US embassy cable - 05OTTAWA3362

UNCLAS SECTION 01 OF 02 OTTAWA 003362 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CAN (BREESE, ERVITI) 
 
TRANSPORTATION FOR OST/IA (EDDIE CARAZO) 
 
COMMERCE FOR 4320/MAC/WH/ONIA/WORD 
 
DHS FOR OFFICE OF THE SECRETARY (AL MARTINEZ-FONTS, KAREN 
MARMAUD) 
 
E.O. 12958: N/A 
TAGS: ELTN, ECIN, EINV, PREL, CA 
SUBJECT: DETROIT TUNNEL OPERATOR COMPLAINS HAS BEEN SHUT OUT OF 
LEASE EXTENSION 
 
SENSITIVE BUT UNCLASSIFIED--PLEASE PROTECT ACCORDINGLY.  NOT 
FOR DISTRIBUTION OUTSIDE USG CHANNELS. 
 
1. (SBU) The President of the Detroit and Canada Tunnel 
Corporation (DCTC), Gordon Jarvis (a Canadian citizen), 
contends that despite many good faith attempts to negotiate 
an extension of their current lease arrangement for the 
tunnel with the City of Detroit, it appears that they are 
being shut out of negotiations in favor of an arrangement 
between the City of Detroit and the owner of the Ambassador 
Bridge.  Jarvis believes that such an agreement, which would 
place the both the Ambassador Bridge and the DCTC under the 
control of the same individual may be imprudent from a 
homeland security perspective, may further complicate cross- 
border efforts to build a new Ontario-Michigan crossing and 
will exacerbate tensions between the two cities regarding 
tunnel operations, revenues and ancillary benefits.  Jarvis 
will be taking his concerns to U.S. federal legislators and 
to the Michigan State House seeking support to move the City 
of Detroit to re-open negotiations with DCTC.  Jarvis 
expects that should this effort fail, that DCTC might 
consider raising antitrust concerns.  Jarvis has met with 
staff in the Canadian Deputy Prime Ministers Office to relay 
this message as well.  End summary. 
 
2. (U) The Ambassador Bridge and the Detroit Tunnel in the 
Detroit-Windsor corridor jointly carry about 25 percent 
(approximately US$100 billion per year) of the total Canada- 
U.S. merchandise trade.  They are arguably the two most 
significant pieces of critical infrastructure along the 
entire frontier.  The Ambassador Bridge is privately owned 
(and carries the vast majority of trucks).  The Detroit 
Tunnel (which principally services passenger vehicles) is 
jointly owned by the cities of Detroit and Windsor and is 
currently operated by the Detroit and Canada Tunnel 
Corporation (DCTC) under a lease arrangement with the City 
of Detroit that runs through 2020 where Detroit receives a 
percentage of revenues as well as property taxes. On the 
Canadian side DCTC holds a Joint Operating Agreement valid 
until 2007 with the City of Windsor and DCTC is paid a 
management fee for the services it provides. 
 
3. (SBU) On November 9, Gordon Jarvis, President and CEO of 
the DCTC (a Canadian citizen) and DCTC's Legal Counsel in 
Ottawa, Jacques Shore from the law firm Gowling-Lafleur- 
Henderson LLP met with DCM and ECON Specialist to up date 
the Embassy on their efforts to negotiate a follow-on lease 
with the City of Detroit.  Jarvis and Shore told us that 
they perceive that the Administration in the City of Detroit 
has decided to no longer negotiate with the DCTC for a lease 
extension beyond 2020.  Rather, Jarvis and Shore contend, 
the City of Detroit is favoring a proposed agreement with 
the owner of the Ambassador Bridge, Manuel Maroun, that 
would see Mr. Maroun, through a new company, gain the lease 
to operate the Detroit-Windsor Tunnel in exchange for US$30 
million.  Jarvis and Shore emphasized that the recent 
process involving the City of Detroit and the owner of the 
Ambassador Bridge has not been conducted in an "open, fair 
and inclusive manner".  Moreover, in their opinion, allowing 
these two pieces of critical infrastructure to be controlled 
by the same private entity may, from a homeland security 
point of view, be imprudent.  They also argued that such 
consolidation should not be allowed from an antitrust 
perspective. 
 
4. (SBU) Jarvis told us that DCTC will soon be approaching 
Michigan's federal and state legislators and will argue 
their case to those individuals that the City of Detroit 
should be compelled to negotiate DCTC's counter offer in 
good faith. Jarvis and Shore noted that the efforts by Mr. 
Maroun to gain operational control of the DCTC generates 
significant cross-border concerns, consequently they have 
also discussed this issue with senior staff in the office of 
Canadian Deputy Minister Anne McLellan.   They argue that 
Mr. Maroun's proposed plan would not effectively reduce 
congestion, will complicate efforts by the Binational Group 
to expeditiously achieve a decision for a new Ontario- 
Michigan crossing and will also exacerbate existing tensions 
between the cities of Detroit and Windsor about tunnel 
operations, revenues and ancillary benefits. 
 
5. (U) Jarvis and Shore shared with the Embassy a series of 
correspondence between the DCTC and the office of the Mayor 
of Detroit on the matter of the DCTC's efforts to meet and 
negotiate a counter offer to the one being offered to the 
city of Detroit by Mr. Maroun.  They also provided their 
analysis of the putative agreement being proposed by Mr. 
Maroun, and correspondence from Michigan State legislators 
and Michigan State officials opposing that agreement. We 
will provide copies to WHA/CAN. 
 
Wilkins