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The rumours of war have been so persistent for so many months that at first it was hard to absorb the news that City of Toronto had reached a deal with its outside workers on Sunday morning. After a full night of bargaining, an exhausted-looking Mark Ferguson, president of CUPE Local 416, emerged first to tell the media "we are extremely excited" to have reached a tentative agreement on a new contract covering garbage, emergency-services and other workers. Mayor Rob Ford came next, calling it an "absolutely fantastic day" for the taxpayers. "We do not have a strike and we're going to keep this city moving."

Mr. Ford, of course, is famous across the country for vowing to "stop the gravy train" and cut waste at city hall. He has made it perfectly clear since coming to office in December, 2010, that he thinks that city workers are part of the gravy, that the city has far too many of them and that he would be demanding more from everyone. Governments around Canada have been watching the dispute, expecting it to set a tone as they look for sacrifices from public-service unions in a time of deficits and austerity.

The assumption since last fall is that the city would be locking out its workers to enforce a deal. City departments from garbage to city planning have been training managers to step in to the shoes of unionized workers in the event of a work stoppage. The union, for its part, had been saying publicly until very recently that it believed that the city was not bargaining seriously and that Mr. Ford simply wanted to make them the whipping boy in his cutback campaign.

Now this: a settlement between a tough-minded conservative mayor and a determined left-leaning union. It seemed like an irony that Mr. Ford could settle with one of his unions while his predecessor David Miller, a former NDP activist who was sympathetic to the union cause, took a bitter 39-day strike in the summer of 2009. "Is it true the union could break Miller's heart, but they couldn't break yours?" one reporter asked Mr. Ford Sunday morning.

The 2009 dispute helped lay the ground for this one. The strike drained public sympathy for the city unions, making it difficult for them to plausibly use the strike threat again. They have been saying for weeks that they had no intention of striking and they did not even hold a strike vote, a common move as negotiations get tough.

The city, for its part, reacted to the events of 2009 by deciding to force matters to a head early. The city is most vulnerable in the summer, when a walkout by garbage workers would mean smelly garbage piling up in heavily-used public parks. The deputy mayor, Doug Holyday, said the city would not let the union employ delaying tactics to drag out talks until the summer.

Instead, the city set a deadline of a minute after midnight on Feb. 5. Many had assumed the city would lock out its workers at that time if a deal had not been reached. The union's propaganda for the last couple of weeks seemed intended to portray it as the injured party if workers were indeed locked out. Mr. Ferguson was suddenly all moderation and optimism, saying first that the union would agree to settle for no pay increase and that it had no plans to strike. If it came to a lockout, he could say: We were talking and making concessions, so why the need to lock us out of our jobs?

But on Friday, in an unusual and aggressive move, the city said that it would not lock out the union at midnight. Instead it would impose new working conditions set out in its most recent contract proposal. The city was demanding more flexibility in how it deploys and, if necessary, lays off its employees.

The tactic put the union in a fix. Going to work on Monday morning as usual under new city-imposed conditions might have seemed like a tacit acceptance of them, a fait accompli. Suddenly calling a strike in protest at the city's move would have been equally tough for the union, given they had said they had no strike plans. Mr. Ferguson called the city a "bully" for making the threat but stayed at the bargaining table. Some time in the dark hours of Sunday morning, a deal was done.

We don't know yet what that deal contains and we probably won't until it is ratified by union members. But Mr. Ferguson indicated he had made important concessions. If so, and Mr. Ford has managed to wring big gains from a tough union rival without even an hour of strike or lockout, then it will be a big political win for Canada' most-watched mayor.

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