Last week I wrote a post about Quebec’s April 7th provincial election as something that could raise questions of national unity. Well, that turned out to be an understatement. Major developments in the week that followed have put the fractious issue of sovereignty front and center for Quebec and the nation.
First, a major player entered the race as a candidate on the side of Premier Pauline Marois and the Parti Québécois. You may not know the name but Pierre Karl Péladeau is of sufficient fame and clout that he’s often simply referred to in Quebec as “PKP”. A write-up by Martin Patriquin in Maclean’s magazine called the development a stunning coup:
Marois has now punctuated her transformation by recruiting media mogul Pierre Karl Péladeau, former Quebecor CEO and arguably Quebec’s best-known, most notorious businessman. Péladeau the businessman has media holdings within and beyond Quebec, and has spent his career being coy on Quebec’s national question—if only to better do business in both official languages. Péladeau the politician put an end to the ambiguity at a news conference announcing his candidacy in the suburban riding of Saint-Jérôme. “My support of the Parti Québécois is a support of my deepest-held and most personal values, and that is to make Quebec a country,” he said, pumping his right fist in the air.
This is definitely a case of politics making for strange bedfellows. The PQ is usually pro-union and PKP is infamous for hard-line negotiating at the many new outlets he owns, including 14 lockouts and the use of “scabs” during some labor disputes. And what of the problem of balanced news coverage when the owner of a media empire is running for office? That’s been met with an announcement PKP will resign from his leadership role and place his investments in a blind trust, for the duration of the election, at least. Still, a different Maclean’s article (also) by Martin Patriquin says it could pay off. How? Because PKP “a brutally effective businessman” who knows how to turn a profit and can represent “… the principles of free market and entrepreneurship.”
Anyway, like it or not, suddenly the election seems to be all about national unity – well, outside of Quebec, at least. National observers are scratching their heads at what sounds like surge of interesting assurances from Marois: Quebec can become a nation with seamless borders within Canada, no need for passports for trans-Canada travel. No need for a new currency, Quebec can stay on the Canadian dollar and should get its own seat at the Bank of Canada governing board.
There are a number of reasons why the money part doesn’t sound so easy to the rest of Canada. Political commentator Andrew Coyne put it this way “Dream on, Pauline Marois. Who would want such an unstable partner in an economic union?”
But now consider specifically what that means. Even as a province of Canada, Quebec is carrying an enormous debt burden, upwards of 50 per cent of GDP: on any assumption of how the federal debt would be divided in secession negotiations — gliding lightly over how it could be negotiated — that figure would climb nearer to 90 per cent. Without a currency of its own, Quebec would have no recourse to the printing press, should it have trouble paying its debts: It would all be denominated in another country’s currency, Canadian dollars or other.
What is more, lacking its own currency, it would have no ability to devalue, should it find its exports were uncompetitively priced on world markets. So either it would have to engineer an internal devaluation, that is by forcing down nominal wages and prices — have you met Quebec’s unions? — or it would soon find itself running short of foreign exchange reserves. It is entirely possible financial markets would notice this dilemma, and mark up the interest rate on Quebec’s bonds to take account of the risk, so compounding its debt problems. As a province, after all, Quebec could call on the federal government for assistance. As a country, it would be on its own.
The Maclean’s Stephen Gordon says while an independent Quebec could use the Canadian dollar (or any other country’s dollar) if it so chose, the EU provides good examples of why that won’t really work.
That’s what the national mood sounds like from many prominent columnists and commentators. Going by those accounts, this reads like an on-coming train wreck. But maybe it’s just so much media hype.
Writing in the National Post, Quebec resident and Post business correspondent Nicholas Van Praet suggests the rest of the country should take a pill. Quebec isn’t in the mood for a referendum on leaving Canada. (It ain’t going to happen, he says, full stop.)
Stay tuned on this one, for sure.