Canadian PM plays Iran card in Keystone push

The U.S. political battle over Keystone is unfolding amid Iranian threats to block the marine shipping lane that serves as the transit point for one-fifth of the world’s oil.

Experts say Iran is unlikely to follow through on the threat, which would greatly escalate military tensions, and hurt Iran itself financially in addition to disrupting flows from other oil-producing nations.

But Republicans are nonetheless citing the threat and wider Middle East instability as they push the White House to back Keystone XL.

Harper is also pushing for diversification of Canadian oil exports beyond the United States, warning that his nation should not rely on a sole buyer.

“I believe selling our energy products to Asia is in the country’s national interest,” he said in the interview.

Canadian regulators are weighing Enbridge Inc.’s proposed Northern Gateway pipeline to bring oil sands west from Alberta to the British Columbia coast for export to Asian markets. Asked if the push toward Asian markets would be occurring even if Keystone had already been approved, Harper replied:

“I think what’s happened around the Keystone [pipeline] is a wake-up call [to] the degree to which we are dependent, or possibly held hostage, to the decisions in the United States and especially decisions that may be made for very bad political reasons,” Harper said.

The Obama administration had initially planned on making a final decision about Keystone by the end of 2011 but subsequently punted until after the 2012 elections.

But payroll tax cut legislation enacted in December forces a decision by Feb. 21, a timeline that administration officials have warned will likely prompt the pipeline’s rejection.

Keystone has become, over the past year, the subject of a high-profile U.S. battle.

Environmentalists bitterly oppose Keystone due to greenhouse gas emissions and other ecological damage from Alberta’s oil sands projects, as well as fear of spills along the route.

Industry groups and a number of major unions and GOP leaders are pushing hard for Keystone, calling it a way to boost U.S. energy security and create thousands of jobs.