Behind the crisis lie the serious blows Washington has dealt to Ottawa for its refusal to take part in the “coalition of the willing” in the assault on and occupation of Iraq. The Canadian rulers put the Martin government in office in an attempt to reverse or slow down the impact of the punishment they got from their much more powerful imperialist ally to the south. But Martin has done nothing to change the situation. Tariffs and other trade restrictions imposed by Washington, especially over softwood lumber and beef, have cost billions to many Canadian capitalists. As the economic crisis has intensified, the Canadian rulers have pushed harder to cut wages and living standards of working people to shore up their declining profit rates—creating discontent across the board.

The ruling Liberal Party presently holds 168 seats of the 301 in the Canadian parliament. Support for the party, however, has been dropping in bourgeois public opinion. In a May 25-26 national poll, 59 percent of the respondents said a new party should be elected in Ottawa. The Liberals, who have run the federal government for the last 11 years, now face the possibility of being forced to form a minority government.

Martin became the leader of the Liberal Party last fall, replacing Chrétien, who had been prime minister since 1993. This was the result of a faction struggle within the party over how to address the economic problems of the Canadian capitalists as a result of being kicked in the teeth by Washington—Ottawa’s main trading partner and competitor.

Soon after Martin’s arrival, however, what has become known as “the sponsorship scandal” broke out. Liberal Party officials were accused of using money from the “sponsorship fund”—an annual government fund to “promote Canada”—to give away up to $100 million to their political allies in business in Quebec. Several central Liberal figures were fired from government posts and even arrested and charged with fraud. But the real scandal, as media reports later revealed, is that since 1993 the federal government had spent nearly Can $725 million ($1 Can = $0.73 U.S.) to promote “Canadian unity” through a propaganda campaign aimed against the right of the Quebecois to self-determination. The Quebecois, who comprise 80 percent of the population of Quebec, are a French-speaking oppressed nationality. In a 1995 referendum that was defeated by less than 2 percent, a significant majority of Quebecois voted for Quebec sovereignty.

In addition to the fallout from the sponsorship scandal, support for the Liberals plummeted in Quebec, Ontario, and British Columbia—provinces where Liberal governments have carried out massive cuts in social programs. A protracted faction fight within the ruling party continued after Chrétien’s departure, accelerating the weakening of the party.  
 
Blows by Washington
Deteriorating relations with Washington have a lot to do with the looming downfall of the Liberals.

In May 2002, the U.S. Department of Commerce imposed a 29 percent duty on softwood lumber from Canada, charging that the Canadian government was unfairly subsidizing logging operations. In May 2003, Washington and many other governments took advantage of the fact that one Alberta cow tested positive for “mad cow” disease to ban imports of all Canadian beef cattle. The latter step was part of Washington’s response to Ottawa’s refusal to send troops to Iraq as part of the Anglo-American offensive.

These knockdowns have cost Canadian capitalists billions of dollars. Big business has made sure workers bear the brunt of the crisis. Workers in the wood and meatpacking industries have been hit by tens of thousands of layoffs across the country. Thousands of farmers have also been badly affected.

Many other large corporations are in decline. Air Canada, the dominant airline, is under bankruptcy protection. On May 27, Bombardier, one of the world’s largest monopolies in aircraft and train assembly, announced 500 more layoffs at its plants in Montreal. This comes on top of thousands of previous layoffs.

As Canada’s economy has declined, successive Liberal governments have carried out $36 billion in cuts to funds allocated to the provinces for health care and other social programs. Since the public health-care system, Medicare, was established in the mid 1960s, the federal government’s share of funding for the program has fallen from 50 percent to 16 percent today.

All the capitalist parties are making demagogic appeals to win votes, trying to tap into working people’s concerns about declining health care and rising medical costs with promises of increased investments or improvements in social services. This has created a momentary shift to the left in bourgeois politics in the framework of the election campaign. On May 9, Martin announced that a Liberal government would inject $9 billion dollars into health care over the next five years, increasing the federal share of funding to 25 percent.

The New Democratic Party (NDP), a “socialist” imperialist party with ties to the trade unions outside Quebec, is campaigning around five themes: an additional $29 billion in health-care funding over five years, pension plan protections, eliminating the sales tax on products related to “basic family needs,” and more funding for education and protection of the environment. NDP leader Jack Layton said funding for these programs would come from new taxes and doing away with tax breaks for corporations and high-income families. “Our fiscal projections are reasonable and moderate,” Layton said May 25. “But if the money isn’t there, we will change the time of our proposals so that we keep the budgets balanced.”

Since the start of the election campaign, the Liberal Party has been playing the Canadian nationalism card to the hilt. Lashing out at Conservative Party leader Stephen Harper, Martin charged that the Conservatives’ tax cut proposals would lead to slashing social programs and health care and a “U.S.-style society.” At the same time, the Conservatives are accusing the Liberals of conducting a domestic and foreign policy contributing to the bullish stance by Washington against Ottawa.

The Canadian government did not officially support Washington’s war against Iraq, in order preserve its façade as “an international peace-keeping force,” an image it has sought to maintain under cover of the United Nations for almost half a century. At the same time, Ottawa has maintained hundreds of soldiers and sailors in the Middle East in various support roles for the imperialist aggression, including in Afghanistan. But that’s not good enough for Uncle Sam.

While questions of foreign policy have been all but absent from the election campaign, there are no significant differences between any of the capitalist parties on foreign policy. No party calls for the withdrawal of Canadian troops from Afghanistan, Bosnia, or Haiti, for example. All support the so-called war on terror and the attacks on civil liberties carried out in its name.  
 
Fragmentation of Canadian politics
The prospect of a minority government—Liberal or Conservative—has become a central question in the present elections. Should this happen, it would mark a deepening of the process of fragmentation of the main capitalist parties and instability of bourgeois politics in Canada, which began a decade ago.

The Liberal Party emerged in the 1993 federal elections as the only capitalist party with support in every part of Canada. In that election, the Progressive Conservative Party (PC), which for more than a century had alternated with the Liberal Party in power, was left with only two seats in parliament compared to 155 in the previous election. This registered the end of this traditional two-party system in Canada, marking the biggest political shake-up in the country since the 1930s Depression.

The 1993 election was also marked by the participation for the first time of the Bloc Quebecois (BQ), which runs only in Quebec. It became the official opposition that year with 54 seats. The BQ and the Parti Quebecois represent a layer of the ruling class that uses Quebecois nationalism to advance its economic interests.

Recent polls show that the BQ could again win some 54 seats in Quebec, a clear sign of the failure of Ottawa’s propaganda campaign to dampen the national aspirations of most people in Quebec. Quebecois nationalism is quite prominent in the election campaign in this province. The BQ, for example, has adopted the election slogan: Un parti propre au Québec, which translates, “For a party that belongs to Quebec.” In French the word propre has a double meaning, so the slogan can also be translated, “For a clean party in Quebec.”

The new Conservative Party, a right-wing bourgeois party, is the product of the December 2003 fusion of the Canadian Alliance and the Progressive Conservative Party. During the last federal elections in 2000, the Liberal Party took advantage of a divided vote between the PC and the Canadian Alliance to get its candidates elected in several regions, particularly in Ontario. The Conservative Party is calling for cuts in taxes and an end to “wasteful spending.” Its politics are more to the center of the bourgeois spectrum in these elections than those of the Alliance party.

The fortunes of the New Democratic Party also seem to be rising. After a decade of low support in elections, recent polls show the NDP could receive between 15 and 17 percent of the vote, and NDP leaders are raising the prospect of winning enough seats to be in position to join a coalition government with the Liberals if the ruling party doesn’t win a majority of parliamentary seats.

Far from consolidating a strong government, which was the framework of the Canadian ruling class when it pushed Martin to the post of prime minister, all signs indicate that, whatever the final results, the upcoming June elections will open up a period of greater political instability in Canada.  
 
 
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