It’s Harper vs. Europe at the G20

What’s behind Stephen Harper’s refusal to pay into an European bailout fund? John Geddes explains

Just say non

Christinne Muschi/Reuters

On the international economic stage, Canada is usually cast in the supporting role of the reliable consensus-seeker. But when he joins the leaders of the world’s major economies next week at Los Cabos, Mexico, for what is shaping up as a high-pressure G20 summit, Prime Minister Stephen Harper will be playing a less familiar part. Harper’s refusal to contribute to an International Monetary Fund plan to help stabilize Europe’s economy has been described by a major ally as “irritating” and slammed by a former top federal Finance official for jeopardizing hard-won Canadian credibility when serious economic challenges are up for discussion at the highest levels.

The fact that Canada was holding out, along with the U.S., as the IMF sought more resources in the face of Europe’s prolonged crisis has been a simmering issue for months. Only recently, though, has it shifted from being a topic of arcane debate among international affairs wonks to fodder for loud partisan slanging on Parliament Hill. When Thomas Mulcair voiced support for the IMF plan last week, the Conservative attack machine suddenly revved up, and a succession of Tory MPs took turns denouncing the NDP leader for asking “Canadians to tighten their belts so they can hand out billions of dollars to Europe,” in the process putting “a huge burden on the economy here.”

That characterization did not, needless to say, match the IMF’s preferred description of its strategy. Since last year, IMF head Christine Lagarde has been travelling the world, seeking more than $400 billion in new support to draw on if needed to shore up Europe’s various troubled economies. Almost all of the G20’s members, from Australia to Japan, are expected to confirm pledges to Lagarde’s kitty when they gather at Los Cabos. But Harper expressed stern skepticism about putting Canadian money into any eurozone bailout at last spring’s G20 meeting in Cannes, France. Since then, he and Finance Minister Jim Flaherty have consistently argued Europe is rich enough to solve its own problems, and the IMF’s proper role is to support poorer countries.

Yet Lagarde seemed to hold out hope that, once enough European money was firmly committed, Ottawa would eventually come aboard. “I say that Canada is a long-standing member of the IMF, has always been a very active partner in the multilateral framework,” she told CBC back in February, “and I remain convinced it will want to play its role.” That made a certain strategic sense. After all, Harper has been willing to take international criticism for his controversial stances on hot-button issues like climate change and the Middle East, but on economic matters, he has positioned his government as a constructive, mainstream player.

Instead of coming around, though, he has backed further off from the IMF as the G20 summit approached. And his tactical bid to score domestic political points by slamming the NDP’s pro-IMF stand appeared to rule out any late reversal.

Scott Clark, Canada’s former IMF executive director and a retired deputy minister of Finance, said the Conservative portrayal of the IMF plan is a distortion. He said Canada is being asked to lend the IMF extra money out of the Bank of Canada’s ample foreign exchange reserves. “By refusing to join the G20 initiative to augment IMF resources,” Clark wrote on his 3D Policy blog, “Canada’s credibility in the G20 will be seriously diminished.”

But some other experts sided with the government. “Europe does not need a financial contribution from Canada to solve its problems,” said Queen’s University business professor Louis Gagnon. Laurence Booth, a professor at University of Toronto’s Rotman School of Management, agreed, arguing any IMF help that seemed to be for fragile European countries like Spain or Greece would in fact mainly benefit German and French banks that loaned them money in the first place.

Perrin Beatty, president of the Canadian Chamber of Commerce, broadly supports the government’s position on the IMF, at least for now. But he also stressed that the big question marks looming over Europe also pose a threat to the global economy, Canada included. Will a recent European Union package turn out to be enough to restore market confidence in Spain’s vulnerable banks? How will markets react if the Greek election on June 17—-the eve of the Los Cabos summit—-elects a leftist government that rejects the existing EU bailout and austerity plan for Greece? Beatty suggested any further severe setbacks in Europe might prompt Harper and Flaherty—and others—to think again. “If the situation were sufficiently serious,” he said, “you’d see all sorts of countries taking a fresh look at all sorts of issues.”

No matter what happens next, Canada’s relations with Europe have been strained. Germany’s ambassador to Canada told the Globe and Mail the Harper government’s IMF stance is “somewhat irritating and somewhat disappointing.” Both Harper and Flaherty have chided Europe for not grappling more resolutely with serial sovereign debt crises. The superior tone can’t be very welcome. “Inevitably, Europe is feeling tender right now,” Beatty said. “Their attitude is that if anyone wants to offer them anything, it’s not advice but money they want.”

John Curtis, a senior fellow at the C.D. Howe Institute in Toronto, and a former top economist and trade official in the federal government, said a key underrated factor behind Canada’s position is probably North American solidarity. President Barack Obama has also declined to give the IMF more resources to grapple with Europe, possibly because the U.S. Congress would fight any such move. “I suspect,” Curtis said, “we’re playing our traditional role of not wanting to leave the Americans exposed.”

Still, he added that Harper will need to find a way to look more supportive toward Europe before too long. The difficult last stages of negotiating a Canada-EU free trade agreement are now underway. While Curtis said Harper is unlikely to try launching any significant Canadian overture toward Europe at Los Cabos, more subtle hints of a future relationship-mending bid are possible at the summit. “Harper can say, ‘We’re flexible’—he doesn’t have to say much more,” he suggested. “Even if he says that, that opens a crack.”

On the other hand, Curtis noted that Harper hasn’t betrayed much indication in the past that he’s uncomfortable being at odds with many European governments. Late last year, for instance, Canada’s opposition to extending the Kyoto Protocol drew heavy criticism at the United Nations climate change conference in Durban, South Africa. And Harper’s staunch support for Israel in voting at the UN has set Canada apart from old allies. “I suspect he’s not the most popular guy at the table,” Curtis said. “But he’s not too worried—that’s the kind of guy he is.”


It’s Harper vs. Europe at the G20

  1. “But he’s not too worried—that’s the kind of guy he is.”

    Just like Alfred E. Neuman.

  2. I’m very glad our tax dollars aren’t going to support the right of some lazy Europeans to retire 10-15 years earlier than I will ever hope to do or to prop up German and French banks.

    • So am I. Of course, since no tax dollars would be given to the IMF, what the hell your comment has to do with this story I haven’t a clue.

      • The money would be coming from the Bank of Canada, a publicly held bank, meaning all of it’s assets belong to the people of Canada. Unless you think the bank is going to get a paper route, that means the money will be coming from the tax payer, hence “tax dollars”.

        • Funds are not given to the IMF; funds are lent to the IMF. More importantly the funds that would be lent to the IMF would not come from Canadian taxpayers. The funds would come from foreign exchange reserves held at the Bank of Canada. As of May 23, 2012 Canada had foreign exchange reserves of $68.7 billion … Were Canada to contribute to the G-20 fund the “contribution” would involve a transfer of SDRs from the exchange reserves to the IMF in exchange for a commitment that the funds would be repaid. There would be no use of taxpayers’ money and there would be no budgetary impact.”

          Do try again.

          • I still don’t understand where you think this money came from in the first place, or where it continues to come from, seeing as it must be coninutally “topped up” do to inflation. Secondly, how does one guarantee that the money wil be returned, when the real issue is not that these countries don’t have enough money, it’s that the money they have is extremely poorly managed? The IMF doesn’t earn money, it is contributed by memeber states. So this money is lent to the IMF, which in turn lends it to Greece or Spain, who then defaults on thier loans. because they have refused to make substantive changes, and the money to repay the debt to Canada comes from where?

          • Hint: There’s no real money there to begin with.

  3. Canada has been ignored on the world stage for so long before Harper’s shenanigans that it will take us a century to get back from being mouthy lunatics to relatively benign.

    So glad we didn’t get a seat on the security council.

  4. Steady as she goes Captain Harper!!

    Great comment on an interesting Bloomberg article re the Euro crisis.


    “The economic model which develops from a socialist political environment is at its very core unsustainable. Its underlining economic structure steadily decays over many decades. That is to say the net effects of socialist policies do not immediately present themselves. It can take many years or decades for a country to suffer the consequences of such policies.

    Inherently, socialism creates an ever increasing centralized government, which must justify its growing power, size and cost by providing more services, entitlements and protection via laws and regulations for its citizens. The cost of this ever increasing, self justifying central body is crippling to an economy. Real time costs (i.e., year to year budgetary) and long term legacy liabilities (i.e., pensions, benefits, retirement cost, etc.) of public sector employees grow at a significantly greater rate than similar private sector employees.

    Additionally, the continued growth of public sector employment undermines private sector stability and growth (i.e., a dollar or euro spent in the private sector is more efficient than the same monetary unit spent in the public sector). Finally, the most concerning element is a labyrinth of regulations which stunt private sector business growth, individual freedom and retard investment capital required in the creation of new opportunities. Nowhere is this more evident than in the environmental regulations.

    Socialism sells an ideology of “equal outcome” for all as part of its imagined utopia, but even this concept is flawed at a fundamental level. Human behavior is such that it responds and performs better when it is duly incentivized and logically this does not occur in a society where a person is provided for regardless of their efforts or performance.

    The standard cliché of “socialism works until you run out of other people’s money” is over simplified. However, if your economy is surrounded by failing socialist economies, your economy will undoubtedly suffer and also bear their burden, which is playing itself out right now in the euro zone crisis.”

    • it’s terrifying to learn that relatively influential people actually make relevant decisions without actually knowing what socialism means.

      • I’m curious, what does it mean?

        • Shared Values. The acceptance that we need each other and it is in our best interests as a species to care for each other, to cooperate. Also, the acceptance that the prime characteristic of a civilized society is the absence of violence (barbarism) and competition is inherently conflictual.

          • I think there is a lot of things in your reply that could be said of the capitalistic, free-market society. The free-market society is certainly co-operative; it is based on free (uncoerced) exchange for mutual benefit. Its members specialise their productive efforts in recognition that the division of labour results in a higher standard of living for all – you might even call it an acceptance that we need each other, or at least that we are better off with each other. The members of the capitalistic society accept that the prime characteristic of a civilised society is the absence of violence, and thus consider inviolable the right of the individual to his person and property.

            Competition is undoubtedly a significant part of the capitalistic society. But we must remember that the competition in capitalism is between businesses trying to outperform each other on the market. This amounts to a perpetual effort to serve mankind better goods and at cheaper prices than everyone else.

    • “Human behavior is such that it responds and performs better when it is
      duly incentivized and logically this does not occur in a society where a
      person is provided for regardless of their efforts or performance.”

      You should read up on behavioural science a bit more. It’s been proven for the last 30 years that the above statement is not absolute. There is a nifty TED talk about it too. Also, explain to me volunteerism, non-profits (including charities), churches, social enterprises and the likes. Explain why I took a 65% pay cut to work for a non-profit bank as a reasonable and rational career choice. I echo GFMD’s comment.

      • I agree that the statement is not absolute, but it is the case for the majority of the population. It is human instinct to compete with each other, and because the size of your house, or bank account is a measurable metric, it is an area where we compete. It may not be the metric for yourself and others, and good for you and them, but even you can’t ignore you comepetitive nature in some aspects of your life.

        • Okay, but to suggest that competitive instinct is the only, or even primary, reason why people work is bullshit.

          • I didn’t suggest it is the only reason people work, my thesis was that it is the main reason socialism, and to a larger extent, communism are a fantasy

          • Learn what the hell socialism actually is before you think to comment on it.. or look like an idiot. Your choice.

      • I do not think that the fact that people may be charitable is a refutation of the statement that people perform better when they are incentivised.

        • Fair enough Justin. The incentive could be intangible, like more happiness. I think most think of incentives in the tangible sense, like money, however. This is what concerns me.

    • First, money spent in the private sector is not more efficient than money spent in the public sector. 95% of all private enterprises fail, which is a waste of 100% of the resources invested into that enterprise. Sure, the successful ones may be more efficient, but to write off all the failures as not existing is either ignorant or intellectually dishonest.

      Second, the article writer needs to learn to look around at the world rather than simply repeat what the friedman institute tried to preach. Nordic countries tend to refute his assertions on the left, and countries like Ireland, Argentina, and most third world nations refute it from the right.

      Third, as GFMD points out, the article writer doesn’t even know what the hell socialism actually is or sells. Perhaps he should look beyond the McCarthy Institute for his definitions.

      • Business failure is a proof of the efficiency of the private sector, not the opposite. Businesses fail because other business are doing it better (more efficiently!). It is not one hundred per cent of the resources invested into a failed enterprise that are wasted because other businesses can buy up those resources from the failed firms. This way, resources end up in the possession of those who use them most efficiently – sort of like getting the ball to LeBron.

        The public sector, on the other hand, is inefficient precisely because it can’t fail. This means it can endlessly go on wasting resources – and because there is no profit or loss, it is impossible to know just how inefficient it is.

        • No.. it’s not a proof. It’s a cause. It’s the cause of the efficiency of those that are left behind.
          But the resources used are always wasted.

          And no, the public sector can’t go on forever, because we have elections.

          • Are you saying that business failure is the cause of the efficiency of those that are left behind? If so, I am afraid I do not understand what you mean by this. Could you explain?

          • Try reading your comment again. Then you might understand.

            Business failure is the cause of why the private sector, as a whole, is efficient. I’m not arguing with you about that.

            I’m arguing with the commonly held notion that private enterprise is always more efficient. In 95% of the specific cases, it fails. That’s not efficient at all.

          • If we are using the rate of business failure as the measure of private sector (in)efficiency, how do we determine how efficient the public sector is?

          • Good question. I’ve got no good answer.

            Especially because the bulk of things that the public sector takes up simply cannot be duplicated by the private sector, as the benefits fall to the public in general, and thus cannot be readily turned into profitable opportunities without disadvantaging whole swaths of people.

  5. If they can afford to retire at 62, they can afford to float their own banks. I am glad Harper isn’t dancing the jig for these backward socialists. Guaranteed they will hoover every dollar you offer and it will only increase their sense of entitlement.

  6. If there was a credible belief that loaning/giving/investing money in these European basket cases would solve the problem, I could see providing assistance. There isn’t. To date, every one of these countries has done its best to avoid fixing the problem (spending more than they have) while trying to convince their populations that the welfare, hand-out policies will continue. Until Greece, Spain, Italy, etc stop digging the debt hole deeper, any money sent to them will be wasted by politicians wanting to get re-elected. Unfortunately, France has now joined the irresponsible group, electing a socialist, welfare promoting President who will allow that country to become a basket case as well. As for us poor slobs in Ontario, we are fast becoming the broke, welfare loving Greece of Canada – perhaps not yet – Quebec is already the broke, welfare loving capital of this country.

  7. Why should Canadian taxpayers pays to bailout Germany and German bankers, who are filthy rich, because that is who is getting bailed out? Germany is a wealthy country benefitting enormously from the profligracy of the periphery. Let it bail out its own banks.

  8. Europe can go suck an egg. they complain about our “dirty” oil so why do they want our “dirty” money?
    Canada doesn’t need Europe, our trading partners are the US and Asia.

  9. Mulcair can go home to France.

    • He was born in Ottawa, Ontario.
      Harper was born in Toronto, Ontario.

      Ontario is in Canada

      • Mulcair CHOSE France as his dual country of loyalty. Does Canada come first? Do you want a PM of whom you even need to ask that question?

        • We already have one!

  10. Mulcair’s desire to contribute Canadian money to the Europeans is one reason why a Prime Minister should not be a dual citizen of two countries.

    Being a French citizen as well as Canadian citizen means he will not be totally bought into only doing what’s right for Canada as Mulcair has his French alliances tainting his decision.

  11. Unionized factory workers in the EU take the entire month of July off for “vacations” as do many government workers. Maybe if they took shorter holidays and retired later they would experience what Canadian and American workers are enduring.


    • Observant – a joke hey?
      Having worked in Europe I can categorically state you are not telling the truth about holidays. In fact you are lying. I have had more days off since arriving in Canada than I ever did working there.
      But you can keep subsidising US industry (F35s) and allowing their law enforcement unfettered access to our country and that is okay; but bailing out a continent that is in a crisis created by US politicians and bankers is beyond the pale.
      I hope the countries of Europe take out legal action against the US for it’s gross irresponsibility with respect to the deregulation of the banking sector. The US taught the rest of us about the effectiveness of class action law suits, now let’s see if they like being elevated on their own petard.

      • I agree completely. Lets scrap the F-35 and buy that super advanced, top of the line Canadian made fighter jet… oh wait.
        Secondly, Europe is in financial trouble for a miriad of reasons, none of which have to do with banking regulations in the US. Most Eurozone countries faced similar housing bubbles to that of the US, but they were slow to respond to the crisis. On top of that, the cooperation that would seem to be the benefit of a monetary union was actually hampered by the lack of a fiscal union. Too many sets of regulations, too many sets of beuraucrats, too many sets of governments.

  12. Why send money to boost an economy that isn’t working. Fix the problems first and then maybe there will be some help to stabilize and keep it going.

  13. Harper makes no sense. Aside from being the illegitimate PM of Canada through cheating in elections, who does he think will be all excited about competing for $5.00 an hour jobs? That is where he wants all of us again and more money to those providing the jobs while they rape the country of our riches. He hates socialism, but what makes him think anyone is going to love what he has in store for Canada? He’s definitely setting up the rich 1% with plans of making slaves of the rest of us. And I wonder how he’d fell if all these job and wage cuts were in his back yard? I think he’d be screaming blue murder. He seems like a guy that has never had to work a day in his life and doesn’t think he needs to.

    • Wants the EU to innovate, tighten their belts, and make hard decisions that run directly into public opinion. In short, everything he himself wouldn’t dream of doing.

  14. 110000 Canadians died helping Europe with its problems. I think we have given them enough.

  15. It is known, another P.M. was who saved our Canadian bacon. Harper had nothing to do with that, what-so-ever.

    Harper is merging Canada in with Communist China. He thinks he will make trillions off the huge chunks of the tar sands, that China now owns. Good luck with that. Contractors in the tar sands, find it pretty tough going, to collect their money from China. They are also bringing over hordes of Chinese, to work their tar sands, right down to Chinese cooks. Communist China is also bringing over swarms, to build the Enbridhe pipeline. Canadian company’s in China, are having trouble collecting their money, and battling with the corruption.

    Communist China has been hacking into other country’s secret files. Seems it was a very bad error, to buy their electronic components from Communist China. These country’s are very worried about their country’s security. The U.S. has infected components in their missiles and other weapons. Perhaps it isn’t only our high dollar, that the U.S. is pulling their company’s out of Canada, costing Canadians thousands of job losses. I guess we can’t blame them for that. Harper thumbed his nose at the U.S. Harper is encouraging Canadians to shop in the U.S. Harper thinks he controls Communist China, good luck with that too. Harper is still trying to get into, the New Trans Pacific Trade Group. They had voted to keep Harper out.

    No wonder, the U.N. Security Council refused Harper a seat. I was in disbelief!!! Canada never used to be refused anything, by the entire world. Those were the days when, Canada used to be, a good and decent country.

    Holland loved our young Canadian boys, who liberated them from Nazi Germany. I had six members of my family’s in WW11. They were shot and blown to bits, so we wouldn’t have evil such as Harper governing our country. Three of them were in Holland. We are still in touch with those friends, my brothers made, while in Holland.

    Harper was not worth their dying for…as our young military veterans are seeing to-day.

    • hinotes…for all your demonizing Harper and complaining about the buiness practices of the Chinese, you must know that Libya was as bad or worse of an oil business partner for the many decades that Canada and its oil companies were in bed with Ghadafi. You can’t blame Harper for initiating that long-standing relationship. As for Canada not being given a seat on the UN security committee….come off it. They would rather give a seat to Iran. They grant the seats as a way to garner political influence or reward some country. They already had Canada sucked into carrying a heavy load in Afghanistan, not to mention the fact that we have been “yes men” for every war and peace keeping mission we have been called on to participate in by the UN. They don’t need to dangle a seat in front of us. We are a “sure thing”.

      • Harper “wanted in”, on the U.N. Security Council. He was very annoyed, he was refused. Europe DID tell Harper where to go, at the meeting in Mexico. Europe was really angry at Harper. He gave them false statements, regarding the toxicity of the dirty tar sands oil. Other country’s DO know, who was responsible for Canada’s standing in the recession. The U.S. for one. Another Common Wealth country knows.

        Have you read of, Harper’s Northern Foundation Party, of 1989? He was Policy Chief’

        Have you read: Harper gives a speech in New York, at the Council of Foreign Relations? This was Sept 25/2007.

        Do you think it right…That Communist China has bought up huge chunks of the tar sands. That hordes of Chinese will work the tar sands, right down to Chinese cooks. That Communist China bringing swarms, to build the Enbridge pipeline. That Canadians don’t even get the refining jobs? That Harper is stopping the funding for, F.N. program, training them for mining jobs? That China is bringing their own people to work BC mines. That BC’s mill industry went to China?

        Fadden of CSIS, warned of China’s deep intrusion into Canada. He was damned well right.
        Libya is not trying to, take over this country.

        That, Luis Moreno-Ocampo, ICC’s Chief Prosecutor, is serving Harper a
        summons for, war crimes and crimes against humanity. Harper does have more
        than a few lawsuits against him.

  16. “socialism works until you run out of other people’s money” The same can be said of the present form of capitalism as practised in the US. Odd that there is no mention of America’s soaring debt, the pillaging of the public purse and its grotesque addiction to military spending. What Washington says Harper does.

  17. Harper is right to say no. Many Europeans receive cradle to grave social benefits. They can tighten their belts. There is plenty of wealth in Europe, they should solve their own problems. Lots of countries are in truly desperate need of help, and their citizens already live miserable lives compared to Europeans.

  18. There is no way our hard earned tax dollars should subsidize more EU profligacy and irresponsibility. Easy money encourages excesses.

    That dufuss Mulcair would give our money away when we have our own deficit to tackle. This man is dangerous, and should never get near power.

  19. A collapse of the Euro-zone economy will have ripple effects in the markets in Canada. I understand the political reasons for Harper’s and Flaherty’s statements, based on the borderline raving anti-European comments from their supporters above. But economically, cheering for a collapse or contraction of the Euro-zone is asking for fiscal troubles on our side of the Atlantic.

    • The point of the “anti-European” comments is that Europe needs to learn to manage its own problems. Canadians shouldn’t have to pay Greeks so that they can retire over a decade before us. The EU can’t just keep giving money to people who don’t deserve it, because that makes the problem bigger.

  20. Since when did Canadians start sounding like Fox News pundits?

  21. “…slammed by a former top federal Finance official for jeopardizing hard-won Canadian credibilit…”
    Hell, THAT credibility harper blew a long time ago.

  22. “I suspect he’s not the most popular guy at the table,” Curtis said. “But he’s not too worried—that’s the kind of guy he is.”
    They don’t come any more paradnoid than harper.

  23. And yet Adolf Harper has absolutely no qualms about picking taxpayers’ pockets on the home front.

  24. Germany and France have created a Black Hole and now they want Canada to get sucked into it. The EU is a failure on numerous levels.
    The IMF has become controlled by Europe and is the personal piggy bank of the EU.
    Unlike the drowning man who fell accidently and will drag his rescuer under, the financial crisis has been manufactured by the EU and now they are trying to suck in as many as will foolishly take part in their Ponzi scheme.
    Protect us as best you can, carry on Mr. Harper.

  25. Even though myself, and Mr. Harper by evidence of the Canadian economic action plan are both supporters of Keynesian economic policy’s, I think it’s a logical fallacy to believe one country giving another country money is a way to fix their economic problems. Keynesian economics only work successfully in terms of a growing debt when the country in question is growing it’s GDP enough to sustain and eventually pay off it’s debts, this it worked in the 40s, 50s and 60s and it was extremely successful. When Europe got payments the rebuild after WWII with the Marshall plan the economy was growing at a substantial rate and everybody was on the same page about the direction of economic policy, now however all the Eurozone is doing is devoting itself to austerity measures, so any money we or anyone else gives to Europe at this time will not help them out of their own problem. Mr. Harper is smart to not give the EU any money at the moment. If the Europeans want to be able to keep their welfare programs they’re either going to need to find a way to drastically increase their GDP growth or find the revenue necessary to sustain the programs. I do believe that countries like Greece and Spain however are unsalvigeable, the people of those country’s don’t have the work ethic to sol their problem and they want their governments to give them social programs that they can’t sustain, and have the rest of Europe pay for their laziness

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