By Doug Struck
Washington Post Foreign Service
Tuesday, January 24, 2006 12:00 AM

TORONTO, Jan. 23 -- Canadian voters, saying they were fed up with financial scandals and ready for a change, ended the 12-year run of the ruling Liberal Party on Monday, ousting Prime Minister Paul Martin in favor of a Conservative Party likely to steer a path closer to the United States.

Nearly complete returns in the national election gave a strong victory to Conservative leader StephenHarper, 46, a political strategist from western Canada who jokes about being dull. He shrugged off Martin's accusations that he is too cozy with U.S. conservatives for liberal-leaning Canada, the same accusations that crippled his candidacy in 2004.

But Harper fell short of winning a clear majority in the 308-seat House of Commons. He will need to compromise with opponents to form a government and further his agenda of scaling back social programs, cutting taxes and winnowing the power of the federal government.

The Liberal Party will swap roles with the Conservatives, becoming the largest opposition party. That change is a stinging rebuff of the party, which has regularly dominated Canadian politics since the country's birth, and for Martin, 67, who has been prime minister for only 25 months. Canadians' pride in clean government was shaken by a kickback scandal in the Liberal Party, and by their suspicion that the Liberals had grown cocky in office, they said repeatedly in public opinion surveys.

Martin conceded at midnight. He declared that he would resign from the party leadership, but would keep his seat in Parliament. In a 16-minute speech, Martin vowed that the Liberal Party would survive the setback.

"Ours will be a strong opposition," he said. "I am so proud to be a liberal. We have a right to be proud. We will not lose faith. We will not lose hope."

The final makeup of the Parliament could be affected by recounts in a few districts with close results. But the returns showed the Liberals dropping to 103 seats from 133. The Conservatives captured 125 seats, more than the 98 seats they hold in the current Parliament but far from the 155-seat majority some Conservative strategists had dreamed of winning.

"We showed Canadians tonight that we are truly a national party from coast to coast. We drew in the whole country," Rona Ambrose, a Conservative member of Parliament, said as the returns began to come in.

A step to the political right will be a change for Canada, which has grown increasingly more liberal on social and political issues than its southern neighbor, to the point that Martin attacked Harper as being "pro-American" in the campaign.

The Conservative Party and its political predecessors have in the past championed such positions as outlawing abortion and banning gay marriage, views that polls show are inconsistent with the more tolerant tilt of Canadians.

"I think we have to give it a try. But I am very afraid that it will be too far right," said Florence Koven, 72, emerging from the polls after voting -- reluctantly, she said -- for the Conservative Party. "The unknown always concerns you. Mr. Harper says he is a changed man; we'll see how much he has changed."

Harper, who lost in 2004 when Martin's Liberals portrayed him as too close to U.S. right-wing politics, studiously avoided discussing social issues in this campaign, concentrating instead on his fiscal plans and his pledge to end government corruption.

He also managed to appeal to voters in Quebec, breaking a lock on the province's seats that had been held by the Liberals and Bloc Quebecois. The Bloc, which advocates separation of Quebec from the rest of Canada, appeared to have lost three seats from its current strength of 53 seats, according to partial returns.

The fourth-largest party, the National Democratic Party, which has championed social liberalism, appeared to have added 11 seats to its current bloc of 18.

The election of Harper, who represents Calgary, Alberta, also marks a historic shift of power from the traditional centers in the east to the energy-rich and increasingly affluent western provinces.

"We really have gone from two basic regions, Quebec and Ontario, to three with the West, in which there is a new center of power in Alberta," said Reginald Stuart, a Canadian political scientist.

Martin's ambition to remain prime minister was threatened by the disclosure of a kickback scheme surrounding his Liberal Party predecessor, and by the growing sense among Canadian voters that his party had been in power too long.

Harper hammered on that theme in the campaign, painting the ruling party as arrogant and suffused with what he dubbed "a sense of entitlement."

The tactic worked, and Martin spent much of the campaign defending his integrity. Martin was not personally involved in the scandal, in which aides of former prime minister Jean Chretien are alleged to have steered lucrative advertising contracts to political cronies who then funneled money back to Liberal political campaigns. Martin pleaded with voters to remember that he had ordered the public investigation into the allegations and fired officials named in the probe.

Appearing increasingly desperate as opinion polls showed his party losing, Martin lashed out at Harper, portraying him as an "American-style" neoconservative with a hidden agenda at odds with Canadians.

Martin warned that Harper would try to reverse last year's vote legalizing same-sex marriage, would seek to erode abortion rights and would pack the judiciary with conservative judges.

Harper stayed above the fray, insisting that those social issues were not on his agenda. Instead, he promised to slightly reduce the national sales tax, replace a sputtering national day-care program with direct payments to parents and increase penalties for gun-related crimes.

He vowed to give more power to provinces and suggested a change that would open the first crack in Canada's traditionally sacrosanct national health care program. He proposes giving patients a right to seek outside care if they are required to wait too long for a health care procedure in the national system.

Harper also is seen as ideologically closer to the Bush administration than is the Liberal Party, which balked at joining the invasion of Iraq and refused to sign on to the U.S. plan to develop an antiballistic missile system for North America. Harper has suggested he might revisit the missile defense decision and has said Canada would reject the Kyoto accord on global warming, as the Bush administration has done.

But some Canadians said they believed Harper would still try to enact a conservative social agenda.

"I would do anything to stop the Conservatives," said Phillip Clarkson, 53, a costume designer in Toronto. "I am gay. I want to be married someday. And I want there to be the opportunity to do it."