A 24 Hour Geopolitical News Cycle

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FRANK MCKENNA: A North American Free Trade deal is a real win-win-win, and that's what we should be looking at, and I think that's where Canada wants to get.
PETER HAYNES: Welcome to episode 77 of Geopolitics, a monthly TD Securities podcast. My name is Peter Haynes. I'm the host of this podcast where I get to speak to my colleague, the Honorable Frank McKenna, about global geopolitical issues.
Now, Frank, I think you probably know this already, but my favorite movie growing up is the movie Wall Street. And of course, there are a million lines that are legendary in our business. But the one that comes to mind now is Gordon Gekko, who wakes up Bud Fox one day to the line "Money never sleeps." I think that the same could be said right now about the geopolitical environment. The news cycle is literally 24/7.
Now, with that said, let's start with the troubling news from the past weekend where there was a third assassination attempt on President Trump's life. Do you consider this a Secret Service security failure or a Secret Service success? And are you surprised that Trump allowed his key cabinet members and the VP to be in the same room at one time for an otherwise innocuous event, like a Correspondents' Dinner?
FRANK MCKENNA: Yeah, Peter, to start with, Chrétien had a good line about money as well. He said, there's nothing moves as fast as a collar bill, which is something all governments should keep in mind. I thought it was a security success. This was not a close call.
There were metal detectors, and this individual ran by the metal detectors. It wasn't like he had been able to sneak weapons in. He ran by them, and there were layers of protection after that. And he was neutralized as a threat. So I don't think it was a close call, that security work.
I've been to that event. I've been to that Hilton at that event, Peter, and I have to tell you my observation. The first time I went there, all of the cabinet were there, a lot of Supreme Court judges, a lot of the CEOs, the heads of all the major networks, president, vice president. My first reaction was, my God, if a bomb went off in here, it would wipe out the entire leadership of the United States of America. So this was some time ago, but I always felt that this was a very dangerous situation.
And you have open access. I was sitting at a table. I was a new ambassador. I walked up at a break and shook hands with the vice president, Vice President Cheney, ran into Barack Obama walking around, shook hands with him and talked to him. So it was a very open. One of the magical things about it is you can meet anybody and have any conversations. So I do think that the security do an extraordinarily good job in a difficult situation.
And by the way, people who watch TV may remember a series called Designated Survivor, where somebody was always designated to take over in the line of succession. Well, there literally was no designated survivor here. And the ultimate designated survivor was Chuck Grassley, who was 92 years old. He would have ended up being the president of the United States if that front table had of have been wiped out. So I think that's kind of instructive.
The other thing though, Peter, I'm going to say, is I think this is-- it's a very sad situation, but I think it's a reflection of a couple of things coming together-- polarization in the United States. Feelings are running high, very intense. All of this is stoked by social media.
You can listen to the totalitarian source of your choice on social media, and you never have to listen to anybody with a more reasonable view. You literally can tune in to hear the message you want to hear. So you've got all that going on, and the prevalence of guns, quite frankly. It's a nation which has more guns than people. And of course, they're readily available to everybody.
And we've seen this is not a partisan situation, which some would like to make it seem. This has been going on for a while-- the Charlie Kirk assassination; the attempt on President Trump's life; Nancy Pelosi's husband being attacked; Steve Scalise; Gabby Giffords, very grievously injured; Gretchen Whitmer, the attempted kidnapping; Josh Shapiro, burning of his house; the Minnesota House Speaker, Melissa Hortman and her husband were both assassinated; and the state senator in Minnesota, John Hoffman and wife. So it's not something new, unfortunately. It's just a tragedy. And mercifully, we didn't have the worst result here.
PETER HAYNES: Yeah. And it does make you wonder whether or not people will think twice to want to be in public office. I know you spent time in public office, a core part of your life. And I remember you explaining to me one day about security details being based on threat levels.
FRANK MCKENNA: Yeah, no. It absolutely was. When I'd come to Toronto as a premier looking for jobs, I was always picked up by the OPP and Bob Rae. And then Peterson used to laugh about how I had Ontario police driving me around to take the jobs out of Ontario and move them to New Brunswick.
And back home in New Brunswick, I had no security. I used to walk to work every morning by myself. And unfortunately, anybody who had a cause with the government would walk with me. And by the time I got to the government building, I had a whole list, a laundry list of things to attend to.
By the way, I want to deal with one issue because, of course, Trump is out immediately saying, look, if we had this great ballroom, the best ever ballroom, we wouldn't have to worry about this. That's not the case. This Hilton is an amazing hotel. It's just up the street from the White House. You can almost walk there. And it's historically held this event.
A ballroom, even with its major expansion, is only going to be able to accommodate about 999 people. The attendance at this correspondent's dinner ranges around 2,600 people, so the ballroom just wouldn't accommodate it. And the idea that a White House property would be used to host a private event doesn't really cut it either. So you can say what you want, but the Hilton is a very good venue for this event.
PETER HAYNES: Yeah, I'm in Washington tomorrow. I'm definitely going to wander around and see what the whole landscape looks like. I want to turn attention here to the latest developments in the war in Iran. Media coverage in the Middle East suggests that the Iranian Republic National Guard is essentially running the country, and that the new Ayatollah remains incapacitated following injuries he sustained in the bombings that killed his father, Ayatollah Khomeini.
Secretary of State Marco Rubio noted recently that one of the challenges of negotiating with Iran is determining who's in charge and who is making decisions. Well, the IRGC might be considered difficult. They are thought to be less secular and more likely to come to a deal with the US. Frank, who is in charge in Iran right now, and how do you expect negotiations to play out from here?
FRANK MCKENNA: I think there's more than one person in charge-- the Revolutionary Guard and certainly the parliamentary speaker. But there are a couple of things I want to say here because this is turning out to be an extraordinary event on the world stage and has the potential to be a real quagmire for the United States.
I believe there are a number of unintended consequences in US policy on Iran now going back for a number of years. You go back to 1953, the CIA overthrew the government in Iran and ended up putting the Shah in. That was met with huge opposition from the population at large. And they ended up effectively throwing the Shah out of office in the 1970s.
Saddam Hussein invaded in 1980. That went on for eight years. Over a million people were killed in that battle, and it kept Iran totally preoccupied on Iraq. The United States, of course, took Iraq off the board, and that left Iran with no natural enemies in the Middle East.
And then, of course, Barack Obama negotiated a treaty to prevent the Iranians from racing towards building a bomb and froze enrichment. Trump tore that up, I think it was in 2019. So the Iranians had no natural reason to continue to reduce their enrichment process.
And then you ended up getting this so-called invasion of Iran, or whatever you might call it. The end result of it so far is that we have the Strait of Hormuz, which transits 20% of the world's petroleum supplies, plus aluminum, potash, and everything else, is closed. I think there's something like one ship going through, when there used to be 125 a day. So before the war, it was wide open. After the war, it's closed.
In terms of bringing Iran to its knees, the United States, in order to try to deal with the escalating price of oil, ended up desanctioning oil on the ocean, which Iran had in ships, and that enriched Iran to the tune of $14 billion.
And then, in terms of the extraordinary runup in the price of oil, where Iran used to make $100 million a day from oil, they're now making $170 million a day from oil. So a lot of unintended consequences here, which unfortunately have made it a very difficult situation to deal with.
Spent some time looking at Iran because a couple of other things that people need to know. This is not a third-world country. This is a major economic power. They would be in the top three or four in the world in terms of reserves of oil and of gas, and their population are extremely secular, extremely well-educated, one of the most educated workforces in the entire world.
The literacy rate in Iran is 94%, which is pretty incredible. It's the global leader in STEM. It's the fifth highest number of STEM graduates worldwide. In engineering, it produces-- it's number three in the world in terms of producing engineers, which is pretty incredible. And 70% of the science and engineering graduates in Iran are women, one of the highest rates globally.
All of that to say that you're not dealing with a third-world country here. You're dealing with a country of 93 million people, an ancient civilization, a proud civilization. And the United States, I think, has opened up a can of worms that it wasn't really ready for. How it all ends, I don't know. But at this stage, I would say the Iranians have probably shown more resilience than the US has patience.
PETER HAYNES: We hear rhetoric that Israel wants to essentially eliminate Iran's capabilities in the region. The Americans may have slightly different objectives. Are they going to be able to come to an agreement? And what happens when the Americans leave? What will Israel do then?
FRANK MCKENNA: Yeah, I think they'll paper over their differences because they need each other. But there's no doubt Israel really wants to degrade the proxy military might of Hezbollah and Hamas and the Houthis. I suspect you're not going to be able to grind that down to nothing, but there's been a dramatic rate of success in terms of doing exactly that.
The United States has different motives as well. They are much more interested, I think, in trying to deal with the nuclear threat, but also in the geopolitical consequences of this. They're making enemies in the Middle East and in Asia and Europe, around the world.
The American public are not happy. The MAGA base is divided. So they're highly incentivized to try to find an off ramp, perhaps before the Israelis are ready for an off ramp. So I think there'll be some hard conversations. But at the end of the day, they need each other, and they'll find a way to smooth it over.
PETER HAYNES: So Frank, there has been some recent news here around OPEC today as we're taping here. The UAE has just announced that it plans to leave OPEC, I think, on Friday of this week. They indicated they've been thinking about this for a while, and it seemed to be the right time in the midst of the war.
What implications does this have for the future of OPEC as a group? Is this the first shoe to fall or pin to fall? And secondly, in terms of the long-term price of oil, is it material to have UAE on its own now rather than control through OPEC?
FRANK MCKENNA: Yeah, I think it's not the first shoe to fall because Qatar ended up exiting. This is another unintended consequence of the war with Iran. UAE is getting pulverized. They're getting hurt hard. Their tourism industry is under attack. Their production facilities, all of those things are under attack.
And you will have noticed in the last week they've reached out to the United States for a credit line because they are worried about dealing with the US dollar denominated obligations they have. So they definitely have suffered perhaps the most being in the neighborhood. And what they want now is to raise more money.
And when they're in the OPEC structure, they're limited to the price that's been agreed upon. But if they're on their own, they have a chance to produce more oil and sell it at higher market prices. So that's the game. They want to raise more money.
The end result, I guess, will probably be more oil in the world market. And again, there's a lot of things at play, and we don't know how they'll work out, how much more Venezuela oil will come on the market, yes or no.
Iraq, what it's going to do in Iran. Iran is one of the largest reservoirs of oil and gas in the world. If they can properly exploit those resources, they could flood the world with oil and gas. And then Russia, are they going to be able to extract and ship all of their oil and gas? But I would say on the surface, it would seem the end result will be more oil barrels entering the world market, which has implications for price.
PETER HAYNES: Yeah, we'll definitely be tabling that conversation to see how this plays out and coming back to it. Perhaps the most impactful consequence of the Middle East war, frankly, is that it has completely wiped out the war in Ukraine from the world's news cycle. Are there any important developments in this battle worth noting today, Frank?
FRANK MCKENNA: I think there are a lot of developments there, and I'm glad you're raising it. First of all, the unfortunate byproduct of the war with Iran has been that Iran is more enriched with the oil it produces, but Russia is also more enriched. Russia is almost now on life support as a result of the run-up in the price of oil. So it's probably been good for them.
But overall, I would say Russia is on its back leg on the war with Ukraine. It may not have received much attention because the United States is totally preoccupied elsewhere. But Ukraine is not only holding its own with Russia this year, but it's pushing Russia back. And it's now able to get $100 billion of credit from Europe as a result of Orban's defeat.
And Ukraine has proved itself in the Middle East. It's made a lot of friends. It's gone to the Middle East and instructed Middle Eastern partners on how to conduct drone warfare and how to defend against drone warfare. And it's earned a lot of respect and support from Middle Eastern countries for that.
So it's created a lot of new friends. It's got very sophisticated weapons now that Americans wouldn't provide. But the Ukrainians are making long-range artillery that is able to take out Russian oil refineries and close their ports. So they have a lot of their production that is shut in.
And Russia is getting really degraded. After four years, they're not making any headway on the battlefield. There's an interesting article in the Washington Post today, and the headline is "Ukraine took Russia's Best Punch," and it wants to teach Europe what it learned. And the Europeans are now stepping up as well, providing financial support and becoming much more muscular and getting behind this war. And of course, they loaned the 90 billion in euros.
But something interesting is that Russia now is on its back foot, but Ukraine is on its front foot with the rest of the world. It just did a deal with a Canadian company to supply the IP for drone manufacturing, I think, in Hamilton. It's working with Europe now at increasing their production capabilities.
The Europeans now are hearing from Ukraine that drones are accounting for 92% of some of the brigades target kills; artillery, 3%. So that tells you how this war has shifted, and it's shifted in favor of the Ukrainians.
And then Russia is bleeding out, if I can use that term. It's losing as many as 40,000 soldiers a month. They're not able to keep up with the replacement of those. It's bleeding the economy. Half the state budget is going into the war, more than education and healthcare combined.
And it's not surprising, but it's shocking. The popularity numbers for Putin, which, of course, in a country like Russia are meaningless, but are normally at 80% or 90%, are now down 25%, 30%. So Russia is clearly losing ground in this war. They're not gaining territory. They're losing a huge number of troops. And Ukraine slot them into a draw. That war has become a stalemate.
And Ukraine, in the meantime, is really becoming one of the world's great war powers. There's nobody in the world probably with more experience in real combat. And they're developing weaponry for the modern age of warfare and using technology. So I think it's a bad news story, which in some ways is a good news story.
PETER HAYNES: Frank, I'm so glad you brought up drones because I was listening to a podcast where they were talking to a retired US Army general who said, I couldn't lead our ground battle right now because the warfare has changed so much due to drones.
FRANK MCKENNA: Yeah.
PETER HAYNES: It just is-- he said it's just a completely different game. So good for Ukraine, and obviously, we'll continue to watch that with interest. So speaking of the region of Eastern Europe, you mentioned Orban.
There was an extremely impactful election. It was in Hungary. And former prime Minister Viktor Orban accepted defeat in the country's recent elections. Now, this was a victory for democracy over dictatorship. And one of the important contributors to this victory was the contribution of independent journalism to ensure a proper flow of information about the candidates.
Frank, are you surprised that after 16 years in an increasingly authoritarian leadership, that Orban accepted defeat to Peter Magyar's Tisza party so easily? And how significant is his resignation that he announced, I think, this week from parliament?
FRANK MCKENNA: Yeah. Well, he didn't have much choice. It was overwhelming. It would have been a revolution if he hadn't of stepped down. It was a large mandate. It's a large parliamentary mandate as well as presidential mandate. And this was in a country which had gone through gerrymandering that would make the United States blush, and also gross suppression of the press. The public clearly were voting with their feet on this.
It's good news for Europe. It's good news for the world. He was a real thorn in the side of Europe in a group that prides itself on consensus building. He was chronically offside, a pro-Russian ally there, and a big pro-Trump ally there. JD Vance was over there the week of the election trying to marshal the troops. So it was a real defeat for that effort as well.
But the United States has some of the same issues that we have to deal with, and that is the gerrymandering. Whichever party does it is wrong. Virginia is wrong. Florida's wrong, Texas, California. That should not be the way that people are elected.
And also the press-- eight out of 10 of the most influential organizations transmitting news in the United States are MAGA supporters. And this is the Joe Rogans of the world, and it's the Candace Owens of the world, and Fox News and Newsmax, and so on. So you're getting a lot of news from one side.
And of course, Trump has got a buddy, Ellison, who is probably going to end up controlling CNN through Paramount. And one of the only independent news sources in the United States may disappear. So we all around the world need to fight for an independent press. It should neither be left nor right. It should be factual.
PETER HAYNES: Do you think that one of the editorial discussions going on in Hungary right now is whether or not the country can actually recover from the hole that Orban dug with the local economy in particular and with relationships in the West. Do you think that that can be repaired?
FRANK MCKENNA: Yeah, absolutely. It's already being repaired within Europe. Hungary, again, is becoming a constructive member of the EU. I spend a lot of time in Hungary. I was on a board in Hungary for years. I have huge admiration for the country. The people there, they're really good, strong people, good economy, and I think it'll turn out just fine now that they're back to having a democratically elected government.
PETER HAYNES: What do you think this means for populist movements in other countries? We'll start in Europe, such as the UK with Nigel Farage, Italy, France, and then, of course, on the Western Front with the United States.
FRANK MCKENNA: Well, I think the pendulum has definitely swung, and it will, it'll keep swinging. You're seeing different governments being elected in Latin America. But in terms of the headlines, it has implications for Meloni in Italy, Le Pen in France, Farage in the UK, all of these-- even Poilievre in Canada. All of these people now will be distancing themselves from MAGA and Trump because where it might have been seen as a bit of an advantage at one stage, now it's considered to be a real liability. That association is considered to be a real liability around the world.
I know Trump is respected by the people who voted for him and support him in the United States. So I'm not going to second guess them. But I will say that around the world the brand is toxic. And the leaders that have been associated with them are all running for the hills.
PETER HAYNES: The worm turned pretty quickly on that one, that's for sure. Frank, let's move to North America. And for the first time in the history of Canadian politics, a minority government became a majority during by-elections. However, in reality, it was floor crossings from the other parties that led to the majority for Prime Minister Carney's Liberal Party.
I know we've talked previously about floor crossings and that these events occur in various governments from time to time in Canada. But I'd like your thoughts on some of the rumblings about there being potentially five or 10 more defections and whether or not this is likely to happen. And then also, I would like you to explain to us how the calculus of governing Canada will change for Prime Minister Carney now that he knows he'll be in the chair until at least 2029.
FRANK MCKENNA: People act as if this is all a big shock. It's not. Floor crossings have been happening for decades. Perfectly legitimate part of the Westminster system. I remember back when Jack Horner crossed over in Alberta to the Liberals under Chrétien. David Emerson, high-profile Liberal cabinet minister crossed over to the Tories under Harper. Belinda Stronach crossed over. We've seen many examples of it.
I remember in New Brunswick, just before I was elected, the Liberals and the Tories were almost tied. And Robert McCready crossed over from the Liberals to become the speaker of the house for the Conservatives to give them the majority that they needed.
And I was elected a year or two afterwards. And I asked one of the caucus members, why did McCready do that? And his answer was because he was the first one asked. And he said, all of us would have taken that offer to become the speaker with higher pay if we'd have been asked. So it's not unusual.
One of the reasons why it actually speaks well of the Canadian system, it shows that we largely are not a polarized country. And the differences between being a Conservative and Liberal and an NDP is not dramatic. There are differences, yes, but it's not dramatic. And there's not a visceral hatred of each other in the political parties.
Your question about more defections, I'm not aware. I talk to cabinet ministers frequently, of course, and I'm not aware of any happening at the present time. The Liberals will go hard after the NDP seat in Quebec-- Boulerice, who resigned in the last day or so to run in the provincial election there.
It's a very lefty seat, but the Liberals will definitely make an effort at that. They were second in the last election in that riding, and there may be a few more that cross.
What does it all mean? It should give Carney more comfort that he can do more difficult things. And it should result in a change of the committee system, which, when it's operated by opposition parties as chair, tends to be obstructionist and slows down the whole legislative agenda. So this will allow the legislative agenda to be more efficient, and it will also allow the government to be bolder.
PETER HAYNES: Frank, what about the argument that has been made by Poilievre camp over the last few weeks as we've watched these floor crossings, that the fact is if you got voted by your electorate to be a leader of a particular party and represent that party in Ottawa, that when you decide to go to another party, you should have to stand for re-election?
FRANK MCKENNA: Well, I've never bought into that. I think you elect people for their good judgment, and you respect them for that. You have a crack at them at the next election. They have to stand up and be counted. And if you don't like what they did, then you can vote them out of office.
It's the same reason I despise referendum, Peter. You elect people for their best judgment. People should make a decision and then run on that decision and be judged in that decision. Don't throw it into the hands of a referendum in order to try to avoid making the tough choice yourself.
So no, I'm not persuaded by that argument. I think the public sort that out in the ridings. If people feel like they're going to lose their riding by crossing the floor, they're not going to do it. But if the public vote them in in the next election, it tells you that they probably were representative of the riding overall.
PETER HAYNES: Well, Frank, you used that referendum word. I was trying not to use that word this entire podcast. I was trying to stay away from that topic. But one thing I am curious about, and I thought it might be related to the-- now that Carney has a majority, is his tone with respect to rebutting some comments that have come out of the US recently from their trade representative, Jamieson Greer, who made some threats about Canada in front of Congress, suggesting he's going to seek an enforcement action against Canada to deal with the wine and spirits ban that's been in place for a year now in certain Canadian provinces.
Here's what Carney said in response to that discussion. Quote, "You know what's an irritant? A 50% tariff on steel and aluminum and a 25% tariff on automobiles, all of the tariffs on forest products. Those are more than irritants. Those are violations of our trade deal, OK?" Are these comments by Greer in front of Congress and Carney more recently apples to apples comments? In other words, the sectoral tariffs mentioned by Carney are, in fact, actually a violation of CUSMA. And in retaliation, is the liquor ban a violation of CUSMA?
FRANK MCKENNA: I think we'll hear even more heated rhetoric as we get into this negotiation phase. Trump loves-- he loves to punch people in the face as a prelude to negotiation. That's been his style. He documents it, in fact.
And the people around him feel like they have an audience of one they have to appeal to, whether it's Ambassador Hoekstra here in Canada, or Greer, or whether it's Howard Lutnik. They feel they have to use extreme rhetoric and bellicose language and threats because that's what Trump looks for in his people. And if you can't deliver on that verbal aggressivity, you probably aren't going to be long for the job.
But yeah, it deserves saying again, Peter, we are the victim here. We did not start this fight. We have a signed agreement. Trump negotiated an agreement, said it was the best deal ever. The United States is the one breaching the agreement. They've chosen to pull things out of the agreement and put tariffs on them-- steel, aluminum, autos. They've torn up the auto agreement, which was working so well for everybody in the auto sector.
There's a story today in the Wall Street Journal about how a number of foreign manufacturers of low-cost autos may have to pull out of the United States as a result of the tariff war that's going on. So the United States chose this battle. Canadians responded with their feet. They stopped traveling to the United States. That's cost the United States billions of dollars. You can't order people to go back and travel to a place where they don't feel welcome.
The province is not the federal government, and the federal government didn't instigate this. They started pulling liquor off their shelves. That's a perfectly legitimate thing for them to do. And they'll all put the liquor back on the shelves if this thing is resolved.
So all we want to do is get to the table, and the Americans can put their issues on the table, and we put our issues on the table. And we add in other important items like the security relationship, critical minerals, guns coming across the border, et cetera, et cetera. But all we're seeing now is just a lot of really heated rhetoric with no real negotiation taking place around the issues that are important.
We know what the Americans want. They probably want some form of CUSMA. They probably would like some kind of an entrance fee to their park, if they could get it. And then they want specifically high sectoral tariffs-- steel, aluminum, softwood lumber, and others to protect those parts of their economy.
And we want the opposite. We want zero tariff access. In turn, we want to continue to be a supplier of energy security to the United States, to be a defense partner with the United States, to be the biggest buyer of their goods, and provide the critical materials which they use to turn into jobs.
Properly constructed, a North American free trade deal is a real win-win-win, and that's what we should be looking at, and I think that's where Canada wants to get. But I admire our political leadership-- Conservative, Liberal, NDP-- for all standing together in solidarity and all making the case for Canada. And I admire our political leaders for exercising restraint in their rhetoric and not rising to the bait of some of the inflamed language that's being used.
PETER HAYNES: So as we approach these negotiations, which are going to occur soon, the prime minister in power currently, Mark Carney, has created-- as did the previous prime minister when the last negotiations took place-- what is known as a CUSMA Advisory Council.
Can you explain for our audience, what role does this council actually play in the negotiation process when compared to, say, Minister LeBlanc or Ambassador Wiseman? And do you think the council is a good cross-section of Canadian business leaders as it was announced?
FRANK MCKENNA: Well, first of all, it's got a couple of roles to play. One is a sounding board. It's not going to be a negotiating committee. Absolutely not. But it is a bit of a sounding board.
Secondly, it allows the government to tick the box of saying they're listening to a representative group of Canadians. And it's not just business, by the way. It includes the Aboriginal community, the labor community, and various cultural industries and so on across the country. So it allows the government cover, if you like, for tough negotiations, but it will not be the negotiating team.
I looked at the list. There are good people, really strong, credible people covering the political spectrum. So I think it will do exactly what it was intended for, but it should not even be considered to be something that will be the leading edge of our negotiation strategy.
PETER HAYNES: So do our negotiators every couple of weeks grab the group and have a call and talk in confidence about where the negotiations are at and what should be the hotspots? Is how that process will work? Not that they're doing negotiations, but they're aware of where the negotiations are at. Is that how this process works?
FRANK MCKENNA: It's exactly right. And that's what happened the last time as well. It just keeps a lot of people in the loop on what's taking place. And that's exactly right.
PETER HAYNES: OK. Let's stay with the prime minister's office for a couple other announcements that took place recently that impact the business community. First, there was the news that Prime Minister Carney will host an investment summit in Toronto in September in conjunction with a couple of the local pension funds. More recently, the announcement of a new federal sovereign wealth fund.
Some of the cynics might think that these announcements could be viewed through a lens of been there, done that, and efforts that have previously been brought by the feds to increase investment in Canada. In your opinion, are either of these announcements, or both of them, consequential?
FRANK MCKENNA: Yeah, I think they're both consequential. And I'll take the other side of that trade. First of all, on the sovereign wealth fund, we haven't really done this before. We have the Canadian investment bank, and it got off to a slow start. But Peter, it's got real traction now. But remember, it's there really to provide debt and starting to perform that function in an effective way.
The sovereign wealth fund is going to be an equity participant in major projects. And I think it has potential. There's no sure thing, but it has the potential to be an effective instrument of public policy. So I would keep an open mind on it.
With respect to the so-called trillion-dollar summit that's going to take place this fall, I like that because it really sharpens the concentration of people in the government and the private sector to get results, which means that they have to come up with good ideas. And it's hand-in-hand with some really good news, Peter, in a number of areas.
We've got-- I think it's OMERS indicated they're going to circle $8 billion of additional money to go into Canada in the next five years. You've got Enbridge committing $4 billion on pipelines to the West Coast. You've got Shell coming back into Canada buying ARC at some $15 billion-- a big vote of confidence in Canada. You've got $100 million in FDI flowing into Canada this year, the most in some 10 years.
So it's on the heels-- on the back of quite a lot of good news. And I think this will actually work. Our pension funds are lined up behind it. I think there are going to be other Canadian institutions line up behind it. And this is one that particularly plays to the strength of our prime minister.
Just being candid here-- if this was Justin Trudeau, I think there'd be a bit of a shrug, and people might say, well, what would he know about attracting investment? But Mark Carney is a household name in countries around the world with sovereign funds, with political leaders, with large corporations and so on. This really plays to his strength, quite frankly.
So I think it's quite an inspired idea. We'll see if it's successful or not, but it definitely plays to his strength. And I think there's a real chance that Canada will get a lot of attention as a result of this.
PETER HAYNES: Yeah, Frank, you mentioned the connectivity of Prime Minister Carney. I by no means have a good lens into that other than when Carney spoke at our conference just before he announced he was going to take over the Liberal Party when Justin Trudeau left.
And I was talking about the CEO of Norges Bank, one of the large sovereign wealth funds in Europe, and about how the CEO had made a comment about how he felt like Americans worked harder than Europeans. And that was one of the reasons for productivity differences. And Carney immediately interrupted me and said, yeah, I spoke to that person two days ago.
So he just immediately-- like it was just, OK, I'll stand down now. But it was very impressive, his ability to, I don't want to say name drop. But when you're the governor of the Bank of Canada and the governor of the Bank of England, and you're at Davos and all these other places that sometimes get criticism, the reality is you make those connections, and he certainly has. So I'm going to watch with keen interest this summit. I'm just glad it's not on November 5 and conflicting with our own event. So I'm glad it's in September.
FRANK MCKENNA: Look, we should all be from Missouri. Nothing happens until it happens. But I've felt in the last month a better mood in the business community in Canada than I felt in some time. We'll see if it all translates, but I think we're starting to see some green shoots.
PETER HAYNES: Very encouraging to hear that, Frank. And I wonder whether or not the rhetoric will get so loud through the CUSMA negotiations and the threat that we have no deal at all, which of course I'm sure at some point will get surfaced, whether or not that changes the tone of the people you're speaking to. I hope not.
Final topic, and you touched on it, was the Shell investment in Canada, back in Canada, as you say. It certainly feels like the M&A space is peaking right now. And it's very much a pro-business environment that we're living in.
And arguably, you could say that the Shell acquisition was one of the recent wins for Prime Minister Carney, as he's trying to get more foreign direct investment into Canada, with the Shell acquisition of ARC, which, as you know, Frank, is a Canadian oil and gas producer who has a low-cost shale gas and liquid carbonation production out West.
But there was another recent transaction in Western Canada that saw Keyera acquire the Canadian assets of Plains All-American Pipeline. And this led some pundits to speculate that both of these deals that have clear net benefit to Canada should, in fact, be fast-tracked through approvals. There were some op-eds in the paper recently around that particular topic.
Proponents of this perspective in Canada will point to the recent competition rule changes in the EU to lower standards for deals that benefit that region. Is this type of pro-business rule change something you think is important, or is it just semantics?
FRANK MCKENNA: I think both of these deals probably will move quickly through the system, and it probably doesn't require a rule change to do that. I don't see where there would be too many issues with them. It's early days, but I'm not sure there's a rule change needed.
And we've also seen Rio Tinto is talking about spending as much as $5 billion on their aluminum industry in Quebec, which is interesting because the US is convinced it can set up big aluminum business in the United States, but they lack the hydroelectric power to do that. So Rio Tinto is going to be doubling down on Quebec.
So a lot of good things happening, and I think that you'll find these approvals will take place quite quickly. It's certainly a big vote of confidence. Shell sold-- I can tell you, I was on the other side of the trade, the Canadian Natural. We ended up buying their Albian assets. And Shell effectively moved a lot of its attention out of Canada.
But they didn't just come back in with a check in buying ARC. They came back in rhetorically saying that Canada is now one of the heartlands of our global strategy. It was very strong language. So it was good for Canada.
PETER HAYNES: Yeah, that's great to hear. Let's talk about Blue Jays here, Frank. We're finishing up. I'm going to give a level-set here. We're 12 and 16, as we speak. We're muddling along in the middle of the pack, basically. There aren't a lot of teams that are doing well, other than the one that's leading our division and the one that's leading a couple of teams in the National League West.
But it feels with the injury bug that we've had over the first 28 games, that just in the last few days, it's felt like they've played better fundamental baseball. And I think we're about to get some of our big boppers back. I'm going down to scout tonight, and we're going to see the pitcher, Trey Yesavage, make his first start. I'll give you my take when I speak to you next. But what do you think about where the Jays are at right now?
FRANK MCKENNA: I haven't really been a happy camper. The injuries, I haven't liked. There's not much we can do about them. And add Kirk to that, who I think is a big part of this team. But I just sensed that we weren't playing fundamental baseball very well.
Our relief pitching has been horrible. More laterally, it looks like we might have landed on a bit of a solution. But my gosh, with Hoffman, we had some really ugly losses, and we've had some ugly games, some errors, a lot of errors. Just not good execution, not hitting with men on base and so on.
So I've not been happy-- not been happy about the injuries, not been happy about the pitching, and not been happy about the execution. And I do see some improvement. It gives me some comfort to know that last year we went through a lot of the same things, and then we ended up developing into a team with really good chemistry and good execution and moving runners along, et cetera, et cetera.
So I live in hope. I hope we get back to that kind of fundamental baseball, Peter, that was so exciting last year. But I, quite frankly, have been a little disappointed so far this year in what I've seen on the field.
PETER HAYNES: Don't give up on them already, Frank. It's only 28 games. Do you remember what you were like at the beginning of last season?
FRANK MCKENNA: Yes. I won't give up on them. I can guarantee you of that. I love the spirit they showed last year. I loved it so much. And I think we'll get there again. But I'm just saying that I guess I had my hopes high at the beginning of the year we were going to win all the games. And it doesn't look like we're going to.
PETER HAYNES: No, but I'm still confident we're turning the corner. And I got to tell you, Frank, the crowds have been unbelievable. We're talking Monday, Tuesday games sold out here this week, and that's impressive. So there's clearly a hangover from last year's success and that-- or carryover, I should say. And that bodes well. I do think the fans matter. And hopefully we can turn it around a little bit here as we get some of our players back.
Well, Frank, another month has gone by here, and there's been a lot of action. Geopolitics never sleep may be our new adage here. And I look forward to talking to you again in May.
FRANK MCKENNA: Thanks, Peter. Never dull.
PETER HAYNES: Thank you for listening to Geopolitics. This TD Securities podcast is for informational purposes. The views described in today's podcast are of the individuals and may or may not represent the view of TD Bank or its subsidiaries, and these views should not be relied upon as investment, tax, or other advice.
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