In US, Quebec Premier to Mute Secession Talk

Lucien Bouchard travels to the Northeast to try to convince skeptical American investors he's got a game plan for dealing with a troubled economy

Rising slowly from his seat, Premier Lucien Bouchard, voice dripping with scorn, declares Quebec's right to hold a vote to secede from Canada and declare independence - whether or not Canadian courts see it as legal.

"It is our right, we will exercise it," he snaps to members of the Quebec National Assembly on May 22, jabbing the air before sitting down. Then the legislation to enshrine that sentiment quickly passes.

But this threat of a hard break with Canada, so familiar to Canadians, is hardly the message Mr. Bouchard will deliver to American investors, four Northeast governors, and journalists in a three-day trip that begins today.

Instead, a cool, calm Bouchard speaking excellent English, will tell Americans that secession would still leave Quebec with close ties to Canada and the United States. Vital trade links would remain unbroken. In short, businessmen weighing investment in Quebec and the global holders of Quebec bonds, have nothing whatsoever to worry about.

His alternating hot-cold rhetoric is carefully calculated to appeal at home and abroad, US and Canadian analysts say.

"He's a realist," says Charles Doran, director of the Center for Canadian Studies at Johns Hopkins School of Advanced International studies in Washington. "He may want Quebec to secede - but knows he can't deal with Quebec's economic problems alone. He will try hard to give confidence to the US business community, telling them they have nothing to fear about [Quebec's] economic destabilization."

Bouchard, who took office in January after a referendum on Quebec secession nearly lost last October, inherited from his predecessor, Jacques Parizeau, a $55 billion debt and and a stagnant economy. (Economists forecast just 1.3 percent real growth forecast this year.) Public and private capital investment in the province shrank 4.6 percent last year.

Even if Bouchard wanted to secede immediately, he has no choice but to try to calm the fears of foreign business jolted by the close vote on secession, analysts say. To rev up the provincial economy he must attract new investment.

Yet while he soothes Wall Street investors, Bouchard must also reassure separatist hard-liners within his Parti Quebecois (PQ), that he hasn't gone soft on secession.

"Both in New York and in Quebec, Bouchard portrays himself as a moderate - that's what he wants to strengthen," says Guy Laforest, a political scientist at Laval University in Quebec City. "Basically the ship of state has been turned in another direction [than secession.] He understands that a political campaign is the last thing Quebec needs right now. We need a government."

Unlike former premier Parizeau, Bouchard understands that Quebeckers must feel sure about their economy before they will vote for independence, analysts say. But such confidence is hardly inspired by unemployment over 11 percent and a $2.9 billion provincial budget deficit.

Bouchard pulled off a coup in March by getting business, union, and cultural leaders - who had been at each others' throats during last year's secession campaign - to work together to fix the economy. The outcome was a plan to eliminate the deficit.

"We're on a very dedicated course," says David Payne, a special adviser to Bouchard in charge of cultivating foreign investment. "There's an economic restructuring on the way."

Certainly that will be Bouchard's message to Quebec bondholders in New York. But US investment managers are even more keen to know about independence. Which is the real Bouchard? The moderate who will not charge toward Quebec independence - or the one that promised to do so two weeks ago? Canadian managers think they already know.

"The big lenders are in New York and Bouchard wants to stay on good terms with them," says Stephen Jarislowsky, president of Montreal-based Jarislowsky Fraser Co. Ltd., one of Canada's biggest investment management firms. "On course we obviously don't have heavy investments in Quebec. We don't think common sense will prevail for a long time here."

Still, the average Quebecker is reassured by Bouchard's focus on the economy over separation. Polls show his popularity is soaring. "He's doing a good job," says Claudine Bonneau, a University of Quebec student in a Montreal park. "After the economy is stabilized will be a better time to think about sovereignty."

But George Lakis, an entrepreneur of Greek ancestry, who is starting a small hotel in downtown Montreal, says Bouchard's game is too calculating. "I think he should be up front with the people in New York. He will go and tell them, 'Hey, no problem'."

Gaining the confidence of Mr. Lakis and other non-French speaking immigrants is key. Immigrants are a big factor in reviving the weak Montreal economy, which produces 50 percent of the province's economic output. English-speakers and immigrants make up about 11 percent of Quebec's population - concentrated around Montreal. Relations between the PQ and immigrants were strained last fall when Parizeau blamed "money and the ethnic vote" for the narrow loss of the referendum to approve separation.

Since Parizeau resigned, Bouchard has struggled to restore trust with the nonFrench-speakers. But despite being hailed for his inclusive speeches, it hasn't been easy even for the highly popular Bouchard. "To date we haven't seen anything concrete yet," says Cynthia Lam, executive director of Chinese Family Services, a community group in Montreal. "We do hope for something besides words. After [Parizeau's comments] in October we really hit bottom. It couldn't be any worse. So in that sense Bouchard can't do any worse."

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