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The new cold war is underway and pits free enterprise against state capitalism. Countries like Canada, the U.S. or Germany have fostered their multinationals and they have acted as de facto instruments to grow their economies through trade success.
But countries like Russia, South Korea, China, Singapore and others operate like gigantic holding companies armed with “soft economic weapons” that include oligarchs, national champions, state-owned enterprises, protectionism, diplomatic initiatives and sovereign wealth funds.
Unfortunately, too few western leaders have a glimmer of understanding about this and are failing to devise policies to counteract and defend their economies.
But there is a glimmer in Canada and this week Ottawa announced what it calls a Global Markets Action Plan. In essence, the scheme will put trade before foreign policy in terms of External Affairs efforts.
More meaningfully, the Plan will deputize diplomats to drum up trade around the world, or become essentially export salesmen. Even better, the Plan does not take a shotgun approach but targets countries – led by the United States – with good credit ratings, fair markets, laws, similar values and promising economic prospects.
(Unfortunately, this Plan will require a cultural shift by career diplomats who are usually international relations or language majors without business backgrounds.)
To me, Stage 2 of such a Plan for a smallish economy like Canada is to look at what state capitalism tools can look like. The best example is Singapore where civil service personnel (and top trade officials) are routinely recruited by headhunters from the private sector, and paid upward of $1 million a year plus bonuses.
Unlike Canada that relies mostly on foreign investment and its resource endowment, Singapore has built the world’s highest living standards through its moxie and business talent. (I don’t admire Singapore’s money laundering niche, however; it has taken over from Switzerland in this regard.)
Canada wouldn’t exploit such an opportunity, but Singapore has no resources and yet makes lots of money from resources. The country has become the logistical kingpin for fossil fuels in Asia. It is now the region’s principal port and transport hub for oil supertankers and LNG and has branched into buying the stuff directly. This month, Singapore’s sovereign wealth fund and oil giant took another step in this direction and bought supplies to keep their hub humming. It bought 5% of Tunisia’s future fossil fuel production.
For the rest of this column, click here: http://opinion.financialpost.com/2013/11/29/canadas-export-salesmen-foot-soldiers-in-the-new-cold-war-for-markets-and-resources/