Greek crisis used by Canadian parties to spar over economic credentials

The situation in Greece became domestic political fodder on Monday for the Conservatives and NDP as the two parties used questions about Greece's future in the Eurozone to attack one another on their respective economic platforms.

The political sparring began when the Prime Minister's Office reached back three years ago to highlight comments NDP Leader Tom Mulcair made about his belief that the Canadian government should have given money to a global fund to prop up faltering European banks.

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The PMO statement also questioned Liberal support for the plan, which was put forward by the International Monetary Fund and G20 nations, but which the Conservatives ultimately turned down.

It also noted a tweet by Manitoba MP Niki Ashton, in which she appeared to endorse Greek voters' rejection of the proposed bailout.

"As Greece defaults on loans from the International Monetary Fund, we are reminded that the Liberals and NDP called for Canada to join the list of countries now owed billions by Greece," the PMO said.

Foreign Affairs Minister Jason Kenney later tweeted a response to Ashton, quoting former British prime minister Margaret Thatcher: "The problem with socialism is that eventually you run out of other people's money to spend."

The NDP, for its part, put out a statement Monday afternoon, questioning the Conservative record on the economy and highlighting how Canada's GDP has shrunk for four consecutive months.

Minimal threat to Canada

The situation in Europe has put a renewed focus on the economy at home as the nation's finances become a key election issue for each party.

Finance Minister Joe Oliver is expected to address the situation in Greece during an event in Vancouver Tuesday morning. In a statement released by his office Monday, Oliver said Canada could well be vulnerable to the "fragility of the global economy" and that the government is closely watching the unfolding situation in Europe.

He said the Greek "crisis" is a "reminder that Canada must stay the course" economically and not test the political waters with "risky plans" — a reference to Mulcair — or "untested leadership," a reference to Liberal Leader Justin Trudeau.

Economists say the threat to Canada from the situation in Greece is minimal, with far greater questions to be asked about the recent slides in GDP and oil prices that have raised the possibility of the economy being in a recession just ahead of October's scheduled election.

Greece makes up less than two per cent of GDP in the European Union, and its annual trade with Canada is about 10 per cent of one day's worth of trading between Canada and the United States, according to the Conference Board of Canada.

Oil decline a bigger impact

"Greece is tragic and it's clearly going to affect Greece more than anybody else and their European creditors, but after that...it's not a profound impact on us," said Glen Hodgson, chief economist at the Conference Board of Canada.

"It does shape the mood though. It is clearly going to dampen global demand and the global economy this year, but for us, the impact of oil prices, are we heading towards a recession — that's much more real."

Markets were not nearly as panicked as they would have been three years ago, said Peter Hall, the chief economist at Export Development Canada. That's because the European Central Bank has the firepower to suppress economic contagion, and because banks have unloaded their Greek debt.

Hall said the European Union's economy could be in for rough times if things actually go well for Greece because other countries forced to accept austerity measures as part of a bailout may feel slighted that the system "is going to capitulate to the one that cries the loudest."

"It's not necessarily fine and dandy for the world if everything goes smoothly for Greece," he said.