With Karlheinz Schreiber revealing that there was nothing wrong with his dealings with former prime minister Brian Mulroney, Stephane Dion has a problem.

The Schreiber revelations were supposed to turn things around for the Liberals. The Conservatives would be embroiled in scandal, while the Liberals would claw their way back to fighting trim in the polls.

But it has not worked out that way. The polls are showing that the Conservatives have not suffered at all because of Karlheinz Schreiber. Quite the opposite. The Conservative numbers have actually improved:

The survey puts the Tories at 36 per cent support nationally, compared to 28 per cent for the Liberals _ unchanged from a survey two weeks ago.

The NDP was at 16 per cent and Green Party at 11 per cent.

The Liberals have been trying to link Harper's government to revelations that Mulroney, while still an MP in 1993, accepted the first of three $100,000 cash payments from Schreiber, a German-Canadian arms lobbyist who is wanted in Germany on charges of fraud, bribery and tax evasion.

Schreiber was a principal figure in the RCMP probe into allegations of kickbacks in Air Canada's purchase of a fleet of Airbus planes.

Mulroney successfully sued the previous Liberal government for $2.1 million for linking him to the scandal and the RCMP eventually closed its investigation in 2003 without laying any charges.

Harris/Decima president Bruce Anderson said the Liberal tactic of trying to link the scandal to the Harper Tories is "not working yet.''

Indeed, he said the Tories have steadily firmed up their support over the course of the year despite "the biggest political story that could have hurt'' the Harper government.

If it's not working, is it time to move on? Normally the answer would be yes, but the Liberals have another reason to keep flogging Karlheinz Schreiber. In particular, Stephane Dion has a reason.

Tucked at the end of this report is news that the Liberals have never polled so badly since Stephane Dion took over as Liberal Party leader:

By contrast, he said the Liberals are in a worse position in every region of the country than they were in at the start of the year, when they were enjoying a brief honeymoon following Stephane Dion's selection as leader.

In the erstwhile Liberal stronghold of Ontario, the poll suggests the Conservatives are now in a statistical tie with the Liberals, with 35 per cent and 37 per cent support respectively.

The NDP was at 16 per cent and the Greens at 11 per cent.

The survey also suggests that the Tories have overtaken the Liberals in Atlantic Canada, another longtime Grit stronghold. The poll put the Conservatives ahead at 39 per cent, compared to 34 per cent for the Liberals, 18 per cent for the NDP and 8 per cent for the Greens.

In Quebec, the Bloc Quebecois was in the lead with 35 per cent, followed by the Tories at 23 per cent, the Liberals at 18 per cent, the NDP at 14 per cent and the Greens at 8 per cent.

What happened?

Well, to put it simply, nothing has happened. Stephane Dion continues his long slide, dragging the Liberals down with him. The Schreiber thing was irrelevant to most Canadians. It is an interesting diversion, but not a distraction. Stephane Dion has not succeeded at distracting Canadians from evaluating him a potential prime minister material, and concluding he is not fit for the position.

Nevertheless, though Canadians are not fooled, Liberals might be. Caught up in the excitement that is Karlheinz Schreiber, Liberal partisans might only give this poll a passing glance, if at all. Senior Liberals are certainly aware of it, and internal party polling is no doubt telling them the same thing but with greater fidelity.

But the Schreiber thing means that these senior Liberals don't have to talk about the miserable polls. While all the major media outlets devote time to Karlheinz Schreiber and Brian Mulroney, there won't be enough time for Gerard Kennedy and Martha Hall Findlay and others to be put in front of the cameras and asked about how poorly the Liberals seem to be doing, and to defend their decisions to support Stephane Dion at the leadership convention. And that means grassroots Liberals aren't going to have to listen to their leadership continue to defend Stephane Dion (and themselves), something that must seem both disheartening and repetitive.

Or disheartening because it has become so repetitive.

So the Karlheinz Schreiber thing is not hurting the Conservatives. But it is giving the Liberals a break. It's not making a difference, as we can see. Still, no one enjoys being asked just how much worse is it going to get, forcing a grin, and saying things aren't all that bad. Expect the Liberals to keep this alive for as long as possible.

Schreiber has not turned out to be a sword with which to strike down the Conservatives. Nor has it become a shield with which to defend Stephane Dion's leadership.

But it has turned out to be a comfortable hole to hide in. And until the media gets tired of Schreiber, the Liberals aren't likely to be forced out of hole for a while. It must seem like a victory of sorts, not having everyone talking about how bad things are.

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