Allegations of exorbitant claims for reimbursement of living expenses submitted by some senators from the governing CPC became a major problem for Prime Minister Stephen Harper after it was revealed that his chief of staff, Nigel Wright, had cut a check for $90,000 to one senator. Wright resigned, but Harper’s claim that he had no knowledge of the transaction failed to convince voters.

This has resulted in a loss of confidence in his trustworthiness. It also has sent the prime minister’s approval rating into decline.

The main beneficiary of Harper’s difficulties is Justin Trudeau, the son of former Prime Minister Pierre Trudeau, who was elected leader of the opposition Liberal Party in April. The Liberals are currently more popular than the CPC, and Trudeau is running far ahead of Harper in terms of public perceptions of his trustworthiness.

Of course, the current poll numbers are more intriguing than important. Given the CPC’s majority status, there is little chance that Harper will be forced to test his mandate before the scheduled election date in 2015, which leaves him plenty of time to repair the damage to the Conservative brand. It also leaves plenty of time for Trudeau’s inexperience to lead to mistakes that reinforce doubts about his fitness to govern.

A Cabinet reshuffle undertaken in July can be seen as a first response by Harper to the clear evidence of a reinvigorated opposition.

A Cabinet reshuffle undertaken in July can be seen as a first response by Harper to the clear evidence of a reinvigorated opposition. The retention of both Foreign Minister John Baird and Finance Minister Jim Flaherty suggests that the prime minister intends to base his party’s re-election campaign on his record of sure-handed diplomacy in an insecure global environment and, most especially, his government’s impressive management of the economy.

In that vein, the government’s top priorities over the next two years will be achieving a balanced budget by 2015/2016, increasing Canada’s oil and gas exports, and reducing the country’s dependence on trade with the U.S.

Canada has weathered the global economic turmoil since 2008 far better than most other advanced economies, and the signals from Flaherty are that he intends to ensure that the country remains in a strong position to withstand external shocks by focusing his energies on reinforcing the economic foundation. Consequently, there is little reason to expect any deviation from the conservative approach to fiscal policy that has been Flaherty’s stock-in-trade over his seven-year tenure as finance minister.

The government continues to engage in negotiations for a Comprehensive Economic and Trade Agreement with the EU, which have dragged on for more than four years, hampered by disagreements over agricultural trade quotas, intellectual property rules, and regulations related to government procurement. With the EU gearing up for trade talks with the U.S, the danger that the EU might put a deal with Canada on the back burner if ratification is delayed should encourage lawmakers in Ottawa to move forward. Whether Brussels will be similarly inclined is harder to predict.

About The Author The PRS Group

The PRS Group is a leading global provider of political and country risk analysis and forecasts, covering 140 countries. Based on proprietary, quantitative risk models, the firm's clientele includes financial institutions, multilateral agencies, and trans-national firms.




www.prsgroup.com