International Business: CANADA
THE CALL OF THE WILD IN WESTERN CANADA
Edward E. McNally, CEO of Calgary-based Big Rock Brewery Ltd., is fed up with Canadian federalism--and Quebec's separatism. His sentiments are shared by a growing number of executives in Western Canada who see taxes from their resource-rich provinces subsidizing Eastern provinces, especially Quebec, half a continent away. Besides, says McNally, given Quebec's high beer taxes, "it's easier to sell in the U.S. than it is in Quebec." He's so frustrated that if Quebec wants independence from the Canadian federation, he says, they should be told "to get the hell out."
"DANGEROUS." Welcome to Canada's Wild West. Even as an aggrieved Quebec inches ever closer to secession, a Newt Gingrich-style right-wing is building momentum in Western Canada. Championed by the Calgary-based Reform Party, the movement wants to slash federal spending and give provinces control over programs ranging from health care to education. Meanwhile, the party's open hostility to Quebec's longstanding demands for a special role in Canada could give the separatists just the push they need to destroy the confederation. "The Reform Party is playing a very dangerous game," says former Prime Minister Joe Clark.
The timing is risky. On Oct. 30, Quebec voters narrowly defeated a sovereignty referendum. But polls show secessionist sentiment has actually risen since then. Prime Minister Jean Chretien's challenge is to meet enough of Quebec's perennial demands to quell the rising support for sovereignty without permanently alienating increasingly vocal Westerners. But his latest unity plan, offered to Parliament on Nov. 29, has been rejected by both separatists and the Reform Party. Unless Chretien changes his strategy fast, warns Reform Party leader Preston Manning, "he'll lose the next and last contest with the separatists."
Manning says there's a way around the stalemate. Both the West and Quebec agree on one thing--that Canada needs to be radically decentralized. But Chretien has offered provinces more control over just one program: employment training.
Nor has Chretien satisfied Western demands for fiscal austerity. Alberta Premier Ralph Klein is enormously popular after slashing spending 20% as part of a plan to wipe out a $2.6 billion budget deficit by next year. "These steps have absolutely improved the business environment," says Doug Mitchell, president of Calgary's Chamber of Commerce, who notes that Alberta's unemployment rate is just 7.6%, vs. 9.4% in Canada as a whole. Mitchell predicts Klein will soon cut taxes, which he says are already the lowest in Canada.
POTSHOTS. The Reform Party has taken its crusade to Ottawa. It wants Canada's budget balanced in three years and control over many programs passed to the provinces. Already, Alberta has permitted private clinics to offer services with long waiting lists, such as cataract operations. Citing erosion of "national standards," Ottawa retaliated by withholding some of Alberta's health-care funding.
Albertans and British Columbians, upset with Ottawa's meddling, are the backbone of the Reform Party, founded in 1987 by Manning. Under the 53-year-old former management consultant's lead, Reform holds 52 seats out of 295 in the House of Commons--just one shy of official Opposition status.
"Traditional federalism has brought this country to the very brink of disaster," says Manning. Such talk has put the West on a collision course with Chretien's conciliatory approach to Quebec. Chretien's move to recognize the French-speaking province as a distinct society and offer it a veto over constitutional amendments would make Quebec superior to the other provinces, the Reform Party complains.
That may play into the hands of Quebec separatists. But to quench separatist flames, Reform is preparing a tough-minded plan to make it "crystal clear, before another referendum, exactly what the negative implications of secession are," says Manning. His party would challenge Quebec's current boundaries and threaten to veto an independent Quebec's application for membership in the North American Free Trade Agreement.
Despite growing pressure for change from Quebec and Western Canada, Chretien is determined to fight for the status quo, with as few changes as possible. If Ottawa can't put a lid on its debt, it will eventually be forced to proffer a larger role to the provinces. The only question is whether that will happen in time to head off divorce with Quebec or as part of a messy breakup.By William C. Symonds in Calgary, Alta.