CURRENT INTERNATIONAL KERFUFFLES: LARGELY RESULT OF MEDIOCRITY / STUPIDITY OF OBAMA ADMINISTRATION

The international scene is currently witnessing huge mess ups: Rise of Daesh (ISIL), Yemen mess, Iran nuclear talk circus, Ukraine imbroglio – these are some of the top ones. Then there are the next tier ones: North Korea’s threats, Af-Pak nuisance, climate change buffoonery etc.

Let’s look at the mess in Middle East, including the circus surrounding the Iran nuclear talks: If one carries out impartial root cause analysis, one finds that the mess created is largely attributable to the prevailing mediocrity/stupidity of the personnel advising President Obama and the selective incompetence of the President himself. Let’s briefly explain the above:

v  Obama is not that a fool to not realize the near bankrupt state of American economy and lack of any super-duper technologically advanced military apparatus that can provide significant edge to US over potential threats, like, Iran, North Korea etc. Coupled with this realization, his very lack of necessary personality traits and intellectual sharpness to manage international stage compel him to actively shun contentious international issues. He prefers to behave like an ostrich, like an escapist, buries his head in the sand and pretends there are no issues.

v  Obama’s so-called doctrine of ‘strategic patience and persistence’ (and ‘leading from behind’) is in fact a front for his ‘pathological chronic avoidance and escapism syndrome’ re: international issues. He lacks the swagger required to stride the international stage, lacks the shrewdness, sharpness and courage to engage in geo-political chess game and is seriously deficient in terms of diplomatic suavity.

v  His weakness/hesitancy towards international issues was quickly spotted by the Europeans who “framed’ him in “peace paradigm” by awarding the Nobel Peace Prize at the very outset of his Presidency thereby virtually castrating him of any residual testosterone for any cowboy adventurism.

v  Obama was at best a community organizer who talked his way through to White House. He is plain incompetent for the international side of things that comes with the role and responsibility of being the President of the US. He feels comfortable to deal with soft, social issues. He would probably be best suited being a President of, say, Austria or Sweden where he would just have to handle domestic issues and would not be called upon to play any significant role regarding international hot topics.

v  Again, quick to realize his shortcomings, Obama surrounded himself with advisers who are mediocre and who would pander to his weaknesses and not advise and/or pressure him to go against the grain of his personality traits.

The net result of the above has been that the US vacated the space in Middle East, which was quickly grabbed by Iran and Daesh. In Ukraine, he and his advisers implemented half-baked plans that were not well thought through and were roundly wrong footed by Putin in Crimea and Eastern Ukraine.

On top of the issues bedevilling BO, he also nurtures a grandiose ambition of leaving behind a legacy of successes (of his tenure). One of them is an agreement with Iran (re: its nuclear ambitions). Another is climate change, plus, others like immigration reform, gay rights and et al.

Obama seems to be so consummated by this legacy thing that he is pursuing the Iran agreement objective with a demonic fervour through his faithful but equally incompetent lackey, Kerry. Obama is not bothered about fall-outs from his psychopathic pursuit of this objective – he is very happy to screw Israel, couldn’t care less if US interests in the Middles East get trashed, is not concerned if the Middle East is unleashed with nuclear race, does not seem at all bothered with potential disastrous impacts on international sea trade routes in the Gulf region and so on.

Obama is like that milksop school boy who would pinch you from behind and giggle from distance; he is not the strong confident type who would engage in a more tough sporting activity. His this sissy type personality aspect can be discerned from how he likes to needle allies, like, Canada, Israel and lectures soft targets, like, India and so on.    

It is unfortunate that at a critical juncture such as this, the US was beset with a wimp like Obama and the world had to face the unfortunate consequences of his weakling and selective incompetence. By the time he leaves White House, he may continue to preside over many events that may come back to haunt generations.

 

Sadly, it is his lack of perspicacity compounded by his intellectual blindness that he is failing to notice his greatest legacy of all and be proud of it – the turnaround of the US economy from brink of disaster. This one stupendous achievement overshadows any potential non-achievement of his presidency – be it failure to reach an agreement with Iran, or, necessity to flex US military might in Middle East and/or Afghanistan-Pakistan or elsewhere to protect interests of the US and its allies. But stubborn as he is, Obama is chasing stuff that may totally cloud the great feat he so painstakingly accomplished. 

UNITES STATES: ONCE THE TOP COUNTRY, BEING UNDONE BY FADING TECHNOLOGICAL EDGE AND MEDOCRITY PRESIDED OVER BY ITS MEDIA

Of late, news in general for the United States of America has been quite discouraging:

·       China overtaking US as world’s largest economy (as per IMF);

·       US special forces mission’s failure in Yemen;

·       Racial tensions arising from string of deaths of African-Americans at the hand of white policemen;

·       Overall deficit topping $18 Trillion;

·       Saudis playing the high stake poker to also subdue the American shale oil boom;

·       Rumors of US administration considering sanctions against one of its closest allies – Israel;

·       Failure to strike a worthwhile deal with Iran to limit its nuclear ambition, and Iran’s religious leaders thumbing their nose to US;

·       Continual dismal performance of President Obama and the administration – at national and international stage.

Suddenly, the US is looking jaded, faded, tired and lacking the panache of a numero uno. Though the US economy is doing pretty well – the latest job creation numbers coming out stronger than expected – there is hardly any sense of being on top.

And, all of the above is getting further compounded for the worst by a third-rate, mediocre television media in US. As it is, the American media is split in left and right – very few in the middle – their coverage is clouded by their ideological slants. To make matters worse, the anchors of the various programs are utterly mediocre who fill air time with virtually meaningless conversations. Most of what transpires on the programs is garbage-in-garbage-out.

Instead of the key issues that is confronting to continual slide in American dominance and unchallenged status of world number one, the TV channels’ programs helmed by disgustingly mediocre anchors/presenters discuss worthless stuff – peripheral at best. Only fluff fills the time slots. Any knowledgeable guests, who may be stating something vital, is cut short and they get back to fluffy stuff and nonsense.

Some examples of key issues to talk about:

·       In view of rising anger within the African-American community, what is keeping this community still so non-violent (barring some isolated incidents in Ferguson)?

·       How the role of the Reverends is helping to keep the focus of the protest non-violent and peaceful;

·       What steps should be taken to address the situation so that the African-American community does not get pushed to a corner where they are forced to contemplate violence of serious nature – which would may not be difficult in a country like US where deadly weapons are available so easily;

·       Falling standards in development of new cutting edge technology;

·       How the economy can be strengthened – newer business models;

·       Issues facing the societal fabric, family structure, human relations etc.

Instead of the above intellectually stimulating and useful discussions, the discussions are personal ideology driven, shallow, wandering and nonsensical. You have to watch a cable channel whose anchors can waffle for hours on end on the topic of the day, say, demonstrations by the African-Americans and their supporters. How nonsensical discussions can fill the whole day of TV time was exemplified on a cable channel during missing of Malaysian Airlines flight MH-370 – hours of generally substance-less discussions took place without zeroing on the kernel.

It is sad for the Americans that they are now called ‘second rate’ based on the latest economic data announcement coming from IMF. It is so ironic that US is a country of dozens of Nobel Laureates in all fields, including economics, yet the country is languishing. The crops coming up in the political echelons are so mediocre and lack luster – on both sides of the aisle.

None of the prospective (and talked about) candidates for 2016 presidential elections are cracker-jacks. They are all so mediocre (if they are assessed impartially) – and none of them inspire any confidence whatsoever about their outstanding capabilities. Since John F Kennedy, the succeeding presidents of the US have all been mediocre to being utterly useless (Carter probably winning the badge of honor of being the worst of the lot).

It seems some sort of supernatural intervention can only bring the change which can stem the rot and be instrumental in carrying out wholesale revamp of the United States – in all fields. Till such time the great country that US was/is will lurch from one crisis to another, from one frustrating level of mediocrity to another.

USA: A GREAT NATION ON ROAD TO DECLINE – THIRD RATE POLITICIANS AND ASCENDANCY OF MEDIOCRITY PRIMARY CAUSES (PART-II)

Mediocrity in general amongst America’s two main parities – Democrats and Republicans – is also turning out to be a major undoing of the stature United States had. The Republicans want to wrest the White House in 2016 and the Senate in Nov 2014. There are number of Republicans who can be seen in the news jostling for prominence and, therefore, trying to be front runners for 2016 elections.

However, two types of Republicans seem to be trying to court their mass base:

-      One by trying to be ultra-conservative (the ‘tea party’ brand)

-      Others just by way of opposing Democrats – the level of vehemence in their opposition differentiating one from the other (within this bunch)

If one looks at the prominent Republicans and their public pronouncements, sadly, one does not find anyone who is really outstanding. On foreign policy, they are being presented on a platter host of issues to criticize Obama, but no one seems to be coming out on those issues in real statesmanlike manner. Most of them do not seem to have thought through the lines of action they are proposing – their strategies, lines of action sound so over-simplified, brash, jingoistic, gung-ho type.

On domestic topics, again, the public stand of these Republican politicians seem amateurish, some of them even childish, and, in general, lacking deep thought and depth. The pronouncements are just anti of anything Obama is trying to do, for example, on the immigration reform (and dealing with the illegal immigrant children issue/crisis).

To be honest, Obama has created such situations at the moment that if there was any one top class Republican politician at the present time, that person would very likely hit the ball out of the political park, could become a towering figure under whose leadership the Republicans could hand the Democrats a decisive defeat in 2014 congressional elections and set the scene for a repeat performance in 2016.

Sadly for the US, all this is due to debilitating mediocrity in the top political layer that is currently seen to people at large.

Over to the Democrats’, the situation is no better. Hillary Clinton is approaching the 2016 presidential bid very cautiously. She has the advantage of advice and guidance of a very wily political figure, namely, her husband, Bill. Hillary is maintaining a carefully calibrated distance from the 2014 congressional elections – only her husband is pitching in 2014 campaign, wherever he thinks expedient.

Other than Hillary, the rest of the Democrats’ field is also full of mediocre political practitioners – same old names, nothing noteworthy or outstanding about them.

With so much mediocrity pervading American politics, it is not surprising that the leadership, the dynamism, the vision, the statesmanship – the necessary ingredients for a nation’s all round development – are all missing and United States is finding itself floundering miserably on various fronts. Others are exploiting it – whether it is Putin in Ukraine, or, the radical Islamic insurgents in Middle East, or, the Chinese in the South China Sea, or, the illegals surging to enter US and so on. 

The industrial base also does not seem fired up. The corporates seem concentrating far more on how to avoid taxation. The technological edge that US at one time possessed so uniquely is all but gone – there does not seem any burning desire within the spectrum of industrial polity to come up with cutting edge discoveries. If at all there is anything discernible, it is all in the notional world of software related products, services.

If today, UK appears to be taking lead on ISIS (though Cameron’s timing is suspiciously close to Scotland’s independence referendum), Germany is taking the lead in arming the Kurds in Iraq, the Canadians are willing to provide troops for a stronger NATO deterrent force, it is all because there is vacuum at the international stage caused by apoplectic dithering on the part of the United States – and the genesis of all of this is mediocrity (and incompetence).

On the domestic front, the virtual paralysis at the Capitol Hill, the canine-like fighting between the two parties on almost all issues and inability to come to consensus is costing US directly and indirectly both. These continual recriminations can be said to be a major reason for creation/prevalence of an atmosphere which is not at all conducive for harmony, hope, optimism, development and prosperity.

It is sad to see that a super-power which could bring about higher levels of prosperity, strength, technological and military superiority domestically and at the same time ‘lead’ the world toward a safer and better place to be in, is potentially slipping in to a vortex of decline – sadly, due to overwhelming mediocrity pervading amongst the current political practitioners straddling the political scene of the United States.

USA: A GREAT NATION ON ROAD TO DECLINE – THIRD RATE POLITICIANS AND ASCENDANCY OF MEDIOCRITY PRIMARY CAUSES (PART-I-OBAMA)

If someone is asked to sum up his/her perception of today’s USA in brief, the pearl points might look like this (in no particular order):

·       World’s largest economy

·       Very powerful military – perhaps the most powerful

·       Gargantuan debt (will be financially broke if debt ceilings are not raised continually)

·       Large country, with different areas having different weather patterns

·       Home of the UN and the World Bank

·       Home of some of the biggest corporate entities

·       Land of some top class educational institutions, laboratories, companies

·       Bickering politicians, dysfunctional Congress

·       A presidency that started with a bang (and great promise) seems to be on way to end with a whimper (and disappointment)  

·       Uninspiring leadership

·       Decline at the international stage

·       Massive world-wide electronic surveillance reach

·       Melting pot of immigrants

·       Land of opportunity

Over the last 6-7 years, the general perception of the US has been changing, unfortunately, for the worse – of a nation which is in decline. A decline which is epitomized in the US being regarded more of a rhetoric-loving/reluctant world power than being a dominant/effective world power. The US’s role in Middle East, Ukraine and East Asia has come under fire. Also, with concomitant rise of China as an economic power (and thence stronger military power), America’s influence is getting challenged more and more, East China Sea being a test case.

Just towards the end of George W Bush’s tenure, the financial meltdown took place which caused havoc in the US and the whole of G-7 (barring Canada which came out of it less scathed than its peers). In the last 7 years, the economic state of US worsened: debt ballooned from 4-5 Trillion dollars to >17 Trillion dollars, unemployment reached close to 9%, GDP grew miserably slowly. Since 2013, the employment situation has been improving gradually and GDP growth numbers also looking up. Notwithstanding this gradual improvement, the debt level continues to be a very disturbing element of overall economic health of US.

Six years ago, an unprecedented event took place. US elected its first African-American as its president: Barack Obama. When he took office the Democrats were in power in both houses of Congress, however, in the fall of 2012 the Republicans won majority in the House of Representatives. Ever since Obama got elected, the political dynamics in Washington DC has gone from bad to worse. President Obama rode on anti-war feeling in the country apart from the health care reform platform he had created (later known as Obamacare). The Republicans despise Obamacare, and have been on collision course with him almost on most issues.

So, what are the prime reasons for the apparent decline – the US which used to be perceived as the sole super power striding the world stage unchallenged, is now considered to be a less effective, withdrawing, bumbling, hesitating and reluctant to intervene kind of world power?

The main reasons for this decline could possibly be attributed to the following:

·         Mediocre but ambitious politicians including the president

·         US economy is not as strong as used to be (very high level of debt makes it vulnerable)

·         Apparent decline in military superiority (which is emboldening other countries and radical elements to challenge the US might)

·         Increasing polarization between the rich class – due to their ruthless and aggressive profit making approaches – and the middle and the poorer class 

·         Bad publicity arising out of alleged surveillance carried out by NSA

·         Loss of technological edge and superiority that US used to have in various fields

·         Mediocre, pandering and self-serving media

 

Let’s look at the aforesaid points in brief:
 

Mediocre but ambitious politicians: First, President Obama:

Why Obama conducts American foreign policy (which is said to be predicated on his mantra “don’t do stupid stuff”) the way he does can be explained by the following factors that probably weigh agonizingly heavily on him (when he has to decide about a foreign policy trajectory):

v  United States is too financially broke to get involved militarily in any part of the world (however small the involvement be)

v  As the first African-American president what would be his legacy, how would the historians judge him

v  The millstone of Nobel Peace prize around his neck: Being a recipient of this honor, he is almost death scared of appearing to be pro-war or pro-interventionist (militarily)

v  His presidential campaign platform which was heavily predicated on getting the American troops out of Iraq and Afghanistan. Therefore, any scenario that even remotely suggests that American boots may need to be put on a foreign soil, he balks at it, he shudders, he panics

v  His personality: Which is more professorial rather than that of a CEO of a top company who is not fearful of making tough decisions (he almost suffers from paralysis by over-analysis on various international issues, especially, the ones that have potential of the US getting involved militarily). Consequently he painfully dithers on an on.

On thorny international issues, Obama tends to behave like an escapist, like an ostrich that buries his head and thinks the threat has gone away, Obama just wishes the problems go away on their own. He is a shy person; he does not like socializing with his foreign counterparts or the politicians in Washington DC, that’s why he fails to cobble up coalitions or agreements abroad or at home. He is just not the type of a leader who could fearlessly play political chess games executing different stratagems.

Obama does not like the role of a global policeman; he believes that the international issues would get solved just through delivering a lecture – whether at home or abroad – using pompous phrases that make good sound bytes. But he forgets that some responsibilities automatically devolve to the president of the USA as soon as s/he gets to sit in the Oval Office – being a global policeman, unfortunately, is one of them. After the breakup of Soviet Union, the world had come to accept that the US will generally set and/or manage the global agenda, pre-empt events, thwart evil designs and so on. But Obama does not relish at all presiding over such activities.

Obama seems to have a tendency to needle people, especially, the allies. He seems to relish needling Canada, harangue Israel, or create instability in innocuous countries. He does not seem to be getting along that well with the British too. In fact, he is not pally with any international leader unlike some of his predecessors.

On a related topic, Obama, of late, seems to be behaving in a weird manner. In a recent speech he said he does not ‘sympathize with Hamas’. Really? How can someone, in one’s sane mind, ever think of using the word ‘sympathy’ in relation to Hamas? Also for some strange reason, he does not condemn ISIS in strong terms. It seems Obama believes that if he avoids being harsh to Hamas or elements like ISIS, threat to US would be less from these terror outfits. If he indeed thinks on these lines, he should get his head examined. Seriously.  

Obama tends to look far ahead on some grand design but shies away from near or medium term realities. The five factors listed above seem to virtually paralyze him whenever he is deciding on a course of action on a tricky international situation – whether it is Syria or Iraq or Ukraine or East China Sea. He somehow tries to keep postponing his decision making under the pretext of ‘situation analysis’/’information gathering’.

Due to the above pattern of his conduct in regard to international issues, Obama’s personal image, and by extension, US’s image (internationally and to many Americans domestically) has more or less morphed in to that of:

-      Dithering

-      Weak

-      Unreliable

-      More of hot air than action

Some of America’s allies have realized that they might have to fend for themselves. Japan has already started working towards developing necessary military muscle to deal with any hostility on its own (potentially with China because of the disputed islands in East China Sea), Israel is going ahead on its own in its fight against Hamas, the Saudis are devising their own strategy vis-à-vis Iran and Sunni extremists ISIS. Turkey is an unhappy ally, so are some of the other allies of the US.

Surely, there has been a decline in respect to US’s stature at the international stage. The tragedy is that probably this decline was avoidable notwithstanding the near bankrupt state of the American economy. Some other person, who was not living under the crushing weight of the five factors listed above, might have been able to adopt different strategies, and thus might have been successful in maintaining the image the US had till President George W. Bush’s tenure. This is indeed sad for the people of the United States. They are feeling it, realizing it and are conveying their frustration through various opinion polls.  

DISTURBING TREND OF CANADA/ALBERTA EMPLOYMENT SCENARIO – DESIGN AND ENGINEERING/WHITE COLLAR JOBS DISAPPEARING SWIFTLY

First let’s look at the numbers reported by Canadian economy regarding month of May 2014: Canada's unemployment rate rose to seven per cent from 6.9 per cent over the previous month; the economy actually shed 29,100 full-time jobs in May. As a consolation, there was a gain of 54,900 part-time jobs, most of them likely temporary seasonal work.

Among sectors that lost jobs, the natural resources industry declined by about 23,000, and there were about 21,000 fewer workers in finance, insurance, real estate and leasing. Manufacturing was also down by 12,200 and construction was largely flat. Alberta saw the strongest gains, with 16,400 new jobs, and Newfoundland and Labrador lost 4,100 positions, but the other provinces saw little change in their employment rates.

The number of working Canadians aged 15 to 24 increased by 49,000 (this is attributed to many university and college students finishing their spring term in April and seeking out work for the summer) bringing their employment to a level similar to that of May 2013. However, this was partly offset by fewer employed men aged 25 to 54.

Still, there are 1.3 million unemployed Canadians, evidence of an economy that has run out of steam after churning out strong job gains in the first few years following the 2008-09 recession. One bank’s chief economist says the latest report "pounds home the point that underlying Canadian job growth remains anemic." He further adds, "Even those modest gains are almost entirely concentrated in piping hot Alberta, with the rest of the country managing just 0.1 per cent growth in the past year."

Now, let’s sift the grain from the chaff and also look at some aspects no one is talking about in Canada for whatever reasons – failing to notice in the first place due to ignorance and/or mediocrity, or, not having the guts to stand up and speak about it.

First, about the so-called ‘piping hot’ jobs in Alberta. These are mostly in the construction (sustaining capital and some new capital investment projects), drilling, and maintenance. As we know, these jobs tend to support associated service sector, therefore, there is some addition of jobs in this sector too.

But the most disturbing aspect of jobs in Alberta (and to a reasonable extent in Canada) is that there is continual decline in white collared jobs in design and engineering (in the EPC companies) in particular and other sectors in general. Reasons?

a)      Drop in new capital projects in oil sands by large, medium and small companies due to increasing pessimism in the investing companies (recent example: TOTAL deciding to put $10 billion project on hold for indefinite period);

b)     Owner companies in Alberta insisting on farming out large chunks of engineering work to offshore places, e.g., China, India, Philippines etc. in order to depress total engineering costs.

The combined effect of the above reasons and especially ‘b’ is that more and more engineering work (from FEED and Detailed Engineering) is getting shipped out of Canada. The direct impact of this in Alberta (and EPC companies located in other provinces of Canada) is increasing job redundancies and hence more and more layoffs.

The way things are going, eventually, the EPC companies in Canada would be doing just the concept evaluation, the design basis memorandum (DBM) and a bit of FEED. Consequently, the engineering work force will continue to shrink and large number of experienced engineers and technologists would either go to other countries (wherever they find jobs) or take on jobs much below their competence level. This would potentially have a domino effect – overall decrease in service sectors’ size and contribution to economy (remember, service sector contributes about 70% to Canadian economy).

One may argue that the proposed LNG projects would pick up the EPC houses’ slack increasingly discernible in Alberta. Unfortunately, that’s not going to happen. Why? Because the bulk of engineering will be done by the companies in Japan (example, JGC, Chiyoda), Korea and US (example, KBR, Foster Wheeler). Only some residual engineering work will be done in Canada.

The other industries, namely, mining are also seeing sluggishness and new capex projects are few and far between. There is hardly any basic design and development engineering taking place in manufacturing industry also. This is coupled with another very disturbing situation: sharp decline in intellectual property generation in Canada which is causing atrophy of design and engineering work in those areas.

So, the net effect of above would be that gradually, for all intents and purposes, Canada will get reduced to a body supplying country for construction industry, drilling, and service sectors, essentially, blue collared jobs. The white collared jobs will decline.

To have blue collared jobs is not bad but disappearance of white collar jobs would mean negative impact on service sector (from new higher mortgages, to new homes building, to new vehicles purchase and so on). Of course, this impact would not be felt immediately, it would take a while before StatsCan and the government in Ottawa would notice the significant negative impact on the economy.

Canada was at one time at the cutting edge of knowledge based activities, but that situation is rapidly metastasizing to such a degree that Canada’s leadership in technology and engineering will turn in to a myth. The situation is getting exacerbated by reluctance of Canadian companies to invest in innovation, R&D and productivity enhancement activities. 

The above indeed is very sad for Canada. If the Federal and the Provincial governments do not show guts and take timely corrective actions, things would continue move from bad to worse and Canada would morph from being a first world knowledge powerhouse to a second or third world body supply warehouse.  

WHY CANADIAN ECONOMY IS IN DANGER OF SLOWLY SLIDING IN TO A SECOND WORLD ECONOMY

Statistics Canada’s figures released on 30 May indicated that Canada’s economic growth slowed to an annual pace of 1.2 per cent in the first three months of 2014. It was the weakest growth since the fourth quarter of 2012. As per Statistics Canada, the gross domestic product of Canada in the first quarter of 2014 marked a deceleration from the 2.7 per cent of the final three months of 2013.

Much of the above is being attributed to severe winter which apparently impacted the overall domestic demand, or spending by consumers, government and business. Harsh winter conditions in US are also being cited as one of the contributing factors apart from drop in housing construction.

            

The weaker first quarter, however, hasn’t changed the 2014 outlook for some observers. A lot of hope is being pinned on US economy to bounce back and businesses in Canada loosening their purse strings to invest. However, some analysts fear that domestic demand are likely to remain under pressure as debt-laden households constrain growth in consumption, housing constructions slows, and government spending remains capped by tight fiscal policy.

But the abovementioned fear does not recognize the elephant in the room – the tardy pace of the exports and the ominous circumstances threatening to crush the expansion potential of major components of Canada’s export resource, i.e., oil sands (and yet to be tapped gas for export as LNG).

People who are familiar with the basics of Canada’s GDP know the significant contribution oil makes to Canadian GDP and the huge service sector it supports (remember, service sector is one of the two main components of Canada’s GDP). The Canadian Association of Petroleum Producer’s 2013 Crude Oil Forecast, Markets and Transportation report forecasts Canadian crude oil production will more than double to 6.7 million barrels per day by 2030 from 3.2 million barrels per day in 2012. This includes oil sands production of 5.2 million barrels per day by 2030, up from 1.8 million barrels per day in 2012.

But the situations that are surrounding oil sands today seem almost poised to strangulate the lofty expansion plans set forth by the industry. One of the main stifling reasons being lack of infrastructure to export the bitumen out of Alberta – the various proposed pipeline projects meant to solve this situation are getting increasingly bogged down in litigations, controversy and delays. One of the casualties of this disheartening situation was Total’s Joslyn North project which was recently put on hold for an indefinite period.

Over on the LNG export side of things too, the portents don’t inspire optimism: the tax regime of the Province (BC) is yet to be finalized, LNG supply economics is getting squeezed due to the recent gas supply deal between Russia and China and the issues with First Nations not settled yet.

The horrifying scenario of oil sands industry getting stifled and LNG projects not getting off the grounds (or just one or two LNG projects getting set up at best) is that Canada’s revenues will get severely impacted in which situation hundreds of thousands of jobs will not get created which will in turn mean opportunity lost in the boost the service sector would have got.

As more people get jobs and earn more, they spend more and, as this work force grows, they need more of everything - from Tim Hortons to pickup trucks. This leads to more jobs and higher wages in other sectors and other regions of the economy, so everyone benefits.

The knock-on effect of stifling of the oil sands (and the proposed LNG industry) will be so severe on the overall Canadian economy that many features of the first world economy that Canada is would get severely disrupted: health care, education, infrastructure, seniors’ care, all these sectors would be badly affected. What would that mean? It would mean Canada would slide from being a first world country to second world nation for all intents and purposes. Is this what Canadians would like for their children’s future?

Can something be done about it? Yes, sure but Canada does not have the luxury of time. The Canadian Federal and the Provincial governments would have to resolve the issues that have the potential of strangulating the oil sands and the LNG industry. The governments need to deal with the First Nations (FN) on top priority basis. The FNs are economically better off than before and smarter too – they now know better how to leverage off their so-called treaties with the Crown and wangle bigger slices of the pie.

The FNs are getting publicity savvy too – the latest example being to get Desmond Tutu to lecture Canada on climate change. What should be raising the alarm bells for the Federal and Provincial governments is that people like Tutu are not lecturing the other heavy oil producing countries nor even lecturing his own country (South Africa) on coal based power plants but comes almost half way around the world to lecture Canada.

This means that there is probably a sinister move to throttle Canada’s oil industry (which for all practical purposes is predicated on oil sands) and thereby deal a crippling blow to Canada’s economy and its economic clout. This is indeed cause for worry and the Canadian government with all the resources at its disposal, namely, CSIS and CSEC, should investigate and take necessary protective measures.

The global economic situation stands at a very critical juncture where economic outlook is still very uncertain and recovery mechanisms highly fragile. At such a juncture, Canadian economy is also walking a tight rope. A slight push or shove can potentially send Canadian economy on downward slippery slope, some forces seem to be wanting to do that. It is up to Canada (its government and the peoples) how it handles this and succeeds in continuing to be a vibrant first world nation. Canada would need all the speed, alacrity, nimble-footedness, resilience, determination and innovativeness to come out on top. 

CANADIAN ECONOMY’s RESTORATION: TIME RUNNING OUT, CANADA NEEDS TO ACT FAST

There were some important nuggets to be picked up from Bank of Canada Governor’s address to the Saskatchewan Trade and Export Partnership in the last week of April:

·       One of the most important forces powering Canada’s economy currently is the long-term strength in global prices for resources; and, for Canada, oil stands out. 

·       As people earn more, they spend more and, as this work force grows, they need more of everything - from Tim Hortons to pickup trucks. This leads to more jobs and higher wages in other sectors and other regions of the economy, so everyone benefits.

·       Diversifying Canada’s export markets is important to future growth and resilience.

·       Canada’s is an export-driven economy. Canadian economy needs to shift gears and for exports to lead again.

A new report from the Conference Board around middle of May put Canada's three oil rich provinces on top of the world in terms of economic performance. The report places Alberta, Saskatchewan and Newfoundland -- the three oil producing provinces -- in that order as the top performers with A-plus scores across indicators such as per capita income, economic growth, unemployment and productivity. They are the only jurisdictions rated to have A-plus economies. Alberta is "class leader," says the report with 2013 per capita income that was $10,000 higher than Norway, the top-ranked country in that indicator. For the rest of the country the news was not so stellar.

What the above narrative clearly suggests is that while the 31 subsectors (of Bank of Canada) of the non-energy export sector need to be promoted with suitable strategies, the increase in production and export of the energy resources, i.e., oil and gas is vital from the point of view of Canadian economy’s restoration to good health in near term and sustaining it in the long term.

However, the growth of the aforementioned two energy resources appears to be getting bogged down in an endless loop of consultation, opposition and procrastination. As Leo De Bever, chief executive of Alberta Investment Management Corp., the largest wealth fund in the country with assets under management of $63-billion, says, “We find it easier to pay somebody not to build something rather than actually build it. There has been a shortage of resolve to build projects.”

De Bever was alluding to opposition to various pipeline projects and oil sands projects. To compound issues there is tardiness is formulating policies that the investors need to know urgently to firm up their investment decisions. For example, investors (Petronas, Shell, Chevron et al) are eagerly waiting on British Columbia’s final decision on the tax regime. As well, the investors are concerned about wage inflation, the tax environment and about Canada’s ability to actually deliver in a timely fashion on environmental assessments.

Besides cost-competitiveness of doing business in Canada (e.g. British Columbia) being crucial, time is of the essence as investor companies are mulling similar projects in Australia, East Africa and the United States. Petronas led consortium is hoping to set sail its first shipment of LNG by 2019 before a number of Australia’s brownfield projects start ramping up. Analysts say that some South Korean investors are already gravitating towards U.S. projects.

Then there is the proposed long term multi-billion dollar oil and gas agreement between Russia and China which Russia’s president Putin is going to pursue aggressively. If this agreement gets concluded, it would mean China’s financial capacity and need to import these resources from other countries like Canada would get that much reduced. Which would in turn mean the companies intending to invest in Canada may like to change their minds.

On the flip side, the Ukraine crisis has got the Europeans to clearly articulate their desire to source their long term energy needs from Canada (and US). This is a godsend opportunity for Canada to latch on to and expedite the necessary approvals process associated with oil and gas and pipeline projects.

Just to give an idea on negative impact of ‘endless cycle of consultations’, as oil sands projects stall and crawl, Canadian producers have lost as much as $30-billion annually due to discounts on their blend of crude in the past few years. While spreads have narrowed over the past 12 months there is much more at stake. According to energy consultancy IHS CERA if oil sands production reaches 3.8 million barrels per day in 2025, the bitumen’s contribution to Canadian GDP could nearly double, and a third more jobs could be expected.

“Between 2012 and 2025, oil sands’ contribution to Canadian GDP could grow from $91-billion to $171-billion,” the IHS estimated in a report published this year. “This would be like adding an economy the size of Saskatchewan today to Canada by 2025. Oil sands could also add over one-quarter of a million more jobs, contributing to 753,000 jobs in Canada in 2025.”

To address the concerns around environmental impacts of oil sands development, Alberta already has in place stringent measures and more are expected. This should blunt criticisms brought forth by the environment-activists. As regards carbon emission issue, an independent group of scientists/experts are challenging the White House National Climate Assessment (NCA) issued in early May. In their view, the foundation of the NCA is a "masterpiece of marketing" that crumbles like a "house of cards" under the weight of real-world evidence.

And, in regard to the issue of opposition by the aboriginals to the various oil and gas and pipeline projects, the legal experts say that as for aboriginal communities, they need to recognize that their right to be consulted doesn’t negate the government’s power to make decisions.

Summary: Energy (oil and gas) is a vital component in the context of restoration and sustainability of Canada’s economy and standards of living associated with this first world country. The companies in Canada, who wish to implement the various oil and gas and pipeline projects, and the Federal and the Provincial governments must expedite the approvals’ process. The window of opportunity for Canada is NOT going to be there for ever, therefore, it would be a criminal folly if they fail to capitalize on the opportunities presented to Canada by the global situations.