He officially resigned last October, but Canada’s 21st prime minister must still be wondering when the relaxation part of retirement starts. Besides completing his memoir, Hell or High Water, and working with not-for-profit organizations around the world, he recently set up Capital for Aboriginal Prosperity and Entrepreneurship (CAPE), a $50-million investment fund targeting aboriginal communities. Meanwhile, his international expertise — he helped found the G20, which at its April 2 meeting will seek a global approach to the economic crisis — means his opinions and counsel remain sought-after by policy-makers and business leaders at home and abroad. The former prime minister spoke to just such an audience at the recent Canadian Business Outlook09 event in Toronto, and he chatted afterward with editor Joe Chidley.
At the G20, what is Canada’s role?
The establishment of the G20 at the leaders level [last November in Washington, D.C.] is a major step forward. It was becoming impossible to have a steering committee without China and India present. But we should not kid ourselves: there are very deep divides here — the U.S. versus Europe, but also the U.S. and Europe versus China, versus India. It’s not enough to say they have to be represented; they have to be reconciled. That will take a lot of political leadership, and it’s the kind of political leadership Canada is in a position to provide. I’m not talking about this myth of Canada as “the broker.” What I’m talking about is, Canada really does have a position to understand both sides. We’re a wealthy country, but we’re also a small-population country, and we know what it’s like to be buffeted by others. And we’re highly respected.
We should be leading the compromises that are required. And if this G20 meeting doesn’t resolve these issues, then Canada should call for another G20 meeting to be held this year. Then, when it’s Canada’s turn to hold the G8 [in 2010], we should hold a G20 meeting.
While it’s clear the G8’s days are drawing to an end as the global steering committee, and while the G20 perhaps has the lead to be the other option, it’s by no means clear that’s the way it’s going to go. It is not inconceivable that there will be a reconfiguration of the countries that make up the G20, or that in fact somebody’s going to say, “No, look, we’re going to create a new G8.” If that’s the case, there’s a very strong chance Canada won’t be part of it. If that happens, it will be because Canada will not have taken a strong enough lead in supporting the existing G20.
What would it take to get China to contribute to some kind of global stabilization package?
To be fair, they have created a huge stimulus package within China. They have not said they would be prepared to contribute to a global stabilization fund within the International Monetary Fund, but nor have they been told they’ll be given a position within the IMF commensurate with their reserves. What it really is, is that the Chinese have got to be treated as a great power. When you think that they’re not in the Financial Stability Forum, they’ve got a very small position at the World Bank and the IMF — we’re not treating them as a great power.
In treating China as a “great power,” how much consideration should be given to human rights?
Human rights is always a crucial issue. I’ve been in China 30 times in my life, easily, as prime minister and minister of finance, and I never once met with the Chinese that I did not raise the issue of human rights. We have got to keep at it. But I also think this economic crisis is of such importance, we’ve got to do both.
You mentioned the myth of Canada as a “broker” in international negotiations. Is that a result of our negligence of the global stage, or was it always a myth?
Well, it was not so much a myth in Mr. Pearson’s time, and my dad’s time when he was foreign minister, but it really has been a myth for quite some time. The myth really was that Canada could bridge the gap between the Europeans and the Americans. Well, you know, the Americans and the Europeans don’t need anybody to bridge the gap between them. So Canada shouldn’t try to play some midwife role that nobody wants it to play. What Canada should do is chart out those areas where we can play a leadership role better than anybody else.
In Africa, there’s a tremendous role for Canada that no one else can play. We’re not a former colonial power, we speak French and English, which are the two main non-African languages, and we have a huge history. I think that we should seek to be in those areas where in fact we can be not the broker, but the leader.
How did CAPE get its start?
I was up in northern Ontario, and a young Cree boy came up to me and said, “You’re a lawyer, but you ran a shipping company — how did you ever learn to run a shipping company?” I told him the truth: I went to work for one and somebody taught me the business. He said, “You must have had a lot of money because later on you bought the company.” I said, “Well, I didn’t have a lot of money — I borrowed it all.” And I explained to him about my mentoring and how I borrowed money. He said, “Do you think anybody would ever mentor me?” I said sure — but I’m not sure my answer was right, and I don’t know if he believed me. Then he said, “If I learned a business, would somebody lend me the money to buy the company?” I said sure — but again I’m not sure I was right, nor do I think he believed me. And that really said to me, there’s a problem here. Aboriginals represent the youngest, fastest-growing segment of our population. They want economic independence, we want them to have it, but we’re not prepared to help them become entrepreneurs, to really help them in the business world. And we should.
So how do you do it? The best way is the way everybody else does it: you give them access to capital and access to mentoring. I decided the best way to do that was to set up this fund. So I went to see 15 Canadian businesses, put the problem to them, and the vast majority just said yes. I was so proud of the Canadian business community and those companies.
What projects will it invest in?
It could be an established company serving a series of reserves in some way. Or it could be a company that has nothing to do with a reserve, but operating in a major city that a group of aboriginals would like to buy into. It could be a startup, but we would only do it in partnership with an existing company that had the skills. If the aboriginals involved do not have the management experience to do it, our goal is to bring in non-aboriginals who do have that experience and have them work together. Then, once the aboriginals had been mentored, our exit strategy would be to sell the company to them, and eventually return the money to the shareholders.
The social return is the driving force here, but this is not charity. It’s got to earn a financial return. I’d like to see this fund succeed, then do another and another. And sooner or later people will realize, hey, there’s money to be made here.
You’re the guy who slew the deficit dragon. How does it make you feel to see Canada now facing big deficits over the next few years?
Well, my biggest concern is that we were probably $10 billion to $12 billion in deficit before a single dollar was spent on stimulus, because of the cut in the GST, and because of what had been a series of really untargeted spending. I worry that deficit is a structural deficit, and those have a way of growing. The spending on the stimulus, we have to do — I don’t disagree with that at all. And if it’s the right spending, such as infrastructure, actually there’s a pretty good payback.The other thing was, they did cut the funding for research and development. Look, the economy’s changed fundamentally here, and this was not the time. We were leading in this area, and now Obama is spending a massive amount of money on this. You’re going to start seeing a brain drain away from Canada.
When you look back on your time in government, and given the scale of the economic crisis, would you have done anything differently, to better prepare for a shock like this?
Well, we did the right thing in terms of the banks, not letting them merge and not deregulating them. To be honest, I received very little pressure from the Canadian banks to deregulate — the pressure came from the wider business community. You’d go down to the G7 finance ministers and they’d all be talking about deregulating banks and how could they do it. I wouldn’t do it, simply because I said, “Wait a minute — it’s fine for the States with 9,000 banks. We have six big banks here, and we cannot afford to do it.” So we did the right thing. And our Canadian banks are better run than most banks in the world. We should give more credit to the people running the banks.
We built up surpluses — you may remember I would get criticized for these surpluses. It may be I should have explained the reasoning behind them. I had been through five financial crises. There was no doubt in my mind there was going to be another one, and another one, and that they would occur on a three- or four-year basis. I certainly didn’t expect this, but I knew there was going to be a crisis. Perhaps I should have told people why I wanted to build up surpluses. I just felt that as a smaller currency, not a reserve currency, it was time to do that.
We might have invested more in infrastructure than we did. Because you see what a difference it makes.
How involved are you with the Liberal party now?
Oh, the last thing anybody wants is a former prime minister looking over — if the party asks, I’ll do it. But I don’t volunteer. I’ve basically been there, done that.