Waterloo Region Record

Flexing our economic muscles

HEATHER SCOFFIELD OPINION HEATHER SCOFFIELD IS TORSTAR’S OTTAWA BUREAU CHIEF AND AN ECONOMICS COLUMNIST.

Economic revenge is the answer to everything these days. Unruly protesters in the street? Cut off their bank accounts. Russians invading Ukraine? Cut off access to international payments systems. Unscrupulous China? Build economic ties everywhere but there.

Flexing our economic muscle is Canada’s answer to foreign policy, defence policy and even domestic public safety. But Ottawa is scrambling to ensure its tools keep up with its ambition.

Of course, economic security has always been paramount for Canada — a medium-sized economy that depends on trade and investment. And of course, money has always been part of the arsenal in every country’s international relations.

But it’s clearly the first line of defence for this Liberal government, even as they rush to fill in the blanks of policy that supports their approach.

The hearings last week on the use of the Emergencies Act were especially instructive.

“This is about following the money. This is about stopping the financing of these illegal blockades,” Finance Minister Chrystia Freeland, explaining the rationale behind what was arguably the strongest measure against the convoy protesters among those allowed by the invocation of the act.

The intent made a lot of sense. At the time, it looked to Freeland and her cabinet colleagues that the only way the protesters were able to remain indefinitely in their trucks and on the streets was because they were underwritten by flows of money that couldn’t be detected — let alone brought to a halt.

So the government invoked the Emergencies Act, tweaked current laws and is now looking even harder at what else needs to be done, if money coming from or destined for undesirable sources is in the pipeline.

But economic revenge cuts both ways.

Protesters hit the country’s Achilles heel — the very border where a billion dollars of trade crosses every day.

When it came to the invasion of Ukraine last winter, Canada pushed hard to cut Russia out of the international financial system. Freeland and Prime Minister Justin Trudeau pushed aggressively in the early days — not just to impose sanctions but also to kick Russia out of the global payments system, isolate Russia’s central bank and sovereign wealth funds, and sabotage the flow of money in and out of that country.

The measures have had some effect. But the sanctions have also led to higher prices around the world in an inflation-prone global economy.

Clearly, in dealing with global powers, economic measures are more effective if they’re accompanied with military might — something that wasn’t lost on the crafters of the Indo-Pacific strategy finally released this weekend.

Foreign Affairs Minister Mélanie Joly announced a $2.3billion plan that lumps China in with North Korea in terms of peace and security in the region, and earmarked almost a quarter of the spending to boosting Canada’s military presence.

That’s a solid commitment from a Canadian perspective, but the big power in the new strategy comes through the economic side.

Over half of the $2.3 billion goes toward building up Canada’s business presence in everywhere that’s not China — especially Japan, South Korea and India.

At the same time, Innovation Minister François-Philippe Champagne has signalled he will take a tougher approach to Chinese investors flirting with Canadian natural resources. He ordered three companies to leave earlier this month.

But the most striking part of the new strategy was its vagaries. Officials have talked about developing new positions, bolstering current laws, tweaking various policies and insisting on a place for Canada in existing trade arrangements across the region.

The strategy, so far, is only a document full of ambition, with a long to-do list. It’s clear we don’t yet have the tools we need to fully engage in a foreign policy through economic aggression.

OPINION

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2022-12-01T08:00:00.0000000Z

2022-12-01T08:00:00.0000000Z

https://waterloorecord.pressreader.com/article/281595244553430

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