Quebec's Squabble Hurts Economy

EMPTY factories, boarded-up hotels, office buildings with "for lease" signs in the window, and weeds on the unmown lawns grab the eye on the drive from Montreal's Dorval Airport down the industrial strip of Cote de Liesse.

They say recession and high unemployment. They also say political instability and nervous money, money fidgety about a place that can't make up its mind about what it wants to be: a country or a semiautonomous province in Canada.

Yugoslavia and the Soviet Union are breaking up. Canadians have been talking about division for more than 30 years, but as yet the nation has not split apart.

Many economists and business people say the seemingly endless haggling over Canada's Constitution is damaging the economic recovery across the country and in Quebec in particular.

"This constitutional madness is crippling Quebec's economic future, and no one will invest with all this uncertainty," says Jean Campeau, former head of the Caisse de Dt Placement du Quebec, the company that manages the province's pension fund.

That is the separatist argument. Mr. Campeau was chairman of the Belanger-Campeau Commission, which looked into Quebec's constitutional problems. The commission recommended a referendum on separation.

Quebec Premier Robert Bourassa "must keep his promise to Quebeckers and hold a clear concise referendum on sovereignty by Oct. 26 at the latest," says Campeau, who now heads a pro-separatist business group called Souverainete Quebec Inc.

"Sovereignty" is the word separatists use for separatism because it doesn't scare people as much.

The separatists predict they would win a straight referendum question and then, say men such as Campeau, they can get down to rebuilding the economy in Quebec.

Unemployment in the province averages 13 percent, but is higher in some parts of Quebec.

"I'm not saying that sovereignty will immediately provide all the magical solutions to our economic problems," Campeau says. "But once we select that option, we can take the powers we need and rebuild the economy."

There may be other factors in Canada's longest recession since World War II, but parties on both separatist and federalist sides say the debate over unity is hurting the economy of Canada and especially that of French-speaking Quebec, the focus of the constitutional debate.

"Everybody is absolutely certain that the economic recession has been compounded by the fact that our political leaders are giving 100 percent attention to constitutional problems for the past two or three years at the expense of the Canadian economy," says Jacques Garon, director of Research at the Conseil du Patronat, a province-wide employers group that represents 70 percent of the Quebec work force.

The federalist-leaning Conseil worries that further inaction could lead to frustration on both sides and encourage Quebeckers to vote for sovereignty in an October referendum.

"We have to pass this constitutional crisis no later than this autumn," Mr. Garon says.

"Beyond that it's very dangerous because people are going to be so fed up that it could go either way and that is something to avoid."

Something as seemingly minor as the dispute over merging western-based Canadian Airlines with Montreal-based Air Canada could cause a nationalist spark this fall to boost the separatist cause.

Not everyone shares Campeau's optimism over the economic success of an independent Quebec.

A vice president of economics at a major Toronto bank says a deal will be worked out because the "have-not" provinces - and that includes Quebec - need the money that is transferred to them from the richer provinces. That only happens in a federal state.

Garon of the employers' association adds that federal unity will help Canada's trade with other nations: "Now that we have this free-trade deal with the US and Mexico we need to prepare ourselves for this continental market."