Cablegate: Provincial Elections Produce New Lineup of Energy Ministers

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: N/A

REF: (A) HALIFAX 0356 (B) HALIFAX 0309 (C) HALIFAX 0238


1. (SBU) SUMMARY: Canada's four Atlantic Provinces have all
held provincial elections this year: Newfoundland-Labrador
(October 21), Prince Edward Island (September 29), Nova Scotia
(August 5), and New Brunswick (June 9). With the exception of
Newfoundland-Labrador, the incumbent governments were all
re-elected, but there have been some changes in the lineup of
energy ministers and energy priorities. Of the four provinces,
Newfoundland-Labrador will see the most profound changes where
political veteran Ed Byrne is the new minister. Byrne will be
working with his boss, new Progressive Conservative Premier
Danny Williams, in pushing Ottawa on their key energy priority
-- enhanced benefits from offshore resource development. Cecil
Clarke is Nova Scotia's newly named energy minister, and like
Byrne will focus on greater revenue flows from offshore
developments. New Brunswick's new energy minister is a rookie
provincial politician, Bruce Fitch, who will have primarily
electricity issues on his plate, including the negotiations to
build a second transmission line to the State of Maine.
Meanwhile it will be business as usual in Prince Edward Island
where Minister Michael Currie will continue to oversee issues
such as access to natural gas and wind energy. END SUMMARY

2.(U) Newfoundland-Labrador
A. Political Background: In the October 21 provincial
election, the Progressive Conservatives under Leader Danny
Williams captured 34 of the 48 seats in the House of Assembly.
The Conservatives' win overturned a 14-year long reign by the
Liberals, who were left with 14 seats, and the third place New
Democrats with their same two seats. With his comfortable
majority, Williams and his Conservative party have a solid
mandate to lead the province for the next four to five years.

B. Energy Portfolio/Minister: Premier Williams has maintained
the same ministry structure as the previous Liberal
administration -- energy matters are in a dual portfolio with
the mining sector. The new minister is a political veteran, Ed
Byrne, and a former leader of the party. First elected to the
Newfoundland House of Assembly in 1993, Byrne was re-elected in
1996, 1999 and in the October election. While in Opposition, he
served in several shadow portfolios, and followed energy issues
closely during the time he was the Leader of the Official
Opposition. The 40-year old minister is a skilled, affable
politician and dedicated to the Premier.

C. Substantive Energy Issues: The new Williams government has
several energy items on its political agenda with the most
significant the pledge to seek jurisdictional control over
offshore energy resources. The government also wants an
improved revenue sharing agreement from the federal government.
Further, the government wants to restructure its provincially
owned utility, Newfoundland and Labrador Hydro, either as an
energy company or alternatively, turn it into a new energy
corporation to participate in all areas of the offshore oil and
gas sector. On the electricity side, the Williams government
also wants federal help in facilitating negotiations with the
Province of Quebec over hydroelectricity development in the
Labrador region and transmission rights across Quebec.

3. (U) Prince Edward Island
A. Political Background: Prince Edward Island voters
re-elected the incumbent Progressive Conservative party in a
September 29 provincial election. With Premier Pat Binns at the
helm, the Conservatives took 23 of the 27 seats in the
Legislative Assembly, leaving the Opposition Liberals with just
four seats and the New Democratic party with none. Like his
Newfoundland counterpart, Premier Binns has a solid hold on the
Island political scene for the next four-five years.

B. Energy Portfolio/Minister/Issues: Premier Binns has made no
changes in how his government handles energy matters --
responsibility for the sector is a unit within the province's
ministry of Development and Technology. The Premier also kept
the same minister in the Department, Michael F. Currie.
Minister Currie was first elected in 1998 and was re-elected in
2000 and 2003. His energy priorities continue to be pursing
access to Nova Scotia offshore natural gas and further
development of wind power facilities.

4. (U) Nova Scotia
A. Political Background: The Progressive Conservative party,
led by Premier John Hamm, is a precarious situation following
the August 5 provincial election. The Conservatives won the
election with their securing 25 seats in the 52-seat Legislative
Assembly. However, the combined total of the seats held by the
second-place New Democrats and third-place Liberals outnumber
the Conservatives. (The NDP have formed the Official Opposition
with their 15 seats and the Liberals have 12.) Given that
configuration, the Hamm government is relying on the support of
the opposition members to get legislation passed in the
Assembly. Pundits predict that the support is probably
short-lived, meaning another election will likely take place
within two years.

B. Energy Portfolio/Minister: Nova Scotia energy matters are
in a separate and new ministry of energy which Premier Hamm
created in 2002 from the remnants of the old Nova Scotia
Petroleum Directorate and from a section of the Natural
Resources department. Premier Hamm has picked a relatively
inexperienced cabinet minister to head up the portfolio, 35-year
old Cecil Clarke. Clarke first entered provincial politics in
2001 and was re-elected in August. He had one previous cabinet
posting as minister of economic development.

C. Substantive Issues: Like Newfoundland-Labrador, Nova Scotia
is looking to the federal government to give the province more
revenue from offshore development. This was the chief item on
the Premier's energy agenda during his first mandate and will
continue to do so in this second. Also of importance to the
Hamm government is supporting future exploration and
development, protection of offshore workers, and facilitating
partnerships with foreign companies.

5. (U) New Brunswick
A. Political Background: The incumbent government of
Progressive Conservative Premier Bernard Lord made a successful
re-election bid on June 9, 2003. However, the party emerged
barely hanging onto enough seats to form a slim majority
government. The Conservatives took 28 of the legislature's 55
seats, the Liberals 26 and the New Democratic Party one. The
scant majority is making for an uncertain political situation in
the province, made even more speculative by rumors that Premier
Lord may resign and move to federal politics. Lord is touted as
a top contender to head up the newly proposed Conservative party
of Canada. Should Lord decide to go for the party's top job, it
would force a by-election, a contest that ultimately could end
the Conservatives' majority.

B. Energy Portfolio/Minister: Despite his government's
uncertain future, it is business as usual in the province. When
picking his post-election cabinet, Premier Lord decided to
increase the profile of energy matters in the province by
creating a separate energy department. The Premier named rookie
politician Bruce Fitch to head up the new portfolio that was
formerly part of the Natural Resources Department. Elected to
the Legislature for the first time in the June election, Fitch
has no legislative experience and was a professional financial
planner and the mayor of a small town near Moncton before
entering provincial politics.

C. Substantive issues: Minister Fitch has a long list of energy
matters on his plate, mainly those associated with the
provincially-owned utility, New Brunswick Power (NBP). The
utility has continuing financial problems, including a debt that
has now reached the $3 billion mark. Fitch is also overseeing
the opening of the province's electrical market to outside
competition, a development that will remove NBP's competitive
advantage and produce additional fiscal concerns. Other issues
are ongoing negotiations to build a second high voltage
transmission line to the state of Maine, the future of the
debt-ridden Point Lepreau nuclear power plant, unreliable
Orimulsion fuel imports from Venezuela, and a possible deal with
Quebec to expand a power plant in northern New Brunswick. On
the oil and gas side, the province's chief priority remains
gaining further access to natural gas, either from offshore Nova
Scotia or through a proposed LNG plant in the Saint John area.

6. (SBU) COMMENT: Of the four provinces, Newfoundland-Labrador
has the heaviest energy agenda, primarily focused on cutting a
new deal with the federal government on offshore management and
revenue sharing. In a 2001 meeting post had with Danny Williams
and Ed Byrne, both vehemently asserted what they perceived to be
the province's right to get more benefits from their natural
resources, primarily in the oil and gas and fisheries sectors.
Now with Williams as the new Premier and Byrne as his energy
minister they are poised to start laying the groundwork for this
new, politically charged campaign.

7. (SBU) Just how intense or confrontational this new campaign
becomes will undoubtedly depend more on what changes occur in
Ottawa after Paul Martin assumes the Prime Minister's job.
Premier Williams has been quite vocal in expressing his optimism
that Martin's ascension to the Prime Minister's office will bode
well for his province. Williams sees the future prime minister
as being more open to working with Newfoundland-Labrador and the
other provinces, with Williams going as far as predicting that
there would be a new spirit of "cooperative federalism" in the
country. Given that it will take some time for the dust to
settle around Ottawa, Williams appears to be taking a
wait-and-see approach, a stance he called "rational and
logical". At the same time, he made it clear on the election
campaign trail that he is prepared "to go to war with them" if
there is no political will in Ottawa to give his province a
greater share of the offshore riches. END COMMENT


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