Turns out Ericsson also has to be bribed to take some of Canada's most valuable, taxpayer-funded R&D assets off Nortel's hands. Just as failed bidder Nokia Siemens had demanded, anticipating a $300-million handout from the Export Development Corp. in exchange for guaranteeing about 2,400 Canadian jobs.
I'll repeat that.
Technology created with Canadian taxpayer handouts, which holds the key to the next generation of global wireless networks, is to be sold at a bargain-basement price by Nortel to a foreign company. Not content with the fire-sale price for Nortel's most valuable assets, the lucky foreign buyer expects still more largesse from Canadian taxpayers.
Scenario: After emerging from the Tower of London one night with the crown jewels in a sack, I encounter Queen Elizabeth II. She pays me 300 million quid for my trouble.
Well, here's a bitter pill for the free-market purists to swallow. One way or another, Ottawa is going to intervene in this deal. Either it will block the deal, a craven intervention in the workings of the capitalist system. Or it will intervene to lavish hundreds of millions of Canadian taxpayers' dollars on the successful foreign bidder, an outrageous case of corporate welfare.
And BTW, the job creation and retention "commitments" attached to these taxpayer subsidies to foreign buyers aren't worth the paper they're written on. Ottawa is actually suing U.S. Steel for job losses at Stelco. And there's evidence of similar reneging on jobs by Xstrata, new Swiss owner of Falconbridge-Noranda, and by Vale, new Brazilian owner of Inco.
Ottawa will be pursuing complicance with these contracts in Ontario courts that have dubious jurisdiction over parent companies domiciled in the U.S., Switzerland and Brazil. So good luck with that.
If Research in Motion, would-be purchaser of the Nortel technology, were to prevail, the Ontario-based RIM would be far easier to hold to such contractual obligations.
The optics of abuse of Canadian taxpayers is becoming so evident that finally the Tories, Grits and Dippers are fully engaged in the dispute. Tony Clement, the federal industry minister, now says he will vet the Nortel-Ericsson deal to ensure it meets the Investment Canada Act's principal criterion of net benefit to Canada. Clement added there is a national security test the deal will have to pass - a notion ridiculed when RIM first raised it last week.
Michael Ignatieff wrote Harper yesterday demanding that "you undertake this review to ensure that the intellectual property developed with the investment of taxpayers' dollars continues to benefit us all."
Yesterday, the Nortel giveaway became an interprovincial issue, as Dwight Duncan (pictured above), the Ontario finance minister, went further than the federal opposition parties by demanding Ottawa block the Ericsson-Nortel deal. "We just think that every step should be taken to try to keep these patents in Canadian hands so that industry can continue to develop here in Canada," Duncan said.
"These have been developed over time, with enormous federal and provincial tax credits available, and we think it is in the interest of Canada, particularly Ontario in this case, to keep those [Nortel] patents here."
Ontario, the manufacturing centre of the country, has endured the loss of hundreds of thousands of traditional manufacturing jobs starting even before the current recession began. There is an urgency to Premier Dalton McGuinty's quest to transform Ontario into a knowledge-based economy - precisely the sort of economy based on the success of firms like RIM.
That RIM would be undermined in the export markets for its world-class smartphones, principally the U.S., by foreign-owned Nortel technology funded by Ontarians and other Canadians is for McGuinty a ludicrous proposition. Especially when RIM says it's willing to pay as much for these "game-changing" patents as Ericsson or Nokia Siemens.
In the blink of an eye, Harper let our mining, steel and much of our forestry sectors slip into foreign hands, With $10 billion of taxpayer funds, he bailed out two U.S. automakers in which we also have no managerial say.
Harper can let this episode drag out for months, suffering no end of abuse for "selling out" our industrial and technological sovereignty, because that's how long it will take for any Nortel deal to close. Or he can end his misery now by blocking any deal in which RIM isn't a bidder. He could do it this week.
For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.