'Economic terrorism': the late Geoff Stirling on the 'coming crisis', automatic renewal of the Upper Churchill contract

I had many fascinating conversations with the late, great Geoff Stirling, mostly over the telephone from his second home in Arizona. I always wished I had recorded the calls, but they were usually incredibly unexpected at 3 or 4 a.m. One of my only official interviews with Geoff, whose funeral is scheduled for Saturday, happened 10 years ago in April, 2004. The thrust was his take on the Upper Churchill contract, which is scheduled to expire in 2016, at which time an automatic 25-year extension will kick in. Read The Origins of a Coming Crisis, Renewal of the Churchill Falls Contract, here. 

Headline: Stirling advice

By Ryan Cleary

The Sunday Independent
April 4th, 2004

Geoff Stirling is calling for a U.S. investigation into the 65-year Upper Churchill contract, a deal that he describes as “economic terrorism.”

The 1967 contract, which was signed by then-premier Joey Smallwood, Stirling’s long-time friend, sees Quebec rake in billions of dollars in profits from the sale of Labrador electricity while this province collects little or nothing.

“There’s nothing intellectually honest about this deal on the Upper Churchill,” Stirling told The Sunday Independent in a telephone interview from Arizona, where he lives part of the year.

“If you are living in a Confederation that says ‘No we will not renegotiate anything. It’s frozen, it’s frozen, we have no sympathy with the fact that the people we negotiated with couldn’t read or write and we were all lawyers’ … if you think this is the kind of country we want to be part of you’re thinking wrong,” says Stirling, the eccentric owner of NTV and OZ/FM, known for his visionary approach to business.

“Terrorism is (when) you terrify the nervous system of people by threatening violence, or terrorism is the cleverness of being able to use superior words like Latin to give prescriptions for an Aspirin so the victim doesn’t know they’re being taken … terrorism is the utilization of consciousness as they found out, the Indians did, on Manhattan Island where they got $17 for Manhattan island. That was terrorism.”

According to the recent royal commission that explored this province’s place in Canada, Quebec made an estimated $850 million each year between 1991 and 2001 from hydroelectricity generated by Churchill Falls. Newfoundland and Labrador, which had to pay for the project’s upkeep, made little or nothing.

“Overall, the 65-year Churchill Falls arrangements will result in tens of billions of dollars in cumulative benefits to others in Canada,” read the commission’s report.

The Upper Churchill contract was signed between Hydro-Quebec and the Churchill Falls (Labrador) Corporation (CFL Co.) — a subsidiary of the British Newfoundland Company  (BRINCO) — to begin hydroelectric development in the Churchill River Basin.

The Quebec and Newfoundland and Labrador governments were not direct signatories, but both had to pass enabling legislation to allow the contract to be concluded.

The contract, seen by many as the biggest giveaway in Newfoundland history, is controversial on a number of fronts.

First, the courts in Quebec — not in Newfoundland and Labrador — hear disputes related to the contract.

Second, Hydro-Quebec insisted that an automatic 25-year extension be included in the 40-year contract, during which time it would get to purchase power at a reduced price.

In lieu of an escalation clause, the contract stipulated that there was to be a reduction in the price paid by Hydro-Quebec for Churchill Falls power.

Finally, throughout the 1970s and 1980s Newfoundland had to spend nearly $700 million on alternative energy sources to compensate for not being able to access Churchill Falls power.

The province made repeated attempts to reopen the contract, but with no luck. Profits from the project would go a long way towards pulling the provincial government out of its dire financial straits.

Premier Danny Williams recently announced 4,000 job cuts and 700 layoffs in an attempt to bring the deficit into check.

Government’s long-term debt stands at almost $12 billion, and rising.

“We have ourselves in one heck of a bind because of this economic terrorism,” says Stirling, “and if anybody doesn’t think it’s economic terrorism look at any one of the 4,000 people who are wondering what’s going to happen in the uncertainty of the present time.”

Stirling recommends former U.S. president Jimmy Carter (or some other “high profile, honest man”) lead the investigation.

“To give up on the Upper Churchill is absolute nonsense. I don’t care if there are 10 Supreme Courts. This is a question of intellectual honesty,” he says. “We ask ex- president Jimmy Carter and a committee of two Senators and three Congressmen to investigate whether Newfoundland, that sovereign country, got a fair deal, or whether we’re subjected to economic terrorism. They terrified the natives to give them five years of jobs and they stole them blind for 75 years …

“It not only should happen, it must happen if there’s any honesty in Canada and nobody wants to be part of a country that has no honesty.”

In an hour-long interview with The Independent, Stirling touched on a number of topics, ranging from the province’s current fiscal situation to nationalism.

In the years prior to Confederation with Canada in 1949, Stirling, along with the late Don Jamieson, favoured the idea of Newfoundland joining the United States.

According to John Crosbie’s book, No Holds Barred, Stirling actually helped form the Party for Economic Union with the United States, although union with the States was not one of the three choices during the 1948 referendum.

“Newfoundland is a nation. Period. A colony, the first in the empire. Well we have to regain who we are,” says Stirling. “We have been hoodwinked so badly we’ve lost our self-esteem.”

On Williams’ attempts to address the deficit: “You have to go back in the beginning and get the government the same size as we can afford. As Joe Smallwood used to say, ‘We have the trappings of an elephant on a rabbit.’

“… (Brian) Tobin is as guilty as everyone else and (Brian) Peckford with his cucumber plant, I mean it’s endless, man. These people with no knowledge whatsoever, no experience in business, no understanding of balance sheets or job creation or even having a degree in economics.”

On terrorism in general: “There’s a lot of terrorism going on, buddy. Not just the danger of some 18-year-old woman being so convinced that you’re wrong that she kills herself. It’s mind boggling what’s unfolding because the cause isn’t being examined.”

On journalism: “It’s very difficult to be fair and honest as a journalist because you’re dealing with people who won’t get at the cause. They’re working always with the effect.

The holocaust was an effect, what was the cause? Why was Hitler able to martial thousands of technicians to create that kind of hell?”