| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
 As the auto rescue bailout winds its way through Washington, Canada is putting together its own package to aid the Detroit automakers' substantial operations in Ontario.
The federal government in Ottawa and the Ontario provincial government have said their assistance to the hobbled carmakers will total about one-fifth of the U.S. rescue package. Moody's Investors Service said this week that it will probably cost the U.S. government between $75 billion and $125 billion to keep the Big Three out of bankruptcy, so the Canadian package will probably come in at $15 billion to $25 billion.
Given that Canada has one-tenth the population of the U.S., each Canadian taxpayer is paying twice what his or her U.S. counterpart is paying -- and doing so to support foreign-owned companies. Why is Canada -- whose per capita GDP is one-fifth of that of the U.S. -- willing to do this? Because of dire political and economic times. On the economic front, Canada needs Ontario to start revving its engines again. Ontario accounts for more than 40% of the country's GDP, but the high Canadian dollar and recent economic crisis have torpedoed its manufacturing sector. With the falling commodity prices jeopardizing the recent strength in the Canadian economy, the country needs a rebound in its economic heartland to pull the country out of recession. Canada cannot afford to lose the 500,000 jobs -- most of them in Ontario -- that are tied to the Big Three automakers. The politics are a bit more complicated. Earlier this month, the ruling Conservative Party was almost flung out of office when the Liberals and leftist New Democrats formed a coalition with the support of the separatist Bloc Quebecois. Conservative Prime Minister Stephen Harper saved his skin partly by denouncing his two mainstream opponents, signing a deal with the "separatists.'' In the ensuing weeks, the Liberal Party has replaced its leader with a popular Ontario member of Parliament and former Harvard professor Michael Ignatieff. Meanwhile, the Conservatives' popularity has soared across the country but crumbled in Quebec, where people resented the prime minister's slights about separatists. What all this means is that Ontario -- even more than usual -- will be the key battleground in the next election. The Liberals are dead in Western Canada, and the Conservatives are similarly belly-up in Quebec. Neither the Liberals nor the Conservatives want to be remembered in Ontario as the party that tossed autoworkers to the wolves in the long, cold winter of 2009. So Canada, on a proportional basis, will be even more generous to the Detroit automakers, than the country in which the Big Three are based. - Peter Moreira Categories Deal Video
    Community
 Elsewhere on The Deal.comDealwatchThe Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||||
|
|
|
|
|
©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.
