Esprit de corps military magazine. June 2008, Vol 15 Issue 5. p 12.

MDA sale caused unlikely alliance of opponents
by Steven Staples

Members of the Canadian Forces have a lot to celebrate in the government’s decision to block the sale of a large part of Canada’s space industry to a U.S. firm last month. The government’s intervention ensured that crucial satellite technology, vital to the conduct of CF missions at home and abroad, will remain in Canadian hands.

On April 10, 2008, Industry Minister Jim Prentice announced that he would use his authority under the Investment Canada Act to disallow the acquisition of the MacDonald, Dettwiler and Associates Ltd. (MDA) space division by U.S. arms maker Alliant Techsystems (ATK).

The $1.3 billion deal would have handed over to ATK ownership of the iconic Canadarm and Canada’s remote sensing radar satellite RADARSAT-2, a satellite that can take very high resolution images of any place on Earth through clouds or even at night.

“I don’t get it,” proclaimed a clearly perplexed Daniel Friedmann, CEO of MDA, after being grilled by Members of Parliament concerned about the deal. Indeed, MDA completely underestimated the amount of controversy the sale would generate when, in January this year, it was announced, and began to move through the government’s approval process for foreign take-overs of Canadian firms.

Looking back over the debate of the past few months, one can feel some sympathy for MDA, given the rather unusual positions taken on the deal by those inside and outside government.

First, let’s consider opponents of the deal. The sale of MDA’s space division to ATK was opposed by an unlikely group of people: MPs from all parties, editorialists, former military leaders, employees, scientists and space experts, nationalists and peace advocates.

The Rideau Institute, for instance, which has been accused of being “anti-defence” by Jack Granatstein and others, argued that the sale should be opposed on the basis of national security.

“The sale of MDA assets to ATK will seriously weaken or defeat Canada’s ability to achieve the objectives of the Remote Sensing Space Systems Act which are explicitly to ‘ensure national security, the defence of Canada, the safety of Canadian Forces, Canada’s conduct of international relations, and Canada’s international obligations,’” I wrote to Industry Minister Jim Prentice and Foreign Affairs Minister Maxime Bernier in March.

UBC Professor Michael Byers is a frequent critic of defence policy. Writing with Liberal Industry Critic Scott Brison in the National Post, Byers argued, “What could be more important to Canada’s national security than our ability to monitor all of this vast country, especially in emergencies? What foreign investment could be of less net benefit to Canada than selling our eyes?”

Second, and just as unusual as defence policy critics decrying the loss of sovereignty and defence capability, traditionally small government, free-enterprise Conservative Party members were urging that the government block the sale.

“It is a waste of your money and a betrayal of the public interest,” Calgary MP Art Hanger wrote regarding the hundreds of millions of tax dollars invested in RADARSAT-2 that would be lost through the sale. “It’s about time Canada stop playing the nice guy at the expense of our own security and sovereignty – not to mention our own research and development capacity.”

The prospect of losing control of Canada’s premier land-monitoring satellite was untenable for the government. Blocking the sale conflicted with the Conservative Party’s traditional free enterprise principles, but the satellite played a key role in fulfilling the government’s priorities of defending Canada’s national security and Arctic sovereignty.

Third, and more unusual still, was the silence from organizations and commentators who typically advocate strongly for maintaining and greatly expanding defence capabilities. There were no opinion articles in the Globe and Mail from Jack Granatstein, and no press releases from the Conference of Defence Associations. Even the Canadian Council of Chief Executives, which is always concerned with improving relations with the White House, said nothing.

The political significance of this decision is hard to overstate. It ranks among the most important decisions made by the Canadian government, including the decisions not to join the U.S. missile defence system or the U.S.-led invasion of Iraq.

Minister Prentice’s decision marks the first time that a minister has used the Investment Canada Act to prevent a foreign take-over of a Canadian firm. Out of 10,000 foreign take-overs since 1985, nearly 1,600 have been reviewed and approved. None have ever been denied – until now.

Supporters of Canada’s space industry and capabilities are now rallying to win more government attention and support to their cause. Canadians have been reminded how important our satellites are for our national interests; now it is up to the government to respond in kind.

Steven Staples is President of the Rideau Institute on International Affairs, an independent research, advocacy and consulting group based in Ottawa. He is a researcher, writer, frequent commentator on defence matters, and author of Missile Defence: Round One (Lorimer: 2006).