Canada is going through some rough times, with unemployment at 12.2 percent (the highest since the 1930s), bankruptcies up 35 percent from a year ago, inflation four full points over U.S. levels, and its dollar -- although slightly stronger in the past few weeks -- still worth only 80 U.S. cents.
With the recession expected to result in a decline of as much as 5 percent in Canada's GNP this year, no one talks of real recovery beginning before 1984. As might be expected, Prime Minister Pierre Elliott Trudeau's popularity has fallen off sharply, even in French-speaking Quebec. This past week, in an effort to turn things around and instill a bit of hope, he played musical chairs with his cabinet.
In a cosmetic reshuffle, Allan MacEachen was moved out of the finance minister's slot -- and back to his more comfortable surroundings as secretary of state -- and replaced by the acerbic Marc Lalonde. Lalonde, a lawyer and economist who used to be Trudeau's principal private secretary, had most recently been energy minister, in which post he managed to outrage both the Canadian oil and gas industry and the U.S. government with a "Canadianization" program. This was designed to assure that at least 50 percent of Canada's energy resources would be Canadian-owned by 1990.
A Globe and Mail cartoon reflects one critical view of Lalonde. "Now that I've solved the energy problem," says a scary-looking caricature as he walks away from the wreckage of an energy works, "I'll dash over and straighten out the old economy."
Even his enemies concede that Lalonde is the smartest and most influential politician on the Trudeau team. He's tough, and many find him abrasive. More than anyone else, he is identified with a growing sense of economic nationalism in Canada.
At lunch with reporters in Toronto just a day before the cabinet reshuffle, Lalonde blamed the media for making economic nationalism a "scapegoat" for Canada's problems. "My view is that we've been getting a bum rap in the United States over the past year for our economic policies," said Lalonde. Compared with what the United States practices, he said that Canadian economic nationalism is a "rather tame animal."
Canadian restrictions on foreign ownership have focused on banking, communications, culture, and oil and gas. Canadians are super-sensitive about being "swamped" by American television, movies, books, newsmagazines, and other "cultural" influences to the point where their own national identity may suffer. That is another, and separate story.
I will concentrate in this column on Canada's Foreign Investment and Review Agency, which, since 1975, has been screening new proposals for investments from abroad, and tries to make sure that Canada and Canadians will benefit from them.
During a panel discussion arranged by the Canadian government, David Crane, economics editor of the Toronto Star, said that while Canadians by instinct do not want to be provincial, "nationalism in Canada . . . has more to do with survival . . . Canadians need to feel self-confident about their own economy, and their ability to make their own way in an increasingly competitive world."
Robert Blair, president of NOVA, an Alberta corporation, made the parallel point that a "non-aggressive" Canadian nationalism, aimed at maintaining a distinct separation from European and U.S. institutions, needs no apology. "There is also a significant public base of informed Canadians who feel that our way of nationhood is already proving better," Blair said. He cited a better distribution of income, more political power in the regions, and -- as almost every U.S. visitor here notes for himself -- lower crime rates and the absence of ghettos.
But as Bank of Montreal Chairman William D. Mulholland pointed out, FIRA sends a signal to the rest of the world that "the Canadian environment is a hostile one and should be avoided." Even though the Canadian market is still relatively open -- in Mulholland's view -- the perception is now the opposite. The government, in other words, has become a victim of its own rhetoric, Mulholland suggested.
I would guess, after talking with Lalonde, that not much will be done to change that perception. Lalonde, in a more important job than ever before, isn't likely to give ground easily. He concedes that the FIRA rules are very broad, and that it's been difficult for foreigners to get details of the criteria by which they are to be judged. But in the end, he says, FIRA has approved between 86 and 94 percent of the proposals brought to it.
If virtually all projects that go to FIRA are approved, what's the fuss all about? Is the game worth the candle? Yes, Lalonde says firmly.
"This is not to say that in those 94 percent of cases, some guy has put in an application, and just walked in," Lalonde says. "It has happened, but in many [other] cases, there have been negotiations--about larger Canadian participation on the board of directors, about larger investments in R&D in Canada, about fair opportunities given for Canadian suppliers, about a commitment to develop an export market independent of the parent company.
"That kind of commitment was obtained through negotiation . . . Yes, it was worth it . . . All you have to do is to look at Canadian history over the past 75 years, when some of the largest dams and hydroelectric projects in the world were built, some of the most powerful reactors, airports that compare to any. Yet we never had a single Canadian engineering company that was able to build a refinery. Are we that dumb?"
The new finance minister sums it up this way: "If somebody wants to come in and invest in the oil and gas fields at the present time, I think we'll look favorably [at his proposal to incorporate] if he says in the next five years, he's going to make an offering of shares on the Canadian equity market."
So Lalonde's philosophy -- and there's nothing to suggest that Trudeau's is any different -- is that FIRA is an indispensable screening process. Canada, in the view here, is a different country from the United States, something that Americans are reluctant to accept, Canada being so close, and alike in so many ways. But Canada is a different country, and so long as Trudeau and Lalonde have anything to do with it, they intend to preserve the difference.