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Would Quebec Survive Sovereignty?


International Business: CANADA

WOULD QUEBEC SURVIVE SOVEREIGNTY?

Laurent Beaudoin, CEO of transportation equipment giant Bombardier Inc., trembled with emotion as he addressed a recent gathering of Montreal business leaders: If Quebec votes "Oui" for sovereignty on Oct. 30, he warned, the "economic disruption" would be so severe that Bombardier might have to move jobs from its factory in Valcourt, Que.--where the snowmobile was invented--to the U.S. Beaudoin's speech drew a loud ovation. But it enraged Quebec Premier Jacques Parizeau. He accused Beaudoin of "spitting in the soup" of Quebec's workers.

Referendum fever is gripping Quebec. From potluck suppers in small towns to mass rallies in Montreal, politicians, businesspeople, and ordinary citizens are debating whether Quebec should separate from Canada. The issue has pitted business against pro-sovereignty unions, Quebec's French-speaking majority against the English-speaking minority, and the separatists against the rest of Canada. Although most observers expect a Non victory, polls show the two sides neck-and-neck, with less than two weeks remaining before the vote. An Oct. 14 survey by Groupe Leger & Leger, Quebec's largest pollster, puts the Oui at 49.2% and the Non at 50.8%.

Quebeckers see three possible outcomes to the vote (table). If the Non vote wins by a solid margin--as business leaders and federalists hope--the referendum will put an end to Quebec's three-decade push for more autonomy and probably force Parizeau to resign. But a narrow win by the Non, with less than 55% support, could heighten tension. It would mean that a majority of French-speaking Quebeckers back sovereignty, providing ammunition for separatists to campaign for yet another referendum and talks with Canada over a special status for Quebec.

The best the Oui forces can hope for is a "very, very narrow victory," says Jean-Marc Leger, President of Leger & Leger. But even with "a majority of one vote," insists Quebec Deputy Premier Bernard Landry, "that will be good enough for Quebec" to leave Canada. The province would immediately call for negotiations with Ottawa. If the Oui vote wins, Brian Neysmith, President of the Canadian Bond Rating Service, predicts a "liquidity crisis," as foreign investors stop buying Canadian bonds until the confusion settles.

Whatever the outcome, Quebec will feel echoes of the debate for some time. The referendum is the culmination of a surge of separatist strength since Canada rejected Quebec's bid for autonomy in the early 1990s. Separatists won two-thirds of Quebec's seats in Parliament two years ago and provincial elections last fall. Since then, they've prepared a blueprint for independence, including a sovereignty declaration that "the time has come to reap the fields of history."

Still, even many separatists concede that the majority of Quebeckers don't want outright independence. The separatists are trying to reassure Quebeckers that they can vote Oui, yet still retain close ties to Canada. Parizeau has even been campaigning in a bus decorated with the Canadian dollar. The message: A sovereign Quebec would keep the Canadian currency. It's a stunning shift for Parizeau, who in 1984 resigned from the Parti Quebecois when it temporarily gave up on independence.

NEAR DEATH. In an even more remarkable concession, Parizeau on Oct. 7 effectively handed over leadership of the Oui campaign to his arch-rival, Lucien Bouchard, head of the Bloc Quebecois, the federal wing of the separatist cause. The move electrified the flagging Oui campaign. Polls show that Bouchard is the politician Quebeckers most trust. His image has soared since he lost a leg to a flesh-eating bacteria last December, narrowly escaping death.

Bouchard is now assuring Quebeckers that he will forge a new partnership with Canada as Quebec's "chief negotiator" following a Oui vote. The aim would be to create a new Canadian union overseen by a Parliament of elected officials from both countries. Bouchard is a potent salesman for a "courageous" Oui vote. "We have no right to waste another Quebec generation on sterile debates," he says.

In an ironic shift, it's the federalists who are talking about independence. They've blanketed Quebec with signs warning that a Oui would inevitably mean separation from Canada. That has been backed by warnings from politicians across Canada. Quebec's "partnership proposal is a nonstarter," Ontario Premier Mike Harris told a cheering crowd at the Canadian Club of Toronto on Oct. 12. "A separate Quebec qould be a foreign country, period."

At a recent federalist rally in a shopping mall north of Montreal, that message was conveyed in personal terms. If Quebec votes Oui, a Non organizer warned, citizens would be stripped of "the world's most envied passport." That prospect terrifies Quebec immigrants and the English-speaking minority, despite separatist promises that they could keep their Canadian passports. Pollster Leger predicts more than 90% of immigrants and English-speakers will vote Non. They make up about 17% of Quebec's 5 million voters.

In sharp contrast, Oui supporters are all Francophones. Many are prosperous and well-educated professionals, like Gaetan Perrault from Charny, near Quebec City, recently retired as a middle manager for Xerox Canada Inc. "Quebec would be better off on its own," Perrault reasons, "since we could eliminate" a whole layer of government. The Oui is also backed by baby boomers, who fell in love with the cause in the '60s.

With about 40% of the voters firmly committed, the outcome hinges on the 15% to 20% who remain undecided. Many voters, though Quebec nationalists, are concerned about the economic consequences of a Oui vote. That concern should play into the hands of the federalists. "Separation [would be] extremely expensive for Quebec," warns the Toronto-based Dominion Bond Rating Service. The new country would be burdened by a crushing debt load, forcing it to get serious about containing its budget deficit. Spending cuts would further depress the anemic economy, where unemployment is already 10.9%. Meanwhile, U.S.-Quebec trade--worth $34 billion last year--would take a beating while Quebec applied for admission to NAFTA.

Business is almost unanimously on the Non side. "We would lose a lot of business if this goes through," says Gordon Pozer, who operates a trucking company with some 40 employees in Saint-Georges de Beauce, on the Maine border. If Quebec separates, many small companies would leave the province. Bigger groups such as Air Canada might move their headquarters from Montreal.

If Quebeckers vote with their heads on Oct. 30, the Non should prevail. But separatism is also an appeal to the heart of a people who feel they've never gotten their due in Canada. No one is better than Lucien Bouchard at invoking this romantic legacy. If he works his magic, the vote on Canada's future could prove historic.

Three Scenarios for Quebec's Future

IF QUEBEC VOTES "OUI" FOR SOVEREIGNTY

The province would seek negotiations with Canada on a new political and economic partnership. The hottest issue: Splitting Canada's $450 billion in federal debts.

IF QUEBEC VOTES "NON" BY A NARROW MARGIN

Separatists will declare a moral victory, step up their campaign to win more concessions from Canada, and probably prepare for another referendum.

IF QUEBEC VOTES "NON" BY A STRONG MARGIN

The sovereignty movement will be crippled and the issue shelved for a decade or more, forcing Quebec to address its economic problems.

DATA: BUSINESS WEEKBy William C. Symonds in Montreal


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