Quebec election: lose the leaf, keep the loonie?

Photo: Marie Berne, detail, Creative Commons, some rights reserved

Photo: Marie Berne, detail, Creative Commons, some rights reserved

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.

Curiously, the emergence of sovereignty as a main issue has forced the Liberal candidate for provincial leadership into the role of demanding more concessions from the rest of Canada to make Quebec feel like staying. Memo to Quebec: many of Canada’s other provinces and citizens are tired of what feels like constant petulance and outright blackmail.

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.

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17 Responses to “Quebec election: lose the leaf, keep the loonie?”

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  1. Pete Klein says:

    Maybe Quebec can leave Canada, join with France and become part of the EU. That way, Quebec can cry broke and get money from the US,
    Let’s face it. Quebec is a problem Canada has never been willing to solve.

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  2. “Curiously, the emergence of sovereignty as a main issue has forced the Liberal candidate for provincial leadership into the role of demanding more concessions from the rest of Canada to make Quebec feel like staying.”

    This is actually quite common. Federalist Liberals are often the ones making demands of Ottawa so they don’t look “soft.”

    But no, a referendum is unlikely. Remember that although the PQ runs the government, they only got 31% of the vote in the last general election… not a good base from which to launch an independence campaign.

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  3. mervel says:

    I wonder if the PQ is like the tea party (certainly not on political issues) but by strategy and behavior?

    They scream and yell, don’t like to negotiate but in the end don’t have a viable plan for anything except raising money and contributions from a hardened minority playing on their regional emotions. No thinking person living in Quebec would want to leave the support and help the rest of Canada gives this province, but its fun to talk about, like its fun to talk about Texas succeeding; its a parlor game that plays on our regional vanities, but of course is a farce.

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  4. Mervel: Good question but there is a difference. Since 1976, the PQ has run the government for more than half the time. So it has accepted the responsibility of governing and has shown it can move beyond loud-mouthed bomb throwing in a way that the “tea party” has not.

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  5. mervel says:

    I think that is a good point.

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  6. mervel says:

    Do people in Quebec really want to leave? I mean even the hardliners? It seems they want to benefits of being Canadian without the responsibilities .

    I don’t see how they could survive fiscally? I understand the history and cultural divide and the strong nationalistic feelings; but that is not enough to run a country in the way that Quebec is used to.

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  7. Mervel: having followed Quebec and Canadian politics for nearly 25 years, my sense is that there is about 40% of Quebeckers who will always support independence and about 40% will will always oppose it. It’s those 20% or so in the middle who decide it. The 1995 sovereignty referendum failed by only 1%… and that was with campaign tactics by the Non (pro-Canada) side that were later declared illegal. So it’s not out of the realm of possibility.

    What will harm the sovereigntists’ chances now is the fact that Quebec already has the largest debt-to-GDP ratio of any province in Canada. If they secede, they will no doubt have to assume a portion of Canada’s federal debt on top of that. In a sluggish economy with already high taxes, that’s going to be a tough sell for the other 20%. Quebeckers accept the higher taxes when they’re for social-democratic programs like health care. I’m not sure they’ll accept even higher beyond that to pay back the bankers.

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  8. Just remember: pride is not always rational.

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  9. newt says:

    One thing not mentioned here is Quebec’s First Nations. They wanted no part of sovereignty in the last go-round, and I saw on the CBC the other night that they seem to be solidly against this one. They are relatively small in number, but I believe they own huge amounts of Quebec.

    And, should push come to shove, many have shown themselves willing to take up arms, and use them..

    I wonder to what extent First Nations have been factored into the Quebec independence equation.

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  10. newt says:

    But if Quebec does secede, maybe they could eventually form a really cool confederation with Scotland.

    ‘You read it here first.

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  11. mervel says:

    That’s interesting Brian. Is there lessons for the US here? What does it mean to have a large portion of a nation not share one language?

    But I agree succession is always exciting and pride is not always rational. The areas in the US that seriously talk about succession (with much much smaller numbers certainly than the support Quebec has), but I think it comes down to pride.

    Do Canadians have a sense of treason? I know when Texas in the US talks about succession many call them traitors etc; I take it the Canadian sense of national pride is not as strong or takes a different notion? How do you trust a province where a good portion of the people wish to reject you; Canada as a nation and leave?

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  12. mervel says:

    Would Canada act militarily against Quebec? Certainly the US has shown it would crush any attempt at succession with overwhelming military force.

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  13. newt says:

    This wikipedia article http://en.wikipedia.org/wiki/Quebec_independence_referendum,_1995 on the 1995 Referendum on independence has interesting info, including:

    The pro-independence leadership (there were several) were planning to consider a “yes” vote a fait accompli for independence, although it had presented only as a “preference”They were planning to consider it done, and declare Quebec independent. They were also preparing to bring into creation a Quebec military, and occupy Canadian bases and seize Federal military aircraft.

    The Federalists had few if any firm plans on how to react. They did evacuate military aircraft from Quebec airbases in advance of the election.

    Cree and Inuit groups occupying a huge chunk of northwest Quebec (see map in article)wanted no part of this, voting by majorities of over 95% to remain in the Confederation. As separate provinces, if necessary

    I didn’t see it in a quick read of the article, by I seem to remember the Ottawa government disavowing military action had the “Oui’s” won. But I think it is likely that there were many, many potential points of conflict, especially involving First Nation territory, that bloodshed, and Federal intervention, would have been a likelihood.

    Once you start seceding based on based on local preferences, where does it end?

    I think many of those factors are no different today.

    In other words, a sovereign-voting Quebec would likely result in disaster for Quebec.

    Very strange and troubling to think of Canadians in civil war. But, as Brian MOFYC says above, “Pride is not always rational.” Usually it is the opposite of rational.

    Remind anyone of another current crisis?

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  14. mervel says:

    Yes the First Nations people have treaties with Canada, NOT with the province of Quebec. Quebec has never been known for its defense of native rights, the tribes are right to be very worried.

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  15. Interesting questions. I studied a bit of Quebec history in college. Quebec nationalists hold the very common nationalist view that “self-determination” only goes so far. They view themselves as the oppressed minority and the revindications of First Nations people vis a vis the Quebec government goes against that narrative. The mentality is fairly similar to the Israeli government’s relationship to the Palestinians and various other examples throughout history.

    It is certainly true that the Quebec government has been often seen to trample of First Nations people and land in natural resource development, particularly hydropower.

    As to what lessons it holds for the US, it’s tricky to extrapolate. Yes, there are parts of the US where there are chunks of people who speak Spanish. The overall percentage of Hispanophones in the US is about half the percentage of Francophones in Canada.

    But it’s the concentration that makes Quebec different. About 22% of Canadians are Francophone but nearly 80% of Quebeckers are.

    There is no state where anywhere close to a majority of the population speaks a non-English language at home. I think New Mexico (34%) is the only state where it’s over 1/3.

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  16. Two Cents says:

    I heard the u.s. will take Québec in, but their name has to change to “Really Northern Louisiana”

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  17. mervel says:

    Thanks Brain that is interesting.

    The concentration is certainly the difference and as we have talked, so is the history.

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