Alberta has warned it could bar federal officials from Kananaskis to force a commitment from Ottawa to cover the full costs of the G-8 summit.
Solicitor General Heather Forsyth hinted Thursday that the province's tough stand has led to some progress in talks over who will pick up the tab.
The discussions are continuing, however, with the province pushing for ottawa to pay the bill for prosecuting any protesters arrested at the June 26 and 27 meeting of world leaders in Kananaskis.
"We had to come to a point where we had to take a tough stance and say, 'Look, this is our province. You just can't move in and have a party,' " Forsyth said.
She said the province is now backing off from its hardline position. However, when asked what bargaining power Alberta has left, Forsyth added: "We have some things in our back pocket that we can still use."
In a leaked month-old memo obtained by the opposition Liberals, the province indicated it was considering several strategies, including banning federal officials from the summit site, about 100 kilometres west of Calgary.
The province also considered withholding its "leaseholder consent" for the federal government to use campsites and areas near a ski hill during the summit if Ottawa doesn't pay.
The memo said it would mean the Department of National Defence and the RCMP, in some cases, would have to find alternative lodging for the meeting.
"Withholding the use of this land could cause some serious logistical problems for the security planning team," the memo stated.
In the memo, the province also looked at pressuring Ottawa by "going public with the impasse" and linking the G-8 summit dispute to other disputes, such as "Kyoto, health care, softwood lumber."
On Thursday, Forsyth said she had a positive discussion with federal Solicitor General Lawrence MacAulay a day earlier.
There are two main cost issues the province is now focusing on.
The first is whether Ottawa is going to ante up for the extra costs the province will incur for putting any arrested protesters through its justice system.
Quebec's experience after the Summit of the Americas last year has spooked Alberta. Quebec officials have told Premier Ralph Klein's government that the bill for prosecuting one protester -- famed anti-globalization activist Jaggi Singh -- will be $860,000.
Since the G-8 is a federal event, Forsyth said, "Alberta believes we should not have to pay for the prosecution costs of protesters."
The second key issue being negotiated by the provincial and federal governments is "third-party costs."
Intergovernmental Relations spokeswoman Beryl Cullum said negotiations over this issue may include what businesses will have to pay as a result of vandalism and lost business.
For instance, helicopter adventure companies have claimed the 150-kilometre no-fly zone around the summit site in K-Country will cost them hundreds of thousands of dollars in cancelled trips -- many of which were booked a year in advance.
However, the federal government has already promised to compensate businesses in the area, including outdoor adventure operators, affected by the heavy security that will see parts of K-Country shut down during the summit.
When MacAulay was asked about the leaked memo Thursday, he said, "We are in ongoing discussions with the government of Alberta and it's my understanding the discussions are going very well.
"The RCMP and other police forces are working co-operatively to make sure all the security measures are in place."
Alberta Liberal Leader Ken Nicol said the provincial government has waited too long to bring up these issues.
"It goes so much against what they've talked about before -- never using one negotiation as a tradeoff in another one.
"Yet one of things they're suggesting here is looking at whether or not they should use support for (the Kyoto Protocol on Climate Change) or support for softwood lumber as a means of bargaining to get funding for this. That's wrong," Nicol said.
Leaders from the Group of Eight leading industrialized countries -- Canada, the United States, Britain, France, Italy, Germany, Japan and Russia -- will meet for two days of talks that will focus on aid for Africa.
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