Saskatchewan Premier Brad Wall has set the stage for a political showdown with Ottawa by publicly rejecting a takeover of Potash Corp. of Saskatchewan. Now Prime Minister Stephen Harper, who seems inclined to allow a takeover but whose government has the legal power under the Investment Canada Act to block one, faces a new and formidable critic. In this confrontation, immediate political and economic calculations will dominate. It would be preferable for all parties to take a longer view.
The rhetoric of the short-term game is all about sovereignty. Mr. Wall says that potash is "a strategic resource, and we should act like it. The country should act like it."
He should not unduly fetishize potash, the fertilizer, or Potash Corp., the company. On occasion, they provide a fiscal windfall. Under Mr. Wall's premiership, Saskatchewan has amassed an impressive record of economic growth during difficult times. While the resources sector has played a role in that success, resources alone are not Saskatchewan's future; the province is developing a whole array of technological innovations. The raw fertilizer that sits in Saskatchewan's soil is indeed a strategic resource - it can enhance food production and the world needs that dearly - but it cannot be transformed into highly productive added value.
Mr. Wall cannot directly stop a sale, but he is a savvy politician and has played his few cards - the divided loyalties of the 13 Saskatchewan Conservative MPs; his own considerable popularity - with great skill.
Mr. Harper, by contrast, did not play his best hand by clinically, and dubiously, observing that Potash Corp. is "American-controlled"; the criteria for control do not add up to an exact science, and considerable elements of Potash Corp., including a good proportion of the shareholders, the head office and the location of much of the resource itself are indisputably Canadian. The people of Saskatchewan overwhelmingly identify it as their own.
Both governments are right to demand considerable assurances from BHP Billiton, the only company to yet make a bid for Potash Corp., to maintain a strong Canadian presence and a continuing revenue stream. Beyond that, they should look ahead, acknowledging that potash is a jewel, but just one, coming from the Prairies.Report Typo/Error
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