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Canada's Trudeau squeezed in pipeline crisis

AFP  |  Montreal 

Canadian is caught in a political crisis over the expansion of an pipeline that has shaken investor confidence in the country's

The dispute pits the country's two westernmost provinces against each other as oil-rich boycotts trade with over its opposition to the pipeline.

warned the standoff risked triggering a constitutional crisis, and is cutting short an overseas tour to return home and mediate.

With an election due by October 2019, needs the support of voters to win a second term as of the world's seventh-largest producer.

But the hit to the economy if the pipeline isn't built could have equally devastating effects at the ballot box, and needs aboard to meet his international climate commitments.

in 2016 approved the tripling of the pipeline's capacity to move 890,000 barrels of per day from landlocked Alberta's sands to the Pacific coast, for shipping to new overseas markets.

But it has faced intense opposition from environmental and indigenous groups concerned about the risk of spills along Canada's pristine affecting tourism and fisheries.

Nearly 200 protestors were arrested in the past month alone.

British Columbia's new social democratic government joined the fight against the project late last year when it looked all but lost, reviving hopes of killing it and pitting the province against Alberta, and the federal government, which has deemed it to be in the "national interest."

Feeling squeezed, Kinder Morgan, the US firm behind the Can$7.4 billion (US$5.9 billion) project, suspended most work on the pipeline this week, saying the row is creating undue risk for investors.

The company gave the parties until May 31 to resolve their differences or it would scrap the project, prompting warnings from that tens of billions of dollars in could be diverted from if the project fails.

On Sunday, will interrupt a trip to Peru, and Britain to try to mediate the British Columbia-spat.

Alberta's Notley has responded to John Horgan's court challenge of the project with a boycott of wines and hydro electricity, and threats to cut off gasoline shipments to

About 97 per cent of Canada's exports are sold at a discount to the The industry and say new conduits to the Pacific are needed in order to diversify exports and get better

With the recent failures of a proposed new pipeline to the and another to the Pacific, all eyes are on as the industry's last hope to grow.

"The reputation of and as stable, predictable jurisdictions for the crucial international investment that fuels so many of our industries is clearly at risk," the Board of Trade said in a statement.

has called on Horgan to "stop obstructing" the project, which the feds approved in a tradeoff with to reject another pipeline that would have crossed a temperate rain forest.

While needs the Pacific province's voter support, he also requires to live up to its commitment to cut in exchange for new pipeline capacity, in order to meet Canada's climate obligation to cut CO2 emissions by 30 percent from 2005 levels, by 2030.

The sands are Canada's top single source of CO2 emissions.

Some have called on to be heavy-handed with Horgan, including cutting off federal funds, at the risk of alienating some voters. Horgan has shown no sign of backing down.

He campaigned against the pipeline to get elected and his minority government needs the support of the -- which opposes the pipeline -- to stay in power.

Alberta, meanwhile, is considering buying a stake in the project to allay investor fears, and is urging to match its investment.

could also declare federal jurisdiction over the pipeline to push through its construction, effectively voiding all provincial and municipal laws applicable to it.

But it hasn't used that power since the late 1800s when it was applied to build a transcontinental railway as a condition of British Columbia's joining confederation.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, April 15 2018. 16:15 IST
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