Jameson Berkow

Reporter

Follow|Archive

ANALYSIS: Alienation, whether it will be of eastern or western Canada, seems inevitable.

When Prime Minister Justin Trudeau sits down with Canada’s provincial leaders in Vancouver this week, he will need to walk an almost impossibly thin line to appease increasingly disparate regional demands.

Quebec will no doubt be pushing for Ottawa to approve a US$1-billion cash injection into Bombardier’s beleaguered CSeries program. Alberta and Saskatchewan, meanwhile, will demand equal treatment for their own economic interests; namely the proposed Energy East pipeline.

Opposition to the $15-billion plan for Calgary-based TransCanada (TRP.TO 0.00%) to convert one third of its pre-existing Canada-spanning natural gas pipeline to crude oil service has reached a fever pitch in the heart of French Canada. On Tuesday, the Quebec government filed an injunction against TransCanada, claiming the company ignored requests to submit the project for provincial approval. The legal action comes barely a month after municipal leaders in the Montreal region came out vehemently against the project.

Alberta Premier Rachel Notley said late Tuesday she was prepared to come out with “guns blazing” in response to the latest provocation from Quebec, but the province’s first NDP leader held off after speaking with officials in Quebec and the Prime Minister’s Office. Eastern leaders reassured her the regulatory process Quebec was seeking would not add to the Energy East review timeline, with a final decision still expected roughly toward the end of 2018.

“I’m going to leave the gun in the holster until we’re actually in the gunfight,” Notley said. “In the meantime, I will simply keep my holster close at hand.”

Saskatchewan Premier Brad Wall took a more conciliatory approach in his latest comments on Tuesday evening, saying Quebec “should be able to have their questions answered” but that the official review needs to be left in the hands of the national process that has yet to get underway.

“But should you have an official sort of a standing or seek to approve or not approve or have a de facto veto on a pipeline… provinces shouldn’t have that kind of standing,” Wall told reporters outside the startup of a new Husky Energy project near North Battleford, Sask.

Trudeau refused to publicly address the rising regional tensions following a meeting with Montreal Mayor Denis Coderre just a few days after he bluntly referred to Energy East as a “bad project.” Since then, the Prime Minister has spoken only vaguely of the need to “balance the economic and the environment” when asked specifically about his views on the controversial project.

“The role of a Prime Minister of Canada is to bring together the diverse voices [and] perspectives that Canadians have across the country, and make sure we are working in ways that both strengthen our economy and continue to assure a better future for everyone across this country. I will continue to do that,” Trudeau told reporters Tuesday in Vancouver, responding to a question about Quebec’s decision to seek an injunction.

“I have never felt highlighting points of disagreement or differing views in this country is a threat to national unity, we are much stronger than that.”

Western leaders view Energy East as critical for Canada’s energy sector to survive its most extreme economic calamity since the early 1980s. Part of the reason Canadian crude oil sells at a discount to world benchmarks is because it comes from landlocked Alberta and Saskatchewan, so access to a deep water port would allow producers to sell their crude for significantly higher prices.

The National Energy Board, which regulates oil and gas infrastructure that crosses provincial boundaries in Canada, has yet to even formally begin what is expected to be a years-long review of Energy East. Quebec is clearly more anxious for Ottawa to accept or reject a bailout of Bombardier with CSeries deliveries expected to begin later this year, but if Trudeau were to do so while continuing to avoid answering calls to support Energy East, many in the west would decry the move as unfair.

“If the federal government is considering a $1-billion bailout to address 2,830 Canadian job losses at Bombardier, what about the tens of thousands of job losses in Canada’s energy sector,” asked Saskatchewan premier Brad Wall in a recent Facebook post. “We could start with Energy East maybe.”

As regional tensions mount, it is traditionally the role of the federal government in Ottawa to act as mediator.

“All of these things are starting to get really complicated because of our decentralized [system],” Bill Harris, partner and portfolio manager with Avenue Investment Management, told BNN on Tuesday. “The resources live with the provinces and Canada is a federal entity until it comes to resources and then it becomes all these states within the state. And this is where it’s breaking down.”

“You actually need a strong federal government to come in and say, ‘Okay we’re doing this’.”

Consensus is possible, but only if Trudeau convinces eastern and western leaders to accept a compromise.