Mulroney's economic dash

Canadian Prime Minister Brian Mulroney is running flat out to change Canada's economic and political direction. Given the magnitude of the challenges facing his nation - unemployment over 11 percent, a Canadian dollar worth 77 cents in US currency, record budget deficits, sky-high interest rates - his haste makes sense.

The reason, beyond the economic problems, relates to the size of Mr. Mulroney's success last month. His Progressive Conservative Party did not just win a national election, replacing the Liberal Party, which has governed Canada for all but slightly less than a year since 1968. It did that, of course. But it also posted a genuine political landslide. Tories snapped up 211 of the 282 seats in Parliament. They won a plurality in every province.

It is the very size of that victory that could produce internal party divisions. Mr. Mulroney is a centrist. Many of his party members are to his right and left, or represent regional viewpoints. So he needs to act boldly before potential infighting develops within his ranks.

Mr. Mulroney has already made headway on three fronts. He has put together a Cabinet that represents all parts of Canada but, in particular, gives special attention to energy-rich western Canada. Thirteen members of the Cabinet are from that region, compared with just one under Mr. Mulroney's predecessor, John Turner. Mr. Mulroney announced a freeze on hiring and discretionary spending pending a review of government spending. Finally, Mr. Mulroney flew to Washington last week to meet with President Reagan in a gesture aimed at, as he said, refurbishing ''trust between Canada and the United States.'' And in a speech at the United Nations last week, Canadian Foreign Secretary Joe Clark pledged that his country ''intends to get along better'' with the US and the Soviet Union.

Canadians are - and should be - wary of US economic domination. That follows because of the very size of the giant US economy in relation to Canada's smaller economy. But at the same time, as Mr. Mulroney recognizes, Canada's recovery is to a large extent dependent on how well its firms can trade with the United States and the extent to which its southern neighbors invest in Canadian firms. Unfortunately, US investment in Canadian firms has fallen off recently, in part a reflection of the limits about such investment set in place under the prior Liberal government.

Canada needs to revise regulations of the Foreign Investment Review Agency (FIRA), a federal agency that monitors investment. The Canadian government also needs to rethink and modify the nation's energy policies to provide incentives for exploration.

There should be a quid pro quo from the US. The US needs to find ways of reducing acid rain. It needs to be less protectionist about steel shipments. And it needs to strike a compromise allowing Canadian fishing in East Coast waters. For both nations, it is time to refurbish relations, better accounts, and find a larger sense of neighborliness.

of 5 stories this month > Get unlimited stories
You've read 5 of 5 free stories

Only $1 for your first month.

Get unlimited Monitor journalism.