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Canadian Defence Minister Peter MacKay, left, listens beside U.S. Secretary of Defence Leon Panetta at a trilateral meeting in Ottawa on Tuesday.

The United States wants the long-delayed transfer of Omar Khadr – the convicted al-Qaeda terrorist and murderer – to Canada to go ahead because it will serve as a model for sending others held at the Guantanamo Bay prison back home.

"There are continuing negotiations to work out that transfer," U.S. Defence Secretary Leon Panetta said during a visit to Ottawa. "I don't have a specific timeline for signing it, but once those arrangements have been made, obviously we will approve the transfer to Canada."

Some U.S. officials have been hinting for months that stalling by the Canadian government was holding up the transfer.

As part of a plea-bargain deal from October, 2010, Mr. Khadr – who many regard as a victim, a child soldier who deserved rehabilitation not a decade in Guantanamo – agreed to plead guilty to multiple charges, including murder and terrorism, in return for an eight-year sentence, only one of which was to be served at the U.S. naval station on a leased base in Cuba.

Mr. Khadr "continues to be held in limbo even though he has lived up to his part of the deal," John Norris, his lawyer said Tuesday after hearing Mr. Panetta's comments. "Canada and the United States have had since October, 2010, to make the necessary arrangements."

Instead, five months after he was eligible for patriation to Canada, Mr. Khadr remains in one of Guantanamo's hulking prison blocks, the only Canadian and the last Westerner left in the notorious set of camps set up by the former Bush administration.

"Your country doesn't want him back," an American official familiar with the case said months ago. Unlike Britain and Australia, both of which successfully demanded release of their citizens from Guantanamo, successive Canadian government refused to push for Mr. Khadr's return.

"We do not know who is causing the delay but it would be completely unacceptable if Canada were holding things up," Mr. Norris said.

In a formal diplomatic note, the Harper government told the Obama administration in October, 2010, that it would be "inclined to favourably consider" any request from Mr. Khadr to transfer from the grim confinement in Guantanamo – where he is segregated from the 160 other detainees because he is now a convicted terrorist – to a Canadian jail.

Under Canadian law, Mr. Khadr will be eligible for parole in July, 2013. By then he will have spent more than 40 per cent of his life in prison. He was grievously injured in July, 2002, after U.S. warplanes bombed the compound in Afghanistan where the then-15-year-old son of one of al-Qaeda's leaders was holed up with a group of fighters who had been building and planting roadside bombs. A U.S. soldier was killed in the ensuing firefight and Mr. Khadr became the first and, to date, the only enemy combatant charged with murder since the Afghanistan war began in 2001.

Mr. Panetta said sending Mr. Khadr back to Canada will be "an important step" because it will serve an example to other detainees. "We've got others there obviously we'd like to be able to move as well."

Mr. Khadr, a Canadian, was born in Toronto but spent much of his childhood in Pakistan and Afghanistan.

With reports from Campbell Clark and Colin Freeze

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