The people of Newfoundland and Labrador love Danny Williams for his bare-knuckles style and blockbuster deals. But with the Atlantic Accord uncertain and no new oil deals in sight, has his luck run out?

In January of 2005, Danny Williams stood in the centre block of Parliament, fronted by the press and flanked by his political peers, speaking about the deal of a lifetime. For Williams, that was saying something. Five years earlier, the lawyer and broadcasting mogul-turned-politician had sold off his 93% interest in Cable Atlantic in a deal valued at $232 million. 

But this night’s agreement was an order of magnitude above that. After months of dramatic negotiations, Williams successfully wrangled a lucrative new revenue-sharing arrangement out of Ottawa for Newfoundland and Labrador’s burgeoning offshore oil industry. The minimum gain: $2 billion in additional benefits for the province over eight years. That number could balloon further, and the deal could extend over 16 years instead of eight. 

“This has been a battle,” Williams said on that January night in Ottawa two years ago. “I can assure the people of Canada that you’re in good hands. There’s no easy dollars going to be squeezed out of this crowd.” 

Fast forward to just over a year later, to another legislature—this time, the Newfoundland and Labrador House of Assembly—and another battle. Williams again stood in front of cameras and microphones. He again talked about an offshore oil industry, but this time his message was less laudatory. “From a government of Newfoundland and Labrador perspective,” he said, “I’m saying to ExxonMobil right now that if you don’t want to move on with this project, then we will be prepared to take you out.” 

The province had failed to reach a deal to develop the potential $10-billion Hebron–Ben Nevis oil field. The Hebron consortium—led by Chevron, with major shareholder ExxonMobil—announced that talks had ended without reaching a deal. The oil companies did agree, with caveats, on the provincial government obtaining a 4.9% equity share of the project and a super-royalty rate when the price of oil topped $50 (U.S.) a barrel. But when the consortium sought tax credits the province said were worth hundreds of millions of dollars, talks collapsed. 

Williams was apoplectic, singling out ExxonMobil for particular scorn and threatening to legislate “use it or lose it” provisions for the province’s oil fields. Now, more than a year later, Hebron, like Elvis, has left the building. Hebron project staff has scattered all over the world, and there are no talks on the horizon. 

Those two outcomes—Accord success, Hebron failure—are emblematic of the deal-making style of Newfoundland and Labrador’s savvy but short-tempered premier. For better or worse, the province has a high-risk negotiator at the helm who relishes high-stakes brinksmanship. The upside when he’s successful? Huge. The downside when he’s not? Just as big. 

Although its status is now uncertain, the Atlantic Accord had set the stage in 2005 for an unprecedented cash infusion into the provincial treasury. The Accord, combined with historically high oil prices, allowed the Williams government to table big-spending budgets with investments in infrastructure and social programs. The cash could build the foundation of a prosperous future for Newfoundland and Labrador, but the failure of the Hebron talks froze the local economy, chilling a combustible St. John’s real estate market and driving skilled labour out West. It also slowed momentum for the oil industry as a whole; the three current producing offshore projects have finite reserves, and there have been no new discoveries in years. 

Danny Williams is premier at an important juncture for Newfoundland and Labrador. The province has a few years of oil-fuelled wealth to set its fiscal house in order. It is again trying to develop the Lower Churchill hydroelectric megaproject, the elusive dream of every premier since Frank Moores. And Williams is locked in combat with a variety of foes: Ottawa, so-called Big Oil, a variety of other business interests. His combative style has critics clucking and backers hailing him as the best thing the province has ever seen. Williams ran on a simple mantra: no more giveaways. Every deal would be a good one. The question now is whether he will be able to get any of those deals done. 

Voters appear to back Williams’ bare-knuckles style; he has consistently scored higher than 70% in recent polls as preferred premier. Memorial University political scientist Michael Temelini says that those numbers are an endorsement of his policies. “This province needs an advocate, somebody who can clearly put its interests first and foremost, and I think that—aside from any personality issues—most people recognize that’s what he’s doing,” he says. “The bottom-line strategy with this guy is that he wants the best deal for the province, and he’s not going to compromise.” 

Temelini says provinces such as Newfoundland and Labrador have nothing to lose by adopting aggressive bargaining positions on natural resources issues. The oil, he argues, isn’t going to go anywhere. “Here we have a person who, whatever his faults, is basically playing hardball to get the best deal for Newfoundland.” 

But economist Wade Locke, who assessed Williams’ campaign platform before the 2003 election and found it at the time to be “progressive and encompass a vision that holds great promise” wrote more recently, “[Let’s] not kill the golden goose” in a presentation given in November. He questioned how a “fair” return should be defined. He found that Newfoundland’s generic oil royalty regime lags behind Norway in terms of government take but is comparable to Alaska, Alberta, and Australia and better than the U.K. and the Gulf of Mexico. 

Locke also noted the importance of “continuity of development,” the constant stream of projects that kept the local supply-and-services industry humming over the past decade and a half. “However, with the failed Hebron negotiations, there is now, for the first time, no new project currently being developed in the short term,” Locke wrote in Newfoundland Quarterly. “This lack of continuity can have major implications for the sustainability of the industry and for the level of benefits that will be captured locally from future offshore developments.” 

Outside of Newfoundland, opinions about Williams aren’t quite as divided.

In the spring of 2006, the national press flayed him after his Hebron hostilities with ExxonMobil, comparing him unfavourably to Venezuelan strongman Hugo Chavez. The Financial Post dubbed him “Hugo Williams.” The Calgary Herald called him “a tin pot, banana republic demagogue.” And on the cover of the April 23, 2007, issue of Canadian Business were the following words: “Has Danny Williams gone too far?” 

Williams retorted that those comments were proof that he was on the right track. “I’m delighted we’re getting that reaction from the national press,” Williams told the St. John’s Telegram at the time. “I got the same reaction initially on the Atlantic Accord. But when people in other provinces sit back and realize that what I’m doing is fighting on behalf of the people in my province, I think they have a lot of respect for us.” 

Williams’ negotiating style could best be summed up by the old proverb about the iron fist inside the velvet glove. Except after beating his opponents with the iron fist, he then slaps them with the velvet glove for good measure. During Accord negotiations, he stormed out of first ministers’ meetings, hauled the Maple Leaf off government buildings, and screamed betrayal. It worked. His courtroom flair and backroom bluster outflanked then prime minister Paul Martin, who was weakened by a minority Parliament. Williams ended up getting a much better deal than the one first put on the table. Recent negotiations have employed similar tactics but, unfortunately, without the same results. 

In the past year, Williams publicly called Prime Minister Stephen Harper “a big buddy to big oil” whose actions were “disgusting, disgraceful, and shameful” for not supporting fallow field legislation. The premier met with Harper privately at a Conservative convention in Gander, then publicly lashed him in a speech hours later. He threatened the prime minister with a “big goose egg” in the province during the next federal election if promises on equalization went by the wayside. 

Earlier this year, when ExxonMobil announced annual profits of $39.5 billion (U.S.), Williams said it was unacceptable for Hebron to remain on the shelf. But the conflicts spill beyond big oil. During ultimately unsuccessful 2005 talks to save the Abitibi-Consolidated paper mill in Stephenville, Williams threatened to expropriate the facility. “If Hurricane Rita is a storm,” he said, “they don’t know what they’re in for down here by the time we’re finished, before it’s all over.” 

The province has also engaged in a messy tug-of-war with Fishery Products International Ltd. over the Newfoundland industry giant’s future. Though publicly traded, FPI is governed by provincial law, having been created decades ago with government assistance from the remnants of bankrupt fish merchants. The Williams government has insisted on retaining authority over any restructuring or sale of FPI assets. On one memorable occasion, Tom Rideout, the fisheries minister and deputy premier, donned a fish union toque, jumped in the back of a pickup truck parked outside FPI headquarters, and accused the company of illegally shipping product out of the province. 

The Williams government has vowed to go it alone on the Lower Churchill, a project that could cost $9 billion. The province rejected a joint development plan from Ontario and Quebec as unsatisfactory. People outside the province are taking notice of the constant battles and questioning Newfoundland’s investment climate, but that kind of debate is muted at home. The local business community seems scared witless—or at least a word that rhymes with witless—of Williams. 

The premier does not encourage dissent in the ranks. He recently threatened to sue the Opposition leader and two local Internet bloggers who were critical of his policies. He has repeatedly insisted that the people of the province must get behind him in every battle or risk showing weakness to the assembled forces lined up against him.

Local business leaders, meanwhile, are careful to back the premier’s ultimate goal: agreements that benefit the province. 

Ted Howell, the president and CEO of the Newfoundland Ocean Industries Association (NOIA), the province’s oil industry group, acknowledges that “there has been a bit of a cloud hanging over the industry” since the failure of Hebron talks. NOIA, which Williams rechristened “Annoy-a” last summer, when it suggested both sides should get back to the table, says market conditions are right for the project. “We said at the time, and we continue to say it time and time again,” says Howell, “that this could be a win-win-win situation.” 

There are some encouraging signs in the local offshore, he adds, such as exploration in more remote and challenging fields and indications that the province is willing to talk through differences over how additional reserves at Hibernia South should be classified. In the meantime, NOIA’s 450-plus members are adjusting their business plans to deal with the current uncertainly. “It’s the lost opportunities from not having the continuity,” says Howell.

Yet overall, Williams retains broad public support. Memorial University’s Temelini says he hasn’t been hurt by an apparent lack of wins since the 2005 Accord deal. “He still has a tremendous amount of political capital,” notes Temelini. He is facing an October election that he is widely expected to win. 

Unemployment in St. John’s is at a generational low, although the picture is grimmer in rural areas. Economists at the Royal Bank predict the provincial economy is expected to cruise along in 2007 at the top of the national heap before plunging near the bottom in 2008. There are potential megaprojects visible on the horizon: the Lower Churchill, the possibility of a miraculous Hebron resurrection, a private sector initiative to build a new multibillion-dollar oil refinery. Williams has an ambitious plan to turn the province into an “energy warehouse,” with government equity in future projects. 

The premier hinted earlier this year at a more subdued, more conciliatory approach to external affairs. That all went by the wayside in late March, when he went nuclear on Prime Minister Harper, accusing him of breaking a key promise on equalization. Williams commissioned a nationwide advertising buy condemning the prime minister and said he would campaign against him during the next election. 

Harper, meanwhile, accused Williams of fighting for the sake of fighting, charging that “this kind of confrontation is damaging the business investment climate” in the province. However, Danny Williams’ negotiating style has yielded benefits in the past; in his private-sector days, he turned down good deals and surprised many in the local business community by securing better ones. The question now is whether he can continue that trend in the future—or whether moving the yardsticks further and further downfield in all negotiations will ultimately result only in a series of four-and-outs.