Canada: Seizing an irresponsible mill’s cutting and hydro rights is inappropriate?

Danny Williams’s move to unilaterally seize the Newfoundland hydro
assets and timber cutting rights of paper giant AbitibiBowater Inc.
after the company announced it would close its adjacent newsprint mill
is the kind of self-inflicted wound that will sour any sensible
business person with an eye on investing in the province. If the
government rips up duly negotiated agreements just when it feels like
it, what’s the point in signing them in the first place? At least Hugo
Chavez, Venezuela’s nationalization-happy President, has the decency
to call himself a socialist. Mr. Williams just acts like one. Yet,
every small-town Canadian who has experienced first-hand the roughshod
tactics of the multinationals entrusted over the decades to “develop”
this country’s resources will deep down be just a little bit grateful
for Danny Boy’s penchant to go rogue. “How will this be viewed by
Newfoundlanders? Positive,” said Scott Simms, the Liberal MP for Grand
Falls-Windsor, where Mr. Williams is expropriating Abitibi’s assets.
“How will it be viewed by the outside world? I bet some people will
say: ‘Hey, there’s someone who actually believes resources belong to
the people.’ ” Generous incentives given to businesses, sometimes more
than a century ago, were the basis of Canada’s economic development.

Over the decades, governments gave (mostly) foreign companies the
right to raze forests, harness rivers and drill for oil in exchange
for jobs and investment. “It was a totally rational policy,”
explained Joe Martin, director of business history at the University
of Toronto’s Rotman School of Management. “Canada leaped ahead because
we did not have the capital to do it on our own.” So, what happens
when one party to the deal decides it’s no longer in its interest to
maintain the mill jobs? Should it get to keep all the other goodies
granted by past governments and be able to auction them to the highest
bidder? We know what Mr. Williams’s answer is. No other government in
Canada has been as bold, or reckless, as Newfoundland’s nominally
Progressive Conservative Premier. Even Quebec, which nationalized its
vast hydroelectricity industry in 1962, spared the hydro assets owned
by Abitibi and aluminum giant Alcan. The companies’ decades-old
generating stations have been the source of fantastically cheap power
to feed their mills and spawned a lucrative side business selling
surplus electricity back to the provinces – usually at a hefty
premium. http://www.theglobeandmail.com/servlet/story/RTGAM.20081217.wabitibiyakabuski17/CommentStory/politics/home

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