No Net Benefit: A Tactical Response to the MDA Sale Raises a Strategic Question

Tasneem Jamal

Jessica West

The Ploughshares Monitor Summer 2008 Volume 29 Issue 2

On May 9, 2008, Federal Industry Minister Jim Prentice delivered his final decision on the immediate future of the space and information systems division of MacDonald Dettwiler and Associates (MDA): it is not for sale. Stating that a proposed sale “would not likely be of net benefit to Canada,” Prentice has inadvertently raised a more strategic policy question: what is Canada’s national interest in space?

The proposed sale of MDA’s space and information systems division to US weapons manufacturer Alliant Techsystems Inc. (ATK) for $1.325-billion was publicly announced early in January 2008. The announcement came just a few weeks after Radarsat-2, the “world’s most advanced” commercial Earth observation satellite, was launched, following almost a decade of design, construction, and $445-million in public investment. Critical reactions to the proposed sale appeared in media across the country, not least because MDA had previously been depicted as crucial to Canada’s space program and Radarsat-2 as essential to Canadian sovereignty (Doyle 2008).

Amidst the controversy, Industry Canada conducted a closed review of the sale under the terms of the Investment Canada Act, complex legislation that allows for the review of significant investments in Canada by non-Canadians. Since taking effect on January 1, 1989, the legislation has not been used to block a single foreign takeover. With the simple statement that the sale “would not likely be of net benefit to Canada,” Prentice made history. And, with that statement, he tried to close the door on what had become a tangle of questions surrounding Arctic sovereignty, national defence, ties to the US military, space weapons, and Canadian access to space technology. But by closing this door he also opened a window on the strategic policy question: what are Canada’s interests in space and how can they best be met?

Space applications such as remote sensing, communications, and navigation play a crucial role in civilian, military, and commercial sectors in Canada. Space technology is quickly becoming a central element of national, international, and human security, enabling economic development, environmental protection, resource management, communications, surveillance, emergency response, and much more. Many countries, both rich and poor, are striving to ensure that they gain the maximum benefit from space applications. Yet Canada, which in 1962 became the third country to design and build its own satellite, seems lost in space.

Among nations, Canada ranks somewhere in the middle in spending on space as a percentage of GDP and in the actual amount spent. But at approximately $345-million, the annual federal government budget is well below the average (OECD 2007, pp. 37-38). Commercial interests lead space efforts in Canada. In 2006 industry saw annual revenues of $2.5-billion (Canadian Space Agency, p. 4). The government decision to block the sale of MDA to a US company reflects, on the one hand, recognition—possibly temporary—that space is important. On the other hand, the reactionary, ad hoc decision on the sale of MDA indicates the absence of a long-term strategy.

Federal space policy in Canada is marked by the absence of broad policy guidance and a coordinating mechanism. Policies are scattered across several departments. There is no unifying vision to drive space programs, direct investments, inform resource allocation, or ensure that Canada derives the greatest possible benefit from its space activities.

Minister Prentice recently announced that he will push a new plan for Canadian space exploration (Spears 2008). The Canadian Space Agency is currently undergoing a strategic review. But space science and exploration are only parts of a broader program that also includes key applications for government and citizen users, an arena for international cooperation and technical assistance, and international security and disarmament considerations.

Canada risks major losses in space by responding tactically and in a piecemeal fashion, rather than by creating a strategic and comprehensive vision for space activities.



Canadian Space Agency. 2006. State of the Canadian Space Sector 2006: Policy and External Relations.

Doyle, Simon. 2008. MDA CEO Friedman couldn’t get a meeting with Prentice. Hill Times, 19 May.

Organisation for Economic Co-operation and Development. 2007. The Space Economy at a Glance 2007.

Spears, Tom. 2008. Prentice pushes vision of Canada as a star in space exploration. Ottawa Citizen, 13 May.

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