Quebec as a Nation: A Costly Idea

ARE Quebeckers sleepwalking to independence, lulled by false economic hopes? That's the conclusion of a new study by an Ottawa economist.Quebec's departure from Canada - if it comes - is going to be more expensive than predicted. And Patrick Grady, who has just published a book on the topic, says the real costs of Quebec independence are being hidden from the average person in a "conspiracy of silence." "Quebeckers have been lulled into a false sense of complacency about their economic future by the reassuring voice of the Belanger-Campeau Commission," said Mr. Grady in a study called "The Economic Consequences of Quebec sovereignty." The Belanger-Campeau commission, a board of inquiry set up by the provincial government, issued a pro-independence report in the spring of 1991. Grady said economists who prepared briefs for the commission "put aside their objectivity and let themselves be carried away by their nationalistic enthusiasm." The latest public opinion poll, released on Sept. 26, showed 42 percent of adult Quebeckers favor separating from the rest of Canada and becoming an independent country. Constitutional reform proposals designed to placate Quebec were introduced Sept. 24. If Quebec turns down the proposal, a referendum on independence would be held next year. "The time has come to get the facts on the table so Quebeckers can make their political choices with their eyes open," said Grady, who is president of the Ottawa consulting firm Global Economics. He lists the consequences of an independent Quebec: * The province's economic output would crash by as much as 10 percent. * Quebec's recession would be as bad as the 1930s Depression. * Industries that rely on trade protection and federal subsidies - textiles and dairy products, for example - would be hit hard. * There would be an exodus of people from an independent Quebec and very little immigration from abroad. * There would be a flight of capital, higher interest rates, and perhaps even a collapse of stock and property prices. Grady, a former senior official with the federal finance department in Ottawa, holds that Quebec might have to issue its own currency, rather than continue using the Canadian dollar, as separatist politicians have promised. "Quebec could not just unilaterally decide to use the Canadian dollar as a currency," said Grady. "Canada could be expected to yield little, if any, say in the formulation of monetary policy to a sovereign Quebec." Economists have pointed out that the Bank of Canada could cut Quebec out of the currency by refusing to ship new bank notes and coins to the province. But Grady says English-speaking Canadians should not be smug about the costs of separation. They would also be hurt, though more moderately than Quebeckers. The costs for English Canada would include a serious recession and drop in stock market prices, potential loss of international influence, and the need to rewrite treaties, laws, and regulations.