Canada’s national interest benefits from a renewal of the North American
wartime relationship
Tom Velk and Todd Fox*
Canada should take advantage of the present crisis to restore her typical wartime
relationship with the United States. Why? If our political leaders at such times
have sufficient imagination and daring, international emergencies create a state
of domestic affairs in which we are better prepared to frame and then pursue our
fundamental national interest, while improving our international stature. The
precipitous rise in military, social and economic pressure common to such
moments loosens Canada's otherwise too-restrictive Constitutional constraints,
and allows innovative politicians to operate at a level of authority unknown in
normal times.
Canada's independent national interest is served, and her economic and political
evolution toward serious statehood is and has been advanced by an association,
typically cooperative, with the United States, during moments of high drama and
significance, involving the international interests of the Americans. At times in
the past, Canada's strings were pulled by European powers, whose purpose was
to limit, cripple or even destroy the then still-growing power of the US. We think
this period created, in Canada, a kind of anti-Americanism that still exists, but
that hardly ever really served to better Canadian development. Canadian
cooperation right now, we say, while the Americans are involved in yet
another crucial interval should be planned with North American national
interest foremost, and we should shed all remnants of that legacy of a
European strategy of diminishing the power of a united American continent.
Europe needed to remain active in this realm if North American union was to be
avoided. We believe that subtle European diplomacy has often succeeded in
leading Canada into the erroneous belief that they shared the overseas interest
in stifling the emergence of a United North America. Sometimes out of a naïve
simplicity, and other times out of a narrow or even personal interest, Canadian
leaders in particular have been induced to do the work of their European puppet
masters in this respect.
The result of Anti-Americanism – erosion of individual liberty
One erroneous belief in Canada has been that a sharing in some of the purposes
and national aims of the United States would mean a sacrifice of Canadian
national interest.
Tom Velk is a professor of economics and the Director of the North American Studies Program at
McGill University.
Todd Fox is a J. William Fulbright Scholar with the North American Studies Department at McGill
and the Centre for Fiscal Studies at the Fraser Institute.
Gordon Gibson, writing in Fraser Forum earlier this year accurately explained the
anxiety associated with continentalism. With regard to the proposed North
American Security Perimeter he wrote:
“There is a concern by some that an enhancement of our common
perimeter will facilitate Canadians voluntarily becoming more like
Americans. The hidden agenda is that we should be denied that choice.
“In the end sovereignty lies in the individual. National states are mere
public utilities for the collective exercise of individual sovereignty. So if our
individual choices bring us closer to the Americans (or they closer to us)
who is to say that is wrong?”
The dominant American national interest has always been to achieve its full
potential as a united country, having continental dimensions, and possessing
worldwide influence and authority sufficient to prevent other powers from
significantly altering American projects at home or abroad. The Canadian
national interest has been (should be?) to share the fruits of American power and
prestige, while paying a discount price for doing so. In economic matters, this
end has been achieved by the high price typically paid in the United States for
Canadian exports, especially commodities. The advantages of low transport
costs, a common language and heritage, common legal traditions, common
assets such as the Great Lakes, the St. Lawrence, the fishery and even the
border-mobile population, all combined with a degree of Canadian monopoly
power in markets like energy, transportation and the defensive value of Canada's
geography, have allowed Canada to free-ride on many American investments,
without a need to carry all the related costs. Some commentators in Canada
interpret this situation as one suggesting that Canada's interest is to remain
"independent" of the United States. Since that is manifestly impossible, we
submit that even these analysts are really saying that it is in Canada's national
interest to reap as many of the benefits that come from the unavoidable reality of
North America's shared history, interdependent economy and common legal and
political heritage, while avoiding whatever costs can be shifted or safely ignored.
What we do not accept is a corollary view, held by Canadians actively opposed
to American welfare, who suggest or imply that it is in Canada's interest to
frustrate the American interest wherever possible, or at least to refuse to enter
into common efforts with the United States, for fear that the largest gains from
such actions will go to the Americans, even though no specific Canadian losses
are anticipated. Advocates of this Dog-in-the-Manger strategy, we think, merely
serve the purposes of major European and other World powers, who sometimes
benefit from reduced American strength. Contrary to the arguments of antiAmerican Canadian nationalists, we find in the historical record ample evidence
to show that Canadian cooperation with the United States, particularly at
watershed moments in the development and evolution of the American nation,
has paid substantial independent dividends to Canada.
Historical Overview - Anti-Americanism and the Balance of Power
Two nations were created on July 4, 1976: the revolutionary US and the
reactionary counterweight to the north. British North America was a large
investment and London was not going to give up on the Western hemisphere
over a tax revolt in the more populous southern colonies. Population and capital
were redirected to the colonies that would become Canada. The loyalist
reactionaries justified their contempt and separateness from the “mobocracy” of
America. They could afford to. They were an appendage of the world’s greatest
empire.
In a utilitarian universe, the decline and fall of the British Empire would have
propelled Canada directly into a common market with the United States.
Whereas New Zealand, Australia and South Africa faced potentially rocky
transitions into autonomy, Canada’s geography assured that she would always
have a world power at her side if she so chose. Of course, ours is not a
utilitarian world. Canada resisted continental integration. Anti-American
balancing continued for one and one-half centuries to the benefit of no one (but
the satisfaction of the British and French). A resource wealthy and population
poor country with an economy suited for capital absorption and commodity export
can shirk capital and markets only if it is willing to accept underdevelopment.
Such policy was justified as being the “cost of being Canadian.”
With the end of its Civil War, America became an internal common market and a
net exporter of capital. American corporations made direct investments in the
manufacturing sector in Europe, in the primary industries sector in Latin America,
and made approximately equal direct investments in both of these sectors in
Canada. The mysteries of trade and finance were penetrated, and New York
challenged and surpassed the European money markets. External expansion
was matched by accelerated economic development at home. This rising giant
made it all the more imperative that Canada be the recipient of sufficient external
capital so that it too, could build its cities and knit together a commodity and
agricultural exporting economy. And so the railways as well as the lines of
command ran east and west in Canada, even though such links already had
been created only a few miles to the south. The north-south orientation that
made the greater economic sense was resisted, on the grounds there was a
sufficient national interest payoff that did not appear on the market's balance
sheets. But such a strategy, so contrary to a market outcome, necessitated a
role for government that, from the beginning of the Canadian counter-thrust to
post-Civil War America laid the foundation for another long-lasting distinction
between the two North American siblings.
Wartime Convergence
World War I was a modern war. It was fought in factories as well as fields. A
belligerent from the earliest days, Canada needed industrial horsepower.
Running a wartime economy with sufficient industrial capacity required
organization and integration that was continental in scope.
The extraordinary pressures of war swept away the ideological and political
support for the artificial barriers that conflicted with economic logic by confining,
burdening and hindering ordinary peacetime trade. Rather late in the game, but
not negligently so, Prime Minister Borden realized the errors and costs of
economic isolation, and he and President Wilson come to an understanding that
allowed Canada some, but not all of the industrial gains that would come from
war's integrating force. Through collaborative efforts such as the War Industries
Board and the Canadian War Mission the Borden and Wilson governments
"established through wartime administration what peacetime politics had made
impossible."1
World War II
The Second World War furnishes a clear example of the gains delivered by
wartime convergence in homeland security and bilateral trade. When Canada
and the United States actualize their cooperative potential, cut through the
bureaucracy and trade barriers and integrate their economies on a North-South
axis, Canadians win.
The Ogdensburg Agreement established a permanent joint board on defense.
Perhaps a more appropriate name for this would have been the “your borders are
our borders” agreement. FDR and King met in private and without involving
lobbyists and special interest groups set up a plan that would guarantee
Canadian defense with American troops. It created a proto-security perimeter for
the continent.
The Hyde Park declaration followed the next year. It too was the product of
informal, personal diplomacy. Hyde Park created a virtual open market in
defense articles, guaranteed Canada $200M - $300M in defense contracts,
solved Canada’s foreign exchange problem (which would have imploded the
economy) and authorized Canada to sell these defense-related goods to the
British under the terms of the Lend-Lease Act.
Leslie Roberts quantifies the gains of Canada’s watime strategy in her biography
of C.D. Howe. “By 1943,” Roberts writes:
1
Cuff and Granatstein, Ties that Bind
Canada stood fourth among the United Nations in industrial output,
overshadowed only by the United States, Russia and Britain. With the
possible exception of the United Kingdom, its per capita production was
the highest of all the nations allied against Hitler. This achievement had
taken four years.2
Economic expansion continued in Canada even after the peace of 1945, and the
great gains in industrial productivity (which were largely the result of Howe's
North-South integrationist strategies) and development translated to
unprecedented levels of international clout. Hillmer and Granatstein explain the
the positive effects of continental integration upon Canadian identity in their
analysis of Canada’s national evolution.
Canada entered the war as an independent nation, but as late as 1938 the
country seemed uncertain of its own strength. It appeared nearly colonial
to the international community, although it actually possessed reasonable
autonomy. The nation seemed far less British and much more serious
after World War II. Canada emerged from the Crucible of war
strengthened. While the fighting went on, the depression that had sapped
the nation for a decade was replaced by full employment in booming war
plants. Though some Canadians feared that the economy might turn down
again with the peace, optimism was well founded. The gross national
product had doubled to over $11 billion, there were jobs and overtime for
everyone who wanted work, and Canadians' savings swelled. Factories
and farms produced a cornucopia of goods; Canadian war production had
amounted to 10 percent of the British Commonwealth total. Such
abundance had helped to give Canada influence in wartime negotiations,
as had the nation's military contribution. Canada had done its full share in
fighting and winning the war. Its claim to be a "middle power" was
justified.3
Perhaps more than a middle power, Canada became influential in the United
Nations and made a member of the western world's two most elite clubs: NATO
and the G7. The small nation had acted as a great power might have done and
was perceived as such in the post war international system. CD Howe,
Mackenzie King (and perhaps even FDR) had built a nation that was more
significant than it had ever been in the past. She operated as an equal among
nations that, by the measures of history, economics or strategic location, far
outranked her. The alliance with the United States, the first to be undertaken
after the demise of Britain's covert desire to thwart American influence, had
catapulted Canada to the front rank of nations, measured by per capita income,
national stature and political influence.
Unfortunately, Canadian post-war diplomacy preferred to downplay (if not ignore
entirely) the reality that it owed its new stature to wartime economic
2
3
Roberts, C.D. Howe
Hillmer, Granatstein, From Empire to Umpire
“Americanization.” Lester B. Pearson, the Canadian diplomat par excellence
(and architect of Canada’s Cold War institutionalism) voiced his ingratitude to
Howe in 1950 saying:
In the turbulent post-war stream, the current seems to be carrying
our boat rather far from its accustomed course, rather too close
perhaps to the rocks on one side of the channel.
Translation: Getting rich and powerful is nice, but let’s not get carried away. This
is yankee money. Its gross. Let’s go back to being a British colony.
Howe’s rebuttal is as meaningful today as it was half a century ago. With little
patience for Pearson and his Department of External Affairs’ willingness to bite
the hand that fed them, Howe remarked that they were, “a little too frightened of
the American bogey and, therefore just a little too anxious to do everything to
help the British.” Continuing his assault on the sentimental irrationality of antiAmericanism, Howe offered the future Prime Minister a lesson in commercial
diplomacy:
Our export policy should be to sell as much as possible wherever
possible. The United States has become the healthiest and most
receptive market in the world at a time when intense difficulties are
being encountered elsewhere...It is not at all obvious that Canada’s
sovereignty would be impaired, even by a large increase in the
percentage of our exports going to the United States. The surest
way to lose our sovereignty would be to get into financial
insolvency...Selling our goods to the Americans is a much better
alternative. (Granatstein, 1988, pp. 54-5)4
Unfortunately for Canada the next generation of Canadian policy makers
(including Pearson) would not heed this advice.
The War on Terrorism and Current Policy Options
Canada's relationship with the United States is enlivened by a diversity of actors.
A direct, unimpeded, immediate and effective decision-making axis running
between Ottawa and Washington is decidedly not the norm. Subnational
governments, multinational corporations, cross-border interest groups and their
lobbies govern the economic partnership. This creates a condition of
paradiplomatic stasis.
The War on Terrorism and its attendant diplomacy provides the necessary
political cover for Ottawa to circumvent paradiplomatic and sub-statal
4
Granatstein, How Britain’s Weakness Forced Canada into the Arms of the United States
entanglements and maximize the national self-interest through increased
cooperation with the United States. September 11, 2001 should be recognized
as a mandate for Chretien and Bush to set aside the official rhetoric and say, in
the Spirit of Hyde Park, "come on down to my house and tell me what you really
want." Such an overture would cut through the barbed wire of interest-group
politics and empower Washington and Ottawa to act with the decisive rationality
that the present crisis demands.
Our specific suggestions
Ottawa has let down the individual citizen in wartime by inverting its perennial
peacetime folly. The federal government has inadvertently deregulated the one
aspect of governance most contingent upon central planning.
What should Canada do? First, stop carping and sniping, especially when it can
have no effect on American policy. Canada should take a lesson in Public
Relations and Brand Asset Management from Tony Blair and the UK. Perceptual
politics go further than material assets in a unipolar global system.
Once the attitude adjustment is made Canada can procede with a continental
agenda. The American Ambassador calls it NAFTA plus.
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Establish a Continental Security Perimeter
Establish an interoperable Northern Command (NORTHCOM) – including
Continental Missle Defense
Restore the common market in defense (Continental Defense Market
Treaty)
Liberalize trade in energy5
Canada should be forthcoming with resources. Energy is an American import that the friends of the
terrorists might very well use as an instrument of persuasion. Mr. Chretien should say - now when it might
have an impact - that, insofar as Canadian resource endowments are able to make up any shortages
whatsoever, they will be made available, at cost. To see just how unproductive Canada's actual current
manipulation of the energy situation can be, consider the observations of Dr. Joseph Dukert of the Johns
Hopkins University School of Advanced International Studies in Washington, DC. He reports the
willingness of Liberal MP's to play "big time hardball" with the Bush administration. Those extraordinarily
shortsighted policy makers suggest Canada should make unilateral cuts in energy exports to the US if the
Americans refused to give ground on Softwood Lumber and Prince Edward Island Potatoes. These public
servants - who, it seems, have not been reminded that "there is a war going on" - merely advocate the
special interests of powerful constituencies. But in so doing, they take a great risk, not unlike a teenager on
a bicycle that veers in front of an eighteen wheeler. If the truck driver is a man of good will, not in any
hurry, having road room to spare, the kid will survive, because the truck will swerve. But should that big
rig be running wide open, on a life or death mission, on a one-lane road, no harm will come to the fender
because of the regrettable but inevitable contact. The Chretien government seems to recognize that the US
needs Canada's energy, but appears uncertain as to how it ought to act. The temptation to play ordinary
politics here is suicidal: silly as well as futile. Border efficiency, lumber exports and agricultural subsidies
have been important foreign policy issues in Canada for decades. MP's and ministers who have spent
careers seeking resolutions to these recurrent problems have not reacted irrationally in continuing to fight
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Move toward a more open border6
Harmonize tariffs
Currency Union
The time has come to abandon irrational Anti-Americanism and make steps
toward increasing wealth and individual sovereignty. Paradiplomatic stasis can
not be disrupted unless Canada makes meaningful steps toward continental
integration. So the real choice is not between security and sovereignty, but
between improved peace and prosperity and inefficient symbolism of the Crown
and Looney.
for concessions now that they have the attention of their American counterparts. The failure has been the
Prime Mini-Minister's. He must find a way to advance Canada's interests while associating himself - in a
productive way - with the solution to the current crisis facing our American neighbors. Canada has the
means to minimize, if not completely resolve, American dependence upon Middle Eastern oil. We can
price our product to them at our domestic rates. We can open the taps. We can welcome their investment
capital. We can encourage exploration. Above all, we must stop playing games with availability and price.
We can then reasonably expect a proper reward.
6
Borders simply must be made secure, and at once. Canadian talk - something of which our Parliament
should be more parsimonious -- of a common, serious and significant security perimeter around both went
on without action until US Attorney General John Ashcroft called in the National Guard and on December
3, 2001, behind a figleaf bilateral consensus, announced the terms of the new border policy which he had
most-likely dictated to the Canadians. In war, Will checkmates Talk. If the Alliance or the Liberals find
any of their own recommendations in the border rules, it is coincidence not influence. Since we have
quibbled away our chance to make the rules, we must at a minimum enforce them, and operate a truly
effective filter on all international traffic and immigration. No more bombers caught by accident - we
better build a record of real intercepts.