Natural Resources Ltd., one of the country's most important energy producers. As Mr. Harper deliberated on his new policy, he had a number of conversations with the Calgary billionaire, according to a source close to Mr. Edwards. In those talks, Mr. Edwards expressed concerns about Canada's ability to keep foreign state-owned companies in check if they do not honour undertakings – or if they take politically unsavoury steps like replacing Canadian employees with Chinese workers.
People close to the federal government said the idea of gaining more leverage with foreign governments came to be a key factor in Mr. Harper's thinking.
Mr. Edwards, who infrequently speaks in public, did not respond to requests for comment on Sunday. In November, however, he spoke approvingly of placing "some restrictions in terms of the amount of ownership the SOEs can have" of certain resources. He said that "if the government is not clear and puts down some conditions or limitations, there is a risk that Nexen could be the first of many."
The government's response closely mirrored Mr. Edwards's views. In Mr. Harper's speech, he said Canada "will continue to push firmly in trade and investment agreements for reciprocal treatment." He called the Nexen decision "the end of a trend." Industry Canada said in future, it will examine "the degree of control or influence a state-owned enterprise would likely exert" both on the company it seeks to buy, as well as the industry it seeks to enter. Indeed, the new policy is sweeping enough that some experts now warn that industries outside the oil sands could be closed to sovereign-owned buyers if their acquisitions give them a dominant share.
Others found themselves called upon to deliver opinion directly to Mr. Harper's ear, a measure of the leading role the Prime Minister himself took in navigating the issue. In June, four policy experts published a report urging Canada to adopt a clearer, tougher line with investment from state companies from emerging markets. The authors – Thomas d'Aquino, who once ran the Business Council on National Issues; former deputy trade minister Len Edwards; Derek Burney, senior adviser at the law firm Norton Rose LLP; and Carleton University academic Fen Hampson – met with Harper for over an hour in his office, briefing him on their report.
They urged Ottawa to adopt Australia's approach, which while officially opaque and done on a case-by-case basis, has made clear that the Australian government will not allow foreign government acquisitions of the country's "crown jewels." It concluded, in part, that "foreign investments in Canadian resources and technology ... could be better used as valuable bargaining chips to obtain reciprocal access to the investors' markets."
Sources in Ottawa say the Harper government looked closely at the Australian experience. But it looked inside Canada, too, tapping academics like Jack Mintz, who leads the University of Calgary School of Public Policy and sits on the board of Imperial Oil Ltd. Government-controlled companies have long been an academic interest for Mr. Mintz, who wrote his PhD thesis on the performance of enterprises with mixed Crown and private ownership – companies like Petro-Canada. Their performance, he found, lagged.
When the CNOOC deal was announced, Mr. Mintz spoke out on the irony that Canada had spent years privatizing companies like Petro-Canada – only to welcome state ownership by companies from other countries.
"I was actually quite concerned," Mr. Mintz said.
On Friday, Mr. Mintz's words were echoed by Mr. Harper himself. "To be blunt," the Prime Minister said, "Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead."