[R-G] Harper: Bush's Willing Accomplice

[Anthony Fenton]

Published on Tuesday, November 18, 2008 by The Toronto Star
Bush's Willing Accomplice

by Linda McQuaig
Isolated, repudiated by his people and even shunned by his own party,  
George W. Bush – the lamest of lame ducks – still seems able to count  
on the support of at least one world leader: Stephen Harper.

And so it was on the weekend, as it has so often been in the past two  
years, that our prime minister provided rare support for Bush as the  
soon-to-be former president battled against a chorus of world leaders  
urgently calling for a set of badly needed reforms.

Just as Harper backed Bush's effort to block global progress on  
climate change, this time he helped Bush stymie European-led efforts  
at the G20 summit in Washington to restore regulations to  
international financial markets.

It was the rollback of these regulations that allowed Wall Street to  
transform itself into a giant casino where tycoons made billions  
playing fast and loose with the life savings of ordinary citizens.

Harper's resistance to European calls for tighter regulations is  
ironic, since he has the luxury of presiding over a country that's  
been spared the worst of the financial meltdown, largely because of  
the Canadian tradition of tighter domestic financial regulations.

This has allowed Harper to ride out the current financial storm  
politically unscathed, even gaining re-election in the middle of it.

In fact, although Harper's record on this has received little  
attention, his government had started to push Canada down the  
dangerous road toward looser financial regulation.

In its first budget in 2006, the Harper government changed the rules  
in ways that effectively opened up the Canadian mortgage market to  
U.S. insurers. Finance Minister Jim Flaherty noted that these "new  
players" would bring "greater choice and innovation" to the Canadian  
mortgage market. Unfortunately, they did just that. They introduced  
risky products – like mortgages amortized over 40 years with little or  
no down-payments.

The new mortgages quickly caught on. With their lower monthly  
payments, they made houses seem more affordable. In reality, however,  
they dramatically increased the cost of a home, roughly tripling it.

As the implosion of the U.S. housing market provided a vivid example  
of the pitfalls of looser mortgage regulations, Flaherty finally  
intervened last summer, tightening CMHC's rules.

The Harper government has been even more aggressive pushing financial  
deregulation on developing countries.

Ellen Gould, a Vancouver-based trade consultant, notes that Ottawa has  
pressed developing nations to open their economies to the "supposedly  
superior services" offered by the financial institutions of the  
advanced world.

At the World Trade Organization negotiations in 2006, Canada played a  
leading role in pushing developing nations to accept rules that would  
allow their domestic banks and insurance companies to be taken over by  
foreign financial institutions – like the ones that have been  
collapsing on Wall Street recently.

The Canadian push for "financial liberalization" predates Harper. It  
was keenly advocated by Liberal governments as well. But the Harper  
government has continued to push for this sort of deregulation long  
after it should have known better, as recently as the WTO ministerial  
in July 2008.

One can draw solace perhaps from the realization that Canada doesn't  
shape the course of world events. Still, it's disappointing to realize  
that we're using what little influence we have at organizations like  
the G20 to help the exiting Bush administration do this last bit of  
disservice to the world.
© Copyright Toronto Star 1996-2008

Linda McQuaig's column appears every other week in the Star.