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FIRST READING: Forget the vodka; why isn’t Canada banning Russian oil?


Everybody (except Canada) buckles down on defence spending

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First Reading is a daily newsletter keeping you posted on the travails of Canadian politicos, all curated by the National Post’s own Tristin Hopper. To get an early version sent direct to your inbox every Monday to Thursday at 6 p.m. ET (and 9 a.m. on Sundays), sign up here.

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TOP STORY

Over the weekend, one of the most visible Canadian reactions to the Russian invasion of Ukraine was that provincially run liquor stores across the country began pulling Russian-origin products from their shelves. As B.C. Premier John Horgan wrote in a statement announcing the withdrawal of Russian products from B.C. Liquor Stores, “we stand with those who want to live in peace.”

There’s just a few problems with the gesture …

  • The products are already paid for. Liquor stores don’t work on consignment, so any Russian products already in Canadian liquor warehouses have already resulted in Canadian dollars being funnelled into the Russian economy. This means that the most immediate result of the policy will be a bunch of paid-for booze being poured down the drain.
  • Canadian liquor stores don’t actually carry a lot of Russian products. Stolichnaya is Latvian, Absolut is Swedish and Smirnoff (the world’s best-selling vodka) is British-owned and manufactured virtually everywhere except Russia. This is why, in Ontario, the ban on Russian products will apply only to two niche vodka labels and one brand of Russian beer.

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(Not a Russian vodka)
(Not a Russian vodka) Photo by Jason Alden/Bloomberg

And most importantly, vodka is a microscopic component of a Russian economy that actually runs largely on oil and gas – commodities that have remained conspicuously untouched even as the world assails Moscow with punitive sanctions. It’s why, on Saturday, the Ukrainian foreign minister explicitly called for an international embargo on Russian oil.

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Russian oil continues to flow even into Canada. Despite sitting on our own ocean of oil, last year saw Canada spend roughly $1 million per day on Russian oil imports – and there have been no official moves made towards turning away Russian-flagged ships at our oil ports.

Writing in the National Post, former Liberal candidate Adam Pankratz wrote that Canadian oil and gas should have been used to alleviate the stranglehold that Moscow currently holds on Western Europe by virtue of supplying much of its energy. “Any Canadian up in arms about (Ukraine)  and wondering what we could do need only look to what we could have done: build pipelines and get our oil and gas to market,” he wrote. “Energy East or other gas pipelines could be sending tankers of LNG to Europe non-stop to ease the dependence on Russian gas.”

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Ukrainian president Volodymyr Zelenskyy pictured with Prime Minister Justin Trudeau during a 2019 meeting in Toronto, where the topics discussed included “the possibility of Russian aggression.” A former actor and comedian who once played the Ukrainian president in a popular TV show, Zelenskyy’s staunch refusal to leave Kyiv has marked him as the face of Ukrainian resistance to the Russian invasion.
Ukrainian president Volodymyr Zelenskyy pictured with Prime Minister Justin Trudeau during a 2019 meeting in Toronto, where the topics discussed included “the possibility of Russian aggression.” A former actor and comedian who once played the Ukrainian president in a popular TV show, Zelenskyy’s staunch refusal to leave Kyiv has marked him as the face of Ukrainian resistance to the Russian invasion. Photo by Office of the President of Ukraine

The areas of the country with the highest concentrations of Ukrainian-Canadians also happen to be the ones with the most oil, so it’s perhaps not surprising that Western Canada’s (mostly Conservative) politicians have been calling for a ramping up of Canada’s “oil weapon” to counter the Russians (and make a lot more money at the same time).

  • Alberta Premier Jason Kenney has renewed calls for Canada to ban Russian oil imports, and for the United States to renew approval for the Keystone XL pipeline in order to supplant its own Russian imports with Canadian oil.
    Canada could become one of the first, if not the first country, to implement a ban on Russian oil,” read a Saturday tweet by B.C. MP Dan Albas.
  • Conservative MP Michael Kram similarly wrote on Saturday that “the world needs more Canadian oil and gas. If Russia’s recent actions don’t convince people of that, I don’t know what will.”

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WAR IN UKRAINE

As of Sunday morning, Ukrainian forces have proved far more resilient than Russia appears to have suspected. While Russian forces have pushed into Ukraine from several directions, they have not captured any major population centres and – at least according to the Ukrainian military – Russian losses have been heavy. It’s perhaps notable that Russian state T.V. is downplaying the scope of the invasion.

In terms of the international response, the past 48 hours have seen two major shifts in Ukraine’s favour:

  • A coalition of Western nations (including Canada) agreed to pull Russia from the SWIFT payments system; the principal mechanism by which money is moved across borders. “This will ensure that (Russian) banks are disconnected from the international financial system and harm their ability to operate globally,” read a joint statement.
  • Germany – which has typically taken a back seat in efforts to counter Russian influence – pulled a dramatic 180 on Saturday. Germany Chancellor Olaf Scholz cancelled the Nord Stream 2 pipeline from Russia to Germany and reversed a longstanding German taboo against sending weapons to conflict zones by approving an immediate shipment of anti-aircraft and anti-tank weapons to Ukraine.

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Canada has largely followed European moves on Russian sanctions, but there are two main measures in which we are increasingly becoming an outlier:

  • Cutting off Canadian airspace to Russian aircraft. The U.K., Germany and several Central European nations have now closed their airspace to Russian airlines. Canada continues to allow daily overflights by Aeroflot, the Russian flagship carrier, although the Ministry of Transport has said it is “actively monitoring” that policy. NOTE: Just a few hours after this newsletter went to press, Canada did indeed close off its airspace to Russian carriers. 
  • Pledging to increase military spending. On Sunday, Germany announced a ramping up of military spending as a direct response to Russia’s actions in Ukraine. It follows a trend seen in other NATO countries such as France. As a NATO member, Canada is expected to spend two per cent of our GDP on defence. But as has been the situation for years, we are one of the alliance’s worst laggards on this promise. As of NATO’s last count, Canada spends 1.45 per cent of GDP on defence.German defence spending used to be in that range, but with Sunday’s announcement Berlin will shortly be meeting the two per cent target.

IN OTHER NEWS

Alberta, rather surprisingly, has just tabled a balanced budget. Of course, it helped that oil prices have soared absolutely through the roof.

While former Quebec Premier Jean Charest hasn’t announced a bid for the Conservative leadership, he has started randomly weighing in on world affairs via op-ed. Here’s what he wrote for the National Post regarding Ukraine.

Frito-Lay pulled all its products from Loblaws-owned grocery stores last week after the grocery giant refused to accommodate a requested price rise. At least in Newfoundland, the immediate result has been chip aisles filled almost entirely with Cheezies, which are manufactured in Belleville, Ont.
Frito-Lay pulled all its products from Loblaws-owned grocery stores last week after the grocery giant refused to accommodate a requested price rise. At least in Newfoundland, the immediate result has been chip aisles filled almost entirely with Cheezies, which are manufactured in Belleville, Ont. Photo by Photo courtesy of Jay Lawrence

Get all of these insights and more into your inbox every weekday at 6 p.m. ET by signing up for the First Reading newsletter here. 

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