President Obama recently decided to rejectTransCanada Corp.’s proposal to build the Keystone XL oil pipeline. While it may have warmed the cockles of the hearts of his Hollywood buddies, environmentalists and various financial supporters, it could cause a devastating political and economic rift with the Canadian government.
Yes, the U.S. is a superpower, whereas Canada is a middle power. The U.S. dollar is a major currency, whereas the Canadian dollar is a decent-sized currency. The American financial markets have long had a direct impact on the global economy, whereas the Canadian financial markets have never been regarded in such an esteemed position.
But if the U.S. economy is going to recover properly, it needs to improve on both the domestic and international fronts. Canada plays a significant role in the latter category because it has long been a major ally and trading partner. It’s the world’s 10th-largest economy measured by gross domestic product, according to the International Monetary Fund andWorld Bank; has one of the highest levels of economic freedom; and is rich in terms of natural resources. Canada also is on more solid economic ground these days because it didn’t get too tangled up in the trappings of the subprime mortgage crisis and global financial meltdown.
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