World will likely continue facing a ‘tyrannical Russia’, Freeland warns

Canada’s deputy prime minister urged the world’s democracies Tuesday to confront the hard economic truths of a perilous new world order and seek common cause in the shared values of prosperity, energy security, protecting the planet and free and fair trade.

Chrystia Freeland delivered an eloquent obituary for the relative peace and stability of the 33 years between the fall of the Berlin Wall in 1989 and Russia’s “barbaric violation” of Ukrainian sovereignty in late February of this year.

The end has been hard to process, especially after the sacrifices of the Second World War and the superpowered nuclear brinksmanship that followed it, Freeland told Canada-U.S. scholars and stakeholders at the Brookings Institution, a think tank in Washington, D.C.

“It was a relief and a vindication to imagine the entire world peacefully marching together towards global liberal democracy,” she said. “It is dispiriting and frightening to accept that it is not.”

And she issued a clarion call to the countries that stand in opposition to Vladimir Putin: the dangers faced by the western world are not limited to the Russian president, nor will they vanish in the event of Ukraine’s triumph.

“We will quite likely continue to face a tyrannical Russia on Europe’s border and powerful authoritarian regimes elsewhere,” Freeland warned.

“We need to understand that authoritarian regimes are fundamentally hostile to us. Our success is an existential threat to them. That is why they have tried to subvert our democracies from within and why we should expect them to continue to do so.”

As a result, the world’s ongoing dependence on “petro-tyrants” in countries like Russia, which are vital international suppliers of oil and natural gas, simply cannot continue.

“As fall turns to winter, Europe is bracing for a cold and bitter lesson in the strategic folly of economic reliance on countries whose political and moral values are inimical to our own.”

Freeland preached the virtues of “friend-shoring” – a term coined this past summer by U.S. Treasury Secretary Janet Yellen to describe fortified, climate-friendly, shock-resistant supply chains that rely mainly on like-minded neighbours and allies.

The concept is music to the ears of many in Canada, a country whose economic fortunes have long been dependent on ties to the U.S., where free trade is now seen as a raw deal and protectionist sentiment is part of the daily political discourse.

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She cited the example of the Inflation Reduction Act, a multibillion-dollar climate, tax and health spending package passed by Congress in August that includes a tax-credit scheme designed to foster the production and sale of electric vehicles.

Those credits will now apply to vehicles made in Canada, and also require that an eligible vehicle’s battery include a percentage of critical minerals procured from countries with which the U.S. has a trade agreement, of which Canada is one _ a measure designed to curb Chinese dominance in the critical minerals supply chain.

Freeland did not mention that President Joe Biden’s original vision reserved the richest credits for vehicles assembled in the U.S. with union labour, an existential threat to the Canadian auto industry that touched off a frantic, year-long lobbying effort and threatened to strain Canada-U.S. relations to the breaking point.

“If we are to tie our economies even more closely together, we must be confident that we will all follow the rules in our trade with each other, even and especially when it would be easier not to.”

Shared approaches to trade will be vital, she added – as will a mutual willingness to “spend some domestic political capital in the name of economic security for our democratic partners.”

Freeland mentioned the European Union’s willingness to allow its vaccine manufacturers to honour existing contracts with non-European allies, including Canada, at the height of the COVID-19 pandemic.

“Canada remembers,” she said. “Canada must and will show similar generosity in fast-tracking, for example, the energy and mining projects our allies need to heat their homes and to manufacture electric vehicles.”

That sentiment is sure to raise eyebrows among critics who accuse Prime Minister Justin Trudeau and his government of dragging their feet on approving energy projects like export terminals for liquid natural gas.

Trudeau has since said Canada would be willing to ease regulatory requirements for such projects to help ease Europe’s supply crunch, but has also said it would be up to industry to decide whether such an endeavour would be feasible.

Freeland is in the U.S. capital this week for the annual meetings of the World Bank and the International Monetary Fund, which issued a dire forecast of its own Tuesday: “The worst is yet to come,” said IMF chief economist Pierre-Olivier Gourinchas, who warned that 2023 “will feel like a recession” to many around the world.

A number of Canadian business interests also made the trip and were on hand in person, including Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, and Goldy Hyder, CEO of the Business Council of Canada.

Hyder described Tuesday’s speech _ he dubbed it “the Freeland Doctrine” _ as a “refreshingly serious prescription” for what is currently ailing the world.

“The real test, however, is can Canada convert intentions into actions and be a reliable supplier of much-needed energy and critical minerals,” Hyder said.

“Can Canada expedite projects, as the prime minister has proposed while providing regulatory predictability to attract the capital to build much-needed infrastructure?” Hyder asked.

“This is what we will ultimately be judged by: can we deliver the goods countries need to be able to live their values by extracting themselves from relying on autocratic oil and gas.”

Added Volpe: “What we do next is the most important part of this laudable proposal.”