Our relationship with our neighbor to the north has deteriorated—at about the same rate as we have come to depend on their natural resources. Oil is an important part of the reason, but it's only part of the story. We need to acknowledge the importance of Canada to our national interests and commit to the relationship.
Petroleum Sources
Access to foreign sources of oil has been a vital U.S. interest for more than 50 years. Our political and military strategies have focused on the Middle East, designed to ensure our continuing use of Persian Gulf oil. But the key to our vital energy interests could lie much closer to home. In fact, currently we import more petroleum, as well as other natural resources critical to domestic energy consumption, from Canada. Persian Gulf oil production may be peaking, while Canadian fields hold significant long-term potential.
American interest in Middle Eastern oil dates back to World War II. However, not until the energy shortage driven by the oil embargo under the Nixon administration, followed by the Iranian hostage crisis during the Carter administration, did the American people link our national interest of economic prosperity with dependence on Middle Eastern exports. During the decades thereafter, the Persian Gulf—Saudi Arabia in particular—became the world's preeminent exporter of oil. U.S. political and military policy was shaped to protect this interest.
This has been the case since the formation of Central Command (1 January 1983) until the present, with conflicts in the region ongoing. We have come to assume that our energy interests lie chiefly in the sands of the Middle Eastern desert, but that assumption may be flawed.
Is the Sun Setting on the Desert?
Various writers, geologists, and petroleum engineers have argued that Middle Eastern oil production has already peaked, or is in the process of peaking. The belief that energy reserves are still high stems largely from the Saudis' unsubstantiated claims, with virtually no variability in their estimates. Also, little new discovery has been made in the region during the past several decades. For 30 years, aside from the Hawtah Trend fields no sizable oil discoveries have been made in Saudi Arabia despite its national oil company's (Saudi Aramco) constant search.
Some have surmised that this situation, coupled with increasing world demand, is causing the Saudis to overproduce their wells.2 If that is the case, the process will yield short-term gains in production—at the expense of long-term, sustained output.
Oil production growth for the rest of the Middle East is just as suspect: Kuwait, Iran, Syria, and Yemen all appear to be in decline.3 Iraqi production likely peaked years ago, and, with violence ongoing, does not offer a reliable export source regardless.
But despite mounting evidence that Middle Eastern oil is in decline, the U.S. state of mind equates energy security with the Middle East.4
Scanning the Horizon
Some may argue for increased domestic production growth. However, this would generally require drilling in protected areas such as the Arctic National Wildlife Refuge and off the Florida and California coasts. Other regions have the potential for increased production, including Nigeria, Algeria, Angola, Russia, Venezuela, the Caspian Sea, Columbia, Indonesia, Sudan, Canada, and the South China Sea. They often also feature domestic instability, an unfriendly attitude to the United States, or geographic inconvenience—with the clear exception of Canada.
In fact, unbeknownst to many of us, the United States is already importing more petroleum products from Canada than from all of the Middle East combined.5 This dependence is likely to accelerate as the Canadian tar sands production comes on line. The fields are the second largest worldwide, with an estimated 100 years' worth of reserves. By 2015, it's estimated the tar sands could represent 2.7 million barrels of production daily (MBD). To whom will that production be directed? Former energy minister of Alberta Murray Smith estimates that Canada could eventually export as much as one-third of its production to China.6
More than Maple Syrup
U.S. dependence for natural resources on our neighbors goes far beyond our thirst for oil. We also rely on Canada as our primary source of imported natural gas. Additionally, we import 100 percent of our uranium from the maple-leaf country. That fact alone puts Canada in a unique position with respect to both U.S. national and economic security. In varying degrees, we also import Canadian iron ore, nickel, zinc, copper, gold, lead, fish, timber, silver, hydro electric power and last, but certainly not least, potash.
In fact, Canada accounts for 33 percent of worldwide production of this mineral.8 This is significant, as potash is the primary ingredient in corn fertilizer and, by extension, critical to the production of corn-based ethanol fuels. Again, Canada will have an increasing effect on our energy security, even as the United States moves toward alternative energy sources.
Competition from the East
Historically, the United States has been almost the only beneficiary of Canadian resources. But in recent years the Chinese economy and their need for natural resources have grown dramatically. In 2004, Asia (led by China) imported 18 MBD of oil, and that is estimated to grow to 35 MBD by 2025.9 The Chinese have made a number of overtures to Canada. And their resource shortfalls coincide with many of ours, including oil and natural gas, iron ore, potash, nickel, copper, and uranium. This has already led to friction between the three nations, and the pressure will likely increase over time.
The Chinese and their state-run energy company, the China National Offshore Oil Corporation (CNOOC), have purchased Sudanese oil rights from the Canadian oil and exploration company Talisman Energy and acquired outright the Canadian-based Petro Kazakhstan. CNOOC has partnered with Canada's Husky Energy in various exploration projects and owns 17 percent of Calgary-based MEG Energy Corp. They are working on a pipeline project with Enbridge Inc. to help deliver Alberta-based crude to the Orient.
Additionally, they are making strategic investments in privately held Canadian energy companies in the hopes of yielding long-term results. A portion of these transactions represent oil fields outside Canada, but a pattern of Sino-Canadian sale of energy assets is in place. Simultaneously, they have signed agreements with Ottawa to jointly mine uranium.10
And yet China has had limited success in accessing Canadian assets. In the wake of the failed Chinese bid to purchase assets of the U.S. energy company Unocal, potential sales of North American energy assets to foreign entities chilled. The specter of U.S. political pressure temporarily sidelined proposed large-scale Sino-Canadian energy transactions and may have affected the ongoing natural resource war.11 The ability of the States to maintain that pressure on Ottawa will likely be key.
It is difficult to predict the significance of inroads by our chief energy competitor, but Venezuela illustrates the potential pitfalls stemming from similar circumstances. The Chinese are displacing us as the dominant purchaser of Venezuelan oil by taking advantage of our deteriorating relationship with a long-term, hemispheric ally. Our relationship with Canada is of course different from the one with Venezuela, but both countries have granted increased Chinese access in the wake of declining rapport with us.
The Deep Freeze
A number of factors contribute to this decline, including interactions between heads of state. As the current administration came into office in Washington, they inherited a legacy of strong interpersonal friendship with the Canadians. Prime Minister Brian Mulroney had strong ties with President Ronald Reagan and, after him, President George H. W. Bush. President Bill Clinton frequently visited Canada and had a warm relationship with both Prime Minister Jean Chretien and his foreign minister, Lloyd Axworthy.
That cordiality clearly ebbed with the current Bush administration, but relationships seemed to improve through Prime Minister Paul Martin's term and with the current conservative Prime Minister Stephen Harper. However, the ongoing NAFTA debate brought to the forefront in U.S. domestic political primaries also has the potential to fray Canada-U.S. (CANUS) relations.
The breakdown goes well beyond the chief executives. Despite the massive amount of annual trade between the two nations (more than $1 billion annually), disputes continue. Both the U.S.-Canada Free Trade Agreement and NAFTA have been huge contributors to increased CANUS trade, but the Canadians do not feel we have lived up to our part of the bargain.
Despite losing appeals in both the NAFTA and World Trade Organization panels, the United States imposed a 27 percent duty against Canadian softwood lumber in May 2001. This has caused job losses in British Columbia and contributed to CANUS friction. The United States has been actively and unsuccessfully accusing the Canadian government of subsidizing wheat export, and has levied increasing tariffs against that import as well.12 Bans on Canadian beef in the wake of the 2003 Mad Cow disease outbreak have contributed to cross-border friction.
Our protectionist policies strain relationships and make trade with other partners more attractive to the Canadians. Washington's refusal to adhere to NAFTA rulings on lumber tariffs even led Ottawa to suggest that this would jeopardize our unlimited access to Canadian energy assets.13
After 11 September 2001, Canada provided refuge to a large number of U.S.-bound aircraft and endured significant economic losses due to miles of backup at our northern border. This strained relations, and many saw subsequent restrictions to Canadian border traffic levied by increased Homeland Security measures as heavy-handed.
Thawing in Spots
Despite the ongoing disagreements, there have also been recent examples of cooperation. These include the Free and Secure Trade program, the Integrated Border Enforcement Team, the Safe Third Country Agreement, and the Smart Border Declaration between the previous Deputy Prime Minister John Manley and former Homeland Security Secretary Tom Ridge.
But Canada's status as a reliable, longstanding continental security partner should afford Ottawa some deference when we implement new border security measures.14 If our policies become overly restrictive, we will lose a key geographic advantage to our competitors for Canadian natural resources.
And U.S. policy should take into account the "Canadian nightmare" scenario.15 A terrorist attack could come from our northern border, a fear that demonstrates the need for our border interests to be aligned. We must increase the sharing of information.
Analyzing the Problem
The Bi-National Planning Group (BPG) was chartered in December 2002 to thoroughly review CANUS defense plans and military assistance protocol, draft new bi-national contingency plans, analyze information-sharing practices, review exercises and joint training, and establish coordination mechanisms between federal departments and agencies. Released in March 2006, the BPG's report goes to the heart of CANUS issues. The committee found that "an overarching vision for continental defense and security organizations is missing," and cited a discrepancy between public policy—as outlined in the Security and Prosperity Partnership of North America and signed in March 2005 by the United States, Mexico, and Canada—and the strategic-political approach of North American Aerospace Defense (NORAD), Canada Command, and U.S. Northern Command (NORTHCOM).16
The BPG recommended recognizing a special relationship, establishing a new security classification for Canada and the United States, and expanding CANUS "Griffin" operational information sharing. Canadian Forces also wish to enhance information sharing and interoperability.17
BPG encouraged a better relationship between Canadian Strategic Joint Staff and NORAD-NORTHCOM J7 directorates. Also suggested was cross-pollination of Canadian Forces/U.S. Military Officers at war colleges, with assignments following at NORAD, NORTHCOM, and Canada Command. An increase in CANUS exercises was proposed. Progress is already evident on that initiative (Canadian Mounted Police participated in the Alaskan Northern Edge 07), but more needs to be done in the maritime domain. Small steps would include reintroducing U.S. diving teams to the Canadian's annual ice-diving exercise and scheduling subsequent Northern Edge events in consultation with Canadian Naval Forces to ensure their involvement.
But our neighbors to the north have resisted some key BPG recommendations, including a Maritime Domain Awareness system akin to the aerial based NORAD system and less restrictive movement of land forces in both directions. Ottawa refused to collaborate on ballistic missile defense.18 The internal Canadian debate pertains primarily to issues of sovereignty. Dangers are cited of blurring lines between operational and national control, resulting in U.S.-dictated foreign policy in Canada.19
How to Change Our Policy
Given the international nature of commodity markets, it is naive to suggest that U.S. foreign policy does not need to focus on peace, or at least stability, in the Middle East. However, we also need to break the prevailing thought cycle that links domestic energy security with that region alone.
We need to address this oversight as well as our lack of consideration for CANUS relations. The importance of this relationship needs to be broadcast more effectively, both here and in Canada. This message from Washington to Ottawa must be a consistently reiterated theme.
Some might argue that political initiatives to retard foreign access to Canadian resources are protectionist and will harm globalization. Also, any change to CANUS trade tariffs will cost American jobs and translate to economic damage. Special Canadian access to intelligence and enhanced border freedom risks potential breaches to Homeland Security. These arguments cannot be dismissed entirely.
But we do not have an effective domestic energy policy. And economic hardships will result from reduced long-term access to Canadian natural resources.
Warming the Air
It is time to set a national course designed to reclaim our neighbors' trust. There is hope that the trend might already be turning. In its recently released Canadian Defense Policy Statement, Canada acknowledged the need for greater cooperation on issues ranging from maritime threats to new military-to-military arrangements to civilian crises.20 Also, with Prime Minister Stephen Harper's ascendancy, the White House and Department of State have an opportunity to reinvigorate relations.
Despite Canada's refusal to send soldiers in support of the U.S. effort in Iraq, they have since shown renewed eagerness to work alongside U.S. forces elsewhere. Canadian Forces contributed to the U.S.-led tsunami disaster relief in 2004, helped in the wake of Hurricane Katrina in September 2005, and recently deployed surface vessels to the Persian Gulf.
Perhaps we should revisit a quote from President John F. Kennedy to the Canadian Parliament: "Geography has made us neighbors. History has made us friends. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder."21
1. M. R. Simmons. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Hoboken, N.J.: John Wiley and Sons, 2005), p. xiii.
2. Ibid., pp. 337.
3. Ibid., pp. xxxv, 299.
4. K. S. Deffeyes, Beyond Oil: The View from Hubbert's Peak (New York: Hill and Wang, 2005), p. 108.
5. "Crude Oil and Total Petroleum Imports Top 15 Countries," Energy Information Administration, 13 March 2007, http://www.eia.doe.gov/pub/oil_gas.
6. "China Begins Moving into the United States' Backyard Oil Supply," Canada, China, and Oil, 27 December 2004, http://www.ofbyandfor.org/node/view/1046.
7. Deffeyes, Beyond Oil, pp. 78—79.
8. "Potash," Natural Resources Canada, May 2006, http://www.nrcan.gc.ca.
9. T. P. Barnett, The Pentagon's New Map (New York: Penguin, 2004), p. 221.
10. "China, Canada Agree on Oil, Uranium Development." From the Wilderness, 20 January 2007, http://www.fromthewilderness.com.
11. "Canada Chilly to China Oil," China Institute, July 2006, http://www.uofaweb.ualberta.ca/chinainstitute.
12. "A Bump in the Road," Continental Divide, 2 May 2003, http://www.cbc.ca/canadaus/mchutchiopn.html.
13. "Canada Uses China's Oil Thirst As Leverage in Trade Dispute with U.S. over Lumber," 14 October 2005, http://www.nctimes.com/articles/2005/10/15.
14. Annual Meeting of the American Political Science Association, Suspenders and a Belt: Perimeter and Border Security in U.S.-Canada Relations (Washington, D.C., 2005), pp. 14, 15.
16. E. A. Findley and J. R. Inge, Bi-National Planning Group Final Report on CANUS Enhanced Military Cooperation (Peterson AFB, Colorado, 13 March 2006), pp. I & 15.
17. Ibid., pp. 19 & C-3.
18. "The Future of Canada's Role in Hemispheric Defense," The U.S. Army Professional Writing Collection, September 2006, accessed through http://www.army.mil/professionalwriting/.
19. M. Byers. Canadian Armed Forces under U.S. Command (North Carolina: Duke University, May 2002), p. 20. Canadian "Defense Policy Statement," National Defence, March 2007, accessed through www.forces.gc.ca.
21. "Address Before the Canadian Parliament in Ottawa," The American Presidency Project, http://www.presidency.ucsb.edu/ws.