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Canada’s opposition leaders portray themselves as soul-mates of U.S. President-elect Barack Obama. Should they succeed in ousting Prime Minister Stephen Harper next month, Obama might soon have cause to disagree.

Victory for an alliance of the Liberal Party and the New Democratic Party, bolstered by the Bloc Quebecois, may mean fewer troops in Afghanistan and less investment in the U.S. It could also complicate U.S. access to energy from Canada, its biggest source of supply.

“Obama’s interests won’t be well-served by this Canadian menage a trois,” says John Kirton, a political science professor at the University of Toronto. If the coalition succeeds in forcing out the Conservative Harper, 49, a “pillar of financial, economic and trade security” will become a less reliable ally, he says.

At stake is the future course of the world’s largest bilateral trade relationship. Canada and the U.S. exchanged goods worth C$1.67 billion ($1.37 billion) a day in 2008, about as much two-way trade as Canada does with Brazil in six months. Canada’s exports to the U.S. have more than tripled since 1989, the first year the two countries implemented an accord that became the North American Free Trade Agreement, or Nafta, when Mexico joined in 1994.

Slumping Exports

Canada, the world’s eighth-biggest economy, is in a recession as businesses struggle to find credit, auto and lumber shipments to the U.S. slump and oil and other commodity prices fall. Gross domestic product will shrink by 0.4 percent next year, producing the country’s first budget deficit in more than a decade, Finance Minister Jim Flaherty said this month.

Harper’s failure to win a majority in Oct. 14 elections, resulting in his second successive minority government, created the opening for Canada’s first multi-party government since World War I. Harper’s Conservatives have 143 seats in the 308- seat parliament; the Liberals, NDP and Bloc Quebecois combined have 163.

The prime minister says a government formed by the alliance would bring in “socialist economics” and be beholden to Quebec separatists. On Dec. 4, he exercised his power to suspend Parliament for seven weeks to stave off the opposition bid to oust him. That means the coalition’s first chance to unseat him will come after Jan. 27, when he presents a budget.

Defeat on the budget vote would leave Governor General Michaelle Jean, Queen Elizabeth’s representative in Canada, with two options: Ask a coalition member, probably Liberal leader Michael Ignatieff, to try to form a government, or plunge the nation into its fourth election campaign in five years.

Waiting to Be Asked

Ignatieff, a 61-year-old former Harvard University professor who succeeded Stephane Dion on Dec. 10, has vowed to lead a coalition government “if asked to” by Jean; Dion, by contrast, asked Jean in writing for the chance to form a government.

Coalition members say they take inspiration from Obama’s successful U.S. election. During Canada’s autumn campaign, NDP Leader Jack Layton invoked Obama’s name so often that Dion dubbed him “Jack Obama.” The Liberals’ Scott Brison, chief opposition spokesman for financial policies, told reporters last month that Obama, who doesn’t take office until Jan. 20, has more advanced plans for an economic recovery than does Harper, “who’s been prime minister for almost three years.”

But Christopher Sands, a fellow at the Hudson Institute in Washington, says that for all the invocation of Obama, the reality of a coalition government would mean trouble for the new U no teletrack payday loan.S. president.

Low Expectations

“Expectations are very low with regards to Canada in the Obama camp,” Sands says. “It gets worse if you replace a shaky minority government, but still one that performed well, with a coalition, because a coalition has a built-in fracture.”

Nafta might provide an early flashpoint. During the U.S. campaign, Obama called for reworking the trade accord to protect U.S. jobs. Since the election, he has repositioned himself, making an economic recovery his top priority and signaling he may want to put off dealing with the trade pact, says Tom Velk, an economics professor at McGill University in Montreal.

The trouble is, Obama’s campaign rhetoric galvanized parties in Canada who also might welcome a renegotiation for different reasons — primarily to loosen preferential U.S. access to Canada’s energy supplies.

“Obama would have trouble if Canada was governed by the triumvirate,” Velk says. Brooke Anderson, a spokeswoman for the Obama transition, declined to comment.

Nafta Plank

The Nafta issue was a key plank of the NDP’s campaign in the last election; Layton even traveled to Washington this year to drum up support for changes to the agreement.

The New Democrats are calling for an end to the U.S. preferences for Canadian oil. Under Nafta, Canada, which sits on the largest oil reserves outside Saudi Arabia, can’t restrict exports to the U.S. unless the same limits or terms apply to Canadian companies.

Nafta “locks us into an engagement of our energy to meet American needs, essentially putting in the back seat our own national needs,” Layton said in an interview in June. All three opposition parties seek higher taxes on oil companies, which might raise costs for U.S. customers.

Kirton says a coalition government might also be more likely to keep Canada’s relatively healthy banks from investing in the U.S. And the fact that a new government would depend for its survival on the Bloc Quebecois — which has pledged to back the coalition on key votes but favors French-speaking Quebec’s secession from Canada — might further rattle investors at a time when Canada’s Standard & Poor’s/TSX Composite Index has plunged 40 percent this year.

Afghanistan

On foreign policy, a coalition government might be reluctant to support Obama’s push for more troops in Afghanistan. Harper earlier this year got the Liberals to vote with him to extend the Afghan mission until 2011, from a previous planned deadline of February 2009. The NDP and the Bloc voted against extending the mission.

Canada has about 2,700 troops in Afghanistan, and more than 100 of the country’s soldiers have died there since 2002. The U.S. has 31,000 troops in Afghanistan, including 14,000 that are part of the 51,000-member North Atlantic Treaty Organization force there.

With all the issues facing the new U.S. president, “what Obama is going to be looking for is partners,” says the Hudson Institute’s Sands. Canada, he says, “could be on that list, but not first, simply because the monkey business going on in Parliament is going to make Canada look too weak.”

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