Canada's Finance Chief Ousted, Igniting Crisis

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Last updated at: (Beijing Time) Monday, June 03, 2002

Canada's Finance Chief Ousted, Igniting Crisis

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Prime Minister Jean Chretien of Canada dismissed Finance Minister Paul Martin Sunday, in a contest for the leadership of the Liberal Party that has thrown Mr. Chretien's government and party into the biggest crisis of their nine years in power.

Mr. Martin's departure had been expected since Friday, when Mr. Chretien warned his cabinet that he would fire any minister organizing and raising funds in preparation for a party convention in February to decide on a leader.

Mr. Martin, widely viewed as the most likely candidate to succeed Mr. Chretien in power, has been organizing for a run at the leadership post for years. He was replaced by Deputy Prime Minister John Manley, a moderate former tax lawyer and loyal ally of Mr. Chretien.

Throughout the weekend, Liberal leaders across the country pleaded with Mr. Chretien and Mr. Martin to bury their differences for the good of the party and the economy. But they are barely on speaking terms, and neither would agree to back down.

In comments to reporters, Mr. Chretien denied that he had fired Mr. Martin. But in a letter to Mr. Martin, Mr. Chretien said, "It is in the best interest of the country that you step down from the government."

Mr. Martin, who had said he was considering resignation for several days, was muted tonight in his comments to reporters about his dismissal and said he would remain in Parliament. "Unfortunately in recent months, and certainly in recent days, the working relationship between me and the prime minister had deteriorated," he said. "The cabinet must be united in its vision."

Mr. Chretien has hinted that recent news reports about ethics scandals in his government came from leaks by supporters of Mr. Martin. He suggested that such efforts had only strengthened his resolve to stay in power until at least 2004, and then maybe run for a fourth term.

Mr. Martin's departure is expected to divide the party and may lead to the third cabinet shakeup since January. The two men have been political opponents since 1990, when Mr. Chretien edged out Mr. Martin in a party leadership fight.

The Liberals have been tightly controlled by Mr. Chretien since he was elected prime minister in 1993. But in recent weeks the series of ethics scandals has caused a sharp drop in his popularity in opinion polls and forced a shakeup of the cabinet.

Mr. Martin, 63, was generally considered the most respected member of the cabinet. He is credited with having brought the government deficit, which stood at more than $20 billion in 1994, under control.

He substantially reduced government spending in health and education, bringing protests from many citizens but cheers from Canadian and foreign investors. Canada's credit ratings and the Canadian dollar have rebounded in recent months, accompanied by a large infusion of investment in manufacturing and firmer stock market prices.

Mr. Martin's importance to the economy was underscored on April Fools' Day, when a political gossip Web site announced that he was resigning. It was a joke, but the farce caused the Canadian dollar to tumble sharply. Liberal Party leaders have warned in recent days that his departure may do lasting damage to the Canadian currency and economy.

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