Key Takeaways:
- The US raid on Venezuela has raised concerns about Canada’s oil exports and potential US expansionism
- Canada’s oil patch is unlikely to take a hit in the short term, but the country’s vulnerability to US influence is a long-term concern
- The US’s "America First" constituency is a durable force that will continue to shape US foreign policy, even if Donald Trump is no longer president
- Canada must adapt to a new world order by increasing its defense spending, developing new industries, and reducing its reliance on commodity exports
- Canada will need to reallocate its wealth, raise taxes, and align investment with national objectives to meet these challenges
Introduction to the New World Order
The US raid on Venezuela has significant implications for Canada, both in terms of its oil exports and its potential vulnerability to US expansionism. While the immediate concern is whether the US military operation in Venezuela will dent Canadian oil exports, the bigger worry is whether the apparent success of the operation makes Canada a potential target for future US adventurism. Donald Trump’s suggestion that Canada should become the 51st state has never been taken off the table, and the White House has long been eyeing Canada’s mineral resources.
Assessing the Impact on Canadian Oil Exports
The short answer to the question of whether the US raid on Venezuela will impact Canadian oil exports is no, at least in the short term. However, the bigger concern is whether the US’s apparent success in Venezuela will embolden it to make a move on Canada. Fortunately for Canada, the US’s occupation of Venezuela is likely to be a long and costly one, which may deter the US from making a similar move on Canada in the near future. Nevertheless, Canada cannot afford to be complacent, as the US’s "America First" constituency is a durable force that will continue to shape US foreign policy, even if Donald Trump is no longer president.
The End of the Old World Order
The US’s turn towards isolationism and expansionism marks the end of the old world order, in which Canada benefited greatly from its proximity to a benign US. For decades, Canada was able to shelter under the US security umbrella, with minimal defense spending, and enjoy easy access to the US market. This allowed Canadians to attain a high standard of living with minimal effort, making Canada a "rich Third World country" that benefited from being a de facto 51st state without the attendant expenses. However, this era is now gone, and Canada will have to adapt to a new world order in which it must fend for itself.
The Need for a New Approach
To maintain its sovereignty and prosperity, Canada will need to commit more to its own defense, adopt a more expansive diplomatic presence, and invest in new industries and products. The country can no longer rely on commodity exports with readily available substitutes, as this leaves it vulnerable to the procurement decisions of its trading partners. Instead, Canada needs to develop products and services that its partners cannot easily find elsewhere, such as the US does with China. This will require significant investment, a reallocation of wealth, and a willingness to raise taxes and align investment with national objectives.
The Challenges Ahead
The challenges ahead will not be easy, and some Canadians may find the required adjustments to be an unacceptable imposition. However, the alternatives, such as applying for US statehood, are hardly more appealing. Canada has the wealth and the resources to rise to these challenges, but it will require a significant shift in mindset and a willingness to make difficult choices. The country will need to balance its desire for consumption and growth with the need to invest in its future and protect its sovereignty. Ultimately, the fate of Canada will depend on its ability to adapt to the new world order and to find its place within it.
