Canada's power increase

A new book puts forward the theory that Northern Rim countries such as Canada will be the world's next great super powers – and sooner than we think, writes RICHARD GILLIS

LIZ LEMON (Tina Fey): Gavin this was wonderful. I really enjoyed watching MTV Canada with you.

Gavin Volure (Steve Martin): Yeah. They can't seem to get anything right up there can they?(From 30 Rock)

Canada's days as the butt of American jokes are, nearly, over. That is, if the predictions contained in Laurence Smith's new book are right. Smith, a UCLA (University of California, Los Angeles) professor of geography, earth and space sciences, set about writing a climate change book, funded in large part by a fellowship from the Guggenheim Foundation. But having spent 15 months touring the Northern Rim, talking to its indigenous peoples such as Canada's Inuit and Scandinavia's Sami he wrote The New North. The book looks at how major factors will change our world: massive population growth, climate change and depletion of mineral and water resources. According to Smith, these factors "all align for Canada. It's going to be good to be a Canadian."

The evidence to support this view is based on two main themes: a fast rising and highly trained workforce and its plentiful natural resources. Oil resources in Canada will be second only to those in Saudi Arabia, and the country’s population will swell by more than 30 per cent, a growth rate rivalling India’s and six times faster than China’s.

Everyone talks about the BRICs (Brazil, Russia, India and China) he says, but these are “an arbitrary lumping together of countries that don’t have a whole lot in common apart from being the big emerging economies, and I’m not sure Russia even deserves to be in that class”. One of Smith’s main conclusions is that while global warming will wreak a terrible toll on the majority of the world, the countries of the Northern Rim will rise in strategic value. This is in part due to the global pressures created by the BRICs and their resource-hungry economic growth.

“The Northern high latitudes experience global warming at a far higher rate and it’s far more of a winter time phenomenon than a summertime phenomenon which is crucial because winter is a limiting factor on their development so far mainly because of the sheer human discomfort caused by the really bitter winters.”

Given Canada’s role in American satire, Smith’s choice of acronym for this new grouping – Norcs – seems almost callous.

Norcs stands for northern rim countries, a collection that also includes Scandinavia and Russia. These will become formidable economic powers and migration magnets as worldwide population increases by 40 per cent over the next 40 years.

“This New North is well positioned for the coming century, even as its unique ecosystem is threatened by the linked forces of hydrocarbon development and amplified climate change,” he says. Smith predicts new shipping lanes will open during the summer in the Arctic, allowing Europe to realise its 500-year-old dream of direct trade between the Atlantic and the Far East, and resulting in new access to and economic development in the north.

Norcs will be among the few places on Earth where crop production will probably increase due to climate change. Collectively these countries, Smith suggests, will constitute the fourth largest economy in the world, behind the BRIC countries, the European Union and the US.

Last year British Columbia exported C$687m (€495.5m) worth of timber to China, a tenfold increase from 2003. According to the Economist, over the past three months total sales to Japan and China exceeded those to the US. Whereas five years ago more than two-thirds of shipments went across the border, now barely more than one-third does. Analysts expect China will be its biggest market by 2013.

Canada’s rapid population growth is, he says, “staggeringly fast”, making it one of the rapidly growing countries in the world on a proportional basis. This, he says, is directly due to its “hugely successful foreign immigration policy. It seems hard to believe now, when immigration is such a contentious debate, that decades ahead, if the population slowdown continues in the developed world, those countries that are best able to attract and assimilate skilled foreign workers will fare best in terms of population, economic stability and growth.

“The Canadian system is more open and targeted towards work skills than, say, America. Both countries look for work skills, language skills, family reunification and both admit a tiny proportion of political refugees. The latter is so small that it can be removed from consideration. The prioritisation of Canada is work, language, education then family reunification. The reverse is true in America, which has had huge benefits for the Canadian workforce over that of the United States.

“Canada and Russia are both resource economies, that’s where it all begins. Yes their cities are diversifying and modernising and getting something else going on, but at the core it’s about resources. Since this recession that we are in, Canada is no longer just looking to the United States for its markets.”

Protectionist measures in the US and the collapse of the American housing market threatened to all but destroy what used to be British Columbia’s biggest employer and export earner. Lumber sales to the US had dropped by 58 per cent from their peak, mills have closed, thousands of workers lost their jobs. But a far-sighted government marketing push in to China has come good, and the country’s mills are open for business again. “The time is past when we pretty well had to take what the Americans offered,” said Pat Bell, British Columbia’s forests minister.

The oil that will be Canada’s other chief asset comes at a heavy environmental cost. “The Alberta tar sands are an ecological disaster yet nonetheless create a very useable crude oil for transportation,” says Smith. Politically too, these bituminous crude oil reserves are important. With 70 per cent-plus of the world’s remaining oil in the hands of Opec, half of its “free oil” is in the tar sands, according to Peter Tertzakian, chief economist of Arc Financial.

World oil consumption is rising again after recession, pushing the price of a barrel towards $100. By 2035, the International Energy Agency (IEA) predicts demand may reach 110m barrels a day, a rise of 20 per cent on the 2009 number.

For Canada to maximise its opportunity, it needs to find a way of getting the oil onto the world market in an efficient way. A $7 billion pipeline has been proposed, which would send the Alberta oil to refineries in Texas. But rather than wait for America to come out of recession, the country’s politicians are keen to sell to China.

Canada’s prosperity is just one part of Smith’s story however, which paints a picture of huge and disruptive change. Hardest hit by the changes, he predicts, will be megacities in the developing world, which are already struggling to accommodate an influx of rural migrants, “despite being hell on earth”.

But not so in the New North. Prosperity awaits communities that lie north of the 45th parallel as global warming diminishes winter’s severity. “In many ways, the stresses that will be very apparent in other parts of the world by 2050 – like coastal inundation, water scarcity, heat waves and violent cities – will be easing or unapparent in northern places.”

Cities he expects to increase in size and prominence over the next 40 years include Toronto, Montreal, Vancouver, Seattle, Calgary, Edmonton, Minneapolis-St Paul, Ottawa, Reykjavik, Oslo, Stockholm, Helsinki, St Petersburg and Moscow.

“It’s not that London or LA are going to become empty wastelands,” says Smith. “Even in 2050, there will be far more people down here than in the north. But many northern places that are now marginal or not really thought much about will emerge as very nice places to be.”

As the Norcs will be among the few places on Earth where crop production will likely increase due to climate change they will also will become the envy of the world for their reserves of fresh water, which may be sold and transported to other regions.

“The Russian hydrocarbon economy speaks for itself. Russia has a lot going for it if it can just get its politics and corruption in order. We are not going to be able to wean ourselves off fossil fuels for at least 20 or 30 years and we are going to continue burning this stuff, so from a practical point of view, for God’s sake let’s at least use natural gas not coal. Where’s all the coal? United States and China. Where’s all the gas? Russia. From the point of view of mitigating climate change the best darn thing we can do is encourage China to buy gas from Russia rather than burning its own coal.

“In terms of telling sad stories about the impact of global warming, I may well have failed, but what I ended up with talked about the significance of this region of the world as a modernising and exciting place. I was very impressed by the vibrancy and strength of the people who, counter to perceptions, don’t want to be pitied and are embracing business models and want to be allowed to participate in the global economy like everyone else. It was a real eye-opener.”

He didn’t, he says, set out to write a counterintuitive book. Rather, he went where the facts took him. “I’m a scientist – I wanted to be rigorous, balanced and sensible. The surprise of the book is that there are reasons for collective optimism for these northern countries. But the broader story is one of pessimism for the world as a whole because the factors making this happen are the problem. For example energy, water, inundated coastlines, storms, extreme events, increased populations. The good news is relatively small. We are talking about 15 per cent of the world’s surface area and a trifling proportion of its population.”

While a nationalist Canadian might find optimism here, the rest of us should be concerned. Nothing funny there.