Some Day the Sun Will Shine and Have Not Will Be No More

by Brian Peckford

  On July 2, 1982, I wrote the prime minister on the offshore following up on a discussion I had with him on June 30 at a First Ministers Conference on the economy at Sussex Drive.

  I pointed out to him the major issues consisted of real management and revenue sharing. I went on to explain why the Nova Scotia deal was inadequate and sought a meeting with him to see if we could come up with a basis to start negotiations again. In the letter I said, “In order to determine if the basis of a settlement is possible, I propose that we meet privately, without publicity, to pursue this matter in the very near future.”

  The prime minister’s answer was disappointing, trying to claim that I was softening my approach to the permanence issue, and deflecting the request for a meeting between us. I responded and still requested a meeting between us for July 10, 1982.

  Without a definite meeting date with the prime minister, I nevertheless agreed with the prime minister’s suggestion of having the Energy ministers meet and review the issue. This occurred over the next few months, culminating in a September 2, 1982, federal proposal, which failed to address our positions of management and revenue sharing. I then met with the prime minister to ascertain whether this was the federal government’s final position.

  On October 6, 1982, I reported to the people of the province in a province-wide address:

  It is with deep regret that I report to you that we did not resolve the basic differences that would make possible an agreement that was fair and reasonable to Newfoundland. The federal government is determined and will not change its position that it alone must manage and control the offshore. The federal government will not sign an agreement that will give Newfoundland a real say in managing these resources. The federal government insists that Newfoundland would only have an advisory role.

  Sadly, it had taken seven months for the federal government to respond to our January 25 proposal—a response that was almost a total rejection of our reasonable positions, and of even greater import the response was contrary to the prime minister’s earlier public statements.

  It was always a mystery to me how five provinces could manage their oil and gas resources, and Newfoundland, once a self-governing dominion of the Commonwealth who brought the oil and resources with them into Confederation, was then to be refused the same management rights. We then suspended all talks with the federal government on this issue.

  Needless to say, the federal government put on a powerful PR campaign to sell its proposal in the province, touting erroneously that we would get 100% of the revenues but conveniently ignoring the equalization revenues we would lose at the same time.

  These were tough and difficult moments both for the Cabinet and the caucus. You knew what some were no doubt thinking and whispering. Had we gone too far? Should we now get the best deal we can? Is the Nova Scotia deal that bad? It was natural that “battle weariness” would settle in. It was at this time that we took a poll to gauge the mood of the people on the issue. What resulted was something like this: “You have fought the good fight; it is time to settle, get the best deal you can, and sign.” I don’t know now how many people I shared this with at the time, but I am sure it was only a few. It would have been political dynamite to have shared such information widely.

  Then, prominent voices began to take issue with our ongoing offshore position. In October the Opposition Leader, Stephen Neary, rejected our position while remaining ambiguous on whether he supported our January 25 proposal or the federal proposal of September 2. Then there was prominent businessman Harry Steele, part-owner of the regional airline Eastern Provincial Airways, blaming the bad economic situation of the time on the impasse over offshore, even though Nova Scotia, which had signed a deal, saw its unemployment rate rise as much as Newfoundland’s, and Canada’s rose by even a larger amount. And then there was a new publication of the time called “This Week,” which criticized the government for issuing pamphlets explaining the offshore proposals.

  Late fall of 1982 saw the prime minister shuffle his Cabinet; lo and behold, we got a new federal Energy minister, Jean Chrétien. Very soon he began making positive verbal comments about the offshore, indicating that there was federal flexibility and that he thought a deal could be forged between the two governments, one that could be different than the Nova Scotia agreement. Of course, we were very skeptical given the recent history and, therefore, approached these new federal statements with great caution.

  The pressure was enormous for the province to get a deal, and now here was the federal government again, making these so-called positive noises. It was decided, therefore, that Mr. Marshall and Mr. Chrétien would meet to explore whether there were grounds to begin serious bargaining. In a bizarre twist, Mr. Chrétien insisted from the start that these talks would not be a formal exchange of written positions; rather, the two ministers would talk and just keep notes. In an unpublished paper he had written giving his recollections on the talks leading up to the Atlantic Accord (and which he shared with me), Bill Marshall explains:

  The second overt sign of Trudeauite aversion to confirm in writing federal seriousness of intent in negotiations came from Jean Chrétien when talks resumed following him replacing Marc Lalonde in December of 1982. We had been lured into the second round on the promise of a deal different than the one accepted by Nova Scotia. At the outset of the Chrétien talks, I was not only assured the promise would be fulfilled, but also led to believe our revenue and management aspirations could be fully accommodated.

  However, after the ministers held a number of meetings, it was time for the negotiating teams to begin sitting down and put into writing a draft agreement based upon the principles the ministers discussed. This process had no sooner started when Cyril Abery, the chair of our negotiating committee, reported to Bill Marshall that the talks were going nowhere. Marshall wrote Chrétien on January 24, 1983:

  I write you concerning the present offshore talks. You and I have had five meetings before any matters were referred to our negotiating teams. Our meetings were meant to establish the principles and agree on parameters that would lead to fruitful, successful, detailed talks between our negotiating teams. From the start you insisted that it would be beneficial if you and I did not exchange written positions on different items, although detailed notes were taken by both sides. I agreed with you for the sake of getting the talks going. During these meetings I thought we had made meaningful progress, and I think you did too. The fact that both sides agreed to refer some of the matters to our negotiating teams proves this.

  However, since the two negotiating teams have been meeting, things have changed dramatically. I find positions being taken by your team widely diverge from the positions you took during our talks. That was the reason for my first meeting with you after the teams started meeting, which I thought would resolve the differences between you and your team. The further meetings between our two teams showed that you were not successful in having your position adopted by them.

  Therefore, I requested a second meeting with you, which we had Friday past. You still maintained that your team’s position is really not your position or that of the Government of Canada. However, your team’s position is the only written position we have. All your positions have been verbal although noted.

  Mr. Marshall went on to express his puzzlement and to request in writing from the minister his “understandings” on the seventeen items critical to the talks, from management issues of a joint board, revenue issues, national self-sufficiency, to sliding scale royalties, etc. This letter came as a result of private meetings between the two negotiating teams being held in the Meridien Hotel in Montreal, considered a good place away from the glare that would more likely be present in Ottawa or St. John’s. The two ministers met and then the teams sat down to map out a framework agreement based upon instructions from the ministers. However, the federal team had the same position that it had displayed during the previous talks with former Energy minister Lalonde. Here is Marshall’s interesting and r
evealing commentary:

  I called Jean Chrétien. He said he would contact his negotiating team and set the matter straight. When the meeting reconvened, it was the same story. It was obvious I was not amused when I called him the second time. He was apologetic and full of assurances there had been some slip-up and he would set things right. The teams reassembled once more, incredibly with the same result. It was so eerie and weird that this could be happening in talks of such import to both governments.

  The best description of my feelings over being toyed with a third time is expressed in the adage: “fool me once, fool me twice, me poor fool if you fool me thrice.”

  I had remained in Montreal. Jean Chrétien had gone back to Ottawa after we had agreed the officials could begin putting together a draft on the basis of the principles agreed by us. I was furious. I called him in Ottawa and asked him to come down to Montreal immediately. He said he was tied up and could not come right away, but he would come that evening.

  In the interval, I sat down and prepared a letter to him listing the seventeen principles of the framework of the agreement that he and I had agreed would be fleshed out in an initial draft by our respective officials. After the letter was typed, I put it in my pocket and waited in my hotel room for my visitor’s arrival.

  He arrived alone and we sat down to discuss the situation. I began by getting right to the point in expressing deep concern over Paul Tellier’s (the prime minister’s chief of staff) refusals to discuss the framework we had mapped out. I then frankly told Jean Chrétien, while he may have believed he could conclude an agreement along the lines of our agreed framework, it was becoming apparent that the Trudeau policy had not changed and he could not deliver on his assurances. I suggested that Mark Lalonde was still pulling the strings. He was then told in unmistakable terms that negotiations could not continue on that basis.

  Chrétien responded in the same refrain; namely, there had been confusion and he would straighten it up. After he went on in this vein for a while, I put my hand in my pocket and pulled out the envelope containing the letter. As I was doing so, I suggested the best way to clear up the confusion for once and for all was to provide a written outline of the framework of our agreement for the negotiating teams. They would then have our joint instructions and would be able to get on with preparing a draft of the agreement for submission to us. Then I advised him that I had prepared that outline and suggested he read it with a view to giving it to the teams.

  When I took the envelope out of my pocket with the seventeen principles intended to serve as joint drafting instructions to respective teams of officials, Mr. Chrétien’s eyes became fixed on it. I remember him rising from his chair whilst exclaiming, “But Bill we agreed there would be no writing.” I recall responding that the federal negotiators were not accepting what we had agreed, so we had to reduce it to writing.

  I, too, then got up out of my chair, holding out the envelope to him. Facing me, he started walking backwards towards the door with his hands up in front of his body as if to ward off some deadly blow, whilst incanting “no letter” to which I replied “just a little one, Jean.” Then I heard him mutter “no writing,” while continuing to back-pedal with his eyes transfixed on the envelope I was holding out to him. I recall responding with something like “just these few words, Jean” as he reached the door, whereupon he exited, slammed the door right in front of my extended hand holding the proffered letter, and beat a hasty retreat lickety-split down the hotel corridor. He was gone, never to return.

  A response to Marshall’s letter was never received.

  We had no choice but to sever any more talks on the issue. It was obvious Chrétien’s words were his own and he could not get them to become federal policy. He continually misled Mr. Marshall and failed to deliver what he had promised. Either he thought, once back in negotiations, it would be difficult for us to leave and, therefore, he could convince us to sign a Nova Scotia deal, doing something that his rival Marc Lalonde was unable to do and making himself look good in the eyes of the prime minister, or naively believing he could convince the PM and Lalonde to accept the Newfoundland position. The former is the more plausible to me. But this did not stop Mr. Chrétien from telling a local newspaper that “the people he was dealing with were not dealing in good faith.”

  Here was a man who refused to put his position in writing, was undermined by his negotiating team, obviously being controlled by others in the federal government, and then had the gall to describe the other side as bad-faith negotiators when we had put our position in writing and where our minister and the negotiating team were saying the same things.

  Even the mayor of St. John’s, John Murphy, a known Liberal, got in the act. Having contacted Chrétien, he wrote me a letter indicating that what the federal government was offering was a good deal. I responded to the mayor by pointing out the facts were not as had been painted by Mr. Chrétien and that we thought it only fair that positions be put in writing, concluding with “however, in the matter of the offshore, I regrettably have to note that your comments, based as they are upon one-sided and incomplete information, hardly serve the interests of all the people of the province.”

  The period from January, 1983, onward, after we severed talks, was the most difficult period of all. As Marshall says:

  The period between the break off of the Chrétien round in January of 1983 and June of 1983 saw the bleakest of days. There was nothing to negotiate and no one with whom to negotiate. The pressures exerted on us locally to sign and get on with development, fueled by local federal acolytes and the Board of Trade, spiralled. Jean Chrétien kept the heat on with statements of his willingness to resume negotiations. But there was nothing to negotiate and no one with whom to negotiate in good faith.

  Then the shocking news came in February. Our court ruled that the offshore was federal—we had no ownership rights whatsoever. The Nova Scotia deal, our own rejection of further talks, and now the unfavourable court decision, tested our resolve—especially in light of a budget that year that saw us having to increase our sales tax to 12%, the highest in the land, increase our corporate and personal taxes, impose a new capital tax on banks and trust companies, increase tobacco and liquor taxes, and raise fees on many other government services.

  In April we played our last card: no more offshore negotiations until there was a change of government in Ottawa. And then the slightest glimmer of hope! Brian Mulroney won the leadership of the federal Progressive Conservative Party. There was renewed vigour in the party and a growing sense that it could win the next general election. Extensive talks with the party concerning offshore had been ongoing for some time, such that it was only days after Mulroney’s ascension to the leadership that I was able to announce that the new leader and party had communicated to us in writing that the party was prepared, when it became government, to finalize with us an offshore accord that met the province’s management and revenue positions. My response at the time, June 14, 1983:

  The Mulroney letter is a significant breakthrough in Newfoundland’s long and often discouraging struggle to receive fair and equitable treatment on this resource which we were proud to have brought into Confederation.

  This agreement provides both the provincial and federal governments with a positive constructive role in the management process. It provides for our province being treated equally and equitably with other oil and gas producing provinces on the matter of revenue sharing.

  I am firmly of the view that the offshore will be an important building block for Canada in the years to come.

  It is often forgotten that this commitment came from Mulroney after our own Newfoundland Court of Appeal had ruled against us and before the Supreme Court of Canada had ruled. It would have been a credible position for Mulroney to announce that he would make a final decision after a Supreme Court of Canada ruling. But true to the commitment of an earlier leader, Joe Clark, Mulroney never flinched—he delivered.

  Mulroney wasted little time, only t
wo months, in getting himself a seat in Parliament by taking the seat of Central Nova in Nova Scotia in a by-election as a result of the resignation of the sitting Member Elmer McKay (Peter McKay’s father), which allowed Mulroney to run there.

  The Conservatives began improving in the polls and the Liberals were slipping. Trudeau seemed vulnerable and a Conservative victory now seemed at least possible, if not probable.

  In February, 1984, Trudeau, seeing the writing on the wall, announced his intention to step down. We were delighted!

  Dampening that optimism of Trudeau leaving, and the possible electoral success of the Progressive Conservative Party, was our defeat at the hands of the Supreme Court of Canada on March 8, 1984. No sooner was Trudeau to leave—our obstinate opponent to a fair deal for the province—than this stunning rebuke of our claims by the highest court:

  In summary, we conclude:

  Continental shelf rights are, in pith and substance, an extraterritorial manifestation of external sovereignty.

  Canada has the right to explore and exploit in the continental shelf off Newfoundland because:

  Any continental shelf rights available at international law in 1949 would have been acquired by the Crown in right of the United Kingdom, not the Crown in right of Newfoundland;

  Even if Newfoundland could have held continental shelf rights prior to Union, they would have passed to Canada by virtue of the Terms of Union.

  In any event, international law did not recognize continental shelf rights by 1949; such rights were not indisputably recognized before the Geneva Convention of 1958. [p. 129]

  Canada has legislative jurisdiction in relation to the right to explore and exploit in the continental shelf off Newfoundland by virtue of the peace, order, and good government power in its residual capacity.