US embassy cable - 04QUEBEC35

UNCLAS QUEBEC 000035 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS USDOC IMPORT ADMIN TERPSTRA 
WHA/CAN - BREESE 
 
E.O. 12958: N/A 
TAGS: ETRD, ENRG, PREL, PGOV, EMIN, CA, Energy, Softwood lumber 
SUBJECT: QUEBEC NATURAL RESOURCE MINISTER ON SOFTWOOD,ENERGY 
 
REF: 03 QUEBEC 233 
 
 
1.  (SBU)  Summary:  Natural Resources Minister Sam Hamad told 
CG Keogh February 17 that a combination of allocation quotas at 
a level of 35% and dropping the 48/52 split of the accumulating 
duties as proposed by the U.S. would form the basis of a 
softwood lumber deal.  A substantial portion of the duties, if 
not all, should be returned to Canada, he asserted.  He also 
told us that log validation was one of his main concerns and 
stressed that the province was impatient to see a Quebec annex 
published in the policy bulletin.   Minister Hamad has asked to 
meet the Ambassador when he visits Quebec in March and arrange a 
working lunch and presentation on energy.  He also requested 
assistance in visiting the United States for exposure to U.S. 
views and policies as a VOLVIS this summer.  End Summary. 
 
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Softwood Lumber 
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2.  (SBU)  On February 17, CG Keogh and Pol Asst Nadeau met with 
Sam Hamad, Quebec Natural Resources Minister, and his staff 
director Jean Quenneville.  Allocation of export quotas at the 
historical level of 35%, or better, and an important slice of 
the duties, if not all, instead of the current 52/48 proposal 
favoring the U.S., would be a palatable solution and clinch a 
softwood lumber deal tomorrow, asserted Hamad.  He also 
commented that log validation was one of his main focuses while 
stressing that the province was impatient to see a Quebec annex 
published in the final USDOC policy bulletin on lumber. 
 
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Energy and Ambassador March Visit 
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3.  (SBU)  Hamad  proposed a working lunch with the Ambassador 
March 23 in Quebec with a focus on energy security.  The hold on 
natural gas exploration in the Gulf of St Lawrence, because of 
environmental concerns relating to sonar activity that disturbs 
belugas and other marine life, did not preclude exploitation of 
current known reserves.  Hamad made it clear the hold was 
temporary while other less invasive tests were developed for use 
in exploration.  However, negative public opinion remained a 
factor, he stated.  An immense pocket of gas, he named "Old 
Harry," located between Newfoundland and Quebec's Ile 
d'Anticosti, is even bigger than the Hibernia Project.  Hamad 
noted tht the oil sands in the Canadian West will run out in 
about 30 years, so that other energy sources must be identified. 
 
4.  (SBU)  The Minister added that he was working on a 
broad-based national prosperity strategy on regional 
development.    He is looking to attract investments to Quebec 
and getting more U.S. involvement, especially in the mining 
sector.  A new source of diamonds was discovered in Northern 
Quebec at Mont Ottish two weeks ago by Ashton Mining.   Ashton 
is a small company and they are still in the exploration phase. 
At this stage, it is a 50/50 partnership with Quebec government 
agency SOQEM. 
 
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VOLVIS Program 
---------------------- 
5.  (U)  Sam Hamad expressed strong interest in participating in 
an individual VOLVIS program in the US.  He said the best timing 
for him would be sometime in the summer, ideally in early July, 
once the provincial legislature has recessed.    In Washington 
we suggested  meetings at State, the Department of Energy, and 
Commerce to discuss softwood lumber, as well as a trip to 
Houston to look at the energy sector, California (Sacramento and 
San Francisco) for wind energy and conservation practices. 
Hamad was enthusiastic about going to Yale and Harvard 
universities to meet with think tanks.  He said his main areas 
of interest would be energy policy, and renewable sources of 
energy. 
 
6. (SBU)  Comment:  Mr. Hamad was not entirely clear about what 
he thought would be acceptable (and workable) "ballpark figures" 
from Quebec's point of view to resolve the softwood lumber 
impasse.  There is obviously room for interpretation as well as 
a continued strong desire to end the dispute.