Politico

Trudeau tasks Chrystia Freeland with Canada’s comeback


OTTAWA — Chrystia Freeland is known as Justin Trudeau’s “minister of everything,” deployed in service of national unity, continental trade and relations with the combative Trump administration. Now she’s Canada’s finance minister and her latest mission is epic.

The prime minister’s fate is tied to her success — as is the economic future of Canadian households and businesses rocked by the coronavirus.

The assignment: Steer Canada out of pandemic-induced economic disaster, while reassuring the public it is money well spent and that there’s a plan to turn off the taps. The federal debt is on track to break the C$1 trillion barrier for the first time.

“I’m of Slavic origin, therefore I’m a fatalist and I’m always worried,” Freeland explained last month after a Montreal speech, when asked by a moderator if she was concerned about Canada’s trade relationships. “It’s a good approach, especially for a finance minister.”

Freeland will unveil the first major building block of her plan on Monday in a fall economic statement.

For years, she spearheaded Canada-U.S. relations during tense trade talks and despite President Donald Trump making it clear he didn’t care for her negotiating tactics. “We don’t like their representative very much,” Trump told a press conference at the time.

The 52-year-old former journalist is known for her work ethic, Davos-stratum Rolodex and her dinner party diplomacy. After the cross-border turbulence of NAFTA, for example, she hosted U.S. Trade Representative Robert Lighthizer for a roast beef supper with her family to smooth things over.

Opponents warn the Covid-19 crisis has given the Liberals license to drive larger deficits across the outlook with no spending cap in place.

“I was expecting a great deal from her because of all the hype. So far, the reality has not matched the hype,” Conservative finance critic Pierre Poilievre said in an interview Tuesday. “It’s kind of hard to judge performance with so little information and so few responses.”

Poilievre’s top concerns about the new finance minister are related to what he describes as a lack of transparency about public cash already spent.

An open question about Freeland, who is viewed as a potential future Liberal leader and possible prime minister, is how much caution she will inject into her stewardship of the federal piggy bank.

POLITICO spoke with people in Freeland’s orbit to gain a sense of how she might approach the job and put her stamp on the critical portfolio. She was not made available for an interview.

Through her office, she sent a statement Tuesday to POLITICO saying her top priority is to support Canadians and Canadian businesses through Covid-19. “That is true for our whole government,” she said. “We are fighting an aggressive second wave. We know many people across Canada continue to face immense uncertainty, and we will continue to be there for them, for as long as it takes.”

Indeed, Freeland has signaled the government is prepared to spend whatever is necessary to help Canadians and the economy through the crisis. She’s noted that fiscal “guardrails” will only be established once the recovery is well underway.

“Doing too little is more dangerous and potentially more costly than doing too much,” Freeland said in a major speech last month in Toronto that offered hints of her perspective. “Our fiscally expansive approach to fighting the coronavirus cannot and will not be infinite. It is limited and it is temporary.”

Canadians will soon learn more about her strategy next week when she releases her fall economic update. It will be the government’s first economic document of substance since its March 2019 budget — and Freeland’s first since taking over as Trudeau’s finance chief in August from Bill Morneau.

Morneau, who stepped down amid the WE Charity contracting controversy, left as media outlets reported a dispute with Trudeau. They apparently clashed over the size of emergency payments for people who lost work during the pandemic — the prime minister, who ultimately got the final say, reportedly wanted to open up the coffers wider than Morneau.

A senior government official with knowledge of the Trudeau-Morneau relationship, speaking anonymously because they were not authorized to comment, argued the talk of a rift was overplayed and left the impression it was like Ali-Frazier between the two Liberals.

Freeland has insisted there’s no daylight between her and Trudeau on, well, just about anything. She made the remark earlier this month to the Senate’s finance committee when asked about fiscal policy.

“There is no difference of opinion on this matter, or on, actually, any other matter I can think of right now between me and the prime minister,” Freeland said. “We are very much like-minded and working very closely together.”

The senior official insisted Freeland will push back, if necessary.

The official has observed Freeland and Morneau share key traits, including work ethic, but that they go about things in different ways. Freeland, they added, is someone with an “athletic mind” who listens well and asks the right questions.

Her skill set matches the demands of the times, said the official, who added that Freeland’s intellectual agility is key when facts and conditions change on a day-to-day basis.

They also said Freeland’s arrival brought a fresh set of eyes to an unprecedented crisis that requires good gut instincts and offers zero opportunities for slow reflection.

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Stakes could not be higher for a country facing a resurgence of Covid cases, a patchwork of public health responses, and competing ideas about what recovery should look like.

Beyond the public and political arenas, Freeland will have to maintain the confidence of financial markets. A big part of holding Bay Street’s trust will depend on whether it believes she has the confidence of the prime minister.

“It wasn’t clear how Trudeau and Morneau’s views were aligned at the end,” Jean-François Perrault, senior vice president and chief economist at Scotiabank, said in an interview. “There’s either a very clear alignment between Trudeau and Freeland, or that Trudeau has very deep trust in her. That’s important. Almost irregardless of whether they do things that Bay Street would like to or not, it’s important that the prime minister has, as a finance minister, somebody who he’ll listen to.”

Perrault, who doesn’t know Freeland personally, said he thinks she’s “more on the left side of the economic dogma spectrum” than Morneau. But he noted “there probably are worse sins” in an environment like this where the government is trying to find ways to kick-start an economy facing a persistent, negative shock.

“But we’ll see in the budget, right? … The budget will be her coming out,” said Perrault, a former assistant deputy minister of finance under Morneau.

Trudeau clearly has faith in Freeland, who is Canada’s first female finance minister and still juggles her preexisting responsibilities as deputy prime minister.

“This is our moment to change our future for the better,” Trudeau said as he introduced Freeland in her new role in charge of his government’s post-Covid ambitions. “We can’t afford to miss it.”

As finance minister, Freeland’s involvement on cross-border ties may not be front and center as they were before, but she will continue to support Trudeau, and other cabinet ministers in tending to the Canada-U.S. relationship.

President-elect Joe Biden will bring new challenges for Freeland, even if the incoming U.S. administration has a friendlier tone with Canada than Trump.

Freeland’s relationship-building skills in the U.S., sharpened during the NAFTA talks, will come in handy when connecting with those around Biden, whose Buy American campaign vows are worrying for some Canadian businesses.

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The trust between Trudeau and Freeland appears to be mutual. She took a leap of faith seven years ago when she decided to leave her successful international career as a financial journalist to run for Trudeau’s then-third-place Liberals.

“I don’t think it was one ask, I think it was maybe many asks from them to bring her on board,” said one of Freeland’s former staffers, who spoke on condition of anonymity because they are no longer in government.

The former staffer says Katie Telford and Gerald Butts, two key figures in Trudeau’s inner circle, first approached her at a 2012 Toronto launch for her book, “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else.” The award-winning bestseller shined a light on the impacts of the super-rich on wealth inequality.

By November 2013, she won a Toronto by-election, which are votes in Canada held between general elections to fill voids left by departing MPs. In her case, she succeeded former interim Liberal leader Bob Rae in the urban district.

“My decision to enter politics was influenced by my family, who pointed out that throughout my life, Canada has given me incredible opportunities,” Freeland said in the statement to POLITICO in response to a question on why she made the jump to politics. “My dad, in particular, said I was being asked to give back to Canada. He was very persuasive.”

In 2015, the Liberals won power and Trudeau picked the Toronto MP to be his international trade minister. She later became foreign affairs minister and then deputy prime minister about a year later.

The former staffer said after entering politics, Freeland deployed skills she sharpened as a journalist. “She very much follows the story and really gets to the bottom of things and really sort of investigates them,” said the person, who worked with her at the start of her political career.

Freeland, the former staffer added, also has something few others, including previous finance ministers, have likely had: access to some of the world’s brightest economic minds. She’s been able to leverage the networks she developed over the years with academics, business leaders and those from the elite Davos crowd.

The former staffer noted Freeland’s friendship with billionaire George Soros and how former U.S. Treasury Secretary Larry Summers is a mentor.

The former staffer said she would often bring very senior officials into her orbit to get to the root of the information and knowledge that they have, and she did so in an “almost disarming” way. “She just sort of pulls them into her universe.”

Freeland has also been known to host many of these figures at her home in the Toronto neighborhood of Summerhill, where she’s personally cooked for her guests.

She hosted Lighthizer at her home for dinner in October 2018 after the conclusion of the sometimes-combative NAFTA negotiations. It was described by one Canadian official at the time as a “working dinner,” but American and other Canadian sources had suggested a social event was in the works to help patch things up between the neighbors’ point people on trade.

Another time, according to the former staffer, she cooked Ukrainian food for former Federal Reserve Chair Paul Volcker. One Freeland dinner party, they said, produced an unusual side event — her young son talked David Frum, a former speechwriter for George W. Bush and a senior editor at The Atlantic, into racing him on a scooter down the street.

But even though she’s built a tight network of big names and Davos-level relationships, the former staffer says she keeps things simple and is much more interested in ideas and conversation than, for example, what people are wearing.

“She doesn’t really care about external appearance,” the person said. “I think she finds the whole thing frustrating that she has to participate in it.”

Freeland has also been known to get around her district by bicycle, for efficiency and exercise.

“In the dead of winter, she would throw on a pair of tights, put on her dress, bike to an event anywhere in the riding and then literally go into a washroom, get herself a bit put together and go in and do whatever needs to get done,” the former staffer said. “She’s very low-maintenance. She’s very, ‘Let’s just get in there.’”

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Following her appointment, critics pointed to Freeland’s lack of business experience. But those who know her reject any suggestion she’s not up to the task.

Brett House, vice president and deputy chief economist for Scotiabank, said Freeland wrote about financial markets and their interplay with public policy for a few decades. House, who’s known Freeland since 1994 when their times at Oxford University overlapped, argued that it makes her at least as eminently qualified as any predecessor, if not more so.

“She is deeply intelligent and incredibly hard-working and savvy and engaged on both big-picture, structural issues and on detail,” House said. “I think those questions would not have been asked of a man with the background and the CV that she has. It wouldn’t have even occurred. If we look at finance ministers over most of the last 40 to 50 years or so very few had any substantial background in economics or finance. And it’s not clear the ones that did were entirely successful.”

Freeland told Toronto Life magazine in a July interview that she employs skills and habits from her days as a journalist to her job in politics — and it starts with the importance she puts on seeking out primary sources.

“Good reporters do their reporting,” she said. “They rely on primary sources and when they’re trying to understand something they go to the smartest person they can find directly.”

Freeland notes this is not the only way to do things, but says it’s quite different from the “standard operating manual” for political leaders. They get briefings that have percolated through many layers of people, she says. Freeland said she gets those briefings, and is grateful for them, but that she also likes to have her own, direct conversations. Reporting, she added, is hard and sometimes only provides 75 percent of what was said comes through.

“That is something I just always find the time to do,” she said.

She added in her statement to POLITICO that her primary sources during the pandemic includes “economists, premiers, mayors, business leaders, labour leaders, doctors and epidemiologists — and, of course, Canadians whose lives are affected by our policies.”

Freeland also told her Toronto Life interviewer about her role models, who include German Chancellor Angela Merkel, New Zealand Prime Minister Jacinda Ardern and Dr. Bonnie Henry, British Columbia’s top health officer.

Merkel, for example, is someone Freeland said she’s admired for a long time.

She called Merkel, who has a doctorate in quantum chemistry, an example of why a good, strong education can be useful for a leader. “Her comfort with technical detail, her extreme level of preparation — she is the ultimate person who does her homework,” Freeland explained.

***

After the 2019 election, Trudeau named Freeland deputy prime minister and intergovernmental affairs minister. Her work across provinces and parties has prepared her for what’s ahead.

Freeland’s friendship with Ontario Premier Doug Ford is the stuff of headlines. “I absolutely love Chrystia Freeland,” the Progressive Conservative leader said in response to news of her appointment.

Freeland, who grew up in Alberta and later studied at Harvard University before becoming a Rhodes Scholar, has also made gains and support in Canada’s oil-rich provinces that were ailing financially even before the pandemic and plummeting oil prices.

Any sweeping spending to bring about a “green” economy is certain to spur further agitation from the west. When asked on the Hill in August about the role of “decarbonization” in future plans, Freeland responded: “Of course, it has to be part of it. All Canadians understand that the restart of our economy needs to be green.”

During last year’s election that reduced the Liberals to a minority mandate, the party was shut out of Alberta and Saskatchewan, the heart of Canada’s oil and gas industry.

With rising sentiments of alienation and frustration from the prairie provinces toward the Liberals who are largely seen as passing climate policies that are antithetical to their economic interests, tensions were at an all-time high. Many provincial and local politicians, as well as fringe secessionists, further whipped up anti-Ottawa sentiment and western alienation.

Freeland and the Trudeau government’s testy relations with the country’s energy-producing regions may be about to get trickier following the recent election of Biden, whose climate policies may challenge Canada to do more.

Once again, Trudeau will likely tap Freeland’s skills and experience in dealing with Americans and western Canadians.

In the face of this, Freeland likes to celebrate her deep Albertan roots. Born and raised in the northwestern town of Peace River, Freeland spent childhood summers and holidays there on her father’s farm after her parents’ divorce. She lived the rest of the year in the province’s capital of Edmonton with her mother on the Ukrainian feminist socialist co-op she helped start.

Within weeks of the 2019 election, the Toronto MP was dispatched to her home province to make inroads with Alberta Premier Jason Kenney, a former federal Conservative party heavyweight and chief opponent of Trudeau and the Liberals’ climate agenda.

She also met with Edmonton Mayor Don Iveson, a more sympathetic figure who’s serious about fighting climate change.

Iveson added in an interview that because Freeland has built a foundation with provincial and municipal leaders on the issues of climate policy and the desires of the oil and gas industry, she will know how to balance those with the federal government’s goal to achieve net-zero emissions by 2050.

He said it’s Freeland’s eagerness to hear people out that’s made her effective and respected, even among the harshest naysayers in the western provinces.

“We have Chrystia Freeland who is either a really adept fire juggler, or a very calm and cool firefighter,” he said. “But one way or another, she’s been able to not descend into any of that and never be provoked by it, … That resilience in the face of provocation is some of the kind of leadership the world needs more of.”

***

Freeland wasted little time putting her stamp on the finance minister’s job.

One of the first calls she made on day one in her new portfolio was to the Canadian Federation of Independent Businesses.

For years, the nonprofit group had butted heads with Morneau, who rebuffed their invitations — the first finance minister in the organization’s 50-year history to decline to meet. That changed the day Freeland took over, to the delight of CFIB chief executive Dan Kelly.

“We’ve already noticed a world of difference,” Kelly told POLITICO. He said Freeland phoned to hear him out and they stayed in contact as the Liberals worked on their Throne Speech and recovery plan.

“We’ve had a thousand times more connection to the minister than we’ve had during five years of Minister Morneau at the helm. … I’m certain we will have some spectacular fights in the months ahead, but to have somebody that will at least listen to those that she may not always agree with, is at least half the battle.”

In months ahead, Freeland will be tested. The finance minister has now made the point several times that major government spending will be needed to continue to help lead the economy through a challenging recovery. It remains to be seen how far Canadians are willing to let her go.

“Canadians are careful about the nation’s finances,” Freeland said in that Toronto speech last month. “I know this very personally. I am from rural northern Alberta, which is not, culturally, a place much steeped in the ideas of helicopter money. And the question I hear from there, and here in downtown Toronto too, is this: Can we afford it? … The simple answer is — yes, we can.”

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