Flaherty talks tough with U.S. in wake of Keystone pipeline delay – by Steven Chase and Carrie Tait (Globe and Mail – November 12, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

OTTAWA AND CALGARY— In a move that reflects a widening rift with Canada’s largest trading partner, a senior Harper government minister is warning that Washington’s decision to postpone a review of the Keystone XL pipeline could doom the project and speed up Ottawa’s efforts to ship oil to Asia instead.

Federal Finance Minister Jim Flaherty delivered this message from the sidelines of the APEC summit in Honolulu as U.S. foot-dragging over the $7-billion Canadian pipeline’s fate becomes the latest in a string of trade irritants between Canada and the United States.

“The decision to delay it that long is actually quite a crucial decision. I’m not sure this project would survive that kind of delay,” Mr. Flaherty told Bloomberg News.

“It may mean that we may have to move quickly to ensure that we can export our oil to Asia through British Columbia.”

It’s been an awkward few months for Canada-U.S. relations.

First, in September, the Obama administration excluded Canadian firms from bidding on $100-billion (U.S.) worth of U.S. infrastructure contracts in the name of supporting homegrown jobs. In October, the United States announced it would slap a $5.50 tax on Canadians entering by airplane or ship as a way to help reduce Washington’s $1-trillion-plus deficit.

On Thursday, the U.S. State Department compounded Canadian frustrations by announcing it won’t approve or reject the proposed pipeline until after the November, 2012, presidential election – a delay of about 12 to 15 months.

The Keystone project is backed by Calgary’s TransCanada Corp., and would ship up to 700,000 barrels a day from the Alberta oil sands to the U.S. Gulf Coast. Massive opposition from landowners along its proposed route and environmental activists has left the Obama administration unwilling to make a tough political call before the next ballot.

The State Department said on Thursday it will study an alternative route to avoid environmentally sensitive areas in Nebraska. Critics argue the proposed route across the Sandhills area would put a water supply for 1.5 million people at risk of contamination.

Mr. Flaherty called Washington’s delay “disappointing” and noted that unions and business groups appear to back the project.

For the rest of this article, please go to the Globe and Mail website: http://www.theglobeandmail.com/news/politics/flaherty-talks-tough-with-us-in-wake-of-keystone-pipeline-delay/article2233894/

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