Saturday, January 24, 2009

The Prime Minister's choices

I recently appeared on Business News Network, discussing the strategic choices facing Stephen Harper as he prepares the upcoming budget. Here is some of the background thinking:

Why Stephen Harper may not cooperate
Tactically, it is not in his best interest

We will likely never know whether Stephen Harper failed to anticipate the formation of the opposition coalition in December, or whether he anticipated the scenario but gave it a low probability of occurring. Either way, examining his strategic decisions from the past give us insights into what he might do on January 27.

Popular opinion seems to be that since his stumble in December, Stephen Harper will be forced to tone down his approach, make concessions, and cooperate with the opposition. But there are sound reasons for exactly the opposite course. Moreover, Harper's retreat in December can be seen as sound tactical thinking, not cooperative politics.

I mapped out the strategic choices that faced Harper after his October reelection to a minority government. The first choice was whether to confront as he had in the past, or cooperate given the election result of yet another minority government.

Although his initial tone was one of cooperation, the December economic statement was obviously confrontational. He made one mistake - he expected the opposition to roll over as they had in the past.

Once the coalition formed, continuing to a confidence vote was too risky, since Harper had inadequate information to make a good tactical decision. He wasn't sure of the public mood, since the economic statement was obviously a direct provocation of the opposition. It wasn't certain the Governor General would call an election (whose outcome was also uncertain.) His first tactical choice was to try to appease the opposition by backing down on several fronts.

But the opposition didn't quit. Since Harper still didn't know the public mood, he prorogued parliament. Proroguing allowed the Conservatives time to gauge public opinion and paint the coalition as 'un-democratic'. Though there was some risk to proroguing, it was much less that the risk of making decisions without good information.

As we approach January 27, Harper once again faces the choices of cooperation or confrontation, this time with better information. The "obvious" course is to introduce a budget which the opposition Liberals will support. But if that happens, the benefits all go to the Liberals.

If the Conservatives introduce a budget that the Liberals willingly support, several benefits accrue to the Liberals. They can put the unpopular coalition on the back burner; they can take credit for forcing Harper to respond to the economic crisis; they can claim they have the best interests of Canadians in mind; it gives Michael Ignatieff time to build his profile; and last but not least the Conservatives will remain in power during the tough economic times.
On the other hand, if Harper introduces a budget unfriendly to the Liberals, the Liberals have two tough choices. They can hold their noses and vote in favour of the budget, allowing the Conservatives to paint Ignatieff as being the same type of leader as Dion. This also passes the budget that the Conservatives want. The Liberals' other choice is to oppose the budget, leading down several uncertain paths ending up in coalitions or elections.

In these scenarios it is likely the Conservatives would stress that Ignatieff is an unelected leader. If the coalition was re-formed, the Liberals would be constrained in what they could do. It is also uncertain whether the Governor General would allow the coalition to form a government. And if an election is called immediately (either with or without the coalition), it would likely be an unpopular election.

Stephen Harper has shown he will play hardball, in situations where his tactical choices are not nearly as clear as they are now. Those who expect a new, cooperative Harper on January 27 may be in for a surprise.

The lessons for you? Things may not be as obvious as they appear; good strategic decisions depend on good information; and it is important to think things through before jumping to conclusions.

Read More......