Hell or High Water

by Paul Martin

  These were the years of massive street protests every time a major international organization convened a meeting, whether it was the IMF, the G7, or the World Trade Organization. Prague was a central meeting place in which it was possible for all sorts of protestors, ranging from the most deeply committed Christian activists, to anti-globalization leftists, to anarchists spoiling for a fight to gather and express their views. Prague was bristling with temporary street fences and riot police ready for the onslaught. The anti-globalization movement was inspired in part by a sense, similar to that behind the Jubilee idea, that the process of globalization was occurring on terms that were lopsided in favour of the rich and often disastrous for the poor. Within my own Finance ministry, there was an increasing recognition that the issue of debt in developing countries needed to be addressed. It was an issue on which I was determined to lead. The crushing debts taken on by many developing countries were compounded by rigid policies at the IMF that forced many of them to cut their already-meagre public services to meet debt payments. This had pushed some of the poorest lands on earth into a further downward spiral.

  In Prague, the G7 finance ministers met at the same time as the IMF/World Bank meetings, as they normally do. The G7 generally works on the basis of “consensus,” which often means that it moves when the United States is good and ready. And I knew they were not yet there on the debt issue. Larry Summers, who had succeeded Bob Rubin as U.S. Treasury secretary in 1999, was eager to move but had not yet persuaded the Clinton administration to do so. I decided that Canada should step out on the debt issue publicly in order to create some momentum. It should not have been a surprise to the other finance ministers, because I had spoken plainly and repeatedly against delay inside the room. Nonetheless, it did seem to come as a shock when we issued a press release calling on the rich nations to immediately grant a moratorium on debt service payments by eligible countries. I then announced that Canada would even further accelerate its program of debt forgiveness and begin its own moratorium on debt service payments immediately. In short, we were no longer prepared to wait for the consensus to develop. We were going to lead and asked others to join us.

  Larry Summers and I had become friends when he was Bob Rubin’s deputy at Treasury. He is brilliant and many of us believe if he put his mind to it, a Nobel prize in economics could still be his. But he is no one’s idea of a diplomat. When he bumped into me in the hall, with staff and media all around, he loudly said, “What in God’s name have you done?” I replied directly to his challenge with cameras whirling and microphones open as our aides tried to pry us apart.

  The next day, after tempers had cooled, there was as usual a closing press conference. Because of his reputation for bluntness, Larry expected questions from the American press about his relationship with his colleagues. Not surprisingly, given our corridor confrontation the day before, the first of these questions was put to me. Of course, I replied that Larry was a person of great diplomacy and tact.

  Next, someone asked Larry what he thought about my initiative on debt relief. “I can’t believe Martin did that. It was the stupidest thing I ever heard of,” he replied, or words to that effect.

  And then, when the cameras turned away, he looked over at me with a huge grin on his face. I’ve been dining out on that story ever since.

  I am proud to say that over time, one by one, the other industrialized countries followed our lead to accelerate debt forgiveness to the poorest countries of the world. This has made a significant contribution to the welfare of millions of people, particularly in sub-Saharan Africa.

  It was also during the Prague meetings that I got a call from Ruth Thorkelson saying that Bono was in the city.

  “Bono wants to see you,” Ruth told me.

  My reply was: “Who?”

  “The leader of U2,” Ruth said.

  “What?”

  Despite the fact that I started off with what I’d call “an in complete knowledge” of U2’s repertoire, by the end of the most complete briefing any minister has ever received from his staff on any topic, I was an expert.

  I had a small meeting room at the end of a corridor, to which there was a steady stream of finance ministers and central bankers, whose comings and goings excited absolutely no interest from either my staff or the other national delegations in the vicinity. When Bono arrived, however, secretaries and pinstriped Finance types lined the corridors flashing their cameras. It was as if the Pope had dropped by for a chat. The question of who would attend the meeting with me, I later learned, was a matter of intense negotiation among my staff.

  Bono and I quickly hit it off. We discussed my decision to take a forward position on debt relief, which was obviously the root of his enthusiasm. But, surprising as it may sound, we connected because he is also a policy wonk, deeply interested in the minutiae and mechanics of international aid. In fact, he is as knowledgeable as anyone out there.

  When our meeting was over, Ruth “volunteered” to accompany Bono down to an interview he was doing with CNN elsewhere in the building. Along the way, he asked her what she thought of some lyrics he was working on and serenaded her with what she later recognized as “Beautiful Day,” when it was released sometime afterwards. I’m told Ruth bought ten thousand copies of the CD.

  It was at the CNN interview that Bono paid me one of the more memorable compliments I have received in my career: that I was a “f——ing great guy.” To my regret, my publishers rejected this as a potential title for this book.

  On the final day of the meetings in Prague, unbeknownst to those inside, the demonstrations outside were turning into full-scale riots. I was able to return to my hotel but did so without Terrie, who was attending other meetings in her role as executive director of the World Bank. As a result, she got locked in the conference centre for better than eight hours. Her phone call to me made Larry Summers’s language earlier that day seem positively decorous in comparison. I suspect that when the Prague summit was all over, I was more popular with Ruth than I was with Terrie.

  On the morning of September 11, 2001, I was at the farm in the Eastern Townships, working out on a stationary bike. Just before nine o’clock, Sheila came into the room and told me that a plane had crashed into the World Trade Center. I didn’t think much of it. We had all heard of Piper Cubs or other small planes flying into buildings before. Twenty minutes later, she came in again and said I really needed to come upstairs.

  “Why?” I said.

  “Well, I told you, a plane hit the World Trade Center, and now a second one has hit the other tower.”

  And so, like a lot of people that day, I came to my television with a sense of utter disbelief. This was an attack on a colossal scale, unimaginable before that day. It was first and foremost a human tragedy: children left without mothers or fathers; parents without sons and daughters.

  After the initial shock had worn off, I realized that this was also a strike at the heart of the world’s financial markets. As finance minister, there were questions I needed to think about and address. How were the markets even going to function? Would there be a liquidity crisis?

  I phoned Jonathan Fried, my G7 deputy, and asked him to get in touch with David Dodge, by now governor of the Bank of Canada, right away. “You’ve got to phone David and suggest he connect with the other central bankers to make sure that we don’t have a liquidity crisis.” By the time Jonathan and I next spoke, that had been done, and I said we needed to have a parallel connection among the G7 finance ministers. I started working the phones. Normally, when I would try to contact my fellow finance ministers, my office would have to arrange a time for the call to go through. But on this occasion, it was no problem tracking them down because most of them were glued to their televisions.

  At one point, Sheila interrupted me and asked me to get off the line.

  I said, “What do you mean? I’ve got urgent work to do. I’m talking with the other finance ministers.”

  She replied, “I want to speak t
o our children, and I want you to as well.”

  Paul Jr. was living in Singapore at the time. Jamie was in Toronto. David and Laurence were in Montreal. “Singapore’s a long way from New York City,” I said, “and besides, it’s the middle of the night there.”

  All she said was: “Get off the phone. I want to speak to my sons. If I can’t reach out and touch them, I want to hear their voices.” I got off the phone.

  Almost every time I tell that story, it seems, someone tells me of something very similar happening in their own family.

  At the time of September 11, before the creation of the American Department of Homeland Security, the U.S. Customs Service was still part of the Treasury. One concern that occurred to us almost immediately after the attacks was that Canada would be side-swiped as the United States tried to secure its borders against further infiltration. It didn’t help that reports soon circulated in the United States that some of the terrorists had entered the country from Canada — a claim that was proven completely false, but was nonetheless repeated by some American politicians and media personalities with an isolationist agenda. Luckily, I was quickly able to persuade Paul O’Neill, the new U.S. treasury secretary, that if the Americans sealed off their borders, it would count as a victory for the terrorists. This resulted in what eventually came to be known as the “Smart Borders” initiative, which aimed to secure a free flow of goods and people across our border while making sure that we felt safe and secure whichever side we were on.

  Interestingly, as time went on I discovered in my discussions with O’Neill that I sometimes had more intelligence information from the United States than he did. Our officials were getting it directly from their American counterparts who wouldn’t share it with other U.S. agencies. As the 9/11 Commission later confirmed, the coordination within the agencies of the American government was deeply flawed, sometimes leaving even cabinet secretaries in the dark on intelligence being shared with allies.

  In the weeks and months that followed September 11, one of the ironies was that the terrorist attacks in the United States struck such fear among the security services around the world that it was not easy to organize a coordinated response from finance ministers. The G20 was scheduled to meet in India not long after the attacks, but everyone was receiving the same advice: it was too dangerous to travel. This is crazy! I thought. I suggested meeting in London or Washington, and those suggestions were shut down too. I kept saying, “You are letting these people paralyze us. This is exactly what they want.”

  Eventually, I invited my G20 colleagues to Ottawa, thinking that it might be easier for them to escape the travel restrictions imposed by their governments if Canada was the destination. This turned out to be the case. Karen Martin in my office did an amazing job in organizing the meetings in a matter of a few weeks. It was gratifying that Canada was regarded as a safe haven in a world in turmoil. More importantly, by convening meetings of the G20, which included the G7 ministers, it sent a signal to the world that the system could not be paralyzed. At the G20, we were able to establish a new mechanism for tracking international terrorist financing — an important counter-strike against them in the wake of September 11 — and an initiative the G7 never could have realized on its own.

  We also ended the paralysis that was affecting the other international institutions and soon the IMF, the World Bank, and others started rescheduling postponed meetings. But as we know, the world did not return to normal.

  1 My father once recounted a remark made to him by the venerable Belgian statesman Paul Henri Spaak to the effect that some of Dad’s influence representing a relatively small country in international forums derived from his longevity as a foreign representative for Canada and the experience he was able to draw upon. Admittedly, Spaak, who had been his country’s foreign minister seven times as well as prime minister three times over a period of thirty years, may have had himself in mind as well when he made the remark. But this insight did reinforce my view that continuity on the international stage was important and that it had been a mistake, for example, for Canada to treat the CIDA agency as a revolving door or a stepping stone to higher office, meaning that the assets due to experience and longevity were never allowed to accumulate.

  2 As an aside, the American initiative in itself was controversial. The Europeans felt that the United States had not always been helpful when problems had arisen in countries important to Europe, but were able to bend the IMF to their will when the problem was in their backyard.

  3 The members of the G20 are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States of America, and the European Union.

  CHAPTER SIXTEEN

  Getting Quit

  In August 1998, I announced that Terrie O’Leary was being appointed as Canada’s executive director at the World Bank. For eight years, Terrie had been tirelessly at my side. She had helped shape my policies in Opposition, staffed my office with wonderful effect in government, supported me fiercely when I was right, and let me have it between the eyes when she thought I was wrong. She knitted policy decisions, which she always understood deeply, with political considerations involving the public, the caucus, and the party that she usually understood better than I did. I would dearly have liked her to stay, but I understood that the intensity of those eight years was taking a toll. Terrie is someone who never does anything halfway. For some reason, after eight years she had wearied of waking up to my phone calls in the morning and staying late into the night at the office — mostly long after I had left. She has continued to be a close friend to this day, but she wanted a change.

  I had no doubt that Terrie would make an exceptional executive director at the World Bank, an institution I knew well. In my experience Terrie is someone who has never found her level. She has always surpassed it. She ended up staying at the World Bank for two two-year terms, and I was often told by her colleagues in the international community, as well as by then World Bank president Jim Wolfensohn, that her energy and intelligence stood out in that world as it had here in Canada.

  I knew that Terrie was going to be hard to replace, but we did eventually fill the position. I assembled an excellent new team. Ruth Thorkelson, who had a strong social policy background and brought the sensibilities of a Westerner to the job, moved up to become my chief of staff. Scott Reid, who had an excellent understanding of the workings of the media, and a good rapport with the press gallery, came on board as my communications adviser. He was soon joined by Melanie Gruer, who was a real find. All three excelled at their new jobs, were great people to work with, and would later become important members of my staff in the Prime Minister’s Office.

  Before she left in the summer of 1998, Terrie, along with David Herle, had arranged to have lunch with me on St-Denis Street in Montreal. Their message was straightforward: I should start considering seriously what I would do if the leadership of the Liberal Party opened up. If I was serious about succeeding Jean Chrétien, I should begin to think about the organization I would need to run once he announced his decision. If I had learned anything from watching Jean Chrétien’s own campaign in 1990, it was how valuable it was to have run before. I had a network of people across the country who had been committed to me, and many of them had remained unusually close. It was no secret that I was the likeliest front-runner if the job opened up, and many of my supporters from 1990 were already positioning themselves for the next race.

  But this was a long-term enterprise. It was preparation for a day we did not expect for some time. No sign of this could be clearer than Terrie’s departure. I would hardly have willingly dispatched my closest and most valuable adviser to Washington in 1998 if I were girding myself to battle for the leadership of the Liberal Party in the near term. Just the opposite. The very fact that David and Terrie had to sit me down and focus me on the matter is a token of how completely absorbed I was at the tim
e in my job at Finance, which increasingly drew me into the international issues that most fascinated me. Their message that day was pretty simple: I needed to tend my domestic political garden too if I still hoped to run for the job of leader some day. In short, I should do what I could to maintain my profile in the party and the country.

  This wasn’t hard for me to do. My role in the government had been crucial to our fiscal success, and the public understood that. As a result, I was inundated with requests for speeches from the party and general public across the country. Meanwhile, my supporters played their part in the Liberal Party organization, even if they occasionally chafed at the secondary roles to which they were often relegated.

  So much in this period is now viewed through the lens of retrospect that it is worth recalling the degree of co-operation that still existed at the time. David Herle, who was later unfairly demonized by the Chrétien camp, was invited to make an important presentation on public opinion to the annual caucus retreat in 1998, which was held in the prime minister’s home riding of Shawinigan. At election time, party organizers were always keen to have me figure prominently in television ads, and I duly co-operated.

  Still, it would be ridiculous to deny the element of rivalry in my relationship with the prime minister. Part of the reason that Terrie’s departure proved to be something of a turning point was that she had played the pivotal role in maintaining cordial relations with the PMO staff. That included Eddie Goldenberg, of course, but also Peter Donolo, who was often a moderating influence. Terrie’s relationship with Donolo was quite close, and they had both been among the group of Young Liberals who had approached me in 1982 to speak at their convention. Terrie and Peter Donolo had been very effective in managing the public dimension of my relationship with the prime minister and keeping any simmering tensions between our respective supporters from coming to a boil in front of the media. A few months after Terrie left for Washington, Jean Chrétien appointed Donolo to be Canada’s consul general in Milan. He was replaced as Jean Chrétien’s director of communications by Françoise Ducros, who regarded me and my staff with suspicion, and wasn’t shy about sharing her doubts with friendly reporters.