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An economic threat is a national threat, Freeland tells inquiry into Emergencies Act

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OTTAWA — Finance Minister Chrystia Freeland drew a direct link between Canada’s economic and national security on Thursday, as she defended her government’s decision to declare a public order emergency to end the “Freedom Convoy” protests.

The assertion came in testimony to the Public Order Emergency Commission, where cabinet ministers have faced questions about the legal basis upon which they invoked the Emergencies Act in February to clear protesters from Ottawa and at several U.S. border crossings.

“I really do believe our security as a country is built on our economic security,” Freeland said. “And if our economic security is threatened, all of our security is threatened. And I think that’s true for us as a country. And it’s true for individuals.”

Yet while Freeland said the Liberal government’s decision to use the Emergencies Act was correct, she repeatedly refused to detail whether the purported economic harm being done by the protests formed the basis of the government’s decision — and if so, whether it was legal.

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“I’m not a lawyer,” said Freeland, who also serves as Canada’s deputy prime minister. “I rely on the judgment of officials who advised us and on expert legal advice.”

That analysis remains the key missing piece as the commission enters the final days of public hearings exploring the government’s decision to invoke the act for the first time since it became law in 1988.

The Emergencies Act specifies that a public order emergency is one arising from a threat to Canada’s security, as defined in the Canadian Security Intelligence Service Act.

That definition includes espionage or sabotage of Canada’s interests, foreign influence, acts of serious violence against people or property with political, religious or ideological objectives, or the violent overthrow of the Canadian government.

But while the clerk of the Privy Council testified last week that the government took a wider interpretation, including threats to Canada’s economic security, the federal Liberals have refused to release the legal advice that formed the basis of their decision.

Freeland testified the protests coincided with a period of fragility for the Canadian economy, with supply chain challenges, American plans to exclude Canada from electric-vehicle incentives and the looming Russian invasion of Ukraine all causing uncertainty.

Freeland said initially, she didn’t involve herself in dealing with the protests, which started on Jan. 29 when thousands of people and hundreds of trucks gathered in downtown Ottawa to protest COVID-19 vaccine mandates and pandemic restrictions.

But when protesters blocked the Ambassador Bridge in Windsor, Ont., the busiest trade route between Canada and the U.S., she said: “From a finance, economic perspective, that escalated things exponentially. That’s what made it a hugely significant economic action.”

The White House was also concerned about the bridge blockade and the director of U.S. President Joe Biden’s national economic council, Brian Deese, made it clear to Freeland that the U.S. wanted Canada to get the situation under control.

The commission was shown an email exchange between Freeland, her chief of staff and deputy minister following a Feb. 10 call from Deese, where Freeland wrote: “They are very, very, very worried.”

She added: “If this is not sorted out in the next 12 hours, all of their northeastern car plants will shut down.”

Freeland had spent a lot of time trying to convince Deese in 2021 that the U.S. needed to create an exemption for electric-vehicle incentives that initially excluded Canada, the inquiry heard.

Part of her persuasion was making the point that Canada was a reliable trading partner — a reputation that Freeland testified was challenged once protesters began blockading bridge access.

“The longer it went on, the greater threat that the U.S. would lose faith in us and our trading relationship would be irreparably damaged,” she testified. “The longer it went on, the greater the threat that foreign investors would write off Canada.”

Freeland repeatedly raised the spectre of U.S. protectionists using the convoy blockades to advance their own interests, which she said would have a profound impact on Canadians and the economy.

“They’re the people in a steel mill in Hamilton who would lose their job as that relationship fell apart, the people in an aluminum smelter in Quebec,” she said.

“For each of those people, having this all fall apart and the country’s economy profoundly undermined, that would undermine their security, and it would undermine our security as a country.”

But Freeland sidestepped questions about the lack of reference to economic harms in the Emergencies Act, saying only that she had received “assurances” about the legality of using the emergency order.

Freeland rejected suggestions Ottawa used the act to appease the White House or assuage American concerns.

The inquiry also heard that by Feb. 13, Freeland was hearing concerns from some of Canada’s banking CEOs.

A readout from a call that day shows some CEOs suggested the government list some of those involved in the protests as terrorists, which could allow banks more quickly choke their funds.

Cabinet met to discuss using the Emergencies Act the same day as the call with bankers. The special measures announced on Feb. 14 included orders giving financial institutions the ability to freeze the accounts of convoy participants.

Freeland defended the decision to freeze roughly 280 accounts totalling about $8 million, saying it was a way to end the protests without violence, by encouraging protesters to go home.

“I would have preferred not to have had to do this. But in my mind, I weigh that against what I really believe is the tens, hundreds of thousands of Canadian jobs and families that we protected.”

She also testified that as the blockades dragged on, she feared there might be violence between fed-up Canadians and protesters, and the government needed to step in.

“I felt that Canada was sort of a powder keg.”

This report by The Canadian Press was first published Nov. 24, 2022.

 

Stephanie Taylor and Lee Berthiaume, The Canadian Press

Economy

IMF Boss Says 'All Eyes' on US Amid Risks to Global Economy – Financial Post

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The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.

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(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency. 

“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday. 

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The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”

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The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last. 

“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”

Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry. 

Read More: A Resilient Global Economy Masks Growing Debt and Inequality

Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year. 

“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”

The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.

China Overcapacity

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“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.

“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.

A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.

US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.

Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.

(Updates with additional Georgieva comments from eighth paragraph.)

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Poland has EU's second highest emissions in relation to size of economy – Notes From Poland

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Poland has EU’s second highest emissions in relation to size of economy  Notes From Poland

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IMF's Georgieva warns "there's plenty to worry about'' in world economy — including inflation, debt – Yahoo Canada Finance

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WASHINGTON (AP) — The head of the International Monetary Fund said Thursday that the world economy has proven surprisingly resilient in the face of higher interest rates and the shock of war in Ukraine and Gaza, but “there is plenty to worry about,” including stubborn inflation and rising levels of government debt.

Inflation is down but not gone,” Kristalina Georgieva told reporters at the spring meeting of the IMF and its sister organization, the World Bank. In the United States, she said, “the flipside” of unexpectedly strong economic growth is that it ”taking longer than expected” to bring inflation down.

Georgieva also warned that government debts are growing around the world. Last year, they ticked up to 93% of global economic output — up from 84% in 2019 before the response to the COVID-19 pandemic pushed governments to spend more to provide healthcare and economic assistance. She urged countries to more efficiently collect taxes and spend public money. “In a world where the crises keep coming, countries must urgently build fiscal resilience to be prepared for the next shock,” she said.

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On Tuesday, the IMF said it expects to the global economy to grow 3.2% this year, a modest upgrade from the forecast it made in January and unchanged from 2023. It also expects a third straight year of 3.2% growth in 2025.

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The world economy has proven unexpectedly sturdy, but it remains weak by historical standards: Global growth averaged 3.8% from 2000 to 2019.

One reason for sluggish global growth, Georgieva said, is disappointing improvement in productivity. She said that countries had not found ways to most efficiently match workers and technology and that years of low interest rates — that only ended after inflation picked up in 2021 — had allowed “firms that were not competitive to stay afloat.”

She also cited in many countries an aging “labor force that doesn’t bring the dynamism” needed for faster economic growth.

The United States has been an exception to the weak productivity gains over the past year. Compared to Europe, Georgieva said, America makes it easier for businesses to bring innovations to the marketplace and has lower energy costs.

She said countries could help their economies by slashing bureaucratic red tape and getting more women into the job market.

Paul Wiseman, The Associated Press

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