Double-dip, L-shaped, V-shaped recession. These are terms Paul Martin doesn’t have time for.
“Call it what you want, we didn’t come out of it,” he says.
We’re sitting in a private room in Le Muscadin, an Italian restaurant a few blocks from the Old Montreal headquarters of Canada Steamship Lines Inc. – a company in which his family has had an ownership stake for 30 years. Canada’s 21st prime minister has been given office space by his sons on a floor that houses their private equity fund.
When he’s not on his farm about an hour outside Montreal, it is from that office that Mr. Martin, the man who fixed Canada’s fiscal mess in the 1990s as Jean Chrétien’s finance minister and gave rise to the Group of 20, is waging his many post-political battles. He chairs the Congo Basin Forest Fund, which aims to end poverty in the 10-nation region. He advises the Coalition for Dialogue on Africa, which examines critical issues facing the continent. He guides the Martin Aboriginal Educational Initiative, a not-for-profit organization he established to help native youth.
And these days, as governments and central bankers around the world grapple with punishing debt loads, painful public spending cuts and the shocks of the 2008 financial meltdown, his focus is on ensuring such a collapse doesn’t happen again. Frustratingly, he says, people aren’t grasping just how desperate the situation is.
“They think this is an American or British or European problem. It is today, but tomorrow it’s going to be a Chinese problem or it’s going to be an Indian problem. And there’s no reason to think that Chinese banks, Indian banks, when they’re as big as Citigroup, aren’t going to have the same problems.”
So here’s how Mr. Martin, who still advises the International Monetary Fund, would fix the world: First, create one international body that oversees financial regulations. Ensuring that all countries’ banking and insurance sectors abide by harmonized global rules – at least to minimum levels – is key to preventing another crisis, he argues. At the moment, authorities in various pockets of the globe are implementing a patchwork of new rules, with relatively little co-ordination.
Now is the time for global financial authorities to get their act together, and turn regulation into a finely tuned machine, he says. “I think there is [currently]a continuation of the Great Contraction into a period of very, very slow growth,” he says, using the only phrase he feels accurately describes the economic situation. “And we’re not going to increase [spending]substantially as long as governments are deleveraging and consumers are deleveraging, and that’s happening in Canada, it’s happening in the United States, and it’s happening in Europe.”
“They can each have the best banking regulation, shadow regulation, everything you want, but banking is a global industry, so unless there are minimum standards, it isn’t going to work.”
Second: Europe must move toward greater economic integration, adopting a form of economic federalism (somewhat akin to the Canadian model) that will allow the continent to issue euro bonds. “If you’re not prepared to have that political and economic integration, then you’re not going to have the euro bond and, under those circumstances, I don’t see how there’s a solution to their problems.”
Third: End the discord. For the most part, politicians have been making bad situations worse, he says. “If they had allowed Greece to default in the beginning, it would have been a one-week story and that’s that. They built it up, like the debt thing in the United States. It’s a problem that actually the government built up into a big issue.”
These are weighty issues that require a great deal of travel, late hours and hard work. His schedule is such that his 15-coffee-a-day habit is understandable. But over the course of his meal of filleted orange roughy, one gets the sense he’s enjoying himself more than ever as he prods today’s politicians to make changes.
He says he has remained involved with the International Monetary Fund mostly so he can cajole the G20 nations into becoming more forward-looking than reactionary. “There are going to be bank crises going ahead. There are going to be [economic and political]tectonic plates crashing as Asia rises and Europe and North America hopefully stabilize. You have to have an organization that can deal with all of the great shifts that are occurring through this period.”
Such hard truths need to be on the table to provide the momentum for speedy change, Mr. Martin says. And, from a new pact in Europe to new bridges in Montreal, he believes that this moment of upheaval is the time for fresh starts.
That also applies to issues such as the welfare of Canada’s aboriginal population, who Mr. Martin says could gain a fresh start by fostering more business skills in youths, something that Mr. Martin’s Aboriginal Education Initiative is working toward.
In Canada, he would like to see the federal government take advantage of this country’s relatively strong finances to quickly make needed investments in infrastructure, education, and research and development. Those, he says, will be the key to Canada’s prosperity in a world where success will hinge on the ability to compete with, and tap into, Asia.
“Our economy is slowing down, we’re going to be affected by the [downturn in the]United States and we’re going to be affected by Europe,” he says. “We have to penetrate those rising Asian markets, and we’re not going to do that unless we have got the best-educated work force, unless we’ve got the best infrastructure, and unless we are creating our own Apples.”
Born Aug. 28, 1938, in Windsor, Ont.
His father, Paul Martin Sr., was a Liberal MP who served in the cabinets of William Lyon Mackenzie King, Louis Saint Laurent, Lester B. Pearson, and Pierre Trudeau.
Earned a B.A. at the University of Toronto’s St. Michael’s College
Studied law at U of T
Made a name for himself in business at Canada Steamship Lines, where he was installed as CEO in the early 1970s by executives of Power Corp.
Went on to buy CSL with an associate.
Minister of Finance from 1993 to 2002
Prime Minister from the end of 2003 to early 2006
“When I went into government, I divorced myself totally from the shipping business and, after I’d been away for 20 years, it made no sense for me to get involved again,” he says. “The company had done well and my sons made it pretty clear that they had done well when I was gone, so why would I come back?”
Married to Sheila Ann Cowan
Has three sons: Paul, Jamie and David
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