The tangled what-ifs of Alberta separation — from trade and treaties to currency and disaster costs
Report lays out what to expect when you're extracting the province from Canada
It’s the big things that might spring to mind first when pondering the consequences of Alberta separation — the potential impacts to the gross domestic product, jobs, wages, debt and such.
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that → lay → product
This week’s major report by the University of Calgary’s School of Public Policy laid out these figures in sharp relief, with a series of outcomes ranging from modest long-term benefits to massive long-range detriments (and short-term pain in any scenario).
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report → lay → scenario
But beyond the headline figures contained in the government-commissioned summary report, we find a series of the U of C academics’ technical papers.
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we → contain → papers
They underpin predictions of an independent Alberta’s debt load and potential job losses by diving into the many complex factors a breakaway republic named Alberta would have to contend with.
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republic → underpin → factors
When you form a whole new country from the rib of an existing one, there’s a tonne to consider, from tariffs and multilateral agreements to currency, interest rates and treaties — both international and Indigenous.
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you → form → currency
Or even seemingly smaller (but still billion-dollar) factors, like public-sector pension obligations, and who pays for the aftermath of major floods and wildfires, the kinds of disasters Alberta knows all too well.
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Alberta → pay → disasters
So without further ado, here’s a glimpse at the report’s analysis of some of the other challenges of Alberta independence, in the event that the public’s current pro-unity majority shifts dramatically, and opts for independence in two successive referendums, beginning with the one on Oct. 19.
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majority → ’ → Oct.
Trade-offs
Owing largely to oil pipelines, Alberta’s trade south of the border is more valuable than its exports to the rest of Canada, the School of Public Policy report notes.
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report → owe → Policy
Because of that, the authors suggest it may be most expedient for a new country to strike a direct deal with Washington, rather than try to inject itself into the already rocky talks around the Canada-U.S.-Mexico Agreement (CUSMA).
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country → suggest → Agreement
However, it notes that while the current U.S. administration might offer terms that are beneficial to an oil-producing neighbour, the report adds: “As much as the U.S. depends on Alberta oil and gas exports, Alberta depends on making those exports more, and the U.S. administration knows this.”
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administration → note → this
Meanwhile, joining CUSMA — does it become CUSAMA? ACUSMA has a certain ring — would provide largely tariff-free access to its big customers, including Mexico.
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has → join → Mexico
“However, the process could be lengthy,” the report states, a familiar refrain throughout.
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report → state → ?
Also, ratification to Alberta’s benefit might run into pushback from Democrats in the U.S. Congress, given their historic opposition to the Keystone XL pipeline.
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ratification → run → pipeline
And while Alberta separatists might be wary of global bodies like the World Economic Forum (WEF) and World Health Organization (WHO), they’re more likely to need to get their new country into the World Trade Organization (WTO), World Bank and International Monetary Fund.
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they → ’re → Organization
“Without membership in these institutions, a separate Alberta would not receive most-favoured-nation tariff rates, making it subject to the same tariff rate as, for example, North Korea,” the report says.
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report → receive → Korea
The fastest any country has ever gotten into the WTO is three years, and five to seven is more like the “best-case-no-active-opposition” estimate, the report says.
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report → get → estimate
Other countries with their own secessionist movements might be wary of offering a quick embrace of a breakaway ex-Canadian republic.
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countries → offer → republic
And domestically, even if there’s a deal reached between Alberta and Canada, the regulatory differences and hiccups of interprovincial trade could get exacerbated when there’s a harder border.
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differences → ’ → trade
There’s a risk “the border ‘thickens’ considerably, in similar fashion to the U.K.’s border with [European Union] countries after Brexit,” the report says.
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report → ’ → Brexit
The report notes that the currency question was a major preoccupation during separation debates in Scotland and Quebec.
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question → note → Scotland
The dilemma is massive: stick with the loonie, try a Euro-style shared dollar, or strike off with a new Alberta form of money?
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dilemma → stick → money
While sticking with the Canadian dollar is easiest and quickest, it keeps Ottawa in control.
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it → stick → control
“A separate Alberta would still be subject to Bank of Canada interest-rate decisions and it would remain reliant on fiscal policy to deal with Alberta-specific shock,” the report states.
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report → remain → shock
An Alberta-Canada monetary union, like in Europe, might most resemble the current situation.
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union → resemble → situation
“It is not obvious, however, that the RoC [rest of Canada] would see great benefit to entering a formal monetary union with a separate Alberta.”
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RoC → see → Alberta
It’s the most common solution for new nations, the report states.
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report → ’ → nations
“The exchange rate for a separate Alberta would likely be quite volatile, as it would largely reflect the price of oil,” it says.
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it → reflect → oil
“This could cause problems for non-commodity exporters, who would see their export revenues become more volatile in domestic currency terms.”
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revenues → cause → terms
On top of the big debt Alberta would assume as its share of Canada’s current federal liabilities, the cost of servicing that debt would be greater.
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cost → assume → debt
Alberta already has to pay higher rates than Canada on interest payments, with a slightly higher credit rating than the country as a whole — a premium currently worth around 0.46 percentage points, the academics’ paper states.
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paper → have → whole
The volatility of the fossil fuel economy may make it tough to boost a standalone Alberta’s credit rating, but the study points out that oil-reliant Norway, which has a similarly sized population, has a solid rating — thanks in part to its massive sovereign wealth fund.
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which → make → fund
However, it adds: “a short-term increase in rates is likely unavoidable” for a new country.
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increase → add → country
The report actually devotes little specific analysis to the question of First Nations rights, given the lack of international comparators of secession that involves Indigenous land claim matters, and the high degree of uncertainty.
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that → devote → uncertainty
(It’s not even certain that courts would allow a secession referendum to go ahead in the first place, given the ruling that blocked a petition for a straight leave-or-stay question.)
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that → ’ → question
Roughly one per cent of Alberta’s land mass is covered by First Nations reserves, over which Ottawa has exclusive legislative authority.
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Ottawa → cover → authority
But 100 per cent of the province’s territory is covered by Treaties 6, 7 and 8 — agreements to which Alberta is not a signatory.
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Alberta → cover → which
Figuring out longstanding land and rights issues in a separate Alberta would be a “focal point” of separation negotiations, the report says.
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report → figure → negotiations
“Given the fraught history of Indigenous-settler relations, as well as those with Métis communities, negotiations over treaties, territory, rights and finances will be delicate, complex and protracted.
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negotiations → give → treaties
The agreement of all actors cannot be presumed.
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agreement → presume → actors
Conflict seems highly predictable, given treaty grand chiefs’ vows to strenuously fight separation, and their call for police to investigate Alberta’s premier for treason for planning October’s vote.
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police → seem → vote
…and 16 more, not listed.
The Aporia
