Ruling on sale of Canadarm, Radarsat to U.S. arms-maker delayed 30 days
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The controversy over whether cutting-edge, taxpayer-subsidized Canadian space technology should be sold to an American arms-maker will rage for another month.
Industry Minister Jim Prentice, facing a Saturday deadline to approve or reject the sale of the Radarsat 2 satellite and the iconic Canadarm, has decided to exercise a 30-day extension.
The move delays but does not avert a politically volatile decision over whether to permit Vancouver-based MacDonald, Dettwiler and Associates Ltd. (TSX:MDA) to sell its space technology division to Alliant Techsystems (NYSE:ATK) of Minneapolis.
ATK is a major contractor to the U.S. military, supplying munitions, mines and booster rockets.
The proposed $1.325-billion deal has repercussions far beyond securing the jobs of MDA’s 1,900 space division employees across Canada.
Critics, including at least one within the governing Conservative party, say the sale would gut Canada’s aerospace industry and diminish national sovereignty while stiffing taxpayers who helped make MDA the jewel of Canada’s space technology sector.
Prentice, who oversees the Investment Canada Act which requires an automatic review of sales of this magnitude, has been extremely tight-lipped about the deal.
“I will be diligent in ensuring the net benefits are examined and the interests of Canadians are protected,'’ he told a House of Commons committee this month.
ATK, which has direct access to U.S. government contracts, says it will ensure the Canadian end of the business thrives.
“The bottom line is we believe this acquisition translates to growth for these Canadian businesses and workforce,'’ spokesman Brian Cullen said Thursday by e-mail.
But the downside risks have been hammered home by many diverse voices.
Peace activists worry that Canada’s civilian space technology is going to a maker of landmines.
Environmentalists say Radarsat 2 technology that is critical to studying the large-scale effects of global warming is being sold down the river.
Many more worry that Canada could lose access to state-of-the-art defence and security imaging of Canada’s Far North, where battles over Canadian sovereignty are heating up in lock-step with the receding pack ice.
Conservative MP Art Hanger, a veteran party stalwart, recently denounced the proposed sale as a “betrayal of the public interest.'’
Nobel laureate John Polanyi delivered a devastating critique of the sale this week: “There are many forms of short-sightedness. Selling your eyes is a rare form,'’ observed one of Canada’s most decorated scientists.
ATK insists all existing contracts between MDA and the Canadian government regarding Radarsat 2 images _ including “emergency access protocols … to the satellite during times of national emergency'’ _ will be honoured if the sale goes through.
Critics scoff at such assurances.
Washington refuses to recognize Canadian ownership of the Northwest Passage, Liberal MP Scott Brison said Thursday.
“If this sale goes through, the Americans will control the satellite and have access to all that (surveillance) information.'’
Added the NDP’s Peggy Nash: “It’s very clear that there are security interests, sovereignty interests, defence interests, foreign affairs interests.'’
But not everyone agrees the deal is the worst outcome for MDA’s world-class space division.
“The fact of the matter is there is not sufficient business in Canada to support a team at that level,'’ John MacDonald, a founder of MDA who left the company in 1998, told The Canadian Press. “That’s the crux of the problem.'’
Canada spends less on its space program than any other G-8 country, both in absolute dollars and relative to GDP, and the budget has been falling over the last decade.
MacDonald said critics who compare the sale to the disbanding of Canada’s Avro Arrow team in the 1950s have it backwards.
“You do one of two things: you either let (the sale) go ahead, or you triple the Canadian Space Agency budget.'’
Joe D’Cruz, director of the Aerospace Executive Management Program at the Rotman School of Management at the University of Toronto, said he couldn’t think of an instance in which the Investment Canada Act was used to reject a major sale.
“That would very significantly reduce the value of MDA,'’ said D’Cruz.
“I think it would be extremely unusual for them to thumbs-down the transaction. I think Jim Prentice would be working behind the scenes to extract as much benefit to Canada as possible. And that’s not unusual.'’
Andrew Eddy, a former manager at the Canadian Space Agency, said the emotional public debate over the proposed MDA sale misses the point.
Few Canadians are upset that most of the auto sector is foreign-owned, because Canada has a clear automotive industrial policy.
“What we need in Canada is a clear industrial space policy and clear national space policy,'’ said Eddy, who now heads the Victoria think-tank Athena Global.
Eddy says the current predicament is part of long failure by successive governments _ specifically, the Liberal government’s 1998 decision to transfer all the Radarsat rights and ground resources to privately owned MDA.
“At the end of the day, if the government lays down rules to protect the national interest, it wouldn’t matter that much,'’ he said of the proposed sale.
“In this particular case, the chickens are coming home to roost.'’
Filed by Anita Li under The New Electronic Economy and Information Technology, Arms Control, Proliferation and WMD