Mr. Speaker, this budget is a very promising document, full of optimism and promise for the future. The government should be very proud of it because it tells a story of sound financial management over the past few years. However it is completely silent on one of the most important issues of the day; and that is what will happen if there is an attack on Iraq? In the time allotted to me, I propose to examine the implications to Canada's financial future in the short term and in the long term if the United States and Britain undertake a unilateral attack on Iraq.
I point out to you, Mr. Speaker, that the budget before us tells a story of debt reduction of some $46 billion over the last five years, the creation over the last year of more than 560,000 new jobs in the economy, and economic growth of 4%, and all this in a context where other countries in the world, both the G-7 and OECD countries, all are performing less well, including the United States. If all things were equal, what we would see is continued growth in Canada, continued erosion of the debt and continued growth in the economy, while occurs in the United States the opposite phenomena occurs. The United States is now looking at an increased deficit in addition to debt of some $100 billion plus.
That is good performance in the context of a world economy that is weak. However what will happen to world economy if there is an attack on Iraq? It will be a different ball game. The people who will be hurt the most will be our American friends. I will give some examples at the very outset.
We know that a war in Iraq will create a reaction in the world. First of all, there will be a security reaction. I think the National Post had a story the other day in which the U.S. airline industry predicted a loss of 70,000 jobs and a loss of $4 billion each quarter should the United States and its ally Britain unilaterally attack Iraq. We can understand why this is so because the public perceives the airline industry and airliners themselves as extremely vulnerable to retaliatory attacks by terrorists.
For example, there was the incident in Kenya in which two surface to air missiles were fired at an Israeli airliner rising from the airport. That sent an enormous chill through the airline industry around the world. All that has to happen is for one airliner to be shot down under those circumstances and it would be total devastation worldwide in the airline industry; the American airline industry and Canada's as well.
We already have a situation where Air Canada, our carrier, is facing a $300 million loss in the first quarter and expects to have continued losses of about $300 million to $500 million in succeeding quarters. Air Canada admits quite freely that the reason why it is facing these losses, which could devastate the company and lead to bankruptcy, is because of insecurity worldwide with respect to air travellers being fearful of not the takeover of an aircraft but fearful of an attack on an aircraft.
Then there are other problems. Of course airports are centres of international communication where a lot of people congregate. People worldwide will appreciate that represents a significant hazard that no amount of security in the world could solve. We can see right there that there is a problem.
Associated with that is the insurance industry. I am speaking of the American insurance industry, the Canadian insurance industry, Lloyds of London, all these organizations that insure various kinds of corporations and various kinds of enterprises in the world. They are facing an incredible disaster should there be a unilateral attack on Iraq and should there be terrorist retaliation worldwide. We are not talking about al-Qaeda. We are talking about the release of all kinds of individuals out there who may be disgruntled for whatever reason, whether it is religious, ethical or otherwise. The focus of their anger will be on American interests both abroad and, to some degree, at home.
This will create incredible insecurity. Insurance companies will have to escalate their rates or else they will have to stop insuring companies. There is a company in my riding that handles hazardous material. It has always been able to get insurance. It had to pay for it, but it could get it. It no longer can because of the nature of the substances that it carries. Now it is going to be forced out of business because without insurance it cannot operate. That is another example and that could be billions of dollars of loss in the American economy.
Think of tourism and what has happened to tourism already, Mr. Speaker. Whether it is the Caribbean, South America, the Far East, the Middle East, or wherever we go we will find that tourism basically has evaporated. Again it is because of the fear that has been generated by the prospect of retaliation if there is a unilateral attack on Iraq.
This costs companies in the United States and Canada, and very sadly, it costs countries terribly in the world, particularly in the third world because there are many small countries that rely principally on tourism. They have lost that tourism. Look at what has happened in Indonesia with the bombing of the night club in Bali.
It is true that perhaps here in Canada there will be some small gain for tourism because Americans have to go somewhere. We could see some benefit, but this is not a benefit that we as Canadians want. We do not want this kind of benefit at this price, particularly because it is going to devastate the travel industry in the United States as well. How many billions of dollars is that going to cost the American economy?
Worst of all is the fact that we can expect a massive backlash against all things culturally American throughout the world. Already there is a systematic boycott in much of the Muslim world against American-made soft drinks, both Coca-Cola and Pepsi. This is significant for two reasons. The followers of Islam do not partake of alcoholic beverages so soft drinks are extremely important culturally in any Muslim country in the world.
Naturally the best technology, the best flavours, and the best soft drinks in the world are the ones that we too acknowledge are the best drinks in the world. They are mostly the ones that originally were invented and manufactured by the Americans: Coca-Cola, Pepsi and related products. We can travel anywhere in the Far East, Indonesia, Malaysia, Egypt or anywhere and we will see these products everywhere. They are manufactured under licence in these countries. These products are going to disappear from the shelves.
You may think the comparison to soft drink companies is trivial, Mr. Speaker, but it is not trivial. They are worth hundreds of millions of dollars to the American economy and they will lose that market abroad.
Even worse than that is what happened just after September 11, with the sabre rattling on Iraq and the problem with respect to Israel and Palestine. There have been various tries at boycotts in Muslim nations against U.S. products. If the Americans and the British do attack Iraq without the backing of the UN Security Council, I think it is very clear from what we are reading about world opinion that the majority of people around the world would regard that as an unjust war, an unjust attack. The negative reaction to American interests abroad will be incredibly profound. It will have an enormous negative impact on the American economy.
If the American economy is affected negatively, we can be certain that the Canadian economy will be affected very negatively. What will it mean to have had surpluses of several billions of dollars? Those surpluses will disappear when we as Canadians attempt to bail out Air Canada and attempt to meet the shortfalls of revenues that we may experience.
Think of how huge, if we extrapolate that, that problem will be in the United States. We will see a situation where pharmaceutical companies will have problems selling products abroad, any kind of American manufactured goods, and not just in Muslim worlds. There could be a reaction throughout Europe and China. This possibility of going to war in Iraq without the moral authority of the UN Security Council has the potential of catastrophic economic consequences against the United States. It is not a matter of just being short term; it could be long term. As a matter of fact, it is likely to be long term.
There will be some quick hurts. We will likely see the complete paralysis of the American airline industry. That will be counterbalanced by a surge in government spending on U.S. defence products and security products. There will be job creation at airports. As we increase security, there will be increased police forces and that kind of thing. But adding money to the military, adding money to the police and security officials, does not create wealth. Actually, it creates liability.
If the Americans, and they are apparently on the eve of doing so, go into Iraq without the support of the UN Security Council the economic consequences to the United States will be devastating. I think we can easily predict the outcome. Americans will not be able to travel abroad and successfully invest abroad. They will be forced back into the western hemisphere.
Now, of course, we have the free trade zone of the Americas. I think we can make a confident prediction that the Americans will centre their economic and political power in the western hemisphere, and leave the rest of the world to the other interests. We can see what will happen.
The countries that will benefit most from the Americans being forced economically out of the rest of the world will be China, on the one hand, which will come to dominate Southeast Asia, and Europe, on the other hand, particularly France and Germany, which will come to dominate western Europe. Even Russia stands to gain. If American products are forced out of competition worldwide because of worldwide boycotts or worldwide resistance to the sale of their products, if American investors are not encouraged abroad, then European, Russian and Chinese businessmen will fill the void.
What we are looking at, I think, is a fundamental and overwhelming change in the way the world will be 10 or 20 years from now. We will have fortress western hemisphere dominated by the United States and two other zones dominated by western Europe and China.
China, with a billion people, is the sleeping giant economically. More than that, it is a people who have a long culture of enterprise, business, and commercial risk taking. The language of commerce in Southeast Asia is not Japanese. It is not English; it is Chinese. Certainly, if Indonesia and Malaysia, and that whole archipelago out there, reject American products and investors, China will be in there to fill the void.
I really do believe that this move that is being contemplated by the United States--no matter what the reason, no matter what the justification for the reason in the eyes of the White House or in the eyes of the British Prime Minister--is going to cost their countries enormously. Just speaking of Britain, it will be excluded from Europe. Its ability to have a say in Europe will be compromised. Its ability to sell its products will be compromised. Do we think the Commonwealth will make much difference to the United Kingdom after it takes a stand on the attack on Iraq that is completely contrary to the position taken by all members of the Commonwealth? I do not think so.
I do not want to sound terribly bleak, but I do believe that what we are looking at now is the precipice of a fundamental change in global dynamics. It is just not the fact that we will be losing the United Nations as a significant voice. This will be creating a climate of rivalry which our children, and perhaps our grandchildren, will pay for because we will create three great zones of power: the western hemisphere, under the United States; western Europe, under the Europeans; and Southeast Asia, under China.
That is not the vision of the world that we saw at the end of the second world war when the United Nations was established. The United Nations was all about the people of the world trying to seek solutions to the conflicts and problems of the world collectively. Now we will have the kind of global super powers that will perhaps be more dangerous and difficult to deal with than when it was simply the Communist block versus the western nations.
There are so few benefits in this. Even the fact that the dollar is strengthening is not a benefit for Canada. We notice that on the market the dollar has been climbing and we must understand the only reason the Canadian dollar has been climbing over the past few weeks is because investors around the world have become more and more uncertain about the economic future of the United States, and so the U.S. dollar has been weakening. We have actually been climbing at the expense of the American dollar. This is actually a bad thing for us because as the Canadian dollar rises it becomes more and more difficult for us to trade with our only really significant trading partner, which is the United States.
So, we are intimately tied to what the Americans are proposing with respect to the invasion of Iraq. I wish the White House would listen to its friends because we as a government, as members in the House--most of us at any rate--have appealed to the Americans to be cautious, to listen to world opinion, to support the United Nations, and to not go down a unilateral course that would only bring, I think, despair, want and hunger on much of the world.