Jim Flaherty, Canada Finance Minister, On Europe: No Backing Down From Hard Line

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Finance Minister Jim Flaherty isn't playing nice with an international effort to help bail out Europe. | CP

OTTAWA - Finance Minister Jim Flaherty is refusing to play nice with an international effort to help bail out Europe — and he's sending his stern message across the Atlantic.

In an opinion piece in the prestigious London Telegraph, Flaherty chides Europeans for asking other nations — some with lower standards of living — to help them when they won't do enough to help themselves.

Contrasting "bold" actions taken by the United States and Canada in response to the 2008-09 financial crisis, Flaherty says Europeans politicians failed to act adequately.

"The 'muddle through' approach has led to an erosion of confidence in public leadership and too many opportunities," he writes.

Canada was one of the few hold-outs in the G20 meetings last month that dissented against the International Monetary Fund's drive to create a $400-billion fund to backstop eurozone debt, and refused to pay its portion when the fund was approved.

The U.S. also did not contribute, but many suggested the decision was taken because President Barack Obama could not succeed in getting approval from a Republican-dominated Congress in an election year.

Canada's decision raised eyebrows in international circles, however, and led to suggestions Canada had isolated itself from the world's pre-eminent decision-making body with its stand. Flaherty flatly denied the charge.

In the 830-word article, the minister shows not signs of back-tracking and questions how the IMF approved the fund in the first place.

He points out that European nations have a 34-per cent voting share in the IMF, which is led by France's former finance minister Christine Lagarde, so attaining a majority is a low threshold to meet.

"In this context, we believe that measures should be taken to ensure that major decisions about resources dedicated to Europe require more than a simple majority," he writes.

He also complained that the "troika" — the IMF, the European Central Bank and European Commission — setting conditions for assistance gives euro voices too much sway.

Bank of Canada governor Mark Carney has also taken common cause with this latter view, saying the IMF should be the sole arbiter of the conditions under which a loan would be made, as is policy.

The article was posted in the Telegraph's online edition Tuesday and is expected to be published in Wednesday's editions.

A spokesman for Flaherty said the Telegraph contacted the minister's office last week and asked if he would expand on the reasons for Canada's position.

Besides claiming that Europe has the resources to resolve its debt problems, Flaherty says in the article that asking others to chip in fails the test of fairness.

"We cannot expect non-European countries, whose citizens in many cases have a much lower standard of living, to save the eurozone," he argues.

Flaherty writes that the IMF's mission is to promote economic stability by providing loans to countries that have exhausted their resources, which Europe clearly has not, so therefore should not qualify.

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Jim Flaherty - Wikipedia, the free encyclopedia

European Debt Crisis: Jim Flaherty Says ... - Huffington Post Canada

Flaherty not backing down from hard line on Europe, questions IMF rules