This article was originally published in Maclean's Magazine on July 31, 2006
Danny Williams' Pugnacity Meets Ottawa's Disengagement
To Newfoundlanders, Danny WILLIAMS is a Sun King shedding light on a land of once-dim prospects. To mainlanders, he is a Lear-like figure, raging against all comers - from big oil to the feds to a former Beatle - from the perch of his rocky throne. The truth is that Williams, entering his third year as premier and poised to lead his provincial counterparts into a new round of negotiations with Ottawa over the fiscal imbalance, is both things at once, a man torn between making NEWFOUNDLAND AND LABRADOR the province it wants to become - an ENERGY dynamo of vast oil, gas and hydroelectric potential that could one day light up a good portion of the northeastern seaboard - and his own reputation as an ego-driven scrapper afraid of nothing but a deal that doesn't go his way.
As a cable TV tycoon, Williams ruthlessly negotiated with Rogers Communications Inc. over the sale of his business, and pocketed more than $200 million when he eventually got his way. Then, from a beleaguered Paul MARTIN desperate to remain prime minister, Williams extracted a $2-billion deal permitting Newfoundland and Labrador to keep both its soaring offshore energy revenues and its equalization payments as a have-not corner of Canada. That political brinkmanship - which included a bold move to pull down Canadian flags across the province - allowed Williams to drag Newfoundland from the edge of bankruptcy, morphing what had been approaching a $1-billion provincial deficit two years ago into a $76.5-million surplus this spring.
He's won his share of brawls, not least because, critics say, he's got an unhealthy compulsion to throw himself into every fight that comes along. Even one with Paul McCartney and his now-estranged wife Heather Mills, with whom he debated the seal hunt on Larry King Live. ("Let's forget that you don't care about the humanity," Mills told him.) Williams keeps a large snapshot from the telecast - his face alongside McCartney's - in his St. John's office, a trophy that says a lot about his pugnacious nature. But there are indications now that the game of chicken - his preferred sport and means of battle - may deliver the premier no more golden eggs.
In an interview with Maclean's last week, the premier backed down from nothing - an immobility, he says, that's part of his very DNA as a Newfoundlander. "We're lovers and we're fighters," Williams says. "Newfoundlanders and Labradorians like to be loved. But by the same token, they like to fight for what they believe in. And I try to embody that." But as he's poised to take over as chairman of the Council of the Federation - provincial and territorial leaders are to meet with him next week in St. John's - the premier faces a myriad of difficulties.
One is with big oil. Williams has charged that ExxonMobil Canada's demands in the $5-billion Hebron Ben Nevis offshore oil project, an important step in Newfoundland's goal of achieving "have" as opposed to "have-not" status, are just this side of usury. He and the oil consortium involved in the project - Chevron Canada, ExxonMobil, Norsk Hydro Canada and Petro-Canada - had once appeared close to a deal. But talks stalled over his desire for an equity stake in the project and the consortium's demand for tax breaks worth $500 million. Williams laid the blame on ExxonMobil, which walked away from the table alongside its partners. The premier responded by suggesting that Newfoundland could buy out the oil giant's share in Hebron. ExxonMobil declined. Now the premier is seeking fallow-field legislation that would revert development rights in oil fields that remain undeveloped for too long back to government - a gambit that invited some to draw comparisons between him and Venezuela's nationalist leader Hugo Chávez. The premier is unapologetic, saying of big oil: "I think they'll know that while I'm here they're going to be expected to have a tough bargain."
His latest push in the battle arrived last week, when he claimed ExxonMobil was low-balling revenues in Hibernia, a spectacularly successful offshore oil concern. "When big oil comes in here and sits across the table from me and some guy says, 'Ah, premier, you know, we're really not maken' a lot o' money on this particular project,' " Williams says - affecting a credible Texan drawl - "that gets me angry." In a letter sent to Prime Minister Stephen HARPER, Williams challenged the federal government, which owns 8.5 per cent of Hibernia, to cough up the tax credits the consortium demands in Hebron. He also reminded Harper that he expects his support on fallow-field legislation, which must be passed federally. "The Hebron project means $10 billion to the government of Canada," Williams says. "It's in their best interest to try and drive this." Yet the oil giants he's battling to get Hebron running have likely abandoned him to wait out his term (or terms) for a future, weaker premier who'll deliver their druthers. Not that that bothers Williams. "People say you can't win with a company like ExxonMobil - they'll just go somewhere else," he says. "Well, fine. Go somewhere else. We'll still have our oil."
Meanwhile, it's been reported that a House of Assembly bureaucrat at the centre of an all-party provincial spending scandal languishes in a St. John's psychiatric ward under suicide watch, while Ed Byrne, the premier's politically savvy right-hand man and a former leader of his Progressive Conservative party, has resigned as natural resources minister. Williams says Byrne's resignation gave him a "nauseating, sick feeling in my stomach." But it was the premier himself who invited John Noseworthy, the auditor general, to examine constituency allowances granted to members of the provincial assembly. The program was long suspected of being misused, and Noseworthy has alleged that Byrne and a handful of other assembly members spent well over their allotted allowances. Noseworthy has also said that Bill Murray, the legislature's former director of financial operations and the man now in hospital, approved the overspending and that kitsch trinkets like gold rings were purchased by members of the assembly from a company owned by Murray or his wife. "It's disappointing - because we're building a reputation here," complains Williams, who as a wealthy man - he donates his salary as premier to charity - has not been tainted by the scandal and whose local popularity remains almost without parallel. Williams has asked Derek Greene, chief justice of the Newfoundland Supreme Court's trial division, to look into the spending of assembly members, while the police are investigating the scandal. "We basically seized on this immediately," says the premier. "There's no cover-up going on in any manner whatsoever."
The premier, then, is handling a spending scandal while trying to stare down an oil consortium. Now he's about to wade into the equalization mess yet again - at a time when being resource-rich could mean becoming equalization-poor. Chairing the Council of the Federation is bound to put Williams at loggerheads both with Harper, who has promised to resolve the fiscal imbalance, and with many of his provincial counterparts, some of whom harbour competing visions of fiscal federalism. As for Harper, he has lately not been one of the premier's favourite people. The Prime Minister refused to be drawn into the Hebron issue and didn't back his fellow Tory, saying Williams was on his own. The premier didn't think much of the comment: "I think it would have been better if he'd said nothing," he told Maclean's.
The prospect of reimagining equalization, the issue that promises to be chief among the premiers' concerns next week, does not excite Williams. "He'd prefer not to revisit it," says Stephen Tomblin, a political scientist at Memorial University in St. John's. In June, the premier first saw a report commissioned by the former Liberal federal government that proposed including 50 per cent of natural resource revenues (like oil) in the formula that determines equalization payments. Williams claims it would cost Newfoundland some $300 million annually and warned of "dire consequences." But other provinces, Quebec among them, are anxious for changes and wonder why resource revenues shouldn't be included.
Adding oil and gas as ingredients in the equation determining how the feds distribute cash to the have-nots - those provinces and territories (all of them excluding Ontario, Alberta and Saskatchewan) who need financial help in order to provide a standard set of services - could threaten the $2-billion deal into which Williams manhandled Martin. "Those gains were more political than policy-oriented," says Tomblin. "Those opportunities probably won't be presented again." With Harper intent on a majority and eager to please vote-rich Quebec, a scheme that siphons non-renewable energy revenues from provinces like Alberta and Newfoundland is not inconceivable. "Quebec certainly has some hammer here," concedes Williams. "On the other hand, the Prime Minister has to be very wary of his power base in Alberta." Still, he adds, "any government that tried to claw back that $2 billion, either by taking it away from us or otherwise taking it from us in some other format, will get the full brunt of my wrath." Asked how he could prevent it, Williams noted only that Finance Minister Jim Flaherty has committed to preserving the Martin deal. "I don't expect them to turn around and flip-flop on that," says Williams, who holds out hope that as chair he'll be able to wrestle compromise from his partners - even if he himself is not known for it. "With any good solution," he says, "people sometimes will have to hold their nose."
But Quebec's strong position vis-à-vis Harper may mean that it's Williams who's doing the nose-holding. Indeed, what leverage Williams could have with either the Prime Minister or the premiers remains something of a mystery. Still, the premier may have some wrath left in him - in the form of the $6-billion to $9-billion Lower Churchill River hydroelectric project in Labrador, a little sister to the infamous 1969 Upper Churchill development deal that poured money into Quebec's coffers and robbed Newfoundland of their due. Just weeks after the Hebron talks broke down in April, Williams declared that Newfoundland would reject several offers to partner on the hydroelectric project and would develop it on its own. "We're going to own it and we're going to develop it, as opposed to what we've done before - just kind of hand it off," says Williams, referring to Upper Churchill.
At home, where his stand against big oil has only heightened his popularity, the premier pitches the wisdom of controlling Churchill by arguing it's time Newfoundlanders became "master's of our own destiny" - a phrase almost designed to invite comparisons to the "maîtres chez nous" slogans of Quiet Revolution Quebec. Critics point out the project is not without risk - not the least of which is the massive costs of readying Quebec's grid. No matter. Williams envisions a Newfoundland capable of slipping the yoke of equalization within the next 10 years with projects like Hebron and hydro sales to Ontario - if Quebec behaves itself and provides the energy-carrying infrastructure required. "Ontario needs this power so badly that it would be a shame - an absolute shame - if Ontario doesn't get it," says Williams. If either Quebec or Ontario doesn't co-operate, well, New England beckons (although the science fiction of a marine route that bypasses Quebec and flows energy from Labrador to, say, Boston, would have a price tag worthy of NASA). Meanwhile, Williams laughs at the irony of big oil throwing its weight around Newfoundland even as the Chinese "are knocking on our door every day looking to develop our projects." If, as Williams has described it in the past, Newfoundland is to become an "energy warehouse," then its premier will become a power broker - politically as well as electrically.
This is all, of course, pie in the sky. Hebron is stalled and the Lower Churchill is embryonic. But Williams has made a career - in fact several, from cable TV maven to defence lawyer to go-getting premier - out of tough talk and a talent for the well-chosen fight. Still, the question remains: how long before brandished fists and posturing lands him in Palookaville, a permanent contender? The wealthy Williams, likely the first premier in the history of his province whose quality of life has been diminished by the job, makes no attempt to soft-peddle the lows of public life. "I've paid a huge price to be premier," he says. "You're under a microscope, you're in a fishbowl and your every move is questioned and scrutinized." Outside, eight floors below his office, the Canadian flags he once pulled down to push an issue with Paul Martin flap at half mast for two Newfoundlanders dead in a military helicopter crash off Nova Scotia. "There's not a day that goes by when I don't say, 'I don't need this,' " he says. But given the relish with which he speaks of his various battles, it's hard to believe that either.
Maclean's July 31, 2006