Quebec Votes 2018

The oil lobby’s pipeline to the CAQ, part 1

Longtime member of Koch-backed think tank could soon shape Quebec’s economic policy
Photo: CAQ leader François Legault. By Axel Drainville.

When I was a journalist at La Presse, I investigated the strategies of certain industries, including generic drugs, construction, and tobacco (and their front groups). This time, I'm interested in the oil lobby and one of its spokespersons, Youri Chassin, former director of research at the Montreal Economic Institute (MEI) and now a candidate for Coalition Avenir Québec. The first part of this series focuses on the links between the MEI and foundations funded by the oil-magnate Koch brothers and originally appeared in the French edition of Ricochet. The second part deals with the writings of Chassin.

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Nicolas Hulot, France’s environment minister, resigned publicly on Aug. 28, denouncing the influence of lobbyists on his government. The most powerful lobby is that of the oil industry, which is mobilizing around the world to dissuade states from adopting effective measures against greenhouse gases, while global warming threatens the survival of humanity.

In Quebec, this lobby includes the MEI, where Youri Chassin, now a candidate for the CAQ, was an economist and then director of research from 2010 to 2017. It is worth looking into his actions there, because he could very well have an important position if elected with the CAQ. This means examining the hidden face of the MEI and its relationship with U.S. think tanks backed by oil magnates, including the brothers Charles and David Koch.

According to the Vancouver Observer, the Koch brothers financed the MEI through their foundations. The MEI is formally associated with the Heritage Foundation, one of the many foundations that is supported by the Koch brothers and promotes oil, according to the Foundation’s latest annual report.

Everything indicates that Legault is on the same wavelength as Chassin in this regard.

The MEI is part of the Atlas Network, a network of pro-oil think tanks that also includes the Heritage Foundation, along with other Koch-backed groups such as the Cato Institute and the Americans for Prosperity Foundation.

Political columnists highlighted Chassin’s absence when the head of the CAQ, François Legault, presented his “economic squad” on Aug. 29. This absence was strategic. Chassin had already spoken against supply management in agricultural production by the time this issue became sensitive because of NAFTA’s renegotiation. The CAQ cannot afford to be lukewarm in its defence of supply management, especially as the issue risks becoming explosive if Prime Minister Justin Trudeau yields to pressure from President Donald Trump before the Oct. 1 elections. Trump does not want to give this point up since he wants to support dairy farmers in Wisconsin, one of the states that brought him to power in 2016.

Ardent support for fossil fuel exploitation

But that is not the only issue here. While public attention is focused on supply management, another is going under the radar — exploitation and transportation of fossil fuels. Everything indicates that Legault is on the same wavelength as Chassin in this regard. When Chassin presented his candidacy in Saint-Jérôme on April 15, the CAQ stressed that the two men “have always shared a common vision for Quebec.” Radio-Canada noted that “the economist (Chassin) was already very close to the party founded by François Legault, as evidenced by his presence at the CAQ’s national congress last November.”

Like Chassin, the CAQ’s program favours hydraulic fracturing (“except in areas where there is high population density or a lack of social support”). This position has remained the same even after the CAQ erased the words “oil” and “shale gas” from its program on Aug. 28, the day its opponents accused it of being a pro-oil party. Remember that Legault has already shown his willingness to support the Energy East pipeline project if Quebec can benefit from it in the form of royalties. The CAQ refuses to eliminate fossil fuel subsidies and to ban the construction of new oil and gas infrastructure.

In recent years, Chassin has been an ardent supporter of the exploitation and transportation of fossil fuels, denouncing, for example, detractors of Energy East such as Mayor Denis Coderre.

The MEI and the Fraser Institute, its counterpart in English Canada, no longer deny climate change, as did some of their researchers in the past, including Nathalie Elgrably-Lévy, another MEI economist. (In 2012, Elgraby-Lévy claimed that scientists were wrong to be alarmed because “the global warming thesis is dead.”)

Chassin was paid by the MEI from 2010 to 2017. But who has financed the institute?

Evidence of warming is now so obvious even to ordinary people that denying it is ridiculous. Climate skeptics 2.0 are working instead to minimize the seriousness of global warming, to deny the urgency to end greenhouse gas emissions, and to ridicule proposals and actions in favour of an energy revolution. That’s what Chassin did for seven years.

Chassin was paid by the MEI from 2010 to 2017. But who has financed the institute? The MEI refuses to tell us. It says that 67 per cent of its funding comes from foundations but does not identify them. In 2011, Chassin and colleagues published a text on the MEI website where they deplored the lack of financial transparency of Quebec unions while receiving tax benefits. The MEI, to which Revenue Canada grants charitable status, also has tax advantages: its donors can deduct donations from their taxes. The MEI’s refusal to disclose its sources of funding raises questions. Is the MEI the independent body it claims to be?

Has the fossil fuel lobby attempted — and is it still trying, through the MEI and candidates like Chassin — to influence the energy policies of the CAQ and possibly of the government?

According to Chassin, it is not urgent to transition from oil, and global warming could benefit agricultural yields. But evidence of the urgency is overwhelming, and warming has hurt crop yields in many parts of the world, even in Nordic countries such as Sweden. Producers have also been impacted by the long heat waves in Quebec. A report released on Sept. 10 by five UN agencies points out that climate disruption is already causing serious food crises and increasing hunger, especially in Africa.

This is only the beginning. If radical change is not made right away, we will reach the breaking point. The most realistic scenario foresees a temperature increase of 3.5 C over the next decades. A rise of 5 C is not excluded before 2100: experts say that such warming means that the planet would become unlivable for human beings. The UN secretary-general warns us that there are only two years left to act. If there is a priority file, as Nicolas Hulot said, this is it.

The MEI and the Koch brothers

The MEI is by far the most-cited think tank in Quebec. In just two years, its full name in French, “Institut économique de Montréal,” shows up 4,802 times on the site Eureka.cc, a media database. During the same period, the full French name of IRIS, “l’Institut de recherche et d’informations socio-économiques,” a research group that publishes detailed but critical studies of neoliberal policies, appears 33 times in the Eureka database. It is an understatement to say that the MEI “has great visibility in Quebec media,” as noted in the Wikipedia article devoted to it.

The MEI was created by economist Pierre Lemieux in 1987, but it really took off in 1999 with Michel Kelly-Gagnon at the helm, so much so that the MEI now says 1999 is its founding year. Kelly-Gagnon studied economics at the Institute for Humane Studies (IHS), a think tank funded by Charles Koch. Three of the 11 members of the IHS board come from the Koch group, including Charles Koch, owner of Koch Industries, and Ryan Stowers and Brian Hooks, both from the Charles Koch Foundation. Before becoming vice president of operations at the MEI, Jasmin Guénette was director of university programs at IHS. The MEI offers $300 to cover transportation costs to students who want to travel to Virginia to attend free IHS seminars.

They are all formed according to the same mold: they employ libertarian researchers to conduct specific studies that give an academic look to the liberal doctrine; the research is published as a book or reports, widely distributed, and actively promoted in the media.

Mother Jones magazine has described IHS as a “a haven for climate change deniers that receives funding from the Koch family foundations.” Greenpeace USA says that Koch foundations donated $30 million to the IHS from 1997 to 2015. The IHS gave birth to the Institute for Energy Research with help from Charles Koch, according to documents obtained by the Republic Report. According to the Huffington Post, Robert L. Bradley Jr. and his father are two of three people who incorporated the Institute for Humane Studies of Texas. Bradley Jr. is the author of the book Climate Alarmism Reconsidered and is the founder and CEO of the Institute for Energy Research.

Charles and David Koch head one of the largest oil empires in the world, long involved in funding political campaigns in the United States and very influential in public opinion through a host of foundations and think tanks such as the IHS, Americans for Prosperity, the Cato Institute, and so on. Koch Industries is headquartered in Wichita, Kansas, with annual revenues estimated at $100 billion — making it one of the largest private corporations in the United States.

In 2011, Reuters reported that Koch Industries is responsible for importing 25 per cent of oil from the Alberta tar sands to the United States. One of its Alberta subsidiaries, Flint Hills Resources Canada LP, supplies 250,000 barrels of tar sands oil each day to the Koch refinery in Minnesota. Flint Hills operates a terminal in Hardisty, Alberta, the starting point for the Keystone XL pipeline. The Koch brothers launched a campaign against President Barack Obama when he planned to block the project. Here is an excerpt from the article:

The Koch brothers are not run-of-the-mill political opponents. An investigative report last year by the New Yorker magazine on the secretive and deep-pocketed pair showed them to be “waging a war against Obama.” They have bankrolled the Tea Party movement, climate change skepticism and right-wing think tanks, such the Cato Institute, the Heritage Foundation, the Competitive Enterprise Institute and the National Center for Policy Analysis. Through Flint Hills Resources LP based in Wichita, Kan., The Koch Brothers provided $ 1 million in 2010 to the failed effort to suspend California’s groundbreaking 2006 global warming law. After the 2010 midterm elections, they have become established at the center of GOP power, according to The Los Angeles Times.

According to the National Observer, Koch Industries controls 1.1 million to 2 million acres of Alberta’s tar sands, the equivalent of about 4,500 square kilometers. The value of its oil sands assets is tens of billions of dollars. Ecologist David Suzuki also stressed the importance of the Koch brothers, not only economically but also ideologically:

Brothers Charles and David Koch run Koch Industries, the second-largest privately owned company in the U.S., behind Cargill. They’ve given close to US$70 million to climate change denial front groups, some of which they helped start, including Americans for Prosperity, founded by David Koch and a major force behind the Tea Party movement. Through their companies, the Kochs are the largest U.S. leaseholder in the Alberta oilsands. They’ve provided funding to Canada’s pro-oil Fraser Institute and are known to fuel the Agenda 21 conspiracy theory, which claims a 1992 UN non-binding sustainable development proposal is a plot to remove property rights and other freedoms.

The political influence of the Koch brothers is such that it has alarmed Democratic senators: 19 of them issued a joint communique in 2016 to denounce the Koch campaign against measures to counter global warming:

Washington, D.C. – Throughout the week on the Senate floor, Senate Democrats called out various trade associations, foundations, and organizations for perpetrating a sprawling web of misdirection and disinformation to block action on climate change. The Senators’ remarks detailed the concerted campaign waged by the Koch brothers, major fossil fuel companies, identity-scrubbing groups like Donors Trust and Donors Capital, and their allies to manipulate the public’s perception of the climate crisis and curtail legislative action to address it.

A 2012 Vancouver Observer article says that donations made by the Koch brothers to the MEI were made through the foundations to which they are affiliated, namely the Claude R. Lambe Foundation and the Chase Foundation of Virginia. According to its tax return, the Chase Foundation made another donation to the MEI in 2016.

An economist very close to the Koch brothers, James M. Buchanan, was an honorary senior fellow of the MEI before dying in 2013. According to the historian Nancy MacLean, author of the book Democracy in Chains, Charles Koch gave millions of dollars to George Mason University to fund Dr. Buchanan’s research, which eventually won the Nobel Prize for Economics. In 1980, Mr. Buchanan was invited to Chile, where he helped Augusto Pinochet’s dictatorship rewrite the constitution and develop privatization programs.

The influential Heritage Foundation

The Heritage Foundation is one of 32 groups denounced by the group of 19 Democratic senators. Studies that minimize the severity of global warming can be found on its website. One of them claims that fossil fuels will help humanity to counter climate change. “The Kochs have funded many sources of environmental skepticism, such as the Heritage Foundation, which has argued that ’scientific facts gathered in the past 10 years do not support the notion of catastrophic human-made warming,’” the New Yorker pointed out.

As mentioned above, the MEI is an “executive associate” of the Heritage Foundation, which is funded not only by the Koch brothers, but also by Exxon Mobile, according to Mother Jones magazine (the same article mentions that Exxon also donated to the Fraser Institute). After the election of Donald Trump, Michel Kelly-Gagnon went to meet his colleagues from the Heritage Foundation in Washington. He reported on his visit in the Huffington Post and on the MEI website:

Trump’s willingness to work with the Heritage Foundation has already calmed some of the fears that the new administration would take a strong anti-free-market approach. Despite concerns that a Trump presidency could be all over the place, the professional and principled presence of the Heritage Foundation certainly makes me less worried that this might be the case. My recent trip to Washington to confer with top Heritage Foundation officials bears this out. These people are serious, and the people around Trump with whom they are working are also serious.

In its latest annual report, the Heritage Foundation boasts of its influence with the Trump administration:

In its first year, the Trump administration embraced fully 64 percent of the Mandate recommendations. No wonder the New Republic called Heritage “The D.C. Think Tank Behind Donald Trump” and the University of Pennsylvania ranked us as the No. 1 think tank globally in terms of impact on public policy.

MEI researchers collaborate from time to time with the Heritage Foundation. Their last joint research publication, from Aug. 14, 2018, focused on corporate tax cuts. It was written by Mathieu Bédard of the MEI and Adam Michel, an analyst at the Heritage Foundation. Dr. Jacques Chaoulli, identified as a senior fellow of the MEI, was invited to give a lecture to the Heritage Foundation after winning a case at the Supreme Court of Canada that breached the public health insurance program.

Networks of networks

The think tanks, foundations, and institutions identified by the 19 senators, and many others, are a kind of nebula, more or less organized into networks. One of these networks is the International Policy Network, which has run campaigns against the science of climate change. In 2004, it received funding from Exxon to conduct climate research, which led to the publication of a book denying global warming and the need to counter it. According to the Center for Media and Democracy, the MEI is a member of this network.

As mentioned above, the MEI is also a partner of another network, the Atlas Network. Donald Gutstein, a professor of communication at Simon Fraser University in British Columbia, says the Atlas Network actually helped create the MEI in 1999. The British founder of the Atlas Network, Antony Fisher, had argued to powerful entrepreneurs from many parts of the U.S. and elsewhere that it was more interesting to entrust the promotion of their ideas to so-called neutral think tanks. The public suspects that companies defend their own interests when they propose the adoption of this or that measure. Companies need think tanks that appear independent but are actually supported by them, so the think tanks can lend legitimacy to their aims and actions, according to Gutstein.

Fisher has participated in the establishment of about 30 think tanks, including the Fraser Institute. They are all formed according to the same mold: they employ libertarian researchers to conduct specific studies that give an academic look to the liberal doctrine; the research is published as a book or reports, widely distributed, and actively promoted in the media. The Atlas Foundation funds or advises more than 150 think tanks of this type. Large conglomerates, such as ExxonMobil, fund Atlas. Charles and David Koch also generously funded it, according to The Intercept. The group also received support from investor John Templeton.

The MEI also has close relations with Power Corporation, one of Quebec’s largest companies, which has interests in the oil sector.

The Atlas Network awards the Templeton Freedom Awards. In 2004, the Atlas Economic Research Foundation sent one of its executives to Montreal to award the Templeton Freedom Award Grants for Institute Excellence to Michel Kelly-Gagnon.

This year, the John Templeton Foundation donated $216,570 to the MEI for the continued production of the Free Markets television series, which airs on PBS affiliates and promotes “classical liberalism.”

Host Robert Guy Scully conducts interviews with various personalities associated with the Atlas Network, such as Edwin Feulner, founder of the Heritage Foundation; Gabriel Calzada, rector of the small private Francisco Marroquin University in Guatemala; and Daniel Ikenson of the Cato Institute. While most neo-climate-skeptics are content to minimize the severity of warming, Feulner continues to deny the phenomenon. During an episode of extreme cold last January, he published a post called “Some Cold Facts” ridiculing Al Gore, the former U.S. vice president who advocates for action against catastrophic climate change. Gabriel Calzada, a member of the Mont Pelerin Society, one of the many companies supported by the Koch brothers, had earlier written that “climate change is the fraud of the century.”.

The Cato Institute was founded by Charles Koch and his collaborators, and his climate-skeptical positions are well documented. Another personality interviewed by Scully as part of the PBS series is Daniel Hannan, who is part of the group of British climate-skeptics and pro-Brexit MPs.

The MEI and Power Corporation

The MEI also has close relations with Power Corporation, one of Quebec’s largest companies, which has interests in the oil sector.

The president of the MEI’s board of directors is Hélène Desmarais, wife of Paul Desmarais Jr., executive of Power Corp. The board of directors also counts among its ranks Jean Bernier, long-time president and CEO of Ultramar and now group president of global fuels at Couche-Tard.

In 2002, while I was a journalist at La Presse, Michel Kelly-Gagnon told me that the MEI did not reveal the name of its donors (supposedly because they did not want it to), but he did say that Power Corporation was a donor.

Power Corporation has an ambiguous attitude regarding global warming. The corporation says on its website that global warming is one of the greatest challenges of our time and must be addressed. One of its subsidiaries invited Al Gore to Montreal to give a lecture on climate. On the other hand, the corporation has interests in oil, via the French oil company Total, which hopes to extract nearly 3 billion barrels of oil from the Alberta tar sands over the next 30 years.

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