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Could Harper's Government be Derailed?

Pipeline Politics: the Canadian Angle

by YVES ENGLER

The protests against the Keystone XL pipeline have already focused a great deal of attention on the Conservatives’ terrible environmental record and if Obama rejects the project it would deliver a major blow to their tar sands oriented economic policy. It could also precipitate a sort of existential crisis within the ardently pro-US Conservative party.

Opposition to Keystone XL is increasingly portrayed as a challenge to the Conservatives environmental policies. “Canada defends climate record amidst U.S. Keystone XL protests‏,” noted a recent CBC.ca headline while a Globe and Mail business article explained: “Ottawa, meanwhile, is guilty of its own folly. It’s cultivated a reputation as an international global warming villain at just about every recent climate conference. The federal government now has no capital in the bank with which to fight off environmental attacks on the Keystone XL pipeline.”

When Obama talked about climate disturbances in his inauguration speech it was seen as a rebuke of the Canadian Conservative government. Afterwards the front-page of the Globe and Mail read: “U.S. ambassador warns Ottawa to heed Obama on energy.” Alluding to Keystone XL, the paper noted, “the ambassador’s remarks send a message that Canada’s action on greenhouse-gas emissions are a factor in the country’s trade interests, especially in oil.”

Prior to the recent Keystone protests the Conservatives had been responding to questions on all different topics in the House of Commons by denouncing the NDP’s “job-killing carbon tax”. But their aggressiveness on this front may have come back to bite them. In an Ottawa Citizen article titled “Conservatives have only themselves to blame if Keystone XL goes awry” Michael Den Tandt notes: “These past six months, believing they were crafting a lethal [“job-killing carbon tax”] narrative for the NDP, the Conservatives were shaping one about themselves. With the country’s economic future hanging in the balance, they now belatedly see their mistake. They can do little but eat crow, shut up about the ‘job-killing carbon tax’ already, and hope U.S. economic self-interest prevails.”

While one may take issue with Den Tandt’s views on Keystone XL, the protests in the US have definitely forced the Conservatives to shift (rhetorical) gears on climate policy. (A similar groundswell of popular opposition in BC to the Northern Gateway pipeline prompted the Conservatives, who want to preserve a number of seats in that province, to back away from their claims that “foreign financed” environmental “radicals” were sabotaging Canada’s economy by participating in the pipeline permit process.)

The Conservatives are worried that if Keystone XL, Northern Gateway and other export pipelines are not approved, Alberta’s oil will continue to sell at a steep discount from international market prices. This might imperil the industry’s plan to triple tar sands output over the next two decades.

Opposition to the pipelines is already weighing on stock prices, according to a recent Globe and Mail Report on Business article that tied the drop to the industry becoming “a global symbol of environmental destruction.”

“This year, nearly every company with major oil sands exposure is down by double digits and some investors may regard them as bargains. However, oil sands equities don’t yet seem cheap enough to compensate for all the risks. Even an optimist has to believe it’s now going to take years to build the pipelines the industry so desperately needs.”

The Conservatives have put a lot of their economic eggs in the tar sands basket and they are pulling out all the stops to convince Obama to grant TransCanada the pipeline permit. “Canada gives full-court press to Keystone approval” noted a recent Globe and Mail headline. A slew of Conservative ministers and provincial premiers have flown to Washington to push the pipeline while Canada’s ambassador has taken an increasingly belligerent tone. Gary Doer recently bemoaned the Hollywood stars opposed to the project and the media’s coverage of the issue. He’s also repeatedly slurred Venezuela’s elected, saying “If you ask the question: Do you want your oil from (Venezuelan President) Hugo Chavez or (Alberta Premier) Alison Redford, I think I know the answer.”

Privately, leading Conservative officials, reports the Globe and Mail’s John Ibbitson, say that if Obama rejects Keystone XL “relations between Canada and the United States will enter a deep freeze the likes of which have never been seen.”

Of course that is hogwash. The Conservatives have limited room to maneuver. The Obama administration knows full well that a large portion of Canadians dislike the Prime Minister and oppose tar sands expansion (they are desperate to get Keystone approved partly because they are having difficulty building pipelines through BC).

A recent New York Times business article speculated that Ottawa was threatening to pull back from purchasing Lockheed Martin’s F35 fighter jets if Obama doesn’t approve KXL. While many would rejoice at such a development, from the government’s perspective this would be like cutting off its nose to spite its face. Their friends among the military leadership and Canadian military industry would not be pleased.

More generally, militarism is a bedrock of the Conservative ideology. And being pro-military in today’s world means supporting the US, the leading global military power.

Alongside that pro-American outlook, the Conservatives have pushed to deepen continental integration on a host of security and economic issues. Are they going to back away from these efforts?

It’s doubtful. The Conservatives have angered so much of the Canadian public with their wedge politics and belligerence that they are limited to their core 35% slice of the political pie. And that core is precisely the pro-military and pro-continental integration segment of Canadians.

Stephen Harper’s government is locked in an unprecedented battle with the largest climate movement in US history. If the environmentalists win, the Conservatives may not fully recover.

Yves Engler’s latest book is The Ugly Canadian: Stephen Harper’s foreign policy. For more informationyvesengler.com