Alberta wants Herb Dhaliwal punished

Vol. 7, No. 13 Week of March 30, 2003 Gary Park PNA Canadian Correspondent

Province fears impact on energy trade from Canada’s opposition to Iraq war and federal minister’s anti-American comments; Alberta talking to OPEC about applying for observer status even though those seats are occupied by countries with state-owned production

Against a backdrop of growing cross-border tensions, the Alberta government is trying to separate itself from a stream of anti-American comments by senior Canadian politicians.

Alberta Energy Minister Murray Smith has called for federal Natural Resources Minister Herb Dhaliwal to either be fired or reassigned in cabinet.

Dhaliwal last week became the flash-point for a growing rift between Canada and the United States when he said the Iraq war reflected President George W. Bush’s failure as a statesman.

With the fallout from those remarks and Canada’s decision not to join coalition forces in Iraq spreading over the 49th parallel, Smith said March 27 that Dhaliwal “represents a serious, if not mortal liability for the oil and gas industry.”

He told the Financial Post that Dhaliwal will have “difficulty building confidence, close relationships, bilateral trade relationships, or anything of that nature” and suggested the federal minister has damaged energy trade worth C$50 billion a year to Canada.

Meantime, Smith said Alberta is “taking under active consideration” a solo international energy role for the province.

He said Alberta is speaking with members of the Organization of Petroleum Exporting Countries about gaining observer status at cartel meetings.

Alberta rebuked Smith told reporters March 25 that Alberta has no intention of consulting with the Canadian government, breaking with the traditional practice of provinces attending international forums in partnership with the federal government.

Last week, Alberta Premier Ralph Klein was rebuked by the Canadian government for sending a letter to Paul Cellucci, the U.S. Ambassador to Canada, supporting the U.S. “war on terrorism.”

A spokeswoman for Prime Minister Jean Chretien said Klein was “entitled to his own opinion … but foreign policy is decided by the federal government.”

The Alberta government shares the concerns of business leaders that Canada’s refusal to send troops to Iraq will have serious repercussions to bilateral trade, although Canada has three warships operating in the Persian Gulf and is sending 2,000 troops to Afghanistan to relieve the United States of that responsibility.

Cellucci expresses disappointment Cellucci, in a speech to business leaders March 25, took the rare step for a diplomat of expressing U.S. disappointment with Canada’s decision not to support the United States in Iraq.

“When Mr. Klein issues strong support for the United States, the Canadian government comes down hard on him,” Cellucci said. “When Mr. Dhaliwal makes totally inappropriate remarks about the president of the United States, they totally ignore it.”

However, Cellucci said it was not in the U.S. economic interests to punish Canada through trade agreements, but added “we’ll have to wait and see if there are any ramifications.”

The overriding Alberta concern is to maintain its access to U.S. energy markets. Currently, about 60 percent of all Canadian oil and natural gas production is shipped to the United States, making Canada one of the three largest sources of imported U.S. oil along with Saudi Arabia and Venezuela and the second largest exporter of gas in the world after Russia.

Alberta seeks observer status at OPEC Smith also said the federal government’s handling of the Kyoto Protocol on greenhouse gas emissions has prompted Alberta to seek observer status at OPEC, even though those seats have until now been occupied only by countries that have state-owned production, such as Russia, Mexico, Oman and Norway. Alberta regulates its petroleum industry, but has no control over prices or production.

Smith said Alberta would have no interest in joining OPEC decisions on regulating production levels, but he said closer collaboration would be valuable for Alberta.

“It’s important and beneficial for Alberta and Canadians to know as much as they can about their competition,” he said.

Mel Knight, a government member of the Alberta legislature who attended a meeting of the U.S. Energy Council last weekend, said the Venezuela ambassador to the United States mentioned the prospect of observer status for Alberta.

“On a world stage that would give us some recognition,” Knight said, noting that Alberta oil sands reserves of 175 billion barrels have just been included in the world’s oil reserves for the first time, reducing OPEC’s share of global reserves by 11 percent.

Alberta first flirted with OPEC 14 years ago, when it was offered “unofficial membership” in return for restraining production to prop up commodity prices.

The province at the time said the meetings it attended were only “technical,” although cabinet ministers argued at the time that development of the oil sands would only be possible if oil prices rose and were maintained. But the prospects of closer ties between Alberta and OPEC fizzled as quickly as they surfaced.