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Saddle Lake Chief Ed Makokis.

People who live on a reserve in northern Alberta have begun a formal boycott of the nearby community of St. Paul, accusing the townspeople of racism.

The Saddle Lake First Nation says it plans to build its own stores on the reserve, start delivering services such as health care and operate shuttle buses to other towns so people living on the reserve don't spend money in St. Paul.

"It's both to hurt their economy and to show them that they really need us," said Saddle Lake Chief Ed Makokis.

The move stems from disparaging comments in a local newspaper attributed to a town councillor in St. Paul.

Coun. Guy Germain was quoted as blaming a "small percentage" of people from the reserve for being "the problem" behind crime in St. Paul, a town of 5,000 that lies about 210 kilometres northeast of Edmonton.

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Colin Porozni of the St. Paul Value Drug Mart.

Many band members said Germain's comments were just one example of the racism they experience in town.

At a meeting on Monday, the band council voted to start the boycott and began plans to build stores on the reserve.

The same day, the Indian Association of Alberta called on all First Nations people to avoid St. Paul and other nearby reserves have said they will join the boycott.

Band member Pat Makokis, who said she's faced discrimination from storekeepers in St. Paul, hopes the two communities can forge a better understanding – even if it takes the boycott to do it.

"We need them to take a real sense of wanting to learn," she said. "Unfortunately, how that's happening right now is by way of economic sanction."

Boycott could devastate town: businesses

Store owners in St. Paul predicted a boycott could be harmful because as much as 60 per cent of their business comes from the 8,000 people who live on the Saddle Lake reserve.

"We rely on them," said Colin Porozni of the St. Paul Value Drug Mart.

"I don't know the exact numbers but I would say at least a third of my business is from the Saddle Lake reserve and area there. By all means, we're going to feel it."

Ron Muller, who owns a furniture store, agreed.

"We've got BSE that we're contending with, we've got a slightly down-turned economy – it's not good."

The town's mayor and business leaders denied that racism is widespread in their community and they said they're eager to patch up relations quickly between the two communities.

However, Muller and other townspeople said they're not clear what people on the reserve want in order to call off the boycott.

Business leaders in St. Paul are scheduled to meet with native leaders this week, and the mayor said he hopes to meet with the band council next week.

Germain apologized in a letter sent to a newspaper and remains on town council. He could not be reached for comment.