US embassy cable - 03HALIFAX356

UNCLAS HALIFAX 000356 
 
SIPDIS 
 
STATE FOR EB/ESC/IEC/EPC AND WHA/CAN 
DOE FOR PI (DEUTSCH) 
 
E.O. 12958: N/A 
TAGS: PGOV, ENRG, EPET, CA, Elections, Liberal Party, Conservative Party, Danny Williams 
SUBJECT: NEWFOUNDLAND-LABRADOR PROVINCIAL ELECTION:  TORY SWEEP ENDS 
LIBERAL HOLD 
 
1.  SUMMARY:  There could be a new round of political wrangling 
between the federal government and the newly elected Progressive 
Conservative Party in Newfoundland-Labrador.  In an October 21 
provincial election campaign, the Tories led by the charismatic 
business leader Danny Williams, solidly toppled a 14-year 
Liberal hold on the province.  A key plank in the successful 
Tory platform was a pledge to seek a new jurisdictional and 
fiscal arrangement with Ottawa over energy and other resource 
development, contentious issues that have the potential to cause 
friction.  END SUMMARY 
 
2.  Newfoundland-Labrador Progressive Conservatives, under 
leader Danny Williams, crushed the incumbent Liberal government 
of Premier Roger Grimes in an October 21 provincial election. 
Williams, a successful business leader and lawyer from St. 
John's, led his party in capturing 34 of the 48 seats in the 
House of Assembly, a significant gain over their previous 19 
seats.  The Liberals, now the official opposition, saw their 27 
seats reduced to 12, while the largely ineffectual New 
Democratic Party maintained the two seats they held before the 
September 29 election call. 
 
3.  The Tories' roll to a comfortable majority ended a 14-year 
Liberal hold on the province that saw Grimes as the last of four 
Liberal Premiers since 1989. However, Grimes ascension to the 
Premier's office in 2001 had come at a high price through a 
nasty and divisive leadership race.  Election watchers reason 
that Grimes was never was able to heal those wounds.  Coupled 
with a general mood on the part of the electorate for a change, 
the combination spelled defeat even as Grimes was calling the 
election.  Another significant factor was the popularity of Tory 
leader Williams, who like Grimes, took over his party in 2001. 
A Rhodes scholar and successful business leader, Williams is 
credited with single-handedly revitalizing the party and making 
it a formidable alternative to the Liberals. 
 
4. With the focus now on the future, Premier-elect Williams is 
busy putting together his transition team and working out who 
will sit in his cabinet.  Of importance to U.S. interests will 
be Williams' pick for heading up the Mines and Energy portfolio. 
Given that the Tory platform contains some tough talk on seeking 
greater control and ownership of energy resources and a new 
offshore revenue arrangement with Ottawa, Williams can be 
expected to pick one of the several seasoned veterans he has in 
the Tory caucus to spearhead this task.  While evidently 
pleasing to the electorate, this commitment could very easily 
spark a high profile battle with the federal government and 
other provinces over issues such as jurisdiction of offshore oil 
and gas exploration and development, local content in energy 
projects and increased hydroelectric development in Labrador. 
 
5.  Comment:  In voting overwhelmingly for a change in the 
leadership of the province, the voters in Newfoundland-Labrador 
will be getting just that, a new look in government.  Williams' 
staff has been telling us all along that the new Premier is 
deeply committed to making some solid improvement in the 
province's economic status and wants to try ideas that have 
never been tried before.  Just how much that will affect 
relations with Ottawa and the rest of the provinces is unclear 
at this point.  What is perhaps more certain is Williams' 
reputation for not backing down on any issue, especially those 
that he views as having the potential to improve 
Newfoundland-Labrador's situation relative to the rest of 
Canada.  END COMMENT 
 
 
 
 
HILL