1. The Software Lumber Agreement
I’m not going to summarize the NAFTA conflict between Canada and the US on softwood lumber, save to say that the Canadians are really pissed at us, and they have every right to be.
For our purposes, important thing is that the conflict may been resolved through the Softwood Lumber Agreement (SLA) between the United States and Canada, which leaves certain monies (the $450 million) to be disbursed. How that money is to be disbursed is the key point at issue.
(For the Canadians, the key point is the SLA itself, not the possibility of Bush’s slush fund. the The SLA has not yet been approved by Parliament. The vote will happen in “the fall,” and it’s huge: Prime Minister Harper’s minority government will fall if Parliament doesn’t approve the deal.)
2. The testimony of Elliot Feldman (“It’s a slush fund”)
Here’s where the Kossacks start the story: With a long excerpt from a statement by D.C. trade lawyer Elliot Feldman before the Standing Committee on International Trade in Canada’s capital, Ottawa. (Feldman is a partner at Baker, Hostetler, who contribute 64% to Republicans through their PAC.) The source for the Feldman transcript is The Tyee, a well-respected Canadian online newspaper. To the transcript:
[FELDMAN] First, on April 7, the United States Court of International Trade ruled that the U.S. industry was entitled legally to no money. None of it. It was not surprising then, that 20 days later, the U.S. coalition said that it would take $500 million. It was hardly a negotiating triumph to persuade them to take $500 million, when they had become legally entitled to not a penny.
The term sheet [for the United States offer that was then formalized as the SLA] promised a major joint initiative to improve North American competitiveness. The “remainder” — that was the word the terms said — would go to so-called “meritorious initiatives” in the United States.
Meanwhile, we were advised by negotiators that the White House had taken a direct and active interest in this money, but that Canadian industry ought to focus on other things. As the minister had said, it was not really their concern. The “remainder,” then, became $450 out of $500 million dollars.
So, here we have the government of Canada requiring that Canadian private parties sign over $450 million to an escrow fund slated to be conveyed to the White House.
Big words, Sahib, that I translate “slush fund.”
The agreement does not mention Congress, and the Bush administration says that Congress will not be involved in any way with this agreement.
The provision in Article 13.A.2 of the agreement, which recites the meritorious initiatives, is language which could be defined only as a slush fund for the president.
We’ll look at Article 13.A.2 in more detail below when we look at the text of the SLA. Meanwhile, here’s one more interesting detail:
There is only one date certain in the deal: that the planned expenditure of the $450 million must be determined by September 1.
Which would be, um, tomorrow. Just in time to roll out new products!
Interesting, if true. Is it true?
3. Coverage from Think Progress (“It’s a slush fund”)
We in the great Republic to the South (of Canada) cheerfully ignore all things Canadian, and this story is no exception. And it’s no credit to the blogosphere that only one blog covered this one. (Maybe it’s just too big to see, or believe). Here’s how Think Progress covered the story, way back in June and linky-rich:
Obscure Trade Settlement Could Create $480 Million Slush Fund for White House
The United States lost virtually every major aspect of the litigation for the last five years, and as a result, a settlement seem elusive. Then, last April, the United States and Canada reached a surprise agreement. Here’s what we know about the deal from public sources:
– $4 billion dollars from the account [tarriff money and “stumpage fees” that were under dispute] will be returned to Canada. $1 billion will be returned to the United States. Of the $1 billion dollars that will remain in the United States, half is designated to the U.S. lumber industry.
– The remaining $500 million is to be split between “a joint initiative benefiting the North American lumber market” and “meritorious initiatives in the United States” such as “Katrina reconstruction.”
Funny. We’re not hearing anything about that now, and the news is full of Katrina propaganda. So, I wonder “initiatives” are more “meritorious” than helping out Katrina survivors?
(The New York Times reported that it is “not clear what will happen” with the money slated for this purpose.)
– The deal was struck after direct communication between President Bush and Prime Minister Stephen Harper, who are political allies and personal friends.
So, those are the details of the SLA acocording to Think Progress. Many red flags here, wouldn’t you agree? Does it create a slush fund under Bush’s control? Think Progress spoke to “a lawyer familiar with the case” (Feldman, presumably) and then to the US Trade representative:
ThinkProgress contacted the U.S. Office of the Trade Representative. A spokesman said that he didn’t know if the White House would be involved in dispersing the funds or if Congress would be consulted, and was doubtful he would “be able to discern” this information in the future.
Nice. “Didn’t know if the White House would be involved.” I guess $450 million dollars is such a trivial sum.
And now comes a passage so polite that it might as well have been written by a Canadian:
The fact that hundreds of millions of dollars may be headed to the White House with no oversight raises the possibility of abuse — especially five months before a federal election. This is a significant amount of money and the administration should explain exactly how it will be spent and who will be overseeing the process.
Let’s translate again: “hundreds of millions of dollars with no oversight” means “slush fund” (Fr. caisse noire)
4. The text of the SLA agreement (“It’s a slush fund”)
So, let’s look at the text of the SLA itself (PDF). And here is an annotated version from the American Consumers for Affordable Homes. (The name makes them look like they’re an AstroTurf organization from K Street, but if the look of the site is any guide, they have no money, so I’m guessing that at least they’re not from K Street, though they might be from Bywater Street.) I haven’t had time to compare this version to the PDF from the Canadian government.
Does the SLA translate to “slush fund” too? Let’s find out!
First, here’s the clause that Feldman wanted us to look at. Article 13.A.2 (“Institutional Arrangements”):
By September 1, 2006 [tomorrow] the United States, in consultation with Canada, shall identify meritorious initiatives to receive the funds that are to be set aside for that purpose under Annex 2C.
[ACAH COMMENT] September 1 is the only date certain in the Agreement. It precedes the most optimistic dates for entry into force of the Agreement, establishing a presumption for the expenditure of $450 million in the United States beginning in the autumn of 2006 during the mid-term congressional campaign.
The funds shall support meritorious initiatives in the United States related to:
[ACAH] The projects all have high visibility potential for compassionate conservatism.
(a) educational and charitable causes in timber-reliant communities;
(b) low-income housing and disaster relief; [Read: or
(c) educational and public-interest projects addressing:
(i) forest management issues that affect timber-reliant communities, or
(ii) the sustainability of forests as sources of building materials, wildlife habitat, bio-energy, recreation, and other values.
“And other values,” as a final term of the Agreement, invites the United States to spend the money any way it pleases.
Gosh, “other values” could mean anything, couldn’t it? Even, perhaps “Christian” values.
So, that’s how the money is to be disbursed, and I think you’ll agree that a Republican with a little imagination could use the $450 million any way they pleased.
Translation: “Slush fund” (Fr. caisse noire)
That makes the issue governance structure. After all, if there are sufficient institutional safeguards in place, we only have the bare possibility of a slush fund; in reality, there would be nothing to worry about and, people, we could just move along. Article 13.B covers governance:
B. Softwood Lumber Committee
1. The Parties shall establish a Softwood Lumber Committee, comprising an equal number of representatives of the Parties or their designees.
2. The Committee shall:
(a) supervise the implementation of the SLA 2006;
(b) oversee its further elaboration [Hmm…];
(c) supervise the Working Groups established under the SLA 2006; and
(d) consider any other matter that may affect the operation of the SLA 2006.
3. In exercising its functions, the Committee may:
(a) establish and delegate responsibilities to Working Groups or expert groups;
(b) seek the advice of non-governmental persons or groups; and
(c) take such other action in the exercise of its functions as the Parties may agree.
4. The Committee shall establish its rules and procedures. All decisions of the Committee shall be taken by consensus, except as the Committee may otherwise agree.
5. The Committee shall convene at least once a Year in regular session and at such other times as the Committee may agree. Regular sessions shall be chaired successively by each Party.
[ACAH] The Agreement does not specify qualifications for people to serve on this committee, the number of members, the term, or compensation. … [A]n unknown, unnamed body of people who run the Agreement on behalf of the two federal governments. … The mandate for this unknown group includes supervision over all other working groups, including therefore, one that would examine policy exits. The terms do not even specify whether Canada and the United States would have an equal number of committee members, nor does it indicate who would chair the committee [Karl Rove? Why not?] or even how a Chair would be chosen.
It looks like the same legal geniuses who turned Iraq into a legal limbo under the Coalition Provisional Authority were at work here. (The next Article covers Technical Working Groups and according to the ACAH is “as defective as the Softwood Lumber Committee – no indication of how many people, distribution between U.S. and Canada, specific qualifications, selection criteria, chairmanship, etc.”)
So, the $450 million can be used for anything Bush wants (“other values”), and Bush can put anybody he wants on the board that disburses it.
Translation: “Slush fund” (Fr. caisse noire)
Finally, let’s look at how the money is actually to be disbursed. ANNEX 2C, clauses 4 and 5:
ASSIGNMENT OF CASH DEPOSITS AND DISBURSEMENT OF PAYMENTS
4. At least 30 days before the Effective Date, the United States shall provide Canada or its agent with information identifying three separate escrow accounts whose beneficiaries are respectively:
(a) the members of the Coalition for Fair Lumber Imports;
(b) a binational industry council described in Annex 13; and
(c) meritorious initiatives in the United States identified by the United States in consultation with Canada as described in Article XIII(A).
5. Canada or its agent shall distribute $US 1 billion pursuant to the Irrevocable Directions to Pay to the escrow accounts referred to in paragraph 4 in the following amounts: $US 500 million to the members of the Coalition for Fair Lumber Imports, $US 50 million to the binational industry council, and $US 450 million for the meritorious initiatives account.
Jeebus, reminds you of a Nigerian 409 letter, doesn’t it? A few points (and I’m not a lawyer, and not an accountant, so I could be way off base):
1. Bush needs to tell Harper what escrow accounts to use “before” the Effective Date—but there’s no requirement that there be an effective date for the accounts to be identified. (In fact, the effective date cannot be known unless and until Parliament passes the SLA, which will not happen ‘til “the fall.”) In other words, the accounts could be open and identified today, for all we know.
2. Harper could even put money into the accounts, even if Bush couldn’t take the money out in the absence of Parliament passing the SLA.
3. With the prospect of $450 million slush fund (Fr. “caisse noire”) before him, I would think Bush could find a complaisant banker to offer him a bridge loan, for that dicey period between September 1, when the “meritorious initiatives” have been identified, and “the Fall,” when the Canadian Parliament ratifies the SLA (or not). Possibly Harper could help him with this through the Caisse de dépôt et placement du Québec, the massive (and highly politicized) Quebec pension fund, which has major investments in timber.
Summary (“It’s a slush fund”)
1. The SLA sets aside $450 million for “meritorious initiatives.”
2. The nature of “meritorious initiatives” is not specified, and is therefore up to Bush.
3. How Bush spends of the $450 million is not subject to Congressional oversight. [UPDATE: Nor is the agreement.]
4. No qualifications of any kind are required for the members of the board that will implement the SLA and disburse the $450 million, so Bush can appoint anybody he wants.
5. The beneficiaries for the “meritorious purposes” are to be listed by September 1 (tomorrow).
6. The mechanics for disbursing the $450 million may already be in place, and any cash flow problems could be solved by a compliant banker, so Bush can use the money now.
So, yeah, I’d say it’s a slush fund, by defintion. Bush has control of it, through a board he appoints, and there’s no Congressional oversight. And he can do whatever he wants with the money, as long as he uses it for a “meritorious purpose.”
And I think I can guess what Bush—after consulting his gut—will consider a meritorious purpose. Can you?
Maybe some enterprising reporter could ask him. After all, the meritorious purposes are going to be decided tomorrow.
Appendix: The political context
The political context: Both Bush and Harper (the Canadian Prime Minister) are authoritarians desperate to hold onto power. From what NAFTA and the WTO say, Harper is selling out Canada by giving the United States $450 million that the United States couldn’t win in court. Why? It’s late, and I’m foily, but I’d say that Harper gets his cut with a kickback from Bush out of the $450 million, to help him pass the SLA in Parliament, and win his vote of confidence. Then Bush gets the rest.
Canadians agree: “It’s a slush fund”
Bob Rae of the Canadian Liberals back in July:
Rae said the deal means the White House will effectively get nearly a half-billion dollars to spend as it sees fit.
“It’s kind of a presidential slush fund that’s being given to them.”
Canadian Centre for Policy Alternatives:
The Bush White House cut (to use for aid projects as it sees fit) is nothing less than a huge slush fund for the upcoming Congressional elections—an unprecedented campaign gift from the Harper government to the Republican re-election bid, paid for by the Canadian lumber industry.
UPDATE Damn, if this were about something serious, like sex, or fisting, or sugar tits, or naked Canadians, or JonBenet, or, maybe the God-of-My-Choice™, or Bush farts, it would be cranking the ol’ Hit-O-Meter (or, for you Canadians, the Hit-O-Metre). But n-o-o-o-o!
UPDATE The September 1 deadline for “determining” the beneficiaries for “meritorious beneficiaries passed without any announcement.