ELECTION 2008: WHAT IF...

C O N F I D E N T I A L SECTION 01 OF 02 OTTAWA 001314

SIPDIS

E.O. 12958: DECL: 10/09/2018
TAGS: PGOV PREL CA
SUBJECT: ELECTION 2008: WHAT IF...

REF: A. OTTAWA 1300

B. OTTAWA 1293

C. OTTAWA 1216

Classified By: PolMinCouns Scott Bellard, reason 1.4 (d)


1. (C) Summary. A Liberal victory in the federal election,
while still not likely, has suddenly become a possibility in
the wake of widespread concerns about the world financial
situation. Improved prospects for the Liberals in Ontario
and for the Bloc Quebecois in Quebec have substantially eaten
into the one-time Conservative hopes of picking up 10-20
seats in these vote-rich provinces. If in office, the
Liberals would likely maintain course on Afghanistan,
diminish spending on military procurement and the expansion
of the Canadian Forces in order to expand social and health
services, and impose a controversial new carbon tax - while
still trying to avoid a budget deficit. The Liberal platform
makes clear that strengthened and good relations with the
U.S. would remain of paramount importance. End Summary.


2. (C) Canadian voters appear to have woken up to the
domestic political implications of the world financial crisis
and potential for new economic woes at home, and to be
rethinking their choices in the October 14 federal election.
Conservative efforts to urge a "steady at the helm" approach,
to reassure voters that Stephen Harper is the best choice to
navigate the ship of state in rocky economic times, and to
convince the public that Liberal leader Stephane Dion is "not
worth the risk" are increasingly falling on deaf ears, while
Dion's claim that the Conservatives have been "asleep at the
wheel" is gaining resonance. Support for the Conservatives
has dropped from over 41 pct to somewhere between 31 and 35
pct, with the Liberals now lagging only by three to five
percentage points (with about a three point margin of error)
in most polls. On October 8 alone, Harper's rating for
trustworthiness and competence dropped by seven points while
Dion's gained nine points, according to a CPAC-Nanos daily
election poll.


3. (C) Economic news is unlikely to improve noticeably in
the few days before the election, and Canadian voters are
headed toward a long weekend to celebrate Canadian
Thanksgiving, meaning that the campaign effectively ends
October 10. Dion increasingly appears to have hit his stride
by assuring voters that the Liberals understand their pain
and have the best track record (in the 1990s) as well as the
best "dream team" to handle an economic slowdown. They have
also argued that Harper is out of touch with Canadian
concerns, lambasting Harper for suggesting to Canadians
worried about their retirement investments that now would
actually be a good time to buy up more stocks cheaply. Dion
is more openly going on the warpath, commenting that, while
his English may not be as good as Harper's, he "speaks the
truth in both official languages" better than Harper. Voters
appear finally to be responding to a new and improved Dion
image, whereas Harper's unemotional style and patient
reassurances are making him appear detached to many worried
voters.


4. (C) For the first time in the campaign, the Liberals
appear to have a shot at beating the Conservatives, if only
marginally, and getting the chance to form a minority
government. (Neither party has any realistic hope at this
point of gaining a majority.) One wild card remains how the
other opposition parties do, with about 15 pct of the voters
still undecided, and even between 8 and 14 pct of "decided"
voters potentially willing to switch their votes by October

14. Green Party voters, in particular, may decide to vote
"strategically" for Liberal candidates in their ridings
Q"strategically" for Liberal candidates in their ridings
instead of voting for their own party's candidates in order
to oust the Conservatives; Green leader Elizabeth May has
said publicly that she wants Dion to be Canada's next Prime
Minister. Support for both the Green Party and the New
Democratic Party is up noticeably from 2006 levels, while the
Bloc Quebecois has apparently rebounded in Quebec, at the
expense of potential Conservative victories there. The
Conservatives are still slightly ahead in Ontario, but their
advantages are declining.


5. (C) Even if the Liberals win, they likely will have only
a weak minority and will be hard-pressed to undertake
significant shifts in policy. Furthermore, their campaign
pledges not to run Canada into deficit territory again --
anathema to most Canadian voters -- will limit their
programmic flexibility. On Afghanistan, a Liberal government
would likely maintain the course set forward in the March
2008 bipartisan Commons motion committing Canadian Forces in
Kandahar until 2011, but the Liberals might well scale back
some of the more ambitious military modernization and
procurement choices of the Conservatives in order to free up
budget spending for social and health services. Dion has
insisted that he would move forward with his Green Shift

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phased-in "carbon tax" plan, claiming that large numbers of
economists have assured him it is the right move for a
declining economy. On other issues of concern to the U.S.,
the Liberals have proposed a $400 million Canadian Water Fund
to clean up boundary waters, including the Great Lakes,"
while promising to "protect Canada's water supply by standing
up for Canadian control over our waters." They have promised
$4.5 billion for Canada's gateways, corridors, and borders
"to ensure that Canada's infrastructure facilitates, rather
than hinders, our trade and tourism industries while keeping
Canada safe and secure." They have pledged to take "concrete
action" to address the flow of illegal guns into Canada
"beginning with negotiations on a mutually responsible
strategy aimed at curbing gun smuggling from the U.S. into
Canada."


6. (C) Good relations with the U.S. would without doubt
remain a top priority for a Liberal government as well as for
a new Conservative government. The Liberals' own campaign
platform contains several references to the need further to
"strengthen" bilateral ties, while nonetheless insisting on
keeping Canada out of the U.S. missile defense shield and on
securing Canada's claim to the Arctic. Ultimately, whichever
party wins the election -- and Embassy continues to predict a
Conservative victory, but potentially with even fewer seats
than the Conservatives held in the last Parliament rather
than a gain of up to 145 as the Conservatives only recently
predicted (ref b) -- will view U.S. relations as of paramount
importance, and will continue close collaboration with the
new U.S. Administration (ref c).

Visit Canada,s Economy and Environment Forum at
http://www.intelink.gov/communities/state/can ada

WILKINS