OTTAWA – A newly leaked U.S. diplomatic note says Libya
threatened to nationalize Petro-Canada’s operations in the North African
country over a spat with the Conservative government.

It’s the latest revelation in a bizarre international saga that first grabbed headlines two years ago.

Libyan leader Moammar Gadhafi cancelled a late September 2009
stopover in Newfoundland after Foreign Affairs Minister Lawrence Cannon
promised a tongue-lashing for the hero’s welcome Libya extended to a man
convicted in the Lockerbie bombing.

The U.S. cable, obtained from WikiLeaks by British
newspaper the Daily Telegraph, says Libya’s state oil company called in a
senior Petro-Canada official with a threat to nationalize the firm’s
operations in Libya if Canada did not apologize.

At the time, Petro-Canada had just merged with fellow Canadian oil giant Suncor.

The cable says Canada’s ambassador to Libya, Sandra
McCardell — whose name is misspelled throughout — told the U.S. Embassy
in Tripoli the Libyans demanded the apology within 24 hours.

“McArdle said she has advocated some kind of public and
private statements from the Canadian (prime minister) and (foreign
minister), which would indicate a Canadian welcome for the Libyans and
hopefully turn the situation around,” the cable says.

“Libyans here are frantically calling the Canadian
Embassy, concerned that if the issue is not resolved, Gadhafi’s trip
home will be complicated by lack of a place to stop for necessary
refuelling.”

The Sept. 28, 2009, cable also says McCardell told her
U.S. counterpart that Ottawa had initially planned to refuse the
eccentric Gadhafi permission to stop on Sept. 29-30 in Newfoundland en
route to Spain from the United Nations.

“On instructions from Ottawa, McArdle said that she
informed the Libyan government in mid-September that Gadhafi was not
welcome to visit Canada at this time,” the cable says.

It adds that McCardell, who had just arrived in Tripoli
and had not yet presented her diplomatic credentials, seriously believed
she could become persona non grata or have her agreement revoked.

“Fearful of delivering bad news to Gadhafi, McArdle
explained that the notoriously slow Libyan bureaucracy delayed passing
Ottawa’s message to the Leader for several days.”

In the meantime, Canadian companies with business
interests in Libya “launched a furious lobbying effort” and persuaded
Stephen Harper’s Conservative government to allow the trip to go
forward, the note says.

“However, McArdle said that the Canadian government’s
precarious domestic situation and upcoming elections pressed the Foreign
Minister (Cannon) to go public with his very stern message.”

Though Gadhafi’s government did not follow through on its
apparent threat to take over Petro-Canada’s operations, a second
WikiLeaks cable obtained by the Daily Telegraph indicates it doled out a
milder punishment.

The Libyan government issued an order Sept. 30, 2009,
forcing Petro-Canada and its operator, Libya’s Hrouj company, to cut
production by 50 per cent, the note says.

The move came less than a day after McCardell had told
the U.S. ambassador that she and Libya’s foreign minister had settled
the issue.

The U.S. cable says while reasons for the production cut
were unknown, a source whose name is excised from the note “intimated
that the order had come from the highest levels, i.e. Moammar Gadhafi
himself.”

The move may be a “cheap” way for the Libyans to punish Petro-Canada for Ottawa’s gruff words, it adds.

Diplomats from Britain and Italy, nations with significant investments in Libya, appeared unsettled by the news, the note says.

Indeed, the earlier cable reveals both Britain and the
United States were prepared to intervene on Petro-Canada’s behalf “to
emphasize that it is not good for Libya to threaten existing and
potential investors and violate the sanctity of contracts with such
abandon.”

“The situation between the Libyans and the Canadians
reflects vintage Libyan policy to strike hard at any quarter that
insults the Leader publicly.”

In October 2009, Libya retaliated further, making it
clear that Canadian travellers were not welcome in the country by
refusing to grant visitor visas.

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