The world, out of breath after two years of pandemic, contemplated with hope a way out of the crisis. But on February 24, the Russian aggression in Ukraine rather brutally brought us back to dark times.
Posted yesterday at 12:00 p.m.
The implications are many, serious and unpredictable. Canada, as it has done from the beginning, must act in concert with its allies to put pressure on Russia and help the Ukrainians. But we must also deal with economic repercussions and prepare for a different world, in a new geopolitical context. The next federal budget currently being drafted will be an important step.
The need for an ambitious industrial strategy
Let’s take a step back. In the spring of 2020, the federal government gave the Industrial Strategy Council a mandate to reflect on how Canada would recover from the pandemic, which appeared to be a general and unprecedented shock to the economy. At the end of our work, in December 2020, we recommended that Canada adopt for the first time a real industrial strategy aimed at sustainable growth. Such a strategy makes it possible to coordinate the public and private forces that create wealth by structuring the investment drivers for the country to rebound successfully. However, with the outbreak of war in Ukraine, this approach is more necessary than ever.
The pandemic and now the war are generating massive spending that is driving up deficits and increasing debt. To cope with events and honor our commitments to our international partners, we must strengthen our economy and implement all our strategic capabilities.
Protecting Canadians’ Standard of Living in a New Geoeconomy
In the short term, the federal budget will have to include measures to mitigate the impact of the worrying pandemic-war combination on households and businesses.
Many analysts indeed fear stagflation. In this unusual situation, high inflation is combined with a slowing economy.
Already, Russian aggression has sent energy and commodity prices skyrocketing, adding to runaway inflation, while geopolitical tensions heighten uncertainty. The government must be proactive.
Facing the future
Prepare for the immediate repercussions, but also, from now on, position yourself strategically for the future. The war in Ukraine has already changed the world. The rupture between Russia and the West will last. It will be necessary to build new solidarities, possibly to rebuild. We must discuss with our allies to adapt our economic exchanges and position Canada strongly.
I believe that Canada absolutely must adopt an industrial strategy based on our major assets to forge new resilience and support our capacity for growth. Let us give ourselves, to use the expression of Alphonse Desjardins, “a deeper knowledge of the incomparable advantages we possess”. We can thus: become a leader in the supply of renewable energies and ESG resources (environmental, social and governance criteria), increase our agri-food capacities to feed the planet, develop a cutting-edge and innovative manufacturing sector and strengthen our technological capabilities. We must seize these opportunities to strengthen the Canadian economy and strengthen the partnership with our allies.
Moreover, these orientations are also responses to the disturbances linked to the war in Ukraine. The conflict is disrupting the energy sector and threatening food security, with Ukraine and Russia being major grain producers in particular. It also represents a tragic diversion from the climate crisis, which calls for concerted and determined action by the international community. Canada must play its full part because the needs will be great.
Exercising mobilizing leadership
The implementation of this integrated industrial strategy would mobilize forces across the country, generate wealth-creating investments and engage Canada in the challenges of tomorrow. Important gestures must be made quickly. Canada is in a position to exercise positive and constructive leadership in our troubled world. It is our duty to act in this changing world.