April 17, 2019 Alberta's Tryst With Destiny

Peter Zeihan | April 17, 2019

Local politics, even at the national level, are rarely a focus for students of geopolitics. Personalities play too big a role in the mishmash while local outcomes often play too small a role globally. Local affairs take up an outsized amount of oxygen in terms of local media coverage and public opinion, yet things usually keep chugging along, be the results good, bad or indifferent.

The key word there being “usually”.

The Canadian province of Alberta held elections yesterday (April 16) that have been on our radar for three years, and the implications of their results are anything but usual.

Alberta is a quirky place. Strong economic growth, a robust energy sector, and center-right political leanings have defined Albertan politics in recent decades—trends broadly disconnected from the reputation and reality of the rest of America’s northern neighbor.

Within that disconnect lies the problem.

Alberta has long been the Canadian province suffering from the largest “gap” between the monies it pays into national coffers compared to what it gets back in terms of federal spending. The rest of Canada has shown its appreciation by consistently stymying the energy industry that forms the backbone of the Albertan economy with everything from carbon taxes to blocking transport routes for the landlocked province’s crude to reach foreign refineries. For the most part, the rest of Canada doesn’t even use Alberta’s crude themselves, deigning to invest in refineries capable of processing Alberta’s tar sands crude, opting instead for lighter, sweeter imports.

If you think hamstringing a region’s economic growth while depending on its tax payments is a less-than-tenable long-term strategy, you’re not alone. While more people are aware of Quebec’s…independent streak, plenty within the Albertan political mainstream have had enough. And thanks to Quebec’s long-standing political wrangling to wrench itself free, any future Albertan separatist referendum would be perfectly legal.

Which gets us to the current state of play. The province’s conservative-leaning voters staunchly backed the Progressive Conservative majority governments from 1971 to 2014, to the degree that after some elections there wasn’t even an opposition in the local legislature. But in 2015 in-fighting within the conservative house generated a political split. The Wildrose Party ran separate from the Progressive-Conservatives in the 2015 elections on a ticket of fiscal conservatism, healthcare reform and direct election of the province’s senators. The fissure split the conservative vote down the middle, enabling the New Democratic Party—a party that is most definitely not of the center-right—to seize control of the Albertan government for the first time.

In a near textbook example of how geopolitics forms politics rather than the other way around, the NDP and premier Rachel Notley quickly went to work not only adopting many of its predecessor conservative government’s policies, but went to the mats with both Canadian Prime Minister Justin Trudeau and neighboring British Columbia over all things energy-related, most notably on pipelines. (Obviously, going to the mats here is relative. For a self-styled, Green/Leftist party to support oil sands in any measure is a big shift. Notley went so far as to embargo British Columbian products.)

It was fun while it lasted. Just as a political spat among the center-right brought the NDP to power, a recent fracturing of the center-left in Alberta combined with a healing of the rift on the right has now escorted it out. While the counting continues, it appears a reunited Conservative-Wildrose alliance—operating under the banner of United Conservatives—now hold at least 62 seats in the 87 seat parliament according to Tuesday night’s provisional results. With victory cemented, many Albertans now look forward to a fundamental shift in the provinces’ fortunes.

The awakening will be a rude one.

The United Conservatives are running on public dissatisfaction against carbon taxes, a lack of pipelines, and an unequal system of taxation by a federal government many Albertans see as being not only out of touch and unhelpful but actively working against Albertan interests.

Alberta’s new government will take the issue of a carbon tax to court.

They will lose. Canada’s provinces lack the legal standing to challenge the central government on such topics, or more accurately, Ottawa has means of enforcement that bypass legal challenges.

Alberta’s new government will sue to allow the Trans Mountain Pipeline to cross British Columbia and so enable Albertan Tar Sands to reach the Pacific.

They will lose. Even if Alberta wins the case, BC will still find a means—with the unofficial blessing of a green-leaning central government—of preventing the pipe’s construction.

Alberta’s new government will push back against the federal government’s heavy reach into Albertan coffers.

They will lose. With Canada’s population aging into mass retirement, transfers from Alberta to the center will increase.

Alberta’s new government will attempt to redefine the relationship between Edmonton and Ottawa in an effort to carve out more policy and financial autonomy.

They will lose. Trudeau’s shiny, Instagram-able veneer aside, his ruling Liberal Party faces what is shaping up to be horrific national election in October. Collapsed positions vis-à-vis the Americans on trade has gutted Liberal support in Quebec, British Colombia has outflanked Trudeau to the left, Alberta’s Prairie Province neighbors have never been strong Liberal territory, and Ontario is slipping into a decidedly non-leftist populism. Trudeau needs Alberta’s tax dollars to hold Canada together, and any concessions to Alberta would immediately be demanded by other provinces. What Alberta is asking for is quite literally an end of Canada. Even if Trudeau wanted to give ground (and he does not), he absolutely cannot.

Something’s gotta give.

This Alberta Question has two possible outcomes.

The first is an Albertan collapse.

Economically, the province’s strength is resource extraction. Without a significant change in how Canada functions, the Albertans inability to bring their crude to market leaves them staring down an economic depression Greek in depth while alsofacing ever higher financial extractions from Ottawa. It is enough to hollow out Calgary on the scale of Detroit. As a government town, Edmonton wouldn’t do much better.

Politically, Alberta’s United Conservatives face an impending litany of defeats on absolutely every issue that they say matter to them. Barring impossible shifts in Ottawa’s position, a repeat of the sort of infighting which brought the NDP to power in 2015 is all but guaranteed.

All that needs to occur to guarantee the rudderless and hopeless outcomes of this option is that the Albertans continue to do what they’ve done for the past decade: hope things get better and hope what they say matters.

Outcome Two requires a sharp break with convention, as it is nothing less than Albertan secession.

The logic of Alberta leaving Canada is difficult to deny. If the rest of Canada remains hellbent on cramping the Albertans’ style, why not quit the Canada Show? Alberta isn’t dependent on the federal government’s financial handouts like other provinces. It has an energy sector, public infrastructure, educational system and workforce that has drawn plenty of international investment interest on its own. Negotiating export pipelines directly with the United States would be infinitely easier than with other Canadian governments, especially since the U.S. Gulf Coast is home to the onlyconcentration of refineries in the world that can process Albertan heavy crudes. The money the Albertan government would save by not having to underwrite the rest of Canada would be gob-smacking.

But just because secession solves a bunch of problems doesn’t mean the Albertans are chomping at the bit to make it happen. No one in the Albertan public space is using the “S” word just yet. None of the major parties campaigned on separation, either in 2015 or 2019, but that doesn’t mean that the topic isn’t about to dominate provincial political discussions.

The United Conservatives now face a truly weird combination of factors: a complete lack of ability to get anything they want from within the Canadian system, and the utter ability to leave that system. It isn’t that anyone in power in Edmonton is agitating for independence, but it will become obvious very soon that discussions of and processes towards independence are the only thing Albertans are actually in charge of.

We’ll save the implications of at-this-point-still-theoretical Albertan independence for another time. Even if the incoming Albertan government were dead-set on a secession referendum—and they are not—simply going through the motions to achieve that end will take a few months.

But as a teaser consider that Alberta by itself is the world’s fifth-largest oil producer, Canada is the tenth-largest economy, and the bilateral American-Canadian bilateral trade relationship has been the world’s largest for the bulk of the past two generations. One way or another, all things Canadian are now firmly on our radar, reaching up to the level of importance of the Saudi-Iranian rivalry, the ongoing Japanese and Russian resurgences, and the pending European and Chinese disintegrations.

For Canadians everywhere, that alone should be terrifying.