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


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SUMMARY
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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.)

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Border Security
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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.

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Trans-Border Energy Policy
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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

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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.

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Cross-border Trade
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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.

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Comment: Preliminary Views of the New Graham Administration
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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