How special is Canada for the USA

Even under Biden, the USA dominates the relationship with Canada

President Joe Biden wants to get closer to the neighboring state of Canada. As one of the first official acts, however, he stopped the construction of an oil pipeline. It's a tough blow for Canada.

The government of the Canadian province of Alberta is raging: On the day of his inauguration, President Joe Biden revoked the approval for the construction of the Keystone XL oil pipeline. The pipeline was supposed to transport more than 130 million liters of oil per day from the oil sands fields of the province of Alberta to refineries in the southern United States and would have expanded the existing Keystone pipeline by 1,900 kilometers. The project was valued at $ 7.9 billion.

The Keystone XL pipeline has become an object of controversy for climate policy, especially in the USA. Barack Obama rejected the project in 2015, but Donald Trump reversed this decision immediately after taking office in January 2017. Biden announced during the election campaign that he would revoke the decision. A promise that he kept shortly after his inauguration.

Alberta is losing billions

For Alberta, the demolition of the pipeline means a direct financial loss. Alberta has already invested around $ 1.2 billion in expanding the pipeline, which would bring nearly a fifth of Canada's oil exports to American refineries every day. The project should have generated $ 23.7 billion in revenue over the next two decades - money the province will now lack.

On the day before Biden's announcement, TC Energy ordered a construction freeze on Canadian territory. The Canadian-American company behind the Keystone XL project cut a thousand jobs.

Alberta Prime Minister Jason Kenney calls the decision an affront by the US to its most important trading partner. "It's frustrating that one of the new president's first acts is against America's closest friend and ally," Kenney said on Fox News. According to Chris Bloomer, President of the Canadian Energy Pipeline Association (CEPA), Biden is not only putting a lot of money and thousands of jobs at risk with his decision, but is also making himself dependent on imports from the OPEC countries.

Environmental and climate protectors, on the other hand, cheer. For them, stopping the project is a stage win. The American environmental association Sierra Club called the pipeline-off a "victory for our communities, for clean water and the climate". Associations, indigenous peoples and farmers have been suing the pipeline for years. For environmentalists, oil made from tar sand is dirty oil. They fear that leaks will cause significant environmental damage. They also criticize the high emissions that are emitted from the tar sand fields in Alberta when the oil is extracted.

Canadian politicians are calling for sanctions

The end of the Keystone XL project, however, does not mean the end of the US-Canadian oil trade. Indeed, the US will continue to import record imports of Canadian oil in the years to come. Because the USA is dependent on oil from Canada, it makes up more than half of the oil imports. Canada currently exports about 604 million liters of oil per day to the US, according to the US Department of Energy. According to the Canadian Energy Regulatory Agency, the capacity could be increased to 636 million liters per day.

The US gets half of its imported oil from Canada

Number of barrels of oil imported into the USA in recent years (in millions)

However, the oil that the Keystone XL pipeline would have delivered would have to be sourced from other pipelines. The Canadian government is currently expanding the Trans Mountain Pipeline, which runs from Alberta to British Columbia and is connected to a pipeline in the American state of Washington. The expansion triples the capacity of the Trans Mountain Pipeline: 141 million liters of oil could be produced daily. Canada would thus have enough resources to meet the growing demand for oil.

Nevertheless, Alberta's Prime Minister Jason Kenney announced that he would challenge the decision of the Biden administration and sue for damages. He also called on Canadian Prime Minister Justin Trudeau to impose sanctions on the US if Biden does not come back to the Keystone decision.

Old friendship is warmed up

Trudeau will hardly respond to these demands. Although he is disappointed with Biden's decision, he respected it. For Trudeau, there is little to be gained by starting a dispute with the US when the US and Canada are only just beginning to grow closer.

Canada and the USA are important trading partners: the volume of trade is $ 700 billion a year. Around 75 percent of Canadian exports go to the USA, and Canada is the most important export market for more than thirty American states. The USA and Canada are also culturally close: They share the language, the colonial history and a very long border.

Under Donald Trump's presidency, however, bilateral relations suffered considerably: Trump issued tariffs on steel and aluminum products, threatened to exclude Canada from the continental free trade agreement and insulted Trudeau after the G-7 summit as "very dishonest and weak".

With Joe Biden, however, Trudeau has a long-standing friendship. Both politicians want to fight climate change, defend human rights and strengthen international institutions. Trudeau organized a farewell dinner for outgoing Vice President Biden after Trump's election in 2016. In a speech at the time, Biden said he was counting on Canada to defend the liberal international order. It ended with: «Vive le Canada. Because we need you very, very urgently. "

National interests come first

The fact that Trudeau does not want to fight for the Keystone XL pipeline is accepted by a majority of Canadians (according to a survey by the Angus Reid Institute of 59 percent). The majority advocate focusing on more important aspects of the mutual relationship. The agenda is long: the joint fight against the pandemic, Joe Biden's “Buy American” strategy and the fight against China's aggression are in the foreground.

Canada hopes to get their two compatriots Michael Kovrig and Michael Spavor released with American help. The two were arrested in China in 2018 - just days after Huawei's chief financial officer, Meng Wanzhou, was arrested in Canada at the request of the United States.

Although President Biden is likely to be much more cooperative than his predecessor, he made it clear in his first few days in office: Canada's interests are secondary. American national interests precede diplomatic considerations. The Canadian newspaper "The Globe and Mail" commented: "By blocking Keystone XL, Joe Biden gets an easy political victory - at the expense of Canada."