Business

Love, pain and the whole trade thing

June 25 1979
Business

Love, pain and the whole trade thing

June 25 1979

Love, pain and the whole trade thing

Business

As love affairs go, this one barely reached the hand-holding stage. Business and the new Clark government, each toying with the idea of torrid romance earlier this month, have already had a falling out. Last week, with his telephone in a constant state of white heat, Robert de Cotret, minister of economic development and trade, became the focus for a nervous business parade to Parliament Hill. At issue was Prime Minister Joe Clark’s campaign promise to move the Canadian embassy in Israel from Tel Aviv to Jerusalem, a policy vociferously opposed by 21 Arab and Moslem nations. As word spread throughout the week that present and future contracts with the Middle East were in jeopardy, about 30 business organizations and companies demanded time with de Cotret as Prime Minister Clark agreed to consider a fact-finding mission to the Middle East. The business lobby list was kept mostly anonymous as de Cotret tried to cool the controversy. A spokesman said the problem was not his main concern, but it was “certainly high on the priority list.” Clark’s campaign promise to move the embassy had been greeted with joy by Israel because it meant recognition of Jerusalem as the capital of Israel. Arab nations, however, saw the move as Ottawa’s acceptance of Israel’s unilateral annexation of the districts seized at the start of the 1967 Six-Day War.

In Paris, the controversy caused Canadair Ltd. to hold its breath as it showed off its Challenger (see page 22). Said Vice-President for Corporate Planning Harvie Walford: “If the embassy were moved to Jerusalem, there would be an effect—but I wouldn’t want to venture how much it would be.” In Canada, several specific contracts were named as potential targets for Arab pressure. They include: Bell Canada’s $1.1-billion contract, now in its second year, to modernize and maintain the telephone system of Saudi Arabia; an $85-million contract under negotiation between Canadian Westinghouse Ltd., of Hamilton, and Libya. While no official trouble has been heard by either company, each is worried. Said Bell Director of Information David Orr: “If they construed they were being threatened [by the move], they would take

offsetting action. It’s a very large contract; if they want to make an impact, it could be one of the areas.” Westinghouse learned about possible problems when a reporter talked to President Frank Tyaack. “If what you say is true,” Tyaack told him, “it sounds as if the deal is off.” By week’s end, Westinghouse was still not clear about the status of the negotiations which have been under way for 18 months. The $85-million contract is for three gas turbine generators and other electrical equipment for the Sarir irrigation project, where 300 wells will bring water up from 600 feet below the Libyan desert, for barley, hay, millet and wheat crops. The negotiations follow a similar $45million contract Westinghouse signed in 1973.

Canadian exports of goods and services to Arab countries—including Iran and Arab nations in north Africa and the Middle East—were about $1.3 billion last year (total value of goods exported was $50 billion), according to Tom Burns, president of the Canadian Export Association. He also estimates that up to 80,000 man-years of work in Canada are at risk. “Canada,” he says,

“has carefully and usefully built a reputation over the years for being evenhanded. That reputation will get a bit tarnished if the government decides to move the embassy.” It is a move that now appears as if it will come under much closer study than Clark may have had in mind when he said at his June 5 news conference: “Those questions are now beyond discussion as to their appropriateness.” A fact-finding and goodwill mission, perhaps under the department of external affairs, is the result of an Arab League request last week. In the words of Abdullah Abdullah of the Arab Information Centre in Ottawa, such a trip could “improve or even help repair the damage which has already been done.” De Cotret, wearing a casual sweater and shirt for the cabinet meeting Thursday at Meach Lake in the Gatineau, is quick to point out, however, that Canadian trade with Arab nations has, so far, not suffered. “We don’t want to see them turned off,” said a trade department spokesman. “We would hope there would be some sort of political compromise.” As with any early wooing, the mating game has turned, for a time, into a waiting game.