When Canada gets a new leader

Mark Carney was elected as the new leader of the Liberal Party in Canada on Sunday, bringing a temporary end to months of political uncertainty. Justin Trudeau, who had been in power for nearly a decade spanning two terms, had to quit office after failing to curb the sharp rise in housing and food prices that had sparked protests in recent times. In addition, the US's increase in import tariffs on key Canadian products after Trump took office also temporarily created a crisis for Trudeau's administration. In a sense, it helped to strengthen national sentiment, but Trudeau did not sit long enough in office to benefit from it. He did not wait for that either. He resigned before that and asked the party to elect a new leader. Therefore, the responsibility of handling both of these will now fall on Carney, the prime minister-designate elected by the party with a large majority. In a sense, Carney, who has a shining background in the field of economics rather than politics, may be more suitable for that. He comes to power with a wealth of experience in economics, having proven himself by serving as the head of Canada's central bank and as the governor of the Bank of England, despite not being a British citizen. There is also an observation that he may be that much less suited for the political maneuvering that entails the new office.

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According to Canadian law, a new parliament is due to be elected in October. The question is whether Carney can build on the majority he received in his party by then. Another question is whether the Liberal Party can win against the opposition Conservative Party led by Pierre Poilievre. First of all, when parliament convenes on the 24th of this month, Carney also has to win a vote of confidence. If he does that, Carney is expected to dissolve parliament and go to the polls soon. The Liberal Party's main advantage in the election is the prevailing patriotic reactions to Trump's announcements. The most provocative statement by Trump was that Canada should become the 51st state of the United States. The announcement that Canadian imports such as iron and aluminum would be subject to a 50% tariff and electricity a 25% tariff also made some ripples. Although the tariffs have been temporarily suspended, the competitive sentiment reflected in the US move has caused a significant rift in the relationship between the two neighboring countries, which until now had been so close as to be seen as one country for many purposes. For his party, Carney has also reacted strongly to all this. Since Mark Carney was not on Justin Trudeau's team, it is expected that he will be able to handle matters independently with his expertise on economic issues, without having to carry the burdens of the previous government.

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The Carney administration will also need to mend fences with India. Here too, his non-involvement in Trudeau's team is sure to stand him in good stead. The Trudeau administration had to temporarily sever diplomatic ties with India after publicly accusing the Indian government of involvement in the 2023 assassination of Canadian citizen Khalistani leader Hardeep Singh Nijjar. The issue worsened as Trudeau repeated the allegation in the public domain multiple times. When Canada expelled officials, including the Indian High Commissioner, India recalled all its diplomats. India then expelled officials, including the Canadian Acting High Commissioner in New Delhi. There are indications that bilateral relations, which had deteriorated as the allegations in this regard continued, are now moving towards restoration of diplomatic relations.

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Canada has a Sikh community of Indian origin, numbering around 800,000 – 2% of the Canadian population. Before the break in relations, there were around 400,000 Indian students there. However, the number of new students seeking admission in 2024 is estimated to have fallen by 4%. This has also been reflected in the overall issuance of immigrant visas. India is now reportedly preparing to appoint a new High Commissioner. On the Canadian side, both Carney and the Leader of the Opposition are reportedly keen on this. Trudeau’s resignation is also expected to facilitate such thawing of friction. The assessment behind this is that the main reason for the precipitated crisis was the manner Trudeau handled the issue which was far from diplomatic. However, with the mysterious nature of the issue and the murder case still pending in Canadian courts, it is not easy to predict the outcome. In addition, Carney's lack of political experience will likely mean he will have to rely on the same advisers who served the Trudeau administration. So, it remains to be seen where the diplomatic twists and turns will ultimately lead matters. The former central banker is likely to make independent and bold decisions on Trump's tariff war. Before all that, what is to be seen is if Carney can win a confidence vote in Parliament.