ROOKIE NEW BRUNSWICK PREMIER TOUTS STRONG U.S. TIES

UNCLAS SECTION 01 OF 02 HALIFAX 000216 SIPDIS SENSITIVE SIPDIS STATE FOR WHA/CAN E.O. 12958: N/A TAGS: PGOV ENRG PREL PBTS PTER EPET ETRD EIND CA SUBJECT: ROOKIE NEW BRUNSWICK PREMIER TOUTS STRONG U.S. TIES REF: A. HALIFAX 0277; B. HALIFAX 0179 AND PREVIOUS HALIFAX 00000216 001.2 OF 002 -------------- SUMMARY -------------- ¶1. (SBU) Shawn Graham, Canada's newest Premier, is ready to implement a U.S.-friendly agenda that is focused on expanded trade to the United States, especially energy sales. While electricity exports have been the primary focus, the new Liberal government is looking at how Irving Oil's growing influence and increased capacity could someday make southern New Brunswick a new energy hub for the United States. Premier Graham and his ministers fear the Western Hemisphere Travel Initiative (WHTI) could erode decades of cooperative shared services along the Maine-New Brunswick border. END SUMMARY. ¶2. (SBU) Border Security, energy matters and increased trade were the main topics of discussion when Consul General (CG) made his first visit to the province of New Brunswick October 24-26. In private conversations with new Liberal Premier Shawn Graham, his ministers and senior bureaucrats, CG heard how the new government is shaping its agenda after their victory in the September 18 provincial election. Following are the main points that emerged during these meetings. (Post has already reported in REF A the new government's opposition to the building of LNG terminals in Maine.) -------------- Border Security -------------- ¶3. (SBU) In separate meetings with the Premier and Public Safety Minister John Foran, CG explained that the U.S. mission in Canada views the U.S.-Canada border as a top priority in the bilateral relationship. In particular, the CG discussed the timetable for implementation of the WHTI and underscored the need for New Brunswickers to get passports as soon as possible. While the Premier and his minister appreciated the CG's update on WHTI, they voiced concerns that the new entry requirements could have a detrimental effect on the free movement of goods and people between New Brunswick and Maine. Minister Foran also pondered the possible effects on long-standing MOUs between his province and Maine. These agreements have been around since the 1970s and provide a framework for shared public and emergency services in isolated border communities. CG assured the Premier and Minister that the USG would strive to implement the WHTI so as to minimize any disruption and allow continued cooperation along the border. CG also advised them of his plans to visit several of these New Brunswick-Maine border communities (and their border crossing stations) to observe first-hand the close business and cultural ties. -------------- Trans-Border Energy Policy -------------- ¶4. (SBU) Both Graham and Energy Minister Jack Keir were upbeat about New Brunswick's energy sector, saying that it has enough potential as a money-maker to someday move the province away from its dependence on federal government equalization payments. At the moment, the province's electricity production is the primary focus. The minister explained that New Brunswick is unique among the Atlantic Provinces since it uses a much more diverse mix of power generation, including thermal, hydro and nuclear power. The province produces enough electricity for its domestic market and has surpluses to export to neighboring provinces and Maine. (In 2005, sales to Maine amounted to over $US 225 million.) Presently, the electricity is carried to Maine via one cross-border transmission line, but a second line is now under construction and will become operational by the end of 2007. ¶5. (SBU) While Graham and Keir were keen to promote increased electricity sales to the United States, they both acknowledged that, because of the impending refit of the Point Lepreau nuclear plant, the province will soon be in the tough, but temporary, position of having to import power from Maine and Quebec. The Point Lepreau facility will be offline for 18 months during a C$ 1.4 billion refit starting in 2008 and timed to coincide with the completion of the second international power line. Keir noted that New Brunswick is committed to nuclear power as a key element in its energy strategy. Moreover, the government is pondering the economic feasibility of constructing another generating station at the Lepreau site which would give the province more export potential to the United States. ¶6. (SBU) While underscoring the importance of New Brunswick's electricity potential, Minister Keir told CG that his government HALIFAX 00000216 002.2 OF 002 views Irving Oil as even more significant in terms of potential new energy sources for the United States. Irving Oil is considering building a second refinery to augment its 300,00 barrel-per-day capacity refinery in Saint John (the largest in Canada). Irving is also teaming up with Spanish partner Repsol in constructing a new liquid natural gas (LNG) facility outside Saint John, which will be able to provide one billion cubic feet per day of regassified LNG to the market in Canada and the United States. With those Irving projects (and the longer-term possibility of a Lepreau II) Keir sees southern New Brunswick as soon becoming a new energy hub focused on expanded energy shipments to the United States. -------------- Cross-border Trade -------------- ¶7. (SBU) Premier Graham and his trade minister Greg Byrne were both quick to point out how energy sales to the U.S. along with mineral and forestry exports have moved New Brunswick ahead of Ontario as the province with the highest percentage of its exports (90%) going to the United States. Moreover, the Premier has taken a personal interest in expanding cross-border trade. One new area of interest is the province's aerospace industry where New Brunswick companies are looking for new U.S. partners in businesses such as aircraft overhaul, computer-assisted training and parts manufacturing. The Graham government is also examining possible new trading relationships in Asia, especially with India and China where New Brunswick officials will be visiting later this fall. -------------- -------------- -------------- Comment: Preliminary Views of the New Graham Administration -------------- -------------- -------------- ¶8. (SBU) Fresh from their victory in the September 18 provincial general election, Premier Graham and his ministers were still in a celebratory mood, but keen to get down to the job of governing. In particular the amiable and confident Graham was especially upbeat given that just a few short months ago pundits were fearful that he was slipping in the polls and might have to face a leadership review. Now that all this is behind him, these same pundits and even party heavyweights are quick to comment that the new Premier is very much up to the task of running the province. Another boost could come the Premier's way later this fall if the rumor mills are correct in predicting that ex-premier Bernard Lord will resign the leadership of the provincial Tories and accept a position outside elected politics. Should Lord make his exit, the leaderless Tories would find it more difficult to mount a spirited challenge to the new Liberal government. With all that it appears that Graham could have a good first year in the Premier's office as he implements an agenda very much focused on strengthening U.S. ties. End Comment FOSTER