Third World America The Keystone beating shows political risk is a major U.S. problem.
http://www.wsj.com/articles/third-world-america-1446594670
One difference between the developed and developing worlds is honest, transparent government that treats investors fairly. By that standard, the Obama Administration’s handling of the Keystone XL pipeline shows the U.S. is sliding closer to Third World politics than Americans would like to admit.
On Monday TransCanada Corp. asked the State Department to stop its review of the proposed pipeline from Canada to the Gulf Coast that has been held hostage to liberal politics for seven years. The company said it wants a pause to give Nebraska time to finish its review of the pipeline route.
That may be true, but everyone knows that TransCanada’s bigger problem is the State review that President Obama has dragged out to the end of his term. The company’s reasonable fear is that Mr. Obama will reject the permit in the weeks before the global climate-change fiesta in Paris in December. He would then use this as a chit to prod other countries to sign onto bigger CO2 reductions.
This triumph of politics is part of a pattern for a White House that has stretched its bureaucratic power to delay, undermine or scuttle investments in mining and energy production, especially fossil fuels. Other examples include Alaska’s Pebble Mine project, Shell’s drilling in the Arctic and liquid natural gas terminals, among others.
This is the capricious rule enforcement that companies expect in Argentina or Cameroon. But then the U.S. is no longer capitalism’s leading light. In the World Bank’s latest Doing Business survey, the U.S. ranks seventh overall. But it is 33rd in the ease of obtaining construction permits, just behind St. Kitts and Nevis but ahead of Belarus. The U.S. is 49th in ease of starting a business and 53rd in paying taxes.
TransCanada is no doubt hoping that a suspension will carry the project past the presidential election, after which it can present its case to a new Administration. That would require a Republican presidential victory, however, because Hillary Clinton has already announced her opposition to Keystone and its thousands of jobs, putting her green donors ahead of blue-collar workers.
TransCanada deserves to have its request granted given its abysmal treatment, but the green lobbies are already demanding that Mr. Obama deny it and reject the permit anyway. In that case TransCanada would have to refile its application and start the review process all over again. America is now a country in which investors have to account for political risk as much as business risk.
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