The proposed takeover of Nexen Inc. by China National Offshore Oil Company, or any other like it, cannot be allowed. If the acquisition of Canada's resource companies is not banned, then Calgary's skyline will be snapped up by the world's gigantic state-owned enterprises.

Resource companies are as important as banks or the stock exchange. The same ownership ring fence must be drawn around them, or a limit of 10 per cent foreign ownership. If that policy had not been adopted years ago in Ottawa, Toronto's skyline wouldn't exist.

The reality is that Canada is a small economy that must be protected, from potash to the TMX, from the foreign governments who bankroll enterprises and investment portfolios that have more money than Ottawa.
The new Game of Thrones is not about military conquest but about picking off trophy assets from countries, like Canada, that are Boy Scouts and naïve enough to let them do so. And growing and nurturing large successful entities is essential to any nation-state. Size matters.

The foreign buyout of resource, infrastructure, agricultural corporations simply has to stop. Foreigners can partner or do start-ups but nothing more.

This debate has nothing to do with economics or ideology. This is about street smarts. The United States -- that bastion of free enterprise -- did not allow the China national Offshore Oil Company buy Unocal in 2005. It did not allow a Dubai company to control port infrastructure assets.

Developing nations like Brazil or China would never allow a Nexen to be bought even though their publicly protected resource giants prowl the world for other peoples' assets. Even undeveloped nations like Nigeria require foreign oil or mining explorers to joint venture with government-controlled local corporations.
Canada should never have allowed Inco, Alcan, Petrokazakhstan, Addax, agri-business Viterra and dozens more resource companies to be picked off. That these deals have been rubber-stamped by Investment Canada does not establish a precedent. These represent disastrous mistakes and a dangerous trajectory.

Here are 14 concrete reasons why. Nexen's purchase will create a Takeover Hit List among Canada's 150 largest corporations, that includes Suncor Energy Inc., Enbridge Inc., Agrium Inc., Cenovus Energy Inc., Canadian Natural Resources Ltd., Teck Resources Ltd., TransCanada Corp., Canadian National Railways, Talisman Energy, Inc., Gibson Energy Inc., Canadian Oil Sands Ltd., Pacific Rubiales Energy Corp., Penn West Petroleum Ltd., and Keyera Corp.

Further down the food chain will be Canadian Pacific Railway, Sherritt International Corp., Pembina NGL Corp., Crescent Point Energy Corp., Pembina Pipeline Corp. and ARC Resources Ltd.

Even others like Potash Corporation and Cameco Corp. or Canpotex, protected by Saskatchewan, could succumb eventually and then there are hundreds more private, or privatized, companies that foreigners are buying. A handful of years ago, two companies were snapped up for $9 billion within days by an arm of the Abu Dhabi government and only criticism by myself and others stopped the execution of a strategy to spend $20 billion buying into Canada's energy sector.

Nexen, however, will send a positive signal that Canada is open for business and for sale.

There are also two policies reasons to stop the global spree here:

1. Reciprocity. No entities from a foreign country should be allowed to do anything in Canada that Canadians cannot do in their country. In China's case, this means that only greenfields, or start-ups, can be invested in here and then with strict licensing from the government as is the case there when building a factory or anything. No Chinese can buy stock on the TMX or own shares of a Canadian company, as is the case there unless special government permission is granted. Same applies to real estate.

2. State-owned enterprises and sovereign wealth funds from all countries must be banned from owning any corporations, real estate or resources in Canada. This is because they are agents of foreign jurisdictions and enjoy sovereign immunity.

Sinopec, for instance, has refused to appear in a Canadian court concerning dozens of outstanding charges against the company involving construction site malpractice that led to the deaths of two workers and injuries to four more in 2007 in Alberta. And this winter a Sinopec official actually said the company wants the Supreme Court of Canada to exempt it from such health and safety actions.

Once Nexen is nixed, the Government of Canada should require full and timely disclosure of any foreign investment activities in future. Any ownership level beyond 5 per cent should be disclosed quarterly and published immediately.

The public, and government, do not understand the extent of the penetration of such investments and has a right to know. Transparency is essential in doing business and is essential in making policy decisions.
Then there are the politics. A recent poll showed that only 11 per cent of Canadians support foreign buyouts by state-owned enterprises.

And fears that disallowing foreign buyouts will lead to less investment in Canada can be laid to rest. After Saskatchewan's Premier successfully fended off the buyout of Potash Corporation, activity increased in the form of greenfields projects or start-ups. These are the only foreign investments that meet the "net benefit" test that Investment Canada is supposed to uphold.

Canada must state clearly that all of its resource-related and infrastructure assets and corporations must be Canadian-owned and controlled and that no single foreign entity can own more than 10 per cent, as is the case with Canadian banks.

Canadian should state that it remains open for ethical, sensible and "net benefit" business. If not, then Canada will simply be a colony waiting to be conquered again.

This article originally appeared in the Financial Post.

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