On November 4, 1993, Chrétien was appointed by
Governor General Ray Hnatyshyn as prime minister. While Trudeau,
Joe Clark, and Mulroney had been relative political outsiders prior to becoming prime minister, Chrétien had served in every Liberal cabinet since 1965. This experience gave him knowledge of the Canadian parliamentary system, and allowed Chrétien to establish a very centralized government that, although highly efficient, was also lambasted by critics such as
Jeffrey Simpson and the media as being a "friendly dictatorship" and intolerant of internal dissent. Chrétien liked to present himself as the heir to Trudeau, but his governing style had little in common with the intense bouts of governmental activism that had characterised the Trudeau era. The Chrétien government had a cautious, managerial approach to governing, reacting to issues as they arose, and was otherwise inclined to inactivity. In 2003, Chretien changed the way politics was done in Canada by introducing Bill C-24 the
Canada Elections Act, on the recommendation of the
Chief Electoral Officer of Canada,
Jean-Pierre Kingsley.
Quebec 1995 Quebec referendum One of Chrétien's main concerns in office was separation of the province of Quebec, which was ruled by the
sovereigntist Parti Québécois for nearly the entirety of his term. When the
1995 Quebec independence referendum began in September, Chrétien was relaxed and confident of victory as polls showed federalist forces were leading by a wide margin. On October 8, 1995,
Lucien Bouchard replaced the separatist
premier of Quebec,
Jacques Parizeau, as the
de facto chair of the
oui committee and, at that point, the support for the side started to dramatically increase, aided by the committee's complacency (they had been taking victory for granted). Unlike the "hard separatist" Parizeau (for whom nothing less than a totally independent Quebec republic would have sufficed), the "soft separatist" Bouchard argued for sovereignty association, which turned out to be a more appealing vision of the future to many Québécois. In the weeks leading to the referendum on October 30, 1995, the federal government was seized with fear and panic as polls showing that, under the leadership of Bouchard, the
oui side was going to win. An additional problem for the
non side occurred when the Gaullist president of France,
Jacques Chirac, stated in a TV interview that France would not only recognize an independent Quebec at once, but also use its influence within the European Union to have the other EU nations recognize Quebec as well, a statement that boosted support for the
oui side. Such was Chrétien's alarm at Chirac's remark that the prime minister—who normally fiercely resented anything that smacked of American interference in Canadian internal affairs in the slightest—lobbied U.S. President
Bill Clinton behind the scenes for an American statement in favor of a united Canada. The
Unity Rally took place on October 27, 1995, when 100,000 people showed up. On the night of the referendum, the prospect of victory by the
oui side was so realistic that Defence Minister
David Collenette ordered the military to begin contingency plans to defend federal property in Quebec from a separatist take-over. On October 30, 1995, the federalist
non side won by the narrowest of margins, with 50.58%. Chrétien blamed the narrow victory on the Quebec Liberals under Johnson, whom he claimed had betrayed him, argued the federalists would have done much better if only he had intervened in the referendum earlier, and presented the
non case in terms of Trudeau-style "hard federalism" instead of the "soft federalist"
non case presented by Johnson, which depicted the benefits of Confederation in purely economic terms and had a strongly nationalist (albeit federalist) tone of language.
Aftermath of referendum On November 5, 1995, six days after the referendum, Chrétien and his wife escaped injury when
André Dallaire, armed with a knife, broke in the prime minister's official residence at
24 Sussex Drive. Aline Chrétien shut and locked the bedroom door until security came, while Chrétien held a stone
Inuit carving in readiness. Dallaire was a separatist who was angered by the result of the referendum. In the aftermath of the narrow victory in the referendum, Chrétien started in late 1995 a new policy of "tough love", also known as "Plan B", where the federal government sought to discredit Quebec separatism by making it clear to the people of Quebec how difficult it would be to leave Canada. Though Chrétien had promised to enshrine recognition of Quebec as a "distinct society" in the constitution in order to win the referendum, this promise was quickly forgotten in the aftermath of victory with Chrétien arguing that the very vocal opposition of Ontario Premier
Mike Harris to amending the constitution to recognize Quebec as a "distinct society" made that impossible. Instead, Chrétien had Parliament pass a resolution recognizing Quebec as a "distinct society", which had no constitutional force and was only a symbolic step. As part of his "Plan B" for combatting Quebec separatism, in a speech in January 1996, Chrétien endorsed the idea of partitioning Quebec in the event of a
oui vote in another referendum, stating all of the regions of Quebec that voted
non would remain part of Canada, regardless of what the Quebec separatists thought. On February 15, 1996, Chrétien was confronted by a protester, Bill Clennett, during a walkabout in Hull, Quebec. Chrétien responded with a choke-hold. The press referred to it as the "
Shawinigan handshake" (from the name of his home town). In February 1999, the
Social Union Framework Agreement (SUFA) was signed between Ottawa and the 9 of the 10 provinces (Quebec Premier
Lucien Bouchard refused to sign the agreement). The SUFA had been promoted by Intergovernment Affairs Minister
Stéphane Dion as a way of promoting a new era of federal-provincial harmony, but Chrétien himself was unenthusiastic, taking the view that the SUFA had given too much to the provinces and Chrétien had only signed the SUFA as a way of gaining the support of the 9 English provinces in his battles against the Bouchard government in Quebec. The SUFA turned out to be largely meaningless as the provinces and the federal government spent money on various social programs with little effort at the sort of co-operation that the SUFA had envisioned.
Clarity Act After the
1995 referendum very narrowly defeated a proposal on Quebec sovereignty, Chrétien started to champion what eventually become the
Clarity Act as part of his "Plan B". In August 1996, the lawyer
Guy Bertrand won a ruling in a Quebec court declaring that the sovereignty question was not just a political matter between the federal and Quebec governments, but also a legal matter subject to court rulings. Following that ruling, Chrétien decided that here was a means of defeating the Quebec sovereignty movement and, in September 1996, ordered the Justice Minister
Allan Rock to take the question of the legality of Quebec separating to the Supreme Court. Along the same lines, Dion started to send much-publicised open letters to Quebec ministers questioning the assumptions behind the separatist case. In December 1999 the Chrétien government tabled the
Clarity Act, which passed Parliament in June 2000. The
Clarity Act, which was Chrétien's response to his narrow victory in the 1995 referendum requires that no Canadian government may acknowledge any province's declaration of independence unless a "clear majority" supports a "clear question" about sovereignty in a referendum, as defined by the
Parliament of Canada, and a constitutional amendment is passed. The size of a "clear majority" is not specified in the Act. After the
Clarity Act had passed by the House of Commons in February 2000, a poll showed that the federalist forces enjoyed a 15 percent lead in the polls on the question if Quebec should become independent, which Chrétien argued meant that the sovereignty option was now effectively off the table as Bouchard had always said he would only call another referendum if he could obtain "winning conditions", which he plainly did not possess at the moment.
Domestic affairs Chrétien appointed his nephew,
Raymond, as
Canadian ambassador to the United States in 1994. In November 1997, the
Asia-Pacific Economic Cooperation (APEC)
summit was held on the
University of British Columbia (UBC) campus in Vancouver. Students on UBC's campus protested the meeting of some of these leaders because of their poor human rights practices. One of the leaders most criticized was Indonesian President
Suharto. Demonstrators tore down a barrier and were pepper-sprayed by the
Royal Canadian Mounted Police (RCMP). Other peaceful demonstrators were subsequently pepper-sprayed as well. There was debate over whether the action was necessary. Suharto had made clear that his coming to Canada was dependent upon his "dignity" not being insulted by any demonstrators. In response to Suharto's concerns about his "dignity" being called into question by protests, he had been promised by the Canadian government that no protesters would be allowed to get close and in early August 1997, the RCMP was informed by the PMO that the prime minister did not wish for any "distractions" at the up-coming conference. Allegations soon arose that someone in the Prime Minister's Office or Chrétien himself gave the go-ahead for the pepper-spraying of protesters. Chrétien denied any involvement, and it has never been proven. On August 7, 2001, the APEC report was issued by Judge
Ted Hughes, which cleared Chrétien of wrongdoing, but stated that
Jean Carle of the PMO had improperly pressured the RCMP to attack the protesters. Hughes concluded that the RCMP had used excessive force that was in violation of the
Charter of Rights and Freedoms. Hughes ruled that the use of force by the RCMP had gone beyond the legitimate security need to protect the visiting leaders at the APEC summit, and was intended to silence the protests altogether, which thus violated the right to freedom of expression guaranteed to all Canadians by the
Charter of Rights and Freedoms. Rock had wanted to compensate all of the hepatitis C victims, but was overruled by Chrétien, who told him the government would compensate only those afflicted between 1986 and 1990. Liberal backbencher
Carolyn Bennett was later to claim in an interview that it was unconscionable on the part of Chrétien to refuse to compensate all of the hepatitis C victims, and then to spend $57 million in legal fees in a successful effort to stop hepatitis C activists from getting a ruling from the courts to compensate all victims. In August 1999, the Anglo-Canadian media magnate
Conrad Black was due to receive a
British peerage. Two days before Black was to receive his title, Chrétien advised the Queen not to accord Black a title of nobility, citing the 1917
Nickle Resolution, where the Canadian House of Commons asked King George V not to grant any titles of nobility or knighthoods to Canadians, and thereby ensured that Black was not raised to the peerage as he was expecting to be. However, the Nickle resolution like all parliamentary resolutions was only symbolic, was in no way legally binding on Chrétien and several Canadians had been either knighted or raised to the House of Lords after 1917. Many saw Chrétien's blocking Black from a peerage not as a case of the prime minister merely enforcing the Nickle Resolution as Chrétien claimed, but rather as an act of revenge for the often critical coverage that Chrétien received from the
National Post, which was owned by Black at that time. By contrast, Chrétien's close associate
Eddie Goldenberg was later to claim that Chrétien cared deeply about the Nickle Resolution, and would have had blocked Black from being raised to the peerage even if the
National Post were more friendly to him. Black gave up his Canadian citizenship to accept the title.
Firearms In 1995, the Chrétien government introduced and passed the
Canadian Firearms Registry, also called the long-gun registry. This would require the registration of all non-restricted firearms in Canada. This
gun registry would document and record information of the firearms, their owners, and their owners' licenses.
Criminal justice reform The government under Chrétien's premiership introduced a new and far-reaching
Youth Criminal Justice Act in April 2003, which replaced the
Young Offenders Act and changed the way youths were prosecuted for crimes in Canada.
Same-sex marriage In July 2003, Chrétien reversed his position on gay marriage, which he had previously been opposed to (in 1999 Chrétien had voted for a resolution sponsored by the Reform saying marriage was a union of a man and a woman only). After a Toronto court ruled that laws forbidding homosexual marriage violated the
Charter of Rights and Freedoms, legalizing same-sex marriage throughout Ontario, Chrétien embraced the idea of gay marriage and introduced a bill in the House of Commons that would have legalized gay marriage despite the very vocal opposition of the Roman Catholic Church with the bishop of Calgary warning in a sermon that Chrétien's "eternal salvation" was at risk.
Environment A flurry of major environmental legislation, including the
Canadian Environmental Protection Act,
National Marine Conservation Areas Act,
Pest Control Products Act, and the
Species at Risk Act were enacted.
Economic policy Refusal to renew term for Bank of Canada governor One of Chrétien's first acts had been not to renew the contract of the
governor of the Bank of Canada,
John Crow, who was replaced with
Gordon Thiessen on February 1, 1994. Crow's policy of high interest rates in the early 1990s to achieve zero percent inflation had made him almost as unpopular as the GST, indeed so unpopular that Chrétien had promised to fire him during the 1993 election campaign. Chrétien, who was fearful of the market reaction if he should sack the
Bank of Canada governor, sent the new finance minister
Paul Martin to meet with Crow in December 1993 to tell him that he could remain as governor provided that he was willing to forgo his zero percent inflation target and end the punishingly high interest rates, which Chrétien believed to be a major cause of the recession. Crow told Martin that the government should mind its own business, at which point Chrétien decided to keep his promise. The budget focused on reducing the deficit to 3 percent of
gross national product (GNP) within three years. Outside of cutting defence spending, there were few cuts in the 1994 budget. According to the diplomat
James Bartleman, Chrétien told him in early 1994 that major cuts to government spending outside of defence were out of the question, and instead he hoped that the economy would grow enough on its own that the deficit would disappear without any cuts. Chrétien's plans in early 1994 for economic growth were to increase exports by embracing globalization and free trade with as many nations as possible, arguing that the export offensive would stimulate the economy out of the early 1990s recession. In April 1994, interest rates in Canada started a steady rise that would continue until early 1995. Further adding to the financial pressure of the debt situation, in May 1994,
Moody's downgraded Canada's debt, citing the high debt levels and concerns about a lack of political will to deal with the deficit.
1995–1997 budgets: Eliminating the deficit In January 1995,
The Wall Street Journal published an editorial written by
John Fund entitled "Bankrupt Canada?" strongly critical of the Chrétien government's deficit-fighting amid a crisis atmosphere caused by the collapse of the Mexican economy in late 1994, the steep decline of the Canadian dollar, and soaring interest rates, which put strong pressure on the Chrétien government to do more to reduce the deficit.
The Wall Street Journals editorial "Bankrupt Canada?" attracted much media attention in Canada and was taken as a sign that all was not well with the national finances. Further applying pressure on Canada was a warning from Moody's that Canada's debt rating would be downgraded again if the 1995 budget did not contain a credible deficit elimination plan. Martin went on a tour of various world financial centers in early 1995 to drum up interest in buying Canadian bonds, and found that investors had no such interest, telling him that Canada had been promising to deal with the deficit since the 1970s, and they wanted action, not words this time. It was only with
the budget that Martin introduced on February 27, 1995, that the Chrétien government began a policy of cuts designed to eliminate the deficit in order to reassure the markets. Chrétien's government began a program of deep cuts to provincial transfers and other areas of government finance. Social spending as a percentage of GDP fell from 20.35 percent in 1993, to 18.35 percent in 1995, eventually falling to 16.94 percent in 1997 and 15.76 percent in 2000, and eventually rising to 16.29 percent in 2003. The deficit was $30 billion. Chrétien himself expressed his unhappiness with his budget in a radio interview with
Peter Gzowski in March 1995, saying about the budget: {{Blockquote The 1995 budget, which was called by
Peter C. Newman a "watershed document" that marked the first time in recent memory that anybody had made a serious effort to deal with the deficit, won a favorable reaction from the international markets, and a led to an immediate fall in interest rates. There were, however, undeniable costs associated with this endeavour. The cuts resulted in fewer government services, most noticeably in the health care sector, as major reductions in federal funding to the provinces meant significant cuts in service delivery. Moreover, the across-the-board cuts affected the operations and achievement of the mandate of most federal departments. Many of the cuts were restored in later years of Chrétien's period in office. The Chrétien government's
March 1996 budget recorded a deficit of $8.719 billion. This was a dramatic decrease from the previous year's deficit of $30 billion. After, five consecutive budget surpluses were recorded (thanks in part to favorable economic times) and $36 billion in debt was paid down.
Conflicts within Liberal caucus over budget cuts In order to silence objections to the cuts from left-wing Liberal backbenchers and Cabinet ministers, Chrétien ensured that the Program Review Committee chaired by
Marcel Massé that would decide what programs to end and which to cut had a majority comprising the leftist MPs
Brian Tobin,
Sheila Copps,
Sergio Marchi and
Herb Gray, people who would not normally be supporting cutting programs, and thereby underlined the seriousness of the crisis. Though Chrétien had supported Martin in his plans for cuts, he did not allow Martin to go as far as he would have liked with cutting various social programs and to devolve spending powers to the provinces as a way of cutting federal government expenditure. As a "hard federalist", Chrétien fiercely objected to what he saw as the "soft federalist" Martin's attempts to weaken the power of the federal government under the guise of cutting the deficit. One senior Liberal later recalled about the Chrétien-Martin debate about reforming Old Age Security that:
1998–2003 budgets Taxation In the 1996 budget, the backbencher Liberal MP
John Nunziata voted against the budget under the grounds it failed to repeal the GST as the Liberals had promised in 1993 and singled out for criticism his former
Rat Pack colleague
Sheila Copps, who had promised during the 1993 election to resign within a year if the GST was not repealed. Chrétien's response was to expel Nunziata from the Liberal caucus. Until the terrorist attacks of September 11, 2001, the Chrétien government tended to be hostile towards defence spending with the government's white paper "Defence 94" declaring that in a post-Cold War world there would be less and less need for armed forces, which accordingly meant reduced budgets for the military.
Other measures In the 1997 budget, the Chrétien government introduced the National Child Benefit program for the children of low-income parents. Chrétien cancelled the privatization of Toronto's Pearson airport. The consortium that was due to take ownership of Pearson sued for breach of contract, which led the government to settle out of court in April 1997 for $60 million in damages. Using the low incomes cut-offs after tax measure, the percentage of Canadians who had low income in 1993 was 14.1 percent; in 1995, when the budget was introduced, that figure had jumped to 14.5; in 2003, the end of Chrétien's time in office, that number had fallen to just 11.6 percent. Chrétien's major policy initiative in the first half of 2001 was increasing the pay of MPs by 20 percent. As a result, the pay of MPs went from $109,000 per year to $131,000 per year while Chrétien's own salary went from $184,000 per year to $262,000 per year. Foreign Minister
André Ouellet claimed that neither he nor anyone else in the Cabinet ever saw the reports from Rwanda. Chrétien's foreign minister at the time,
Lloyd Axworthy justified Canada's involvement in
NATO bombing of Yugoslavia under the grounds that allegations of massacres against ethnic Albanians in Kosovo made the use of force legitimate on humanitarian grounds, even without the approval of the UN Security Council. Under his leadership, China and Canada signed several bilateral relations agreements. The Team Canada missions attracted criticism that Chrétien seemed concerned only with economic issues, that he rarely raised the subject of China's poor human rights record, and that on the few occasions that he did mention
human rights in China he went out of his way to avoid offending his hosts. Moreover, Chrétien attracted criticism for presenting the case for improved human rights in purely economic terms, arguing that a better human rights record would allow China to join the WTO and thus sell more goods to the West. Chrétien argued that there was no point in criticizing China's human rights record because the Chinese never listened to such criticism, and instead were greatly annoyed about being lectured by Western leaders about their poor human rights record. Given that Canada could not really do anything to change the views of China's leaders about human rights, Chrétien contended that the best that could be done was to improve Sino-Canadian economic relations while ignoring the subject of human rights. Clinton bluntly refused, saying that it had been extremely difficult to get Congress to ratify NAFTA, and if NAFTA was renegotiated, then he would have to submit the renegotiated treaty again for ratification, which was not something that he was going to do just for the sake of Chrétien. Following the
September 11 attacks, Canadian forces joined with multinational to pursue
al-Qaeda in
Afghanistan. U.S. President
George W. Bush had also commended how Canada responded to the crisis. Among them included
Operation Yellow Ribbon and the memorial service on
Parliament Hill three days after 9/11. In January 2002, Chrétien together with the Defence Minister
Art Eggleton were accused of misleading Parliament. When asked in Question Period if Canadian troops had handed over captured Taliban and al-Qaeda members in Afghanistan to the American forces amid concerns about the treatment of POWs at
Guantanamo Bay, Chrétien stated this was only a "hypothetical question" that could not be answered as the Canadians had taken no POWs. Critics of the government such as
Joe Clark then pointed out that in the previous week,
The Globe & Mail had run on its front p. a photo of Canadian soldiers turning over POWs to American troops. One year after the 9/11 attacks, Chretien gave controversial remarks about what led to the attacks, suggesting they were a reaction to Western foreign policy. During the 2002 CBC interview, Chretien said "I do think that the Western world is getting too rich in relations to the poor world. And necessarily, we're looked upon as being arrogant, self-satisfied, greedy and with no limits. And the 11th of September is an occasion for me to realize it even more. When you are powerful like you are, you guys, it's the time to be nice. And it is one of the problems — you cannot exercise your powers to the point of humiliation of the others. And that is what the Western world — not only the Americans but the Western world — has to realize." The comments were condemned by the new Official Opposition leader and the new Canadian Alliance leader,
Stephen Harper, who charged Chretien with
victim blaming, while the leaders of the New Democratic Party and Progressive Conservative Party did not interpret Chretien's comments as critical of the United States.
Refusal to join the Iraq War Chrétien's government did not support the US-led
2003 invasion of Iraq. His reasoning was that the war lacked UN Security Council sanction; while not a member of the Security Council, Canada nevertheless attempted to build a consensus for a resolution authorizing the use of force after a short (two to three-month) extension to UN weapon inspections in Iraq. Critics also noted that, while in opposition, he had also opposed the first US-led
Gulf War, which had been approved by the UN Security Council and in 1999 supported NATO air strikes against Serbia, which had no Security Council approval. In order to avoid damaging relations with the United States, Chrétien agreed to another and larger deployment of Canadian troops to Afghanistan on February 12, 2003, in order to prove that Canada was still a good American ally, despite opposing the upcoming Iraq war. Canada sent 2,000 soldiers to Afghanistan in the summer of 2003.
Other In early 2001 Chrétien personally lobbied Chilean President
Ricardo Lagos in favour of Canadian mining to ease Chile's ban on
asbestos. Later that year Canadian diplomats in Chile made a new unsuccessful attempt to lobby Chilean government to ease the asbestos ban, sparking Chilean trade unions to protest outside Canada's embassy in Santiago. In January 1998, Chrétien's government announced that the CH-113 helicopters would be replaced by a scaled-down search-and-rescue variant of the EH101, carrying the designation
CH-149 Cormorant. Unlike the Petrel/Chimo contract which Chrétien had cancelled in 1993, these 15 aircraft were to be built entirely in Europe with no Canadian participation or industrial incentives. The first two aircraft arrived in Canada in September 2001 and entered service the following year. His Maritime Helicopter Project was supposed to find a low-cost replacement aircraft. The candidates were the
Sikorsky S-92, the
NHIndustries NH90 and the EH-101, although critics accused the government of designing the project so as to prevent AgustaWestland from winning the contract. A winner, the
Sikorsky CH-148 Cyclone, would not be announced until after Chrétien retired.
Reelections 1997 federal election Chrétien called
an early election in the spring of 1997, hoping to take advantage of his position in the public opinion polls and the continued division of the conservative vote between the
Progressive Conservative Party and the upstart
Reform Party of Canada. Despite slipping poll numbers, he advised the governor general to call an election in 1997, a year ahead of schedule. Many of his own MPs criticized him for this move, especially in light of the devastating
Red River Flood, which led to charges of insensitivity. Liberal MP
John Godfrey tried hard to interest Chrétien in an ambitious plan to eliminate urban poverty in Canada as a platform to run on in the election, which was vetoed by
Eddie Goldenberg and John Rae of the PMO, who convinced Chrétien that it was better to stick with an "incrementalist" course of small changes than risk any grand project. The Progressive Conservatives had a popular new leader in
Jean Charest and the
New Democrats'
Alexa McDonough led her party to a breakthrough in Atlantic Canada, where the Liberals had won all but one seat in 1993. Chrétien benefited when the Reform Party aired a TV ad in English Canada charging that the country was being dominated by French-Canadian politicians, which Chrétien used to accuse
Preston Manning of being anti-French. In 1997, the Liberals lost all but a handful of seats in Atlantic Canada and Western Canada, but managed to retain a bare majority government due to their continued dominance of Ontario.
2000 federal election Chrétien called another
early election in the fall of 2000, again hoping to take advantage of the split in the Canadian right and catch the newly formed
Canadian Alliance and its neophyte leader
Stockwell Day off guard. At the funeral of Pierre Trudeau in September 2000, the
Cuban President,
Fidel Castro happened to meet with Day. Later that same day, Chrétien met with Castro, where Chrétien asked Castro about his assessment of Day and if he should call an early election or not. In the first weeks of the 2000 election, the Canadian Alliance gained in the polls and some voters complained that Chrétien overstayed his time in office and had no agenda beyond staying in power for the sake of staying in power. The fact that the Red Book of 2000 consisted almost entirely of recycled promises from the Red Books of 1993 and 1997 and various banal statements further reinforced the impression of a prime minister with no plans or vision for Canada and whose only agenda was to hang onto power as long as possible. However, the Liberal claim that Day planned to dismantle the health care system to replace it with a
"two-tier" health care system along with a number of gaffes on Day's part in addition to Alliance candidate
Betty Granger warning that Canada was faced with the threat of an "Asian invasion" (which furthered the Liberals' plan to paint the Alliance as a xenophobic and extreme right-wing party) started to turn opinion decisively against the Canadian Alliance. Day's socially conservative views were also attacked by Chrétien as the Liberals claimed that Day would make homosexuality and abortion illegal. The New Democrats and Bloc Québécois also ran lacklustre campaigns, while the
Progressive Conservatives, led by former Prime Minister
Joe Clark, struggled to retain official party status. On November 27, the Liberals secured a strong majority mandate in the
2000 election, winning nearly as many seats as they had in 1993, largely thanks to significant gains in Quebec and in Atlantic Canada. Without
Jean Charest as leader, the PCs who had done well in winning the popular vote in Quebec in 1997 fared poorly in 2000, and most of their voters defected over to the Liberals.
Scandals and controversies Shawinigate In late 2000 and early 2001, politics were dominated by questions about the Grand-Mere Affair (or the
Shawinigate scandal). Opposition parties frequently charged that Chrétien had broken the law in regards to his lobbying for
Business Development Bank of Canada for loans to the Auberge Grand-Mère inn. Questions were especially centered around the firing of the president of the bank, François Beaudoin, and the involvement of
Jean Carle, formerly of the PMO, in sacking Beaudoin. Chrétien claimed that Carle was not involved in any way with the loans to the Grand-Mere Inn, only to be countered by
Joe Clark, who produced a leaked document showing that he was. After initial denials, Chrétien acknowledged having lobbied the Business Development Bank to grant a $2 million loan to Yvon Duhaime. Duhaime was a friend and constituent to whom the Prime Minister stated that he had sold his interest in the Grand-Mère Inn, a local Shawinigan-area hotel and golf resort, eventually providing evidence of the sale—a contract written on a cocktail napkin. Duhaime was a local businessman with an unsavoury reputation and a criminal record, who received a loan from the Business Development Bank that he was ineligible to collect on the account of his criminal record (Duhaime did not mention his record when applying for the loan). The bank had turned down the initial loan application, but later approved a $615,000 loan following further lobbying by Chrétien. When the bank refused to extend the loan in August 1999 under the grounds that Duhaime had a bad financial history, Beaudoin was fired by Chrétien in September 1999, which led to a
wrongful dismissal suit that Beaudoin was to win in 2004. It was revealed that Chrétien had never been paid for his share in the sale of the adjoining golf course, and criminal charges were laid against Duhaime. On February 19, 2001, the RCMP announced that there they did not find sufficient evidence to lay criminal charges against anyone in regards to the Grand-Mere Affair, and Chrétien accused Clark of waging a "witch hunt" against the Liberals. The revelation of the Grand-Mère affair did not affect the outcome of the 2000 election. Chrétien and his circle believed that the breaking of the Grand-Mère story was the work of the Martin faction.
Sponsorship Scandal The major controversy of the later Chrétien years was the
Sponsorship Scandal, which involved more than $100 million distributed from the
Prime Minister's Office to Quebec's federalist and Liberal Party interests without much accountability. On May 8, 2002, the Sponsorship Scandal broke when the auditor general,
Sheila Fraser, issued a report accusing Public Works bureaucrats of having broken "just about every rule in the book" in awarding $1.6 million to the Montreal ad firm
Groupaction Marketing Inc. Chrétien's argument that he had nothing to apologize for in regards to the sponsorship program, and his apparent condoning of corruption as justified by the results of saving Canada fared poorly with the Canadian public, which increasingly started to perceive the prime minister as an autocratic leader with a thuggish streak. The Sponsorship Scandal would tarnish Chrétien's reputation only a few years after he left office, and contributed to the Liberals losing their majority government in
2004 and losing power altogether in
2006.
Chrétien and Martin: Liberal Party infighting Relations between Chrétien and Martin were frequently strained, and Martin was reportedly angling to replace Chrétien as early as 1997. Martin had long hoped that Chrétien would just retire at the end of his second term, thereby allowing him to win the Liberal leadership, and were greatly disappointed in January 2000 when Chrétien's communications director
Françoise Ducros had fired "a shot across the bow" by confirming what had been strongly hinted at since the summer of 1999 in an announcement to the caucus that Chrétien would seek a third term. Chrétien was due to face a leadership review in February 2002, but the Liberal national executive, which was controlled by partisans of Paul Martin, agreed to Chrétien's request in early January 2001 that the leadership review be pushed back to February 2003. In January 2002,
Brian Tobin complained to Chrétien that the Liberal Party machinery had been "captured" by Martin's followers to the extent that it was now virtually impossible for anyone else to sign up their own followers. In January 2002, an incident occurred which was to greatly damage Chrétien's relations with the Liberal caucus. After Chrétien reorganized the Cabinet in late January 2002, Liberal MP
Carolyn Bennett criticised Chrétien at a caucus meeting for not appointing more women to the Cabinet. Chrétien exploded with rage at Bennett's criticism, saying that as a mere backbencher she did not have the right to criticise the prime minister in front of the caucus, and attacked her with such fury that Bennett collapsed in tears. In February 2002, reflecting a growing number of Liberal MPs' displeasure with Chrétien, the Liberal caucus elected the outspoken pro-Martin MP
Stan Keyes (who had already openly mused in 2001 about how it was time for Chrétien to go) as their chairman, who defeated pro-Chrétien MP
Steve Mahoney. Chrétien had expected Mahoney to win, and was reported to be shocked when he learned of Keyes's victory, which now gave Martin more control of the caucus. Martin left his cabinet on June 2, 2002. Martin claimed that Chrétien dismissed him from Cabinet, while Chrétien said that Martin had resigned. In his memoirs, Chrétien wrote that he regretted not having fired Martin a few years earlier. The open split, which was covered extensively on national media, increasingly painted Chrétien as a
lame duck. During the summer of 2002, a number of backbencher Liberal MPs associated with Martin started to openly criticise Chrétien's leadership, calling on him to resign now or suffer the humiliation of losing the leadership review. Chrétien asked
Jim Karygiannis, who had been so effective in signing up supporters for him in 1990 to repeat that performance, only to be told by Karygiannis that Chrétien had never rewarded him by appointing him to the Cabinet as he asked for many times over the years, had not even returned his phone calls to set up a meeting to discuss his possible appointment to the Cabinet and that he was now a Martin man. Karygiannis then called a press conference on July 13, 2002, where he called for Chrétien to retire "with dignity", rather than risk losing a potentially divisive
leadership review and avoid having his career end that way. After less than half the caucus committed to support him in August 2002 by signing a letter indicating their support for the prime minister in the up-coming leadership review, Chrétien announced that he would not lead the party into the next election, and set his resignation date for February 2004. Martin was not happy with the 2004 departure date, preferring that Chrétien retire at the end of 2002, but considered it better if Chrétien were to retire than having to defeat him at the 2003 leadership review, which would have been more divisive and would have established the ominous precedent of a prime minister being ousted by his own party for no other reason other that someone else wanted the job. Due to mounting pressure from the Martin camp, Chrétien no longer saw his February 2004 resignation date as tenable. His final sitting in the House of Commons took place on November 6, 2003. He made an emotional farewell to the party on November 13 at the
2003 Liberal leadership convention. The following day, Martin was elected his successor. On December 12, 2003, Chrétien formally resigned as prime minister, handing power over to Martin. Chrétien joined the law firm,
Heenan Blaikie on January 5, 2004, as counsel. The firm announced he would work out of its Ottawa offices four days per week and make a weekly visit to the Montreal office. In early 2004, there occurred much
in-fighting within the Liberal Party with several Liberal MPs associated with Chrétien such as
Sheila Copps and
Charles Caccia losing their nomination battles against Martin loyalists. == See also ==