Archive | May 2013

Taking apart Tories’ Party Line on China-Canada Treaty

A Conservative MP’s letter attempting to soothe citizens worried about FIPA is misleading says expert Gus Van Harten, who breaks it down item by item.

By Gus Van Harten, 5 Nov 2012, TheTyee.ca

Canada China FIPA cartoon

Osgoode Hall law professor and investment treaty expert Gus Van Harten asks, why won’t Tories admit deal is lopsided?

[Editor’s note: Opponents of the Canada-China investment treaty (FIPA) continue to hammer the Harper government in an effort to delay the agreement’s ratification, which could happen anytime. According to a report last week by the Globe and Mail, the government was in a position to ratify the agreement Thursday, Nov. 1 through an order-in-council. However it has not yet done so, and “it now appears that ratification will wait until Mr. Harper returns from an eight-day trip to Asia,” which began Saturday [Nov. 3], the Globe reported.

Critics have called FIPA a “31 year ball and chain on Canada” that would hand over unprecedented control over the country’s pace and scale of resource development to China. “Ottawa capitulated to China on everything,” concluded Conservative commentator Diane Francis. Many Canadians have written to the government with concerns. (As of Sunday night, 74,000 people sent messages asking specifically for a rejection of FIPA, as well as the sale of Nexen to the Chinese National Offshore Oil Corporation, through a Leadnow campaign.)

Bev and Cole McKay sent one of those messages. They received a response from Alberta Conservative MP Blake Richards. The Tyee forwarded the response for analysis to Gus Van Harten, associate professor at Osgoode Law School and a critic of the agreement who’s written letters outlining his concerns to Prime Minister Harper and B.C. Premier Christy Clark, both published on The Tyee. Van Harten responded to 11 claims made by government in Richards’ letter. We publish them below.]

Government claim #1:

Our Conservative Government is committed to creating the right conditions for Canadian businesses to compete globally. Canada’s Foreign Investment Promotion and Protection Agreement (FIPA) with China — the world’s second largest economy — will provide stronger protection for Canadians investing in China, and facilitate the creation of jobs and economic growth here at home. 

Reply:

Chinese investment may facilitate the creation of jobs and growth in Canada. On the other hand, if it removes value-added benefits from Canada’s resource sector or other areas of the economy, then it may undermine jobs and growth. A problem with the treaty is that it will hamper the ability of Canadian governments to ensure that benefits of resource extraction in Canada accrue reasonably to Canadians. On the other hand, China will retain a wider range of policy tools to discriminate in favour of its own companies in China.

Also, the potential role of the treaty in protecting Canadian companies in China is being overstated by the government and other proponents of the deal, some of whom are lawyers at firms that offer investor-state arbitration services. No foreign investor has ever sued China in a known case under one of these treaties since the explosion of investor lawsuits against countries began about 15 years ago. This may be because companies fear jeopardizing their relationship with the Chinese government. On the other hand, Canada has been sued many times by U.S. companies under NAFTA and has lost important cases on economic measures and environmental regulations (Ethyl v Canada, SD Myers v Canada, AbitibiBowater v Canada, and Mobil/ Murphy Oil v Canada), and the lawsuits against Canada keep coming. If anything, Canada appears more vulnerable to being sued and having to pay compensation to Chinese investors under the treaty.

Notably, at the time of NAFTA, Canadians were told that NAFTA was needed to protect investors in Mexico. Since then, U.S. investors have sued Canada dozens of times under NAFTA and a Canadian investor has sued Mexico in just one case. Meanwhile, Canadian investors have lost all of the 16 cases they have brought under these treaties, usually against the U.S.

The arbitration mechanisms under these treaties enrich lawyers and arbitrators, but there is little evidence that they can protect Canadian business in a meaningful way against a major player like the Chinese government, especially when China has retained the right to continue to discriminate in favour of its own companies.

Government claim #2:

Our government’s ambitious pro-trade plan is opening new doors for Canadian businesses in dynamic, high-growth markets like China, and our FIPA with China provides important benefits for Canadian investors.

Reply:

Unlike NAFTA, the FIPA is not a trade agreement and does not reduce tariffs for Canadian exports to the Chinese market. Its main role is to protect Chinese-owned assets from legislatures, governments, and courts in Canada, and vice versa. Because there is more Chinese investment in Canada than Canadian ownership in China, the treaty’s investor protection mechanism puts disproportionate risks and constraints on Canada.

To illustrate, if current trends were to continue (tracking from inward Foreign Direct Investment flows during 2008 to 2011), the ratio of Chinese investment in Canada to Canadian investment in China would increase from about 2 to 1 now to 10 to 1 in approximately 10 years. Also, Chinese investment in Canada would exceed U.S. investment in Canada after roughly 17 years. Incidentally, this is just over halfway through the minimum 31-year lifespan of the Canada-China treaty. These investment outcomes are highly speculative and may not come to pass. But it is the governments’ responsibility to indicate how much Chinese investment is anticipated under the treaty and in what areas so that the treaty’s risks and constraints can be assessed and debated in an informed way.

Government claim #3:

For businesses looking to set up in China, China cannot treat a Canadian company less favourably than they would any other foreign company looking to do the same.

Reply:

This is misleading. The treaty does very little to protect Canadian investors from discriminatory treatment in China and, in fact, it locks in an uneven playing field. Under the treaty, both Canada and China can keep their existing laws and practices that discriminate in favour of their domestic companies, and these existing laws and practices are then locked in. Because China has more discriminatory laws and practices than Canada, the treaty freezes an unlevel playing field in China and a relatively level one in Canada.

To illustrate, in a recent report the U.S.-China Business Council reported that foreign investors in China complained they had to obtain licenses where local companies did not and that they had to pay higher tax rates than domestic investors. The Canada-China treaty exempts these existing discriminatory practices in China from the requirement not to discriminate against Canadian companies (see Article 8(2)(a)(i) of the treaty).

Incidentally, other countries that have signed these treaties with China, such as Germany, obtained a commitment from China to not discriminate after the other country’s investments were allowed in, without an exception for existing discriminatory measures like that in Article 8(2) of the Canada-China deal. Canada failed to get the same protection for its investors in China, even assuming that the treaty’s arbitration mechanism is reliable to enforce China’s commitments.

Government claim #4:

Fundamentally, this investment treaty will help protect the interests of Canadians.

Reply:

Perhaps the treaty will protect Canadian interests. But on each of the key issues of market access, investor protection, and leveling of the playing field, the treaty favours China. The federal government needs to acknowledge this and explain why it is in Canada’s interest. And before locking in the treaty for 31 years, the federal government and other governments in Canada should make public their risk assessments and cost-benefit analyses of the treaty in order to allow independent scrutiny and informed debate. If they have not done those assessments, then frankly it would be negligent for the federal government to ratify the treaty.

Notably, when the Australian Productivity Commission in 2010 assessed the role of the investor-state arbitration mechanism that is replicated in the Canada-China treaty, it recommended that Australia not include this mechanism in future treaties. The Australian government accepted this recommendation after being sued under an investment treaty by Philip Morris for Australia’s national anti-tobacco legislation.

In recent weeks, the federal government has indicated that state-owned entities should be treated differently at the stage of admission to Canada’s economy. However, similar issues arise in relation to the treaty and its extensive protections for state-owned entities after they are admitted to Canada. The treaty will allow Chinese companies to challenge democratically-authorized decisions in Canada via arbitration processes that are not open, fair, and independent in the manner of a domestic or international court. Canadians deserve an opportunity to learn more about these arbitrations and the lawyers who control them before their sovereignty is conceded to the arbitrators for 31 years, for the purpose of protecting Chinese state-owned firms from governments in Canada.

Government claim #5:

Creating a secure, predictable environment for Canadian investors is why, since 2006, our Government has concluded or brought into force FIPAs with 14 countries, and are actively negotiating with 12 others. The Canada-China FIPA is very similar to the other FIPAs that Canada is a party to. It contains all of the core substantive obligations that are standard in our other FIPAs. 

Reply:

The Canada-China treaty is vastly different from Canada’s other FIPAs with countries like Armenia, Costa Rica, and Romania, all of which invest relatively little in Canada (notably, the only other FIPA with a major player, Russia, does not contain the same broad investor-state arbitration mechanism as the post-NAFTA FIPAs). Chinese ownership of assets in Canada will dwarf that of these other countries. Thus, the FIPA’s liabilities and constraints are much greater for Canada. Unlike all of Canada’s other FIPAs, Canada is the capital-importer, and to a very significant extent, in the relationship with China.

Before ratifying the treaty, the government should make clear whether it could admit tens or even hundreds of billions in Chinese investment in Canada over the foreseeable future. It should allow for independent assessments of the risks and constraints that will be put on Canada in relation to Chinese-owned assets in different scenarios. These risks and constraints, and the costs of the treaty’s unlevel playing field on both market access and discriminatory practices, could then be weighed against the purported benefits of investor protection to Canadian-owned assets in China.

Government claim #6:

Our Conservative Government has introduced an unprecedented process for putting Canadian international treaties to the scrutiny of the House of Commons. In 2008, our Government announced that treaties between Canada and other states or entities, and which are considered to be governed by public international law, will be tabled in the House of Commons. Accordingly, the Canada-China FIPA was tabled in the House of Commons on September 26, 2012. This reflects our government’s commitment to transparency and accountability.

Reply:

The treaty’s constraints on Canada will last for 31 years, with major implications for Canada’s relationship with one of the largest economies in the world. It is as yet unclear how China will act as a major capital-exporter and how it will use these sorts of treaties to protect its interests. Rather than release assessments and analyses of the treaty, however, the government has limited Canadians to about five weeks’ notice of the treaty text with little opportunity for scrutiny and debate. If the government were serious about making a well-informed decision, it could, for example, establish an independent commission to study and report publicly on the costs and benefits of the treaty for Canadians.

Government claim #7:

With regards to investor-state dispute settlement, it is Canada’s long-standing policy to permit public access to such proceedings. Canada’s FIPA with China is no different. As we do with all other investor-to-state disputes, this FIPA allows Canada to make all documents submitted to an arbitral tribunal available to the public. All decisions of the tribunal will be made public.

Reply:

The federal government still has not released a NAFTA award in an important case that Canada lost in May 2012 (Mobil/ Murphy Oil v Canada). This undermines the government’s credibility when it says that it will make decisions and documents public under the Canada-China treaty. It also raises the question of why the government in this treaty, unlike other FIPAs, retained the right to withhold documents relating to Chinese lawsuits against Canada (see Article 28 of the treaty). By retaining this right, the government will be able to shield itself from embarrassment by not telling Canadians about cases in which a Chinese company has sued Canada. The government’s response, in the face of the clear language in the treaty, is to ask Canadians to trust that the government will release all documents in all cases over the next 31 years.

Government claim #8:

Ultimately, access to international arbitration will provide Canadian investors with the confidence that comes from recourse to an independent, international body to adjudicate any disputes.

Reply:

Again, no foreign investor has ever resorted to these arbitration processes in a known case against China, despite hundreds of lawsuits against other countries over the last 15 years. Also, the arbitration process lacks institutional safeguards of independence that apply in courts. Based on the arbitrators’ decisions to date, there is reason to suspect that the arbitration mechanism may favour major capital-exporting countries and their investors to the detriment of Canada under this treaty. (More here.) Canada should have insisted on a dispute settlement process that accords with the rule of law and ensures a fair, rules-based system.

Government claim #9:

It is also important to note that under this treaty, both Canada and China have the right to regulate in the public interest. Chinese investors in Canada must obey the laws and regulations of Canada just as any Canadian investor must.

Reply:

This is misleading. Both countries maintain the right to regulate in the public interest only to the extent that the arbitrators agree with how that right was exercised. The arbitrators are largely a power unto themselves and have regularly rejected interpretations of these treaties that were proposed by governments, including by Canada. In many ways, they have expanded their own powers to award public compensation for foreign investors. It should also be kept in mind that these are for-profit adjudicators who are paid by the case, not tenured judges who receive a set salary from the state.

Taking apart Tories’ Party Line on China-Canada Treaty

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Further, a government may face intense pressure not to exercise its right to regulate, due to the power of foreign investors to threaten lawsuits for hundreds of millions or billions of dollars. Even if the government thought it had a strong defence in a case, it would run the risk of being ordered to pay massive compensation to an investor. Unlike at the World Trade Organization, the compensation order tracks back to the government’s original decision, creating uncertain but potentially catastrophic fiscal risk for governments. Although governments maintain the right to regulate, subject to the arbitrators’ authority, their bargaining power can be undermined significantly in closed-door discussions, especially in relation to expensive projects.

Finally, Chinese investors, by their access to arbitration tribunals outside of the Canadian legal system, may obtain a competitive advantage over Canadian investors who are limited to Canadian courts. This favouring of foreign investors over domestic companies is one of the reasons that the Australian Productivity Commission and the Australian government decided against including these arbitration mechanisms in future treaties, let alone in a treaty where Australia occupied the capital-importing position and appeared especially vulnerable to lawsuits.

Government claim #10:

At the same time, Chinese investment in Canada will continue to be subject to the Investment Canada Act for both the net benefit test for acquisitions above the applicable threshold and for national security concerns with respect to any investment. Decisions by Canada under the Investment Canada Act are excluded from challenge under the provisions of the FIPA.

Reply:

This is true; indeed, if the treaty comes into effect, the primary protection for Canadians from the treaty’s risks and constraints will be the federal government’s power to limit Chinese investment under the Investment Canada Act. That said, there are weak points that could potentially be exploited by Chinese firms to buy assets in Canada outside of the framework of the act. Also, on this point, Canada excluded only the Investment Canada Act from the treaty, whereas China excluded unspecified “Laws, Regulations and Rules relating to the regulation of foreign investment” (see Annex D.34 of the treaty) that allow China to block Canadian investments. As a result, in Canada — but not in China — a sub-national (e.g. provincial) government could not rely on this clause to block takeovers by foreign investors, if the federal government approved the takeover. This is another example of how the treaty is lopsided in China’s favour.

Government claim #11:

We’ve been clear that Canada wants to continue to expand its relationship with China, but we want to see it expand in a way that produces clear benefits for both sides. By ensuring greater protection against discriminatory and arbitrary practices, and enhancing predictability of a market’s policy framework, this FIPA will allow Canadians to invest in China with greater confidence.

Reply:

What are the benefits for Canada? The treaty does not lower tariffs for Canadian exports to China’s market. It does not open China’s economy to investment by Canadian companies, beyond what governments in China already allow. It does not level the playing field for Canadian companies. On the contrary, the treaty allows China to continue to discriminate in favour of its own companies in China, while locking in the relatively even playing field in Canada.

On investor protection, the treaty favours China because Chinese investment in Canada is more extensive than Canadian investment in China and because Canada appears more vulnerable to being sued in arbitration proceedings. Thus, Chinese companies — and presumably the Chinese government — will have more bargaining power over governments in Canada and, in turn, an apparent competitive advantage over Canadian companies in their own country. It is dubious to claim that the treaty’s arbitration mechanism, which has never been invoked by a foreign investor in a known case against China, will offer meaningful protections or enhance predictability for Canadian companies in China.

A final note

Why would the federal government agree to such a lopsided deal? One reason could be that this is the price demanded by the Chinese government in return for allowing large flows of Chinese investment into Canada. Whatever the reason, the federal government should acknowledge that the treaty is lopsided and explain how it will nevertheless benefit Canada. This would allow public debate to focus appropriately on the terms that will accompany Chinese ownership of assets in Canada, the extent to which those terms may shift value-added benefits of resource extraction and other economic activity in Canada to China, and the government’s strategy for avoiding this outcome in spite of the constraints imposed by the treaty.

These questions are important because the treaty will undermine the bargaining power of Canadian governments and the competitiveness of Canadian companies in relation to Chinese state-owned companies for at least 31 years. Once the treaty comes into effect, no future Canadian Parliament or court will be able to change any of its terms without China’s consent.

Faced with public concern about the treaty, the government has released misleading information about the treaty and has pointed fingers at critics. For example, I have been called by the government or other proponents of the treaty: alarmist, protectionist, totally wrong, fear-mongering, and xenophobic. This avoidance of the substantive issues at stake heightens my own concern that governments in Canada have not considered carefully the pitfalls and risks of this imbalanced deal for Canadian voters, taxpayers, businesses, and workers. The treaty should not be ratified, at least until after a thorough, independent, and public review of the government’s claims.  [Tyee]

Gus Van Harten is an associate professor as Osgoode Hall Law School and author of Investment Treaty Arbitration and Public Law (Oxford University Press, 2007).

P3(PPP) – What are they? Our Future

P3 – The Partnership That Joins Public and Private Sectors

Part II

Charlie Munn

P3s or PPPs: What Are They?

Public-Private Partnerships, also known as PPPs or P3s, are joint ventures between the public and private sectors wherein governments leverage the financing capacity and expertise of the private sector to accomplish a public purpose.

A P3 such as the recent 99-year city of Chicago parking garage and toll road concession deals center on the acquisition of revenue-producing public infrastructure by the private sector. However, P3’s also have been utilized in diverse applications such as health care (the Global Alliance for Vaccines and Immunization combats infectious disease) and education (the National Maritime College of Ireland).

The private sector’s interest in P3 infrastructure deals has been influenced by the weakness of the so-called “dot com” and real estate investment sectors and by the ongoing worldwide terrorism threat. Infrastructure is widely viewed as a relatively safe and stable environment with investment-return opportunities that exceed yields realized in other low-risk financial instruments such as government bonds.

The public sector is motivated by the desire to free up its financial resources and administrative expertise for those government services considered to be its “core competency” or those it feels simply should not be privatized. Funds from the sale or lease of public assets can also jump-start capital campaigns for public interests such as parks, libraries and schools.

While the majority of P3’s have been successful (such as the Chicago Skyway), some have been outright failures (such as Australia’s Airport Link). The concept of transferring the responsibility, authority and revenue rights to public assets remains, therefore, controversial.

Alternatives to Asset Divestiture & P3’s:

Increment Bonding, Enterprise Funds & 6320 Corporations

Some critics of the recent trend toward public asset divestitures warn that the cold, hard cash offered by PPP’s is fool’s gold. As quoted by Joseph A. Giannone in a Dec. 7, 2006, Reuters article, privatization expert John Foote, a senior fellow at Harvard University, stated: “The public sector should not be seduced by the dollars without first examining all the issues. These deals aren’t always in the public’s best interests.”

Several alternatives put forth by critics may be options for some governmental entities considering PPP’s for the sale or lease of revenue-producing infrastructure.

Increment Bonding

If the objective is to reap a lump sum of cash now to deal with current needs, governments can take advantage of the well-established and stable bond market, critics point out. They say governments should emulate PPP’s by “monetizing” a primary source of these gargantuan upfront payments: future rate increases.

Dennis J. Enright, a principal and founder of NW Financial Group and a critic of Chicago’s privatization deals, says the question is: “Should the public sector capture the excess revenues generated for public transportation purposes or should they allow the private sector to capture these revenues?”

Capturing these excess revenues could be done in at least two novel ways, Enright says, utilizing relatively cheap municipal bond financing. First, if allowed by bond protocols, future rate increases in excess of bonding coverage requirements could be separately pledged to support a revenue bond. This would be similar in effect to a homeowner taking out a second mortgage due to increases in local home prices that elevate the value of the home.

There are ways to get around bonding limitations on pledging future rate increases, Enright suggests in his May 1, 2006, analysis critiquing the sale of Chicago’s Skyway toll road. “Another alternative financing structure would be a toll surcharge that could be securitized on its own without direct debt on toll road operations.”

Proponents of PPP’s argue that bonding entities are not going to look kindly on these sorts of “second” tier pledges and will tighten bond requirements accordingly. Or, if they allow them, borrowers may pay higher initial rates as a result. Further, PPP champions say, critics put too much emphasis on rate increases, rather than on the “value engineering” that a PPP will deploy in support of its acquisition.

They say that improving the quality and efficiency of the asset, such as improving audit procedures, painting, cleaning and installing new revenue controls in an acquired parking garage, will yield as much or more revenue in the long run than rate increases.

Indeed, industry sources close to the new Chicago parking PPP who wish to remain anonymous say that the new operation has yielded a significant and unexpected increase in revenues from unearthing and resolving management and accounting issues from the previously city-owned operation. Governments, these sources say from industry experience, simply cannot match the private sector’s performance, innovation and incentive to succeed.

Parking Enterprise Funds

Some municipalities and universities are attempting to harness the power of private sector entrepreneurship by creating an in-house Parking Enterprise Fund (PEF). The PEF is run as a “wholly-owned subsidiary” of the creating entity, much as the NBC television network and parking operator Interpark are subsidiaries of General Electric.

Revenues collected by the PEF are utilized to pay all expenses. Profits from the PEF are used to bankroll and/or leverage capital projects such as parking garage construction.

The creation of a PEF often creates an initial budget “hole” for the creating entity. Thus, in some cases, the PEF offsets the loss of revenues to the general fund by making a “rent” payment back to the creating entity.

In the PEF model, parking functions are still under the auspices of the entity, as though it were still a department or division of the entity. Authority and decision-making still flow from within the political system that created it; no separate board of governance is required, as is typical with parking authorities. Examples ofgovernments with PEF’s include Norfolk, VA, and Wilmington, NC.

6320 Corporations

A “6320 Corporation” is a creature of an administrative ruling made by the Internal Revenue Service (# 20 of the year it was made, 1963, hence the “63” and “20” in “6320”). It is a captive financial entity that is allowed to issue bonds and enter into agreements with its creating government to purchase, own and lease assets. The corporation must serve a nonprofit governmental or “public” purpose, and is not supposed to benefit a specific private interest, although some do indirectly.

Such corporations are normally exempt from state Taxpayer Bill of Rights (TABOR) requirements since taxpayers are not responsible for any debt the corporation incurs. In many states with TABOR requirements, governments are limited not by what they can spend or bond, but by what they can collect in taxes or related fees. A 6320 Corporation may allow governments to bypass public approvals of bonds that the entity might issue or the payments or fees it might collect.

In a typical arrangement, a separate board of directors governs a 6320 Corporation; it cannot be controlled in any way by the creating entity, although in practice the board members are often political appointees. The 6320 Corporation issues bonds to build new facilities; these facilities are then leased back to the creating entity. Either the owner (the 6320) but more typically the lessee (the creating entity) operates the facilities.

A major distinction between a 6320 Corporation and a parking authority or utility is that once the bonds are paid off, the 6320 typically goes out of business and asset ownership reverts to the creating entity.

Ratings agencies have expressed some concerns over the use of this provision by municipalities as a way to expand their bonding capacity and now include a calculation of such revenues and expenses in their bonding capacity calculation. Some municipalities have escaped this limitation by converting the lease agreement from a guarantee to an annual appropriation, despite the increase this might have on the interest rate the 6320 pays to its bondholders.

Although 6320 Corporations have been used in a number of venues, such as courthouse construction in Kentucky and toll roads in Virginia, municipalities are only beginning to consider their use in a parking context.

See the full text of the Reuters article by Joseph A. Giannone at: http://www.reuters.com/article/reutersEdge/idUSN0744524720061207?sp=true

For Dennis J. Enright’s analysis, see:

http://www.nwfinancial.com/pdf/thechicagosalereport.pdf

Charles R. “Charlie” Munn III, CAPP, CPFM, is a parking research principal for Scotchtown Associates, a human resources and customer service consulting firm. Contact him at: cmunn3@aol.com.

Sidebar 1:

Pros & Cons of P3’s

Pros

• Upfront cash payments can exceed revenues generated over time by the asset; windfalls can be directed to other long-term needs.

• Where divestitures “defease” (pay off) existing general obligation bonds, bonding capacity may be redirected to other projects.

• New owner/lessee assumes financial and legal risks for the asset; agreement can include specific operating, renovation or investment requirements.

• Extricates government from a business that is typically not its core competency; allows government to refocus on what it does best.

• Asset stays put and remains a viable part of the community; even in a “sale,” the new owners/lessees are not removing the asset as a public utility.

• Can improve quality of operations; operating standards can be written into sale/lease documents.

• Successful track record of results in Europe, Asia and North America.

• Governmental entity can reclaim asset if new owner/lessee fails to meet operating standards set by agreement or encounters financial difficulty.

• In a lease scenario, government can reclaim asset at the end of the lease term when it may be more valuable.

Cons

• Sometimes difficult to achieve political consensus on the concept of selling a public asset for private profit.

• Only measure of control over operational quality is what is written into agreement; if it’s not in the agreement, new owner/lessee is not required to do it.

• New owner/lessee can raise rates as it sees fit, unless limited by agreement (however placing limits on rates will reduce amount of upfront payments).

• Government loses benefit of the “upside” of the asset, such as future rate increases, new development/demand, etc.

• New operator/owner could default or fail financially, or find the asset was in poor shape or misrepresented requiring Government to step back in as operator.

• Asset’s responsiveness to the community’s needs is no longer subject to the political environment but up to the “goodwill” of the new owner/lessee.

• Loss of good-paying government jobs with benefits; private sector will pay less and have few or no benefits for workers.

• PPP’s are a slippery slope: where does it stop?

Sidebar 2:

A Brief History of P3’s

• 1930s – European governments utilize state-owned companies to build and operate toll roads.

• 1940s – European governments take on private partners to expand and rebuild infrastructure damaged by war.

• 1950s thru 1980s – Partnerships expand to include ports and airports, such as London’s Heathrow. Today, 55 airports in Europe are privately owned or operated.

• State-controlled enterprises gradually morph into private companies as expanding capital needs outpace the ability of governments to meet them. For example, Autostrade SpA, a company founded by the state in the 1930s, became wholly private in 1999 and now operates more than 2,000 toll roads in Italy.

• 1990s – PPP’s expand into Asia and Australia, where they catch on quickly. There are half a dozen toll roads in and around Sydney alone. Some, such as Sydney’s Airport Link fail, leading to the realization of the limits of such deals.

• 1999 – First PPP in North America, with the privatization of Toronto’s 407 ETR Toll Road.

• 2000-2001 – “Dot com” crash and 9/11 catastrophe have Wall Street investors looking for safe investments; money begins pouring into infrastructure funds.

• 2004 – Chicago’s Skyway toll road becomes America’s first infrastructure PPP, yielding $1.8 billion for a 99-year lease.

• 2006 – A 75-year lease of the 157-mile Indiana Toll Road nets the state a record $3.8 billion.

• 2006 – Chicago awards a 99-year lease for its parking garages, generating $563 million.

• 2006 – Acquisition of six U.S. ports by a company with

ownership in the United Arab Emirates becomes political football over concerns the PPP will provide cover for terrorist activities.

• 2007 – Chicago prepares RFP to privatize Midway Airport and mulls the possibility of offering its parking meter operations for PPP.

Article Abstract from January, 2008

P3 (PPP) one should understand are one interface being used. They aim to take us into a regional bloc world dominated by oligopolies, where national sovereignty and traditions are to be swept aside.

Most Canadians don’t understand danger of letting China into Canada – but a B.C. First Nations band is wise to history

BC First Nation says no to China-Canada Unequal Treaty, aka FIPA: The SinoFile

A First Nation is trying to stop Chinese history from repeating itself — in Canada.

Colonial powers divided China through a series of ‘Unequal Treaties’ in the 19th and 20th centuries. Is Canada next?

A BC First Nation aims to prevent Ottawa from signing a trade agreement with Beijing that may put Canadian national sovereignty where China’s own autonomy was in the mid-1800s.

Canada’s Hupacasath First Nation aims to block legislators from signing the Canada-China Foreign Investment Protection Agreement (FIPA), which includes investor arbitration rights that would allow Chinese enterprises to sue Canada “in cases where the host country attempts to impose new or updated regulations that may interfere with the investor’s bottom line,” Osgoode Law professors Gus Van Harten told The Vancouver Observer in October.

The Hupacasath First Nation believes the treaty – slated to protect investors’ rights for the next 31 years – would infringe on their existing aboriginal right to resources.

Chinese sovereign wealth fund The China Investment Corporation (CIC) is in negotiations to buy a 12.5 percent stake in BC-based Island Timberlands, in what Hupacasath Councillor Brenda Sayers told The Vancouver Observer would encroach on the Nation’s territorial rights.

Chinese-owned BC land harder to protect

“From a First Nations perspective, if the Chinese company should purchase what they are looking at with Island Timberlands, and if FIPA is signed, it’ll be more difficult to protect our sacred sites, water sources, fish-bearing streams,” Sayers said.

But the Hupacasath aren’t just concerned with themselves.

“This is about Canadians as much as First Nations – that’s the approach we’re taking,” Sayers said, explaining that a deal preventing Canadian authorities from harming Chinese business deals would enable the overseas enterprises to bring in their own workers – potentially affecting Canadian jobs. It would also ramp up the extraction of natural energies, with little regard for environmental impact as the owners would be based elsewhere.

Analysts have cited an unspoken inequality of the Canada-China FIPA and Chinese gestures to buy into Canadian energies: even if China’s CNOOC was recently approved to buy Canada’s Nexen energy company, Canadian investors would likely never be allowed to buy into the Chinese state-owned enterprises pushing for a chunk of Canadian natural resources.

Unequal treaties

In the mid-1800s, China under the Qing Dynasty signed a series of “Unequal Treaties” with Western powers – to include the United States – and Japan. The treaties, the result of foreign aggression, were essentially trade agreements that reduced China into a para-colonial playground for international business and geopolitical interests.

Of course, the Unequal Treaties did not serve to benefit China — Although Canada would surely benefit from Chinese cash inflows, Ottawa’s prospects of buying into Beijing’s business in kind are slim to none.

Extraterritoriality was also a key feature of the Unequal Treaties – The idea that foreigners in commercial port cities were not beholden to Chinese law, but rather their respective consular authorities.

In 2013, it seems the tables have turned and a Western country is legislating extraterritoriality for an Eastern business interest, as FIPA aims to legislate that Chinese companies are not beholden to Canadian laws that prejudice their interests.

MH

SinoFile is The Vancouver Observer’s daily series on Chinese affairs, including analysis of the nation’s business, politics and society, with a focus on international media coverage, Chinese and foreign social media and original interviews with China’s movers and shakers.

Cyprus Robbed in Broad Daylight and We Let it Happen – Watch this Mechanism Become Standard Useage -‘So Prepare’

The Great Cyprus Bank Robbery

March 18, 2013

It is well known that there are a number of countries in Europe that are in dire financial straits. So dire that they make our $16.7 trillion national debt look manageable.

We know about Greece and Italy, Portugal and Spain. Not only are they drowning in debt, but they have high unemployment (Spain’s is nearly 25 percent) and negative GDP growth.

But the scariest news over the weekend came from the tiny country of Cyprus.

I’ll wait while you try to remember if you know where Cyprus is located.

Ok. It is an island about half the size of Connecticut, with a population of about 1.1 million, located in the Eastern Mediterranean south of Turkey.

It is also broke.

Cyprus has close ties with Greece and had invested heavily in Greek bonds. Unfortunately for Cyprus, foreign investors in Greek debt were forced, in 2011, to take a voluntary haircut of up to 50 percent of the value of those bonds.

With an economy as thin as Cyprus has, a loss of that magnitude in the funds it had, essentially, parked for safety sake was more than just a jolt. It threw the economy into a tailspin.

Why am I bothering you with the Cypriot economic woes? Because of the manner in which the big guns in the European Union – in this case Germany – wanted to structure a $13 billion bailout

Here’s what they decided: Individuals who have deposits of at least $130,000 (equivalent) in Cypriot banks will pay what the New York Times called a “one-time tax” of 9.9 percent of their deposits.

Smaller depositors will have their funds confiscated — taxed to the tune of 6.75 percent.

The Times reported that many of the higher-value depositors are “Russians who have put vast sums into Cyprus’s banks in recent years” but it wouldn’t matter if it they were North Korean generals. A deposit is a deposit for the use of the depositor, not for Angela Merkel.

Naturally as soon as word hit that this “tax” was going to be imposed on Tuesday, there was a run on the banks to get money out of bank vaults and into mattresses where it would be safe.

Naturally the ATM networks were shut down to prevent the good people of Cyprus (or Russia) from getting to their money before the government could take it away.

Chancellor Merkel said that making the depositors help pay for the bailout is the right thing to do. “That way,” she said, “those responsible will contribute in it, not only the taxpayers of other countries.”

I have $12.75 in the bank in Alexandria, Virginia. How does that make me responsible for creating the national debt?

My fear is this becomes a standard mechanism for helping to reduce what is known as the “sovereign debt” – the money countries owe.

Think about what will happen when officials of the Obama Administration come to work this morning and read that the EU could force Cyprus to confiscated legally deposited funds.

According to the Federal Reserve Bank of St. Louis, as of last Monday there was $6.8 trillion on deposit in U.S. banks.

No one, not even Barack Obama, would consider taking 100 percent of those deposits, but I can certainly hear the clack-clack-clack of keyboards drawing up the talking points explaining why rich people with deposits of over, say $50,000 should be willing to do their fair share in paying down the national debt.

Maybe to the tune of a “one-time tax” of, say, 15 percent. That’s not 15 percent of $50,000, it would be 15 percent of whatever you’ve got in the bank – in all your accounts. Maybe throw in those greedy 401(k)s and brokerage accounts that have swollen with the sudden rise in the U.S. stock market.

Sample Talking Point: If you can afford a 401(k) and $4/gallon gasoline, you’re making too much.

I’ll be a little late for work this morning. I’m going to the bank with my change purse and get my money out before I become an unwilling donor to help reduce the Obama debt.

It may only be $12.75, but the taxes have been paid on it, and it’s mine.

On the Secret Decoder Ring page today: Links to the CIA entry for Cyprus, to the NY Times coverage of the bank robbery, and to unemployment by EU country. Also two Mullfotos showing the present structure and a drawing SP4 Hockenberry’s new home you helped pay for.

Comments:
It’s BOTH corporatist parties and The Fed. (which has reduced the value of the dollar by 98%) Stop arguing over left and right ideas.

  • “We must keep the people busy with political antagonisms. We’ll
    therefore speed up the question of reforms (of tariffs within) the
    Democratic Party; and we’ll put the spotlight of protection for
    the Republican Party. By dividing the electorate this way, we’ll
    be able to have them spend their energies at struggling amongst
    themselves on questions that, for us, have no importance
    whatsoever.” UNITED STATES BANKERS magazine 1892 So what has
    changed? NOTHING!!! You’re STILL having the wrong conversations!!!
    END THE FED!!!

  • Reply
  • garyinaz66 2 months ago

    oblamer and the dems already did this to us with obamacare. biggest tax increase ever.

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  • ronb39339 2 months ago

    Surprised they’re not thugging up on the bankers with knives & clubs. Of course, hitting bank accounts hits the people who actually work for a living or have retirement money… Doesn’t hurt the welfarers at all; Thus it damages the ideal of working for a living.

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  • Mark Kortum 2 months ago

    Savings are being taxed in the United States right now under the euphemistic term “quantitative easing”. Quantitative easing is nothing fancier than good old fashioned printing of paper money. The only difference is that in the US all accounts are being taxed, not just those over $130,000.

    Paper money printing gives the government money to spend when it wants to spend more than it collects in taxes. The Fed. keeps interest rates low and the value of the dollar (your savings) is diluted by the percentage of new dollars that enter the market as compared to the USA’s cumulative net worth. It is sort of like a company that splits its stock. If it splits on a two-for-one basis the value of each share halves. The only difference is when there is a stock split you get the new shares. When the government prints money (issues new shares of stock in the US) you never see it and the value of your shares (money) decreases.

    Our combined US net worth is about $75 trillion. When the Fed prints $1 trillion more dollars it dilutes the value of each dollar by 1.4 percent. It does not sound like a lot but it adds up over time. If my grandfather gave me $1,000 in cash in 1954, the year I was born, that cash would be worth $137.00 today. By printing money for the past 58.5 years the Federal Government have taxed $863 out of my birthday gift. . . maybe not as much per year as Cypress is doing but much more insidious because of the clandestine way in which it is done, hoping no one will notice. At least the Cypriots are honest!

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  • Avatar
    Dens 2 months ago

    Your bank has been reporting every dime that moves in and out of your accounts, where it came from and where it went to the government for some time. The IRS watches your financial activities like a hawk.

    It’s really just a simple keystroke for them to clean you out instantly if and when they decide it’s “for your own good” or if you spend money on things they deem “inappropriate”. Do you trust your present “leaders” in the Administration and Congress not to do that?

    Remember, they are trying to disarm you right now so you will have absolutely no defense against anything they decide to do to you and your family financially or otherwise. Just imagine how truly naked and helpless you, your family and friends will be when they have your guns and your money.

    Of course they know what’s best for you and it is after all “for your own good” and will make things “safer” for everybody…right? If you are not yet afraid of your government….you damned well should be.

    When only one Senator will take it upon himself to stand up and make an issue over the government’s “right” to kill American citizens on a whim then you surely must be afraid even if you are liberal to the core.

    It is probable, progressives or liberals are as likely to be taken out if not directly then collaterally just for being near a conservative target when the government strikes. They also can be wasted as the primary target if they offended the wrong ones in our present regime.

    see more

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  • pupsncats 2 months ago

    Money has no value anyway. Since going off the gold standard in 1971, there isn’t anything tangible to base the value of money and that is why the Fed can just keep printing it. Since the world bases the value of their money on our dollar and our dollar is worthless, when the time comes for those who put a stake into buying up our worthless money demand repayment of something that does have value, the world economies will crash because money is completely worthless.

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  • Frank_O 2 months ago

    More reason to take all your “spare” paper Dollars out of your checking or savings account & hide it someplace safe (not in a bank) & put at least some of it into gold & silver now (as a hedge against inflation & a storage form of REAL wealth) & also store that someplace safe (not in a bank). Buy a bit more gold/silver monthly so as to “cost average” some of your “spare” Dollars in the future.

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  • WTF 2 months ago

    This is why we have guns. Not for hunting but to protect our rights and freedom from a out of control Government. This will happen if we also contune doing what we are doing. History will repete itself.

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  • Avatar
    Fed-Up Great Grandpa 2 months ago

    This current administration contains a bunch of greedy spendthrifts who don’t respect the Bill of Rights. Of course they do in all in the name of “fairness” which includes being totally unfair to those who work hard to make a decent living.
    In short, they’re educated idiots!

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  • snaketrapper 2 months ago

    Hans Hoppe shows how to make the banksters pound sand in his idea of a Private Law Society.

  • Reply
  • Washington76 2 months ago

    The Inflation chart you will not see or hear about in our government run media!

    Jan. 17 (Bloomberg) — In today’s “Single Best Chart,” Bloomberg’s Scarlet Fu displays how inflation has increased in the 100 years since the creation of the Federal Reserve. She speaks on Bloomberg Television’s “Bloomberg Surveillance.”

    http://www.bloomberg.com/video…

    “Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one’s government is not necessarily to secure freedom.” Friedrich August von Hayek

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  • RhettButler1 2 months ago

    Pelosi is pushing this hard in our country. She wants to confiscate all retirement plans and 401K accounts. That pile of money just drives leftists crazy when they think of what they could be spending it on and stealing some for themselves.

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  • Gill O’Teen 2 months ago

    Keep in mind that o’bummer’s regime (and it’s predecessor) has been keeping its great bloodshot eye of Sauron upon OUR 401k plans. That plan is to confiscate those in exchange for OUR VOLUNTARILY ‘CONTRIBUTING’ them to their Social Security lockbox where they will assuredly be as well cared for as all previous monies ‘secured’ in said lockbox. Do not forget that its current economic policies are just mere repetitions of every failed idea of the past. The probability it will view this blatant theft of other people’s money as anything short of brilliant is extremely unlikely. For the most part, any money placed in a bank account has already been taxed.

    This robbery has already declined the Oriental markets. I track 8: Nikkei 225 (Japan) down 2.709%; Hang Seng Index (Hong Kong) down 1.996%; SSE Composite Index (Shanghai) down 1.685%; S&P/ASX 200 (Australia) down 2.047%; CSI 300 Index (Shanghai) down 1.472%; SZSE Comp Index (Shenzhen) down 1.150%, BSE SENSEX (India) down 0.692%; TSEC weighted index (Taiwan) down 1.465%

    Stories over at Market Watch and Motley Fool are placing the blame for these declines on the bank account tax.
    http://au.finance.yahoo.com/ne…
    http://www.marketwatch.com/sto…

    Expectations are that this earthquake will send shock waves throughout the Euro-zone and the USA before the day is done. However, if their strong central banks increase their level of stimulus. They might succeed in continuing their illusion of prosperity.

    To the ‘progressive’ way of thinking anyone with the means of putting $12.75 in the bank, is one of THEEVILRICH.

    see more

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  • Avatar
    Fred 2 months ago

    This is all in the cards for the US. There’s nothing that can be put past this purple lipped, Marxist, ego-maniacal, narcissistic, Hitler and Stalin wannabe.

    If Osama doesn’t get his way, he’ll begin to take money from people’s bank accounts, without permission of course. You know, it’s all “for the people”. Spread that money around.

    He’s already raping the American people with his “no-healthcare”, refusal to bring domestic sources of oil online, and so many other things, we’ll just all bend over and take it, because he says it’s the “right thing to do”.

World Bank Sending Out its Minions to Promote Disassembling of Band Land

World Bank Darling Promotes Privatization of Reserves

Critics say fee-simple title on reserves could further erode Indigenous land base

by Neskie ManuelEmma Feltes Original Peoples

Hernando de Soto on Peruvian TV - Image by Roberto Bustamante CC2.0
Hernando de Soto on Peruvian TV – Image by Roberto Bustamante CC2.0

Also posted by dawn:

Earlier this month, Peruvian economist and World Bank poster child Hernando de Soto visited Vancouver to speak in favour of the establishment of individual property ownership (“fee simple”) on First Nations Reserves in Canada.

The First Nations Property Ownership (FNPO) conference — hosted by the First Nations Tax Commission — paired de Soto with a select roster of Indigenous leaders, lawyers, economists, and scholars from across British Columbia and Canada to promote a proposal that would allow fee simple title on reserves.

The proposal aims to give individuals living on reserve access to the same legal private property rights that exists in the rest of the country, as opposed to the collective title held by bands. Currently, collective title is bound by section 91(24) of the Constitution Act, 1867 (a guiding provision of the Indian Act), which allocates legislative jurisdiction over “Indians and lands reserved for the Indians” to the federal government, constitutionally protecting existing Indigenous title.

“What [the proposal is] doing is putting a damper on 91(24) lands,” said Harley Chingee, a member of the First Nations Lands Advisory Board. “There’s no internal controls once you take 91(24) out of it. Because then the provinces — and Canada, for that matter — can have control.”

The proposal is championed by conference organizer C.T. (Manny) Jules, Chief Commissioner of the First Nation Tax Commission, former Chief of the Kamloops Indian Band, and one of Canada’s foremost proponents of private property ownership on reserves.

The conference came at the crest of an increasingly aggressive effort throughout recent months to generate support for the controversial proposal — a charge led by Jules alongside conservative political scientist Tom Flanagan. Flanagan — a former campaign manager for Stephen Harper — has published a number of contentious books and articles prescribing solutions to First Nations economic development and land management. He most recently co-authored Beyond the Indian Act, which argues for federal legislation that would make way for fee simple on reserves.

In response to this effort, a growing group of Indigenous Chiefs and community members have been speaking out against the Jules/Flanagan proposal, making the argument that fee simple property ownership will leave collective Indigenous Title and Rights and Reserve Lands — which are affirmed in section 35 of the Constitution Act, 1982 — vulnerable to encroachment by developers, corporate interests, and Federal and Provincial control. Chingee has been open in his rejection of the fee simple proposal, as has Arthur Manuel, spokesman for the Indigenous Network on Economies and Trade.

De Soto, president of the Institute for Liberty and Democracy (ILD), is notorious for advocating fee simple property ownership and market-led agrarian reform among Latin America’s campesinos. His ideas are promoted by international financial institutions like the World Bank, as well as the US international development organization USAID, who use his theory to back their own market-driven development projects throughout Latin America.

He’s also been assailed with criticism from popular and grassroots organizations, such as Via Campesina — a global peasant movement — which maintains that the most common ramification of de Soto’s economic agenda is dispossession and deeper economic stratification.

Like de Soto’s proposal for Latin America, which aims to convert latent, or “dead” assets into market capital, Jules and Flanagan aim to transform collective rights into individual titles, which can be openly traded on the market. In Canada, collective land title is understood to be the inherent right of Indigenous Peoples.

In a letter against the fee simple proposal published in the First Nations Strategic Bulletin, Manuel asserts the power and protection of collective title. “No single individual can give up or extinguish our Aboriginal Title and Indigenous Rights. It would be suicide or extinguishment for our future generations to accept Fee Simple in exchange for our collective Title,” he wrote.

Chingee’s response to the proposal warns of the damaging impacts of privatizing reserve land. “The change would undermine signed Treaties across Canada; undermine our political autonomy; restrict our creativity and innovation; and place us in a dangerous position where any short-term financial difficulty may result in the wholesale liquidation of our reserve lands, or the creation of a patchwork quilt of reserve lands like Oka,” he wrote.

The fee simple proposal has come under further fire for implying that individual property ownership is the sole recourse for economic prosperity on reserves. De Soto’s frequent reference to reserve lands as “dead capital” was wholeheartedly adopted by the conference organizers, who littered promotional material with the promise to unleash this un-tapped asset.

A recent article by Dan Cayo in the Vancouver Sun explains that a common approach taken by individuals on reserve is to find substitutes for individual property ownership, such as long-term leasing and “certificates of possession,” which are enough to provide sufficient collateral to qualify for business loans.

“Certainly you don’t need fee simple standards to prosper. People have an illusion that’s totally false,” says Chingee, citing examples of First Nations who have achieved economic success without fee simple ownership. “You just have to look at Westbank First Nation out in Kelowna. And there’s countless others, like Squamish Nation in Vancouver, for example, Macleod Lake Indian Band, up north of Prince George, that are prosperous 91(24) lands. And I think there’s a lot more potential throughout Canada, it’s just people haven’t realized their potential.”

Ironically, it was Westbank’s economic success that the fee simple advocates tried to use to their advantage, adding former Chief Ron Derrickson’s name to the conference’s speaker’s list and promotional material without his consent or support.

Derrickson — known as one of the most successful Indigenous developers in the country — was alerted to this name-borrowing via Manuel. Once alerted, Derrickson voiced his disproval of the fee simple proposal and his name was removed from the list.

The FNPO website uses the Switzemalph 7 reserve near Salmon Arm as an example of a community with untapped development potential.

“Actually if you cut out the environmentally sensitive areas you come up with a picture that has a lot of development,” says Dave Nordquist from Adams Lake, refuting the FNPO’s claims about Switzemalph 7. The environmentally sensitive area is part of the Salmon River Delta, an area unsuitable for any land development.

Though Tom Flanagan is not a listed speaker at the conference, and is rarely named on the FNPO website, his presence is discernable. The cover image from Beyond the Indian Act graces the front page of the site, and his co-author, André Le Dressay, was a speaker during the Vancouver conference.

Beyond the Indian Act bears the subtitle “Restoring Aboriginal Property Rights,” implying that fee simple property ownership is a traditional right among Indigenous people in Canada. This message is reiterated in the forward and in a recent Globe and Mail editorial — both written by Jules, who evokes early Indigenous civilizations across the Americas to make the case that individual property rights and free market trade are fundamental to Indigenous peoples, and have been obscured and impeded upon by colonial legislation.

Nevertheless, the fee simple proposal also names the Torrens title system as a source of inspiration — a colonial model which hinges on the creation of an individual title registry. Its name pays tribute Sir Robert Torrens, a colonial Premier who introduced the title system to South Australia in the mid-19th century.

Though proponents claim that the right to fee simple title is inherent, the proposal is curiously lacking in popular Indigenous endorsement. Whether or not de Soto will be able to drum up support for the proposal remains to be seen.

 

 

First Nations Band Land First Considerations

Privatization of reserves promoted by liberalization gurus

November 1, 2010

Peruvian economist and World Bank poster child Hernando de Soto Polar visited Vancouver in October to speak in favour of the establishment of individual property ownership (“fee simple”) on First Nations Reserves in Canada.

The First Nations Property Ownership (FNPO) conference — hosted by the First Nations Tax Commission — paired de Soto with a select roster of indigenous leaders, lawyers, economists, and scholars from across British Columbia and Canada to promote a proposal that would allow fee-simple title on reserves.

The proposal aims to give individuals living on reserve access to the same legal private property rights that exists in the rest of the country, as opposed to the collective title held by bands. Currently, collective title is bound by section 91(24) of the Constitution Act, 1867 (a guiding provision of the Indian Act), which allocates legislative jurisdiction over “Indians and lands reserved for the Indians” to the federal government, constitutionally protecting existing indigenous title.

“What [the proposal is] doing is putting a damper on 91(24) lands,” said Harley Chingee, a member of the First Nations Lands Advisory Board. “There’s no internal controls once you take 91(24) out of it. Because then the provinces — and Canada, for that matter — can have control.”

The proposal is championed by conference organizer C.T. (Manny) Jules, chief commissioner of the First Nation Tax Commission, former chief of the Kamloops Indian Band, and one of Canada’s foremost proponents of private property ownership on reserves.

The conference came at the crest of an increasingly aggressive effort throughout recent months to generate support for the controversial proposal — a charge led by Jules alongside conservative political scientist Tom Flanagan. Flanagan — a former campaign manager for Stephen Harper — has published a number of contentious books and articles prescribing solutions to First Nations economic development and land management. He most recently co-authored Beyond the Indian Act, which argues for federal legislation that would make way for fee simple on reserves.

In response to this effort, a growing group of indigenous chiefs and community members have been speaking out against the Jules/Flanagan proposal, making the argument that fee-simple property ownership will leave collective Indigenous Title and Rights and Reserve Lands — which are affirmed in section 35 of the Constitution Act, 1982 — vulnerable to encroachment by developers, corporate interests, and Federal and Provincial control. Chingee has been open in his rejection of the fee-simple proposal, as has

Arthur Manuel, spokesman for the Indigenous Network on Economies and Trade.

De Soto, president of the Institute for Liberty and Democracy (ILD), is notorious for advocating fee-simple property ownership and market-led agrarian reform among Latin America’s campesinos. His ideas are promoted by international financial institutions like the World Bank, as well as the U.S. international development organization USAID, who use his theory to back their own market-driven development projects throughout Latin America.

He’s also been assailed with criticism from popular and grassroots organizations, such as Via Campesina — a global peasant movement — which maintains that the most common ramification of de Soto’s economic agenda is dispossession and deeper economic stratification.

Like de Soto’s proposal for Latin America, which aims to convert latent, or “dead” assets into market capital, Jules and Flanagan aim to transform collective rights into individual titles, which can be openly traded on the market. In Canada, collective land title is understood to be the inherent right of indigenous peoples.

In a letter against the fee-simple proposal published in the First Nations Strategic Bulletin, Manuel asserts the power and protection of collective title. “No single individual can give up or extinguish our Aboriginal Title and Indigenous Rights. It would be suicide or extinguishment for our future generations to accept Fee Simple in exchange for our collective Title,” he wrote.

Chingee’s response to the proposal warns of the damaging impacts of privatizing reserve land. “The change would undermine signed Treaties across Canada; undermine our political autonomy; restrict our creativity and innovation; and place us in a dangerous position where any short-term financial difficulty may result in the wholesale liquidation of our reserve lands, or the creation of a patchwork quilt of reserve lands like Oka,” he wrote.

The fee-simple proposal has come under further fire for implying that individual property ownership is the sole recourse for economic prosperity on reserves. De Soto’s frequent reference to reserve lands as “dead capital” was wholeheartedly adopted by the conference organizers, who littered promotional material with the promise to unleash this un-tapped asset.

A recent article by Dan Cayo in the Vancouver Sun explains that a common approach taken by individuals on reserve is to find substitutes for individual property ownership, such as long-term leasing and “certificates of possession,” which are enough to provide sufficient collateral to qualify for business loans.

“Certainly you don’t need fee-simple standards to prosper. People have an illusion that’s totally false,” says Chingee, citing examples of First Nations who have achieved economic success without fee-simple ownership. “You just have to look at Westbank First Nation out in Kelowna. And there’s countless others, like the Squamish Nation in Vancouver, for example, Macleod Lake Indian Band, up north of Prince George, that are prosperous 91(24) lands. And I think there’s a lot more potential throughout Canada, it’s just people haven’t realized their potential.”

Ironically, it was Westbank’s economic success that the fee-simple advocates tried to use to their advantage, adding former Chief Ron Derrickson’s name to the conference’s speaker’s list and promotional material without his consent or support.

Derrickson — known as one of the most successful indigenous developers in the country — was alerted to this name-borrowing via Manuel. Once alerted, Derrickson voiced his disproval of the fee-simple proposal and his name was removed from the list.

The FNPO website uses the Switzemalph 7 reserve near Salmon Arm as an example of a community with untapped development potential.

“Actually if you cut out the environmentally sensitive areas you come up with a picture that has a lot of development,” says Dave Nordquist from Adams Lake, refuting the FNPO’s claims about Switzemalph 7. The environmentally sensitive area is part of the Salmon River Delta, an area unsuitable for any land development.

Though Tom Flanagan is not a listed speaker at the conference, and is rarely named on the FNPO website, his presence is discernable. The cover image from Beyond the Indian Act graces the front page of the site, and his co-author, André Le Dressay, was a speaker during the Vancouver conference.

Beyond the Indian Act bears the subtitle “Restoring Aboriginal Property Rights,” implying that fee-simple property ownership is a traditional right among Indigenous people in Canada. This message is reiterated in the forward and in a recent Globe and Mail editorial — both written by Jules, who evokes early indigenous civilizations across the Americas to make the case that individual property rights and free market trade are fundamental to indigenous peoples, and have been obscured and impeded upon by colonial legislation.

Nevertheless, the fee-simple proposal also names the Torrens title system as a source of inspiration — a colonial model which hinges on the creation of an individual title registry. Its name pays tribute Sir Robert Torrens, a colonial premier who introduced the title system to the state of South Australia in the mid-19th century.

Though proponents claim that the right to fee-simple title is inherent, the proposal is curiously lacking in popular indigenous endorsement. Whether or not de Soto will be able to drum up support for the proposal remains to be seen.

Emma Feltes is a writer, researcher and activist based in Halifax and the southern interior of British Columbia. Her work centres on First Nations and state relations, cultural heritage and intellectual property, and urban issues.

This article first appeared in the Vancouver Media Co-op.

Aboriginal Insurrection in Canada – Oxford University Study

John Ivison: Grim report warns Canada vulnerable to an aboriginal insurrection

John Ivison | 13/05/01 10:17 PM ET

 

A new report states that, in some respects, an uprising has and is already occurring in Canada.

Geoff Robins/The Canadian PressA new report states that, in some respects, an uprising has and is already occurring in Canada.

 

Mankind is at a crossroads, Woody Allen once quipped: “One path leads to despair and utter hopelessness. The other to total extinction. Let us pray we have the wisdom to choose correctly.”

 

Canada’s relations with its aboriginal people are also at a crossroads but, fortunately, one of the potential paths forward promises a more auspicious outcome than Mr. Allen’s doomsday scenario.

 

The Macdonald-Laurier Institute think-tank laid out the options in two important essays released Wednesday. One paper, by Ken Coates and Brian Lee Crowley, outlines an optimistic vision where aboriginal and non-aboriginal Canadians find ways to collaborate on natural resource development, to the benefit of all.

 

A more pessimistic report, by Douglas Bland, suggests that Canada has all the necessary “feasibility” conditions for a violent native uprising — social fault lines; a large “warrior cohort”; an economy vulnerable to sabotage; a reluctance on the part of governments and security forces to confront aboriginal protests; and a sparsely populated country reliant on poorly defended key infrastructure like rail and electricity lines.

 

 

Mr. Coates and Mr. Lee Crowley suggested that aboriginal people are in a “sweet spot” when it comes to natural resource development — the result of treaty agreements, court settlements and Supreme Court decisions.

 

Mr. Coates said many First Nations have made it clear they want to work within the structure of Canada by taking their grievances to court, a process that culminated with a landmark Supreme Court decision in 2004 that said companies who want to develop resources on traditional native land have a “duty to consult and accommodate.” This gives aboriginal people substantial influence over resource decisions, if not a legal veto, and has led to the emergence of well-funded community development corporations, impact-benefit agreements, indigenous collaboration and resource revenue sharing. (British Columbia has led the way with a new mineral tax.)

 

The authors point out these kinds of deals are not a panacea — the troubled Attawapiskat reserve has a royalty-sharing agreement with De Beers over its Victor diamond mine, yet has recently seen a state of emergency declared again.

 

But their conclusion is that even such movements as Idle No More —“overwhelmingly peaceful and culturally rich” — suggest accommodation is possible, if native Canadians receive a “fair” share of the country’s wealth.

 

That’s the good news. There’s precious little sunshine in Douglas Bland’s paper, Co-operation or Conflict?

 

He took the accepted “feasibility” hypothesis, developed by researchers at Oxford University, as the basis for predicting civil unrest and applied it to Canada. The findings are scary enough to make you stock up on canned food and start digging your bunker.

 

In Canada, it seems, unrest is very feasibile

 

The Oxford research suggests that “feasibility,” rather than root causes, is the foundation for challenging civil authority. In Canada, it seems, unrest is very feasibile. “Social fractionalization” along native and non-native fault lines is obvious. There is a growing warrior cohort — by 2017, 42% of First Nations population on the Prairies will be under 30 — many disadvantaged, poorly educated, unemployed and angry. The economy is dependent on moving resources over long, hard-to-defend transportation routes. Finally, the security forces are limited by capacity and the will of their leaders to confront aboriginal protesters who break the law.

 

While the Oxford hypothesis suggests feasibility is the determinant and predictor of insurgency, it does not dismiss that grievances do provide motive. And Mr. Bland’s paper reels off some particularly damning statistics: a homicide rate of 8.8/100,000 compared with 1.3/100,000 in the non-aboriginal population; a stratospheric incarceration rate that means 80% of prisoners in Alberta are aboriginal (out of 11% of the population); a high school graduation rate of 24% of 15 to 24-year-olds, compared with 84% in the non-native population; a 40% youth unemployment rate and on and on.

 

Mr. Bland argues that, in some respects, an uprising has and is occurring, “as a quick head count of the Warrior Cohort inside our penal colonies will demonstrate.”

 

In the event of an insurgency, the Canadian economy could be shut down in weeks. The 2012 CP Rail strike cost an estimated $540-million a week, as it hit industries including coal, grain, potash, nickel, lumber and autos. Some First Nations leaders like Terry Nelson in Manitoba have already concluded that a covert operation involving burning cars on every railway line would be impossible to stop.

 

Mr. Bland cites Manitoba, with its vulnerable transportation hub, as a province with a large native population and a relatively small police presence that would be unable to guarantee security in the event of even a modest protest. “The reality is that the security of Manitoba now and in the future is whatever the First Nations allow it to be,” he quotes one security specialist as saying. “[And] as the security guarantee drifts lower, the feasibility of confrontation climbs higher.”

 

It makes for grim reading, but Mr. Bland suggests there are ways to diminish the feasibility factor and create conditions for the happier outcome put forward by Messrs. Coates and Lee Crowley.

 

He suggested resource revenue-sharing; a Marshall Plan style reconstruction package that acknowledges some sort of native sovereignty; programs aimed at dealing with aboriginal incarceration; comprehensive resettlement of remote communities; and a well-funded First Nations leadership institution as ways to address some of the frustrations felt by natives on reserves.

 

But the logic of the feasibility hypothesis means the most effective way to prevent an insurrection is to make one less feasible. Hence, he concludes Ottawa must reinforce the security guarantee in and near First Nations by safeguarding critical transportation infrastructure, beefing up policing on reserves and cracking down on illegal drugs.

 

In his conclusion, Mr. Lee Crowley said that, on balance, there are strong reasons for optimism. “The feeling that this is an intractable problem where progress can never be made is not true,” he said.

 

But, having read both papers, I tend to side with Mr. Allen’s (and perhaps Mr. Bland’s) more gloomy world view.

 

National Post