Speech

Keynote Speech Delivered by The Honourable Michael H. Wilson, P.C., O.C.

The Conference Board of Canada
2009 Honorary Associate Award Dinner
Thursday, November 5, 2009
Keynote Speech delivered by
The Honourable Michael H. Wilson, P.C., O.C.

Thank you, Anne.

It’s great to see so many good friends—people we haven’t seen for the past 3 ½ years.

And thank you to the Conference Board for the great honour of being selected as your Honorary Associate this year.

I have been the beneficiary of many great sessions of the Conference Board over the years – especially the annual Canadian Conference. I remember one of my first, shortly after the 1979 election, when Joe Clark appointed me as Minister of State for International Trade. Following my eight minute presentation, the Chairman asked one of the attendees if he had a question for me. His response was “I will save my quest – ions for da Question Period, dis Fall!” And so began my long friendship with Jean Chrétien!
 
So the Conference Board and I go back many years and I have learned from this association. The economic analysis has been first class. The discussions at the sessions have always been provocative and informative. And the participants have contributed greatly to intellectually stimulating events.
 
When Anne invited me to speak at this dinner, she suggested I speak about my time as Ambassador in Washington. Since many of you have read lengthy books that my predecessors have written on that topic, you can be sure that I will be very selective this evening.
 
I will spare you of any commentary on softwood lumber, pork countervail, potato nematodes or border obstructions. These are natural products of a very busy and complex relationship.
 
I had thought that a larger part of my time would be spent on these bilateral irritants. In fact, much of my time was devoted to global issues – Afghanistan, Pakistan, Iran, the Americas, nuclear non-proliferation being the most active. Interpreting U.S. views to Ottawa and conveying Canadian views to the Administration and Congress. Also, because of my financial background, I took a great interest in the financial and economic crisis and the implications for Canada.
 
So my remarks this evening will focus on some broad observations about these issues.
 
But first, a brief observation on my time as Ambassador.
 
It was a great experience. A terrific honour to represent our country in the political capital of the world. The range of issues. The opportunity to interact with two quite different Administrations. A wide mix of very interesting people. All of this together made for a most stimulating intellectual adventure. One that Margie and I will never forget.
 
The relationship between our two countries today is in very good shape. I believe that the primary force behind this was the strong focus that the Harper government placed on national security.
 
Canada had not been involved in Iraq and had turned down the Missile Defence proposal. We were seen as weak on military preparedness and boarder security and our intelligence sharing relationship had suffered.
 
A number of factors have altered this situation.

The primary catalyst has been the great work by our military in Afghanistan, coupled with a strong development and diplomatic presence.
 
The decision to re-equip and increase our military supported by a long-term financial commitment is significant.
 
Our intelligence sharing relationship and stronger border management has been productive and cooperative.
 
Prime Minister Harper’s message during the Obama visit in February that “a threat to the U.S. is a threat to Canada”, has set a very positive tone with the new Administration.
 
We are viewed as strong national security partners both in the United States and in NATO.
 
Because of the importance that the U.S. places on national security, this has had a positive impact on other elements of our relationship. This connection is something we should never forget. The respect we have gained in national security has established a positive environment for much of what we do together.
 
Let me now shift my focus to three sweeping trends affecting the United States and also globally. The potential for significant change in these three areas has major consequences for all of us. We, as a close neighbour, must be alert to the impact on us and the challenges and opportunities that are presented.
 
The first of these relates to the economic and financial crisis. You all know the history of this to date so I won’t repeat it.
 
But, there is much unfinished business. 

• The exit strategy 
• How and when to unwind the massive fiscal and monetary stimulus that was injected into the economies of most developed countries 
• Should there be more stimulus later this year or next if the recovery falters? 
• Getting the right balance in the exit between moving too soon and pushing the economy back into recession or delaying until a recovery is assured and risk a period of stagflation. There is clearly room for many variations between those two extremes. 
• The longer term challenges of fiscal management as we emerge from deficits amounting to 12% of GDP in the U.S. – huge numbers in absolute terms as well. 
• The currency impact of all of this.

The evolution of: 

• Financial regulation 
• Specific regulatory changes needed in individual countries 
• Domestic systemic oversight 
• Who does it and how? 
• International sharing of the results of this domestic systemic oversight 
• How is the information shared? 
• Who manages it? 
• And does the process carry enough rigour to lead the changes in domestic practices to head off future global systemic problems 
• The contentious areas of moral hazard, executive compensation, and consumer protection agencies, among others 
• And let’s not forget the major question of global imbalances that are central to the U.S./China relationship and is at risk of being pushed aside.

Lots of questions. Not many answers yet. Recently, some signs of progress, but this needs a coordinated and sustained global effort. And in spite of the strong standing of the Canadian financial sector, we cannot shield ourselves from the global dialogue and decisions, so we must take an active role in this debate. The outcome is important to us.
 
One final comment: the sense of urgency and call to action of the earlier two G-20 meetings was not evident in Pittsburgh in September. Canada, as host to contiguous G8/G20 meetings next time, has an important opportunity to energize this process.

Let me move to the second major policy area, also very much in a state of flux. This is the role of government in the United States.
 
President Obama is presiding over the carnage of the economic and financial crisis and has been forced to take a number of decisions that probably, in large part, he would have preferred to avoid.
 
In addition though, he has chosen to move quickly and with some force into other policy areas – health care and climate change are front and centre, with education and immigration just over the horizon.
 
The combination of the exit strategy, financial regulation, together with the collective outcome of this second grouping of his issues of choice, plus the practically inevitable increase in the tax burden, must signal a meaningful increase in the role of government in the lives of Americans.
 
Let me summarize by saying that the outcome of all of this is not just in the hands of the Administration and Congress. There has been a long history in the U.S. of restraining the role of government, driven by the fear of an unhealthy burden on the economy and the impact on the highly valued freedom of Americans to live and choose without too heavy a hand of government.
 
The debate on each of these issues individually is fierce. But it is made the more so, because of the overriding potential of a fundamental shift in the role of government, resulting from the cumulative impact of so much change.
 
Again, a series of events and decisions which bear close watching and which will likely have an effect on Canada.

The final major shift that is underway relates to the position of the U.S. in the world. This has probably the most significance.
 
After the fall of the Berlin Wall and the dissolution of the Soviet Union, the U.S. stood alone in the world as the unrivalled political military and economic superpower.

The Iraq and Afghanistan wars ended that illusion. They brought home the reality that while the U.S. remains the preeminent nation in the world and has unparalleled global capabilities, it could not achieve is goals alone. And, as I’ve already noted, a new economic order has simultaneously been emerging.
 
Thus began the growing realization in Washington, which first took form in the second term of the Bush Administration and, subsequently, has gained prominence as the signature feature of the Obama Administration, that the United States has not got the capacity – financial, political, or military to tackle all of the major international security and economic issues by itself. It could provide leadership but it needs partners and allies.
 
The Obama Administration has elevated this reality to doctrine. They talk about the U.S. deployment of “Smart Power”, of diplomacy engaging with all, working with allies, developing partnerships, and seeking to build global networks to devise solutions to global problems.
 
And on September 23rd, at the United Nations, President Obama spoke in these terms when he said: “Those who used to chastise America for acting alone in the world cannot now stand by and wait for America to solve the world’s problems alone. We have sought – in word and deed – a new era of engagement with the world. Now is the time for all of us to take our share of responsibility for a global response to global challenges.”

And that responsibility must include Canada. But, the way we respond must be the focus of broad debate in our country as we move forward in this changing environment. All Canadians have a role to play.
 
President Obama’s plea comes at a time of increasing global challenges. War in Afghanistan and wider security implications for the region particularly Pakistan. Global economic recovery. Poverty. Pandemics. Climate change. Global terrorism. The proliferation of weapons of mass destruction in North Korea and Iran. Failed and fragile states. Regional conflicts. The health of the international trading system.
 
Unchallenged leadership of the U.S. will not continue. Even the post-World War II global architecture, which has served us so well for the last sixty years, is shifting. We are entering an uncharted era that needs to be shaped and defined if we want to have the peace, stability, and prosperity we have enjoyed over the last generation.
 
This broad process of change is now at a critical decision point. The Obama domestic agenda is currently running hard against the rigidities of the checks and balances of the U.S. political system. His agenda for change has been stalled by the resistance of special interests, by those who do not share his prescriptions for an enhanced role for government and those who are uncertain about what future direction America should take. These next few weeks or months will be pivotal to the further prospects of the Obama Administration, both domestic and international.
 
The international prospects are cloudy and challenging. Will other countries take more of the burden?
 
What will be the position of Russia and China on Iran and North Korea? Will China, Russia, India, Japan and Brazil play a constructive and more proactive regional role?
In the end, will President Obama be forced to resort to the traditional U.S. role of arbitrary and hard-line decisions? 

Let me conclude.

Major shifts are underway in the U.S. and in the rest of the world.
Canada cannot ignore this and the potential outcome.
 
We are in a relatively strong position to respond economically, financially and politically, I hope there will be a good debate within Canada – not just in Parliament but within the private sector as well. I do fear that the constant threats of an election that we hear in this time of a minority parliament will distract us. That would not serve our country well.
 
Given the stated approach of the new Obama Administration to work with partners and allies, and given the scope of the international agenda, the U.S. is looking for committed partners in the world. This presents challenges to a country like Canada, but also great opportunities.

It is in Canada’s interest to be an active player in the world. We must be alert to these opportunities and be pro-active and imaginative to seize them.

If we decline to participate, others will fill the vacuum and our international standing will suffer. Our voice will be diminished. Contributions to critical peace and security endeavours are noticed and valued by global political leadership, particularly in the U.S. because of their concerns for national security and because they increasingly want others to help share the burden. I recently read, on the Korean War Memorial, a statement which made me think. It said, “Freedom is not Free”.

Canada has been an important player in Afghanistan. I hope that Canadians will support other roles for Canada as the global environment shifts. Washington, of course, will continue to be our most important focal point, but we must broaden this to other capitals as well. Others want to hear our voice and see our efforts. We are there, to be sure, but we need to keep stepping up our game if we are to successfully position Canada at a level to fulfill our potential.

And the Conference Board itself has a part to play in this debate.

Again, my thanks and best wishes to the Conference Board on all their great work.