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### Viewing cable 04OTTAWA3115, SCENESETTER FOR PRESIDENT BUSH,S VISIT TO CANADA,

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
04OTTAWA3115 | 2004-11-18 19:07 | 2010-12-01 18:06 | SECRET//NOFORN | Embassy Ottawa
Appears in these articles: nytimes.com

`

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

` `

    S E C R E T SECTION 01 OF 04 OTTAWA 003115

    SIPDIS

    NOFORN

    NSC FOR NSA RICE

    E.O. 12958: DECL: 11/17/2009
    TAGS: CA PGOV PREL
    SUBJECT: SCENESETTER FOR PRESIDENT BUSH,S VISIT TO CANADA,
    NOVEMBER 30 - DECEMBER 1, 2004

    Classified By: Ambassador Cellucci, reasons 1.4 (b) (d)

    Summary and Key Themes
    ----------------------

    ¶1. (C/NF) The Canadian Government and the Embassy strongly
    welcome your visit and the opportunities it will afford to
    advance our broad bilateral relationship.  The two key themes
    I would stress for your visit are partnership and
    reassurance.  The Canadians need to be reassured that at the
    end of the day, whatever tactical disagreements we may have
    over Iraq and individual trade cases, we are firmly united
    across the world,s longest undefended border by common
    values, shared political heritage, and the largest bilateral
    trading relationship in the planet,s history.  We need to
    send the message that we value Canada with no strings
    attached.  The early timing of this visit will help make this
    point.

    ¶2. (C/NF) Specifically, it would be very helpful if you came
    to Ottawa with three key public messages.  First, a positive
    signal demonstrating movement on BSE, short of resolution but
    beyond &we,re working on it.8  A firm date for completion
    of the regulation would give PM Martin a huge political boost
    and help beleaguered Canadian ranchers get through the
    winter.  Second, appreciation for the positive role Canadians
    play in the world as peacekeepers and in transmitting our
    shared political and cultural values to failed and failing
    states.  And third, personal thanks for our close cooperation
    in defending the continent against terrorism, both in border
    security, and in the larger fight to roll back the
    availability of weapons of mass destruction, contain the
    activities of terrorist groups, and support development that
    will provide alternatives to terrorism.

    ¶3. (C/NF) Several themes about the future would also be
    helpful for your private meetings.  You should note the
    substantial Canadian support to date for Iraq reconstruction
    and encourage Canada to play a larger role in the development
    of political and security institutions there.  You should
    promise continued close cooperation in places such as Sudan,
    Afghanistan, and Haiti, and solicit PM Martin,s views on how
    to best synergize our efforts.  And finally, you should
    commit to focus on settling our trade and environmental
    disputes.  End Summary

    Martin,s Minority Government Stable, but Weak
    ---------------------------------------------

    ¶4. (C) After governing in majority for ten years, the Liberal
    Party called elections June 28 to gain a mandate for PM
    Martin, who succeeded Jean Chretien in December 2003.  The
    Liberals were hurt by a scandal involving the disbursement of
    public monies in Quebec, and the Martin government was
    reduced to minority status, the first in Canada since 1979.
    In the first week of Parliament, Martin was able to loosely
    win over the New Democratic Party, putting him neck-and-neck
    with the Conservatives and the separatist Bloc Quebecois.
    Both the Liberal-NDP and the Conservative-Bloc alignments are
    very tentative, however, and different issue-driven
    coalitions are likely to emerge on an ad hoc basis.

    ¶5. (SBU) Predictions on how long the government will last
    range from six months to two years.  Canadians do not want to
    go to the polls soon and the Government and Opposition know
    it.  But given the nature of Canada,s political system, the
    Government,s fall is never more than one bad decision away.

    ¶6. (C/NF) The Liberal's thin margin leads Martin to exercise
    extreme caution, which some observers are now touting as weak
    leadership.  The PM has made it clear that he will not try to
    carry out an aggressive agenda, and on issues such as missile
    defense, would just as soon wait rather than try to tackle it
    now and risk a negative vote.

    Seeking Canada,s Place in the World
    -----------------------------------

    ¶7. (SBU) All of this is taking place in the context of a
    certain amount of soul-searching here on Canada,s decline
    from &middle power8 status to that of an &active
    observer8 of global affairs, a trend which some Canadians
    believe should be reversed.  In the short term the country,s
    priorities are improving the quality of life for Canadian
    citizens and there is little support for increasing defense
    spending (currently among the lowest per capita in NATO) or
    the foreign affairs budget.  PM Martin has promised to focus
    his government on policies to perpetuate the &Canadian
    economic miracle,8 help cities, improve health care, and
    provide easier access to child-care.  However, he has also
    made modest increases in the defense budget and has announced
    plans to add 5,000 troops to the armed forces.

    Engagement on Homeland Security
    -------------------------------

    ¶8. (SBU) Within the constraints of weak public support and
    low funding, PM Martin has made his foreign affairs and
    homeland security bureaucracies more capable and has kept
    Canada selectively active in global issues.  In the wake of
    the September 11 attacks, Canada has implemented a range of
    practical measures that improve Canada,s homeland security
    while facilitating the flow of people and commerce across our
    common border.  Starting with the December 2001 Smart Border
    Action Plan with the U.S., changes include enhancements to
    aviation security, full compliance with UN and other
    multilateral conventions, and strengthening of financial
    controls.  In the fall of 2003 Canada undertook an aggressive
    reorganization of its security and border agencies,
    consolidating them into a structure similar to that of DHS,
    and in April 2004 rolled out its first-ever national security
    strategy.  Bilateral efforts have resulted in better
    information sharing, joint targeting, and smoother flow of
    low-risk traffic.

    ¶9. (S/NF) A potential irritant on the Canadian side that may
    be raised has to do with sharing of intelligence regarding
    Iraq operations.  The government is aware that we are
    creating a separate US-UK-Australia channel for sharing
    sensitive intelligence, including information that
    trationally has been U.S. eyes only.  The GOC has expressed
    concern at multiple levels that their exclusion from a
    traditional "four-eyes" construct is "punishment" for
    Canada,s non-participation in Iraq and they fear that the
    Iraq-related channel may evolve into a more permanent
    "three-eyes" only structure.  PM Martin may raise this with
    you privately.

    A Modest but Effective Agenda on Global Affairs
    --------------------------------------------- --

    ¶10. (C) PM Martin has also kept Canada in the game
    internationally.  In 2002 Ottawa sent 750 soldiers to
    Afghanistan where they served with distinction in Khandahar,
    and Canada led the maritime task force monitoring movement in
    the Persian Gulf, a service that began with an eye on
    Afghanistan but later was useful in the lead-up to Operation
    Iraqi Freedom.  Ottawa continued to support democratization
    in Afghanistan, leading the ISAF mission from February to
    August 2004, and contributing 2,300 of 7,100 troops.  Canada
    has been active in development and elections support for
    Afghanistan, committing USD 500 million to a wide-variety of
    programs through 2009.  Finally, Canada has pledged to deploy
    a Provincial Reconstruction Team, possibly to Khandahar, in
    the fall of 2005.

    ¶11. (C) In Haiti, Canada has provided civilian police
    officers, a sizable aid budget, and positive involvement in
    diplomatic efforts on the ground.  Canada has been largely in
    synch with our efforts to seek a durable solution to Sudan,s
    current and chronic crisis.  PM Martin, who met with
    President al-Bashir in Sudan last week, supports the
    &responsibility to protect8 as an obligation of each
    government and a core function of the international community
    through the United Nations.  Canada has allocated US$16
    million to support the African Union in Sudan.
    ¶12. (SBU) Despite opposition to our invasion of Iraq, Canada
    has offered strong support for Iraqi reconstruction, saying
    "we can't afford to fail."  The GOC quickly committed funds,
    pledging about US$ 240 million in Madrid, and made active
    efforts to leverage contributions from countries that were
    initially hesitant.  Over two-thirds of Canada's aid has been
    allocated and over half has been disbursed on projects such
    as police trainers in Jordan. Canada also supports Paris Club
    efforts on debt reduction.

    Trade and the Border: Vital Links for Canada
    --------------------------------------------

    ¶13. (SBU) The U.S. and Canada have the largest bilateral
    trade relationship in the history of the world and over 95%
    of that trade is trouble-free.  The billion dollars a day in
    trade with the U.S. generates about a third of Canada,s GDP,
    with energy exports and the integrated North American auto
    industry dominating the picture.
    ¶14. (SBU) Since implementation of NAFTA ten years ago,
    US-Canada trade has doubled.  Most Canadians see NAFTA as a
    success but are frustrated by its limits, thrown into relief
    by U.S. trade remedy actions on softwood lumber and pork.
    Expectations that NAFTA would give Canadians greater control
    over US actions have largely been disappointed.  The softwood
    case remains a long-running and intractable irritant; even
    so, Canadian lumber exports boomed last year in response to
    US housing demand.

    ¶15. (SBU) There are trade disputes and then there is beef.
    Reopening the border to trade in live cattle is Canada's most
    pressing bilateral concern and our top priority for this
    visit.  Cut out of our highly integrated North American
    market since 2003, Canadian ranchers have lost over $2
    billion to date.  Canada has spent $400 million on relief for
    the cattle industry, but many farmers and their suppliers may
    not survive another winter. Indefinite delays and the
    perceived unpredictability of the U.S. regulatory process
    have soured views of the U.S. in some of the most
    traditionally pro-American regions of Canada.  Issuance of
    the new rule, or at least a firm commitment to a date for
    completion, would help restore public confidence and give the
    GoC some political room to respond to other U.S. priorities.
    In the long term, failure to resolve the problem will result
    in two North American beef industries, reducing efficiencies
    and stiffening competition in traditional US export markets.
    Significantly, movement on beef will give Martin political
    space to cooperate more on security.

    ¶16. (U) Canada enjoys an enviable economic situation, with
    steady budget surpluses and the most sharply-reduced debt
    burden in the G-7.  Although the economic outlook is rosy,
    the currency's rapid appreciation against the U.S dollar,
    driven partly by rising commodity prices, could put a damper
    on exports, and there are concerns here about global
    imbalances and the sustainability of the U.S. economic
    recovery.  Even with strong economic fundamentals, Canadian
    GDP growth is projected to lag that of the U.S. in 2004.

    ¶17. (U) In addition to worries about exchange rate risk and
    perennial trade disputes, Canadians feel increasingly
    vulnerable to &border risk8.  Exporters worry about
    lengthening border delays due to infrastructure overload and
    to tighter security measures such as prior notice
    requirements.  Application of USVISIT fingerprint and photo
    requirements to Canadian non-citizen residents, and the
    possibility that eventually Canadians will require passports
    to enter the U.S., have sparked public anxiety among
    Canadians.  Businesses fear that future terrorist incidents
    could lead to catastrophic border closings and strongly
    support the GoC,s efforts to strengthen bilateral security
    cooperation.  Continued DHS engagement with Canada via the
    Smart Border Action Plan, the Ridge-McLellan dialogue, and
    regular working-level meetings, is a key element in managing
    this anxiety and addressing underlying problems.  The GoC is
    pushing to accelerate progress and add to the &Smart
    Border8 agenda in its version of the North American
    Initiative, &Beyond Smart Borders8.

    Energy Inter-Dependency
    -----------------------

    ¶18. (U) Canada is by far the United States' largest foreign
    source of energy.  It is our largest supplier of petroleum,
    as well as our leading external source of natural gas,
    uranium, and electric power.  With Alberta,s oil sands now
    classified as &proven reserves,8 Canada,s petroleum
    resources of 180 billion barrels are second only to Saudi
    Arabia,s.

    ¶19. (U) Canada,s northern territories contain large energy
    resources, notably natural gas deposits in the delta of the
    Mackenzie River, several hundred miles east of Alaska,s
    Prudhoe Bay.  The energy industry expects that two gas
    pipelines will be built, one from the Mackenzie Delta and the
    other from Alaska,s North Slope.  As the regulatory
    framework for the Alaska line develops, industry will have to
    determine the pipeline,s exact route both in Alaska and as
    it passes through Canada.

    ¶20. (U) Canada's electric power sector is interconnected at
    numerous points with the U.S. grid and has for decades been a
    large supplier of power to the U.S. market.  The U.S./Canada
    Joint Task Force that investigated the August 2003 power
    outage recommended the creation of a North American Electric
    Reliability Organization, which would implement mandatory
    standards for electricity transmission in both countries.
    Canadian players in this industry are intensely interested in
    the shape of proposed U.S. energy legislation, as it affects
    their future strategies.

    Environmental Issues
    --------------------

    ¶21. (U) The U.S. and Canada cooperate closely on a broad
    range of environmental issues. Together we have made
    significant progress on key issues, including trans-boundary
    air and water pollution, regulation of pesticides and
    chemicals and protection of the Great Lakes.

    ¶22. (C) There are, however, a number of thorny cross-border
    water issues still unresolved, including Canadian demands
    that the U.S. move a derelict fishing vessel (Victoria M)
    mistakenly scuttled in Canadian waters, controversy over the
    proposed clean-up of pollution of the Columbia River from a
    Canadian smelter in British Columbia and North Dakota,s
    plans to mitigate flooding at Devils Lake by pumping water
    through a canal system to the Red River.

    ¶23. (C) The Canadians have raised these issues before at
    senior levels and are likely to do so again.  The most
    pressing of these problems is Devils Lake, where Canada
    believes that the state outlet from the lake to the Red River
    would violate the Boundary Waters Treaty.  North Dakota has
    almost completed its canal system and plans to start pumping
    water in the spring of 2005.  Canada has asked for U.S.
    agreement to &refer8 this issue to the International Joint
    Commission for study and recommendations, but we have not yet
    responded to that request.  The Embassy believes it would be
    in our interest to agree to a &reference,8 tightly limited
    in scope and time-frame.

    ¶24. (U) Canada formally ratified the Kyoto Accord at the end
    of 2002, despite vocal opposition from some provincial
    governments and industries.  While political approaches to
    the climate change issue have differed between the U.S. and
    Canada, practical cooperation has been close.  In 2002, we
    signed agreements on Renewable Energy and Climate Science,
    and formed a bilateral Working Group on Climate Change.  Few
    Canadians understand just how much we do on climate change,
    reducing U.S. efforts only to Kyoto.  Canada participates in
    several U.S.-led multilateral initiatives, such as the Carbon
    Sequestration Leadership Forum and the International
    Partnership for the Hydrogen Economy.  We expect that they
    will soon join the Methane to Markets Partnership.

    Visit Canada's Classified Web Site at
    http://www.state.sgov.gov/p/wha/ottawa

    CELLUCCI

`