Canada Changes Course

By James Kelly

After a smashing victory, Mulroney's Tories get set to move a nation

The favorable opinion polls, the encouraging reports from the provinces, the heavy turnout -all signs pointed to an election victory for Brian Mulroney. Thus the leader of the Progressive Conservative Party was not especially surprised when, at 7:37 p.m., an announcer for the Canadian Broadcasting Corp. crisply declared that Mulroney would be the country's next Prime Minister. But within 15 minutes, Mulroney and many of his 25 million fellow Canadians began to realize that something extraordinary was happening. By night's end the balloting had turned into nothing less than a landslide of Rocky Mountain proportions. In one of the biggest electoral sweeps in Canadian history, Mulroney's Tories captured 211 seats in the 282-member Parliament, up from 103 seats in the 1980 election. The Conservative Party won a plurality of popular votes in all of Canada's ten provinces, making it a truly national party for the first time in 20 years. Drowned in cheers of "Brian! Bri-an!" Mulroney, 45, thanked the 3,000 supporters gathered at an indoor hockey rink in his Quebec home town of Baie Comeau. Said the Prime Minister-elect: "Canada has responded to a call to national unity."

By contrast, the Liberal Party, headed by Prime Minister John Turner, won only 40 seats, down from 147 in 1980. The defeat was not only a loss for Turner but a national repudiation of the party dominated by the cosmopolitan, sometimes cavalier Pierre Elliott Trudeau, under whose leadership the Liberals had ruled Canada for all but nine months since 1968. Turner, a Toronto corporate lawyer who became his party's leader after Trudeau resigned as Prime Minister in June, came close to losing his own constituency in the western province of British Columbia. He eventually prevailed, 21,728 to 18,404. Though some party regulars grumbled about dumping Turner as Liberal leader last week, the white-thatched chieftain ignored the criticism. "The people of Canada from coast to coast have spoken," said Turner to a dispirited band of followers on election night. "Tomorrow I begin my task of rebuilding the Liberal Party."

Though the date has not been officially set, Mulroney is expected to be sworn in early next week. After moving to 24 Sussex Drive, the Prime Minister's official residence in Ottawa, only two months ago, Turner and his family will have to start packing again. One of Turner's last duties will be to play host to Pope John Paul II as he begins an eleven-day visit to Canada this week. Turner, a Roman Catholic, planned to be on hand for the Pope's arrival in Quebec City on Sunday.

Mulroney will face far more onerous tasks as Prime Minister. He must revive Canada's sluggish economy, which is still recovering from the country's worst recession since the 1930s. Unemployment stands at 11.2%, compared with 7.5% for the U.S. The Canadian dollar is worth a meager U.S. 77-c-, down from U.S. 98-c- in 1975. Mulroney also inherits the task, difficult even in the best of times, of ruling a country whose strong-willed provinces are often at odds with the federal government, and whose people do not share the same language: one of every four Canadians speaks French. Mulroney must also set the tone for his country's relationship -sometimes rewarding, sometimes maddening, always crucial -with the superpower neighbor to the south.

Indeed, the Mulroney victory is of major importance for the U.S. Ottawa and Washington are inextricably linked by a full diplomatic pouch of issues, ranging from acid rain to fishing rights to import quotas for steel. The two countries have the world's largest trading partnership: almost $100 billion in bilateral trade last year, more business than the U.S. did with Japan or any West European nation. American companies have more money directly invested in Canada than in any other foreign country. Canada and the U.S. are more than just neighbors: they share the longest undefended border in the world. As members of NATO, the two nations consult on defense even more frequently than they might. And as Canadians note wryly, their country is all that lies between the U.S. and the Soviet Union, as the missile flies.

During the 15-year reign of Trudeau's Liberals, however, relations between Canada and the U.S. reached a low ebb. Tired of what they considered to be Trudeau's insolence, Reagan Administration officials made little secret of their feelings that either Turner or Mulroney would be an improvement over the former Prime Minister. During the campaign, both candidates spoke of their desire to strengthen bonds between Ottawa and Washington, but Mulroney sounded especially fervent. "Superb relations with the U.S. will be the cornerstone of our foreign policy," he declared. When Mulroney visited Ronald Reagan at the White House in June, the two leaders swapped stories and got along famously. Campaigning in Chicago last week for his own reelection, Reagan telephoned congratulations to Mulroney.

Though Mulroney is committed to warmer ties, U.S. officials will be disappointed if they expect the new Prime Minister to be a Canadian version of Ronald Reagan. Mulroney is what members of his party call a "Red Tory," a pragmatist who favors compromise over ideological combat. During the campaign, he not only vowed to keep his country's extensive net of welfare programs intact, but he also advocated such innovative ideas as paying pensions to homemakers. By and large, Canada's Progressive Conservative Party tends to be several shades more liberal than the U.S. Republican Party, especially on domestic issues. Mulroney describes himself not as a conservative but as "a centrist, open to all discussions."

Mulroney's triumph brought to a close an eventful chapter in Canadian political life, the era of Pierre Trudeau. He came to symbolize Canada not only for Canadians but for the rest of the world, often to the delight of his countrymen. At a time when the French-speaking province of Quebec noisily threatened to secede, Trudeau blunted the menace with bilingual reforms. Toward the end of his tenure, however, Trudeau was increasingly perceived by Canadians as having overstayed his welcome. Many felt that the Prime Minister had grown bored and petulant, and that the Liberal Party had become rudderless, lazy, unimaginative. Against the backdrop of a stagnant economy, Canadians yearned for a fresh new course. The election results were not so much a resounding note for Mulroney as they were a deafening rejection of the incumbents. "The Liberal Party had become too remote, too arrogant," says George Perlin, professor of political science at Queens University at Kingston, Ont. Editorialized the Toronto Sun the day after the ballot: "The people didn't speak, they bellowed, then chewed up the Liberals and spit them out."

The Liberals expected a different outcome in early July, when Turner dissolved Parliament and scheduled new elections. Though he had succeeded Trudeau only nine days earlier and could have called for a vote as late as next spring, Turner decided to take advantage of opinion polls that showed his party with an eleven-point lead over the Tories. Immediately, however, the new Prime Minister committed his first major blunder: he reappointed nearly all Trudeau's ministers to his own Cabinet. Bowing to pressure from his predecessor, Turner also awarded cushy patronage posts to 17 Liberal colleagues.

By then Mulroney had already assembled a nationwide political machine and raised an estimated $14 million. After years of relying on the Trudeau name to win elections, the Liberals found themselves with an organization in disarray and a bankroll of only $2 million. So chaotic was the Turner team that the Prime Minister replaced his campaign manager halfway through the race. "Part of the problem is that you must have a horse and a jockey," says a Turner associate. "John tried to be both."

Mulroney and Turner differed so little on the issues that New Democratic Party Leader Edward Broadbent dubbed them "MasterCard and Visa." Both candidates, for example, pledged to cut the government's deficit of $23 billion and increase defense spending. At times the only real squabble between them seemed to be how many promises Mulroney had made; by Turner's count, the Tory had made 338. One Liberal TV ad featured a shopping cart crammed with packages at a cash register; the items were labeled "Tory promises," but none carried prices.

UItimately, the campaign turned not on ideas but on images. An unusually private politician, Turner seemed nervous and creaky-voiced when delivering speeches or working crowds. He would sometimes stammer or gesture wildly, then laugh nervously to cover his embarrassment. His oral flubs became legion. "It's a great country where a man can come up, whatever his religion, whatever his sex," he told one group. His manual gaffes caused Turner even more trouble: he was shown on television patting Party President lona Campagnolo and another female Liberal on their posteriors, afterward explaining weakly that he was a "tactile politician."

Mulroney, on the other hand, campaigned like a lottery winner, smiling perpetually and pumping every hand in sight. He perfected a punchy stump speech, delivering it in French and English with equal ease. Mulroney's wife Mila, 31, turned out to be the election's second-best campaigner; pretty and vivacious, she charmed even jaded journalists. The Tory candidate shone in the three televised debates, especially when he attacked Turner for the Trudeau patronage plums. "You chose to say yes to old attitudes and the old stories of the Liberal Party," he charged. When the Prime Minister held up his hands, ostensibly to silence Mulroney, many viewers interpreted it as a sign of surrender. It might as well have been: one month before the election, Turner found himself trailing Mulroney 45% to 36%.

By carrying all ten provinces, Mulroney demonstrated his stature as a truly national leader. Not since Party Leader John Diefenbaker swept the Tories into power in 1958 has one party been so strong across the country. Since then the Liberals have tended to prevail in the East, while the Progressive Conservatives dominated the West. Ontario, the country's most populous province, has alternated between the two parties. This time Mulroney picked up 67 out of 95 seats in Ontario and captured the Liberal stronghold of Quebec, winning 58 out of 75 seats (see box). To underscore his empathy for the French-speaking province, Mulroney, a Quebec native himself, chose to run for Parliament from his home constituency of Manicouagan. He won handily, 30,386 to 9,729.

The Tory tide pushed many prominent Liberals from their seats, including lona Campagnolo and 15 of Turner's 29 Cabinet ministers. In the postmortem, Turner's aides spoke bitterly of Trudeau. They blamed him for not quitting office sooner, thus affording Turner more time to build his record, and for weakening the party by ignoring its provincial roots. Asked what he thought of Turner's campaign, Trudeau blithely replied, "I don't really know. I've been on vacation." Said a top Liberal strategist: "Trudeau did not give a fig about the party. It was hard to escape the feeling that he was delighted at the trouble Turner was having."

The Liberals barely outpolled the country's third party, the New Democrats. Though early polls showed the N.D.P. losing most of its 31 seats, Leader Broadbent came off so well during the televised debates that the party dropped only one seat. During the campaign, the N.D.P. toned down its reformist rhetoric; instead, Broadbent emphasized job-training programs and women's rights. Having pulled to within ten seats of the Liberals, the New Democrats now nourish dreams of becoming the main opposition party after the next election.

Mulroney's triumph is especially remarkable for a man who, until his election to the House of Commons last year, had never held public office. The oldest son of an electrician, Mulroney (pronounced Mulrooney) was born in the papermaking town of Baie Comeau, 265 miles north of Quebec City. His ancestors had emigrated to Canada from Ireland in the 1840s, when the potato famine wasted their native land. Young Brian grew up speaking English at home and French with his playmates. After dinner, the parents and their six children would gather around the piano and sing Irish songs. During visits to Baie Comeau by Colonel Robert McCormick, publisher of the Chicago Tribune and proprietor of the local paper mill, the silver-voiced boy would be brought out to sing Danny Boy for him. By ten, Mulroney was also honing his oratorical skills in public speaking contests sponsored by the local Rotary club. In an early address, he wisely extolled the virtues of trees. He won first prize.

At 16, Mulroney entered St. Francis Xavier University in Nova Scotia, where he majored in political science -and minored in campus politics. He joined the Progressive Conservatives partly because, a friend recalls, the college's Liberal club was dominated by English-speaking "elitists." Even then, Mulroney knew what he wanted: as a sophomore, he was elected Prime Minister in a mock student parliament. In 1958 he served as national vice president of the Youth for Diefenbaker campaign; when the Tory leader swept into office, the precocious Mulroney served as an occasional adviser to the Prime Minister.

After graduating from Quebec City's Laval University law school in 1964, Mulroney joined an eminent Montreal law firm, where he specialized in labor litigation. "Running for office was always in the back of his mind," says Jean Bazin, a law-school classmate and co-chairman of Mulroney's campaign. "But he wanted to get established first." Though he represented management, Mulroney won a reputation among union leaders as a fair negotiator who did not bluster or talk down to them. At Montreal's Mount Royal Tennis Club, Mulroney, then 33, met a Yugoslavian-born engineering student named Mila Pivnicki, 18. Though the age difference initially troubled them, their shared passion for tennis and politics overcame all doubts. They were married a year later. The Mulroneys have three children: Caroline, 10, Benedict, 8, and Mark, 5.

Mulroney was catapulted to prominence in 1974, when he was appointed to a three-member commission investigating corruption in the Quebec construction industry. Thousands of Canadians followed the panel's televised hearings, which seethed with daily testimonies of bribes and beatings. Mulroney and his fellow commission members received several death threats and were given round-the-clock police guards. The panel's 600-page final report led to 24 indictments. Emboldened by that burst of public acclaim, Mulroney decided to run for the Tory party leadership in 1976. He barnstormed the country, flying by private jet and giving lavish lunches for party regulars. Many Tories, however, were uncomfortable with Mulroney's slick style and free-spending ways. At the convention, he was shoved aside in favor of another candidate, Joe Clark of Alberta.

Casting about for a new challenge, Mulroney joined the Iron Ore Co. of Canada, a subsidiary of the U.S.-owned Hanna Mining Co. His main task was to bring labor peace to the strike-plagued firm and its 7,000 workers. Mulroney succeeded admirably, raising widows' pensions and distributing worker bonuses when the company broke the $100 million mark in earnings. Faced with the U.S. auto recession and declining demand for steel, Mulroney in 1982 shut down a company mine at Schefferville in northeastern Quebec. The closing put 285 miners out of work and turned Schefferville into a ghost town of boarded-up stores and FOR SALE signs.

Though some labor leaders castigated him for the decision, Mulroney avoided heavy political damage by offering handsome severance packages to the workers. In 1983 he again campaigned for the post of party leader, but this time he crisscrossed the country by commercial plane and wooed delegates over coffee. His chief rival for the job: Joe Clark. Having unseated Prime Minister Trudeau and the Liberals in the 1979 elections, Clark was in office only nine months before a parliamentary no-confidence vote brought down his rickety government and returned Trudeau to power. Crippled by his reputation as a has-been, Clark lost the leadership to Mulroney on the fourth ballot at the party convention.

The outcome presented the Tories with a problem: their new party leader did not sit in the House of Commons. A Tory M.P. from Nova Scotia obligingly resigned, and Mulroney ran for the seat in a special by-election. Leaving nothing to chance, the rookie candidate moved his family into a three-bedroom log cabin in the contested district. Swapping his pinstripes for plaid sweaters, Mulroney beat his closest opponent by more than 2 to 1. Perhaps Trudeau, vacationing in Greece at the time, sensed what was to come. Remarked the Liberal leader upon hearing of Mulroney's election: "We will certainly be treating him with respect -and apprehension."

Mulroney's life revolves around politics so much that his closest friends, most of them college and law-school chums, tend also to be his most trusted advisers. An early riser, he scans half a dozen newspapers a day, including the New York Times. Though he radiates a hearty amiability, Mulroney rarely wastes a minute; if he is delayed somewhere, he pulls out a book and starts reading. (He prefers biographies, especially volumes on John Kennedy.) For relaxation, Mulroney favors a fast-paced set of tennis. Once an avid golfer, he rarely plays now because the game takes too long. When time permits, he relishes fishing trips to Labrador and skiing in the Laurentian Mountains.

Once he takes office, Mulroney's first priority will be to create more jobs, especially for the country's half a million unemployed young people. During the campaign, he proposed tax credits for employers who hire and train youths. He also recommended grants of up to $20,000 to young entrepreneurs who want to start their own companies. The Prime Minister's efforts, however, will be hampered by Canada's persistently high interest rates, now at 13%, and by an apparent pause in the country's recovery from the recession. Mulroney has already backed away from his earlier promises to eliminate the Canadian budget deficit by 1990. Indeed, he has acknowledged that his campaign pledges, including a $200 million hike in health and welfare spending, will cost an additional $3 billion over the next two years. Mulroney plans to cover the higher expenses partly by imposing a minimum income tax on the wealthy.

To a large extent, Canada's economic woes resulted from a whirlwind of outside forces that hit the country in the early 1980s: a drop in energy prices, a turndown in world trade, lofty U.S. interest rates. Yet the Trudeau government cannot escape blame. The Liberals overestimated the revenues that would flow from the country's oil holdings. Through legislation and attitude, Trudeau's men undercut the confidence of businessmen at home and investors from abroad. Finally, Trudeau himself had no patience for the nitty-gritty of economic management, preferring to leave the details to others. By contrast, Mulroney is certain to immerse himself in his government's economic policies.

The traditional friction between the federal government and the provinces is also likely to ease. Mulroney does not share Trudeau's confrontational style in such dealings, and seven of the ten provincial premiers are fellow Tories. The new Prime Minister has not offered any specifics on how he will deal with regional grievances, especially the continuing squabble between the energy-rich west and the energy-hungry east over oil pricing and supply. But he has set a conciliatory tone by promising to hold an early economic summit with the premiers.

Mulroney also has proposed measures to stimulate investment, a notion that should make U.S. firms happy. He is committed to revising the country's 1980 National Energy Program, a controversial act that allowed the government to claim a 25% stake retroactively in oil discoveries. The legislation infuriated U.S. oil companies, which have substantial holdings throughout Canada and off the Atlantic and Arctic coasts. Mulroney will also overhaul the Foreign Investment Review Agency, a 1974 Trudeau creation that monitors companies wishing to do business in Canada to ensure that their activities are in the country's interest. FlRA's regulations, however, drove many foreign businessmen away; in the past three years, U.S. investment in Canada declined by $3.7 billion. Mulroney plans to turn FIRA into more of an investment promoter than a nationalistic watchdog. Says Charles Doran, director of Johns Hopkins' Center of Canadian Studies: "The form will be there, but the teeth will be gone."

Relations between Washington and Ottawa have actually been improving since 1982, when Secretary of State George Shultz started holding bilateral talks with Foreign Minister Allan MacEachen every three months. Colleagues at the Massachusetts Institute of Technology in the early 1950s, the two men enjoyed an excellent rapport that quickly trickled down through their respective bureaucracies. "We got energized knowing that our bosses were looking over our shoulders," says a U.S. diplomat. The meetings focused primarily on trade and economic issues; though Mulroney has not yet named MacEachen's successor, both U.S. and Canadian officials expect trade barriers to fall.

Many disagreements remain. The Reagan Administration is especially concerned about Canadian defense expenditures. The country this year will spend $6.8 billion on arms, or 2.1% of its gross national product, well below the U.S. level of 6.8%. In the early 1970s, Trudeau froze the Canadian military budget and cut the armed forces serving with NATO in Western Europe from 10,000 to 5,000. Though the Prime Minister eventually increased defense outlays, the perception lingers in Washington that Ottawa is not paying its fair share. Mulroney has promised a 6% hike in. defense expenditures, but it is unlikely that he will be able to modernize his country's aging military hardware as much as Washington would like.

Mulroney has his own agenda for dealing with the U.S. At the top of the list is acid rain, which is threatening Canada's important fishing and timber industries -and which many Canadians blame on the U.S. The Reagan Administration contends that the link between acid rain and sulfur-dioxide emissions that drift northward from coal-fired power plants in the Midwest has not yet been proved. Mulroney, however, has promised to push the issue with the White House, most likely after the U.S. election in November. The Liberal government committed itself to halving emissions on its side of the border by 1994, but Canadian officials doubt that Washington will do the same. Some U.S. experts think the U.S. might agree to install scrubbers on some aging smokestacks. Says Doran: "Mulroney's going to have to make some progress." "He has to get something beyond just 'further discussion.' "

Reagan this month will decide one major issue dividing the two countries: whether to include Canada in any new limits on foreign steel imports, which are hurting the U.S. steel industry. Canada, whose steel shipments to the U.S. totaled nearly 2.4 million tons last year, has asked to be exempted from the quotas. They could cost the country up to 3,000 jobs, and the Ottawa government contends that Canadians buy more steel-related products from the U.S., notably automobiles, than they sell to the U.S.

In addition, the World Court at The Hague is expected to rule soon on a longstanding fishing dispute between Nova Scotia and the New England states. The U.S. has laid claim to all of the Georges Bank, off the Massachusetts coast, while the Canadians contend that about half the bank belongs to them. The contested area is rich in scallops and other seafood (the annual harvest totals some $75 million), and may also hold abundant reserves of oil and natural gas.

Some U.S. officials predict that Mulroney will eventually have to take a more critical stance toward the U.S., if only for domestic reasons. Canadians have a historical ambivalence toward the colossus to the south, proud of their status as one of the world's leading industrialized nations but keenly aware their neighbor is about ten times Canada's size in production and population. "Mulroney will have to give the Americans the back of his hand every so often," says a Capitol Hill expert. The Reagan Administration expects that relations will remain warm because of Mulroney's oft-proclaimed affection for the U.S., his attitude that, as he has said, "the U.S. is our greatest friend, neighbor and ally."

Mulroney may find that his most trying moments are spent dealing not with Washington but with his Tory colleagues. The new Prime Minister won the election partly because he succeeded so well in uniting a fractious party. With victory secured, however, the Progressive Conservatives could easily regain their penchant for bickering over ideological and regional issues. In a parliamentary majority this lopsided, Tory backbenchers may grow restless, or find it safe to dissent from the government line, or even -form cabals to pursue narrow issues. The 58 Tory members from Quebec may prove especially difficult to control. Most of them are parliamentary newcomers with little experience in the customs and folkways of Ottawa -and with much dedication to their province's distinct identity. Mulroney is no doubt aware of the hazards. Diefenbaker, his onetime mentor, won a large majority in 1958 but could not hold it together. Some members grew tired of hewing the party line; others championed regional questions. The government crumbled after five years.

Such cautionary talk, however, seemed wildly out of place last week as Mulroney prepared to assume his post. The Tory leader planned to closet himself with his aides in Ottawa to pick a Cabinet and prepare his party's address for the opening of Parliament. The speech is expected to outline, in greater detail than Mulroney did on the campaign trail, the Tory vision for Canada. If his race and his past are any guide, the new Prime Minister will describe a society that is tolerant in its vast diversity, compassionate toward its less fortunate members and, of course, more prosperous than the one he is inheriting. That last expectation will be especially difficult. But in the heady days between victory and taking office, Mulroney savored a far smaller problem, though one that neatly captured the magnitude of his mandate to put Canada on a new course. So many Progressive Conservatives were elected last week that the Tory benches in Parliament will not be able to hold them all. Some M.P.s will have to sit on the side of the aisle usually reserved for the opposition, crowding out the diminished ranks of those who ran Canada until the boy from Baie Comeau arrived.

With reporting by Marcia Gauger, Gavin Scott, Barrett Seaman