My Take

Toronto's focus is on Keystone XL oil pipeline, not Mayor Rob Ford

PUBLISHED : Tuesday, 22 April, 2014, 2:23am
UPDATED : Tuesday, 22 April, 2014, 2:23am

Having spent last week in Toronto, I can safely report that Rob Ford, the crack-smoking mayor of the city now seeking re-election, is not what most people worry about, not even if you are from Toronto.

Instead the national conversation is again focused on the controversial Keystone XL pipeline extending from Alberta to the US Midwest.

It strikes me that how Canada deals with its rich reserves of oil sands - also known as tar sands - is a textbook example of why some countries succeed in spreading wealth from natural resources, while others suffer from the so-called resource curse.

The Obama administration has, once again, delayed a decision on whether to approve the last phase of the Keystone pipeline system. Earlier construction means the system as a whole is already running crude and bitumen from Canada all the way to Texas, and shortly to the Gulf coast as well. So you have to wonder why the greenies are making such a fuss over XL. They say approval will cause runaway global warming from uncontrolled carbon emissions and turn democratic Canada into another corrupt petro-dollar state.

You should worry more about emissions from coal-powered electricity plants in the US or even heavy crude oil and ethanol production in California than Alberta's oil sands. But protesting against coal is not "sexy", whereas going against Canadian oil sand has become such a cause célèbre that even ex-US president Jimmy Carter and US hedge fund billionaire Tom Steyer have jumped on the bandwagon.

What political scientist Francis Fukuyama says about the success and failure of democracies applies here: "institutions matter". Countries like Canada with strong and functioning socio-economic institutions and government are far more capable of making effective and equitable use of natural resources.

On the other hand, failed states and developing economies with weak or non-existent institutions and government are ill-equipped to handle the riches, often resulting in corruption, social tensions and even civil war.

Canada has nothing to be ashamed of about oil sands, and the XL pipeline, if approved, will be the most scrutinised, technically advanced and safest ever built.