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Lawrence Summers comes out swinging for Keystone XL pipeline at Rotman talk

 

Barbara Shecter 

April 6, 2015

Financial Post 

 

If it were up to Lawrence Summers, the former U.S. treasury secretary who also served as chief economist at the World Bank, the United States would approve the controversial Keystone XL pipeline.

In fact, Canada’s largest trading partner should already have done so, Mr. Summers told a crowd at the University of Toronto’s Rotman School of Management on Monday.

“I do not speak for us, I speak for me. I wish we already had” approved the pipeline, Mr. Summers told his audience, adding that the United States should give a green light to the pipeline based on considerations such as the country’s energy needs and the importance of its ally, Canada.

Shipping oil by rail is a “dangerous” activity that dates back to the 20th century – and not even the last part of it, he said, noting the potential for accidents and environmental damage.

Still, he said Canada ”could have made it easier for the U.S. to approve Keystone,” in part by showing “more concern” around the potential environmental opposition and climate change arguments when shipping fossil fuel into another country.

Canadian Prime Minster Stephen Harper has taken an aggressive approach on Keystone, famously calling the project “a no-brainer” in 2011, and then further saying Canada “won’t take no for an answer” on the controversial pipeline project.

“Whatever you did, we should’ve approved Keystone,” concluded Mr. Summers on Monday, to murmurs of approval from the audience of business students and Rotman elite. He added that allowing construction of the pipeline is “the right answer.”

The U.S. State Department is conducting a review of the TransCanada Corp. project that would carry Alberta’s crude oil into the United States. U.S. President Barack Obama has repeatedly thwarted attempts to get approval for building the US$8-billion pipeline before that review is complete.

Just last month, the U.S. Senate failed to override Mr. Obama’s most recent veto of a bill that would have approved the pipeline.

Mr. Summers’ remarks at the business school were largely focused on technology and infrastructure, two necessary ingredients for what he called “inclusive” economic prosperity.

The Harvard University professor, who also served as the Ivy League school’s president, said the issues are very different from the 1980s and 1990s. Inflation is not on anyone’s radar these days, he noted, and even bonds in North America, Japan, and Europe indicate there will be no upward movement in prices for decades.

Rather than focus on monetary stimulus, He urged governments and policy makers to focus on infrastructure development, including “bricks and mortar” projects such as bridges and roads, and information technology for schools. This would create jobs and stimulate much-needed demand in the economy, he said.

There are practical implications as well, in that low-interest-rate debt is a better legacy to pass to future generations than ongoing maintenance requirements for airports, he said.

Mr. Summers praised Canada for the country’s policies on immigration, which he suggested would help the economy going forward. The United States has “a lot to learn from Canada. You have done it better than most,” Mr. Summers said.

The U.S. ambassador to Canada concludes the first year of his posting acutely aware that a single irritant over an oil pipeline has grabbed so much of the attention in the Canada-U.S. relationship.

He has not been holding back recently on criticism of his own country. In a Financial Times column this week, Mr. Summers chastised the United States for allowing political pressure from all sides to render the country “increasingly dysfunctional” as a global powerhouse.

A tangible result, he said, is that China is establishing a major new institution, the Asian Infrastructure Investment Bank, with many traditional allies of the United States.

Mr. Summers packed the hall at Rotman with an audience eager to hear advice from a man whose wide-ranging career has not been without controversy.

Less than a decade before the global financial crisis, when Mr. Summers was deputy treasury secretary, a 1999 Time magazine cover heralded him as part of a trio of economic heavyweights dubbed The Committee to Save the World. The others on the magazine’s cover were then Federal Reserve Chair Alan Greenspan and Robert Rubin, who was treasury secretary at that time.

In the fall of 2008, Mr. Greenspan acknowledged to the U.S. House Oversight Committee that he had made “a mistake” in his hands-off regulatory policy and in presuming the ability of the country’s banks to assess risk, and their self-interest, would protect the financial system from excesses.

Financial Post

 A PERSONAL COMMENT

TIME FOR POTUS TO LISTEN TO ONE OF THE BEST POLITICAL MINDS IN THE U.S.

DAN ZWICKER

TORONTO

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