Winnipeg Free Press

Winnipeg Free Press (Newspaper) - August 25, 1981, Winnipeg, Manitoba Winnipeg fret pm a t by Thomson Ottawa two stunning by tettion losses last appear to have shocked the Federal government into taking belated action on the at least there is for the first time in of concern about Ord record interest rates and the sorry state of the Canadian Cabinet ministers Are meeting this week to refine a strategy to restore in the in the and in the government that has let things slip badly out of every Liberal admits now that eco nomic particularly inflation and interest were important fac tors in the electoral there were other reasons As Spadina voters obviously did not like the idea of providing a comfortable launching pad for the political aspirations of Jim until recently the principal Secretary in the prime ministers and when voters in Joliette gave conservative Roch Lasalle a substantial Victory Over the Liberal there was More than Lasalles personality at the Bottom of the election results was a Basic discontent liberals now a perception that the government was Drifting not acting on ruinous interest rates and Infra the government Hopes to change that perception Over the next couple of the first step is expected to be an Energy pricing and taxing agreement with All seem to be agreed that an agreement is imperative and that the sooner it can be the there is an urgency on the Issue that has not been evident in the past 14 since the former agreement and there is a belief that an agreement is within reach and can be announced within a matter of it is believed there is general agree ment Between Ottawa and Alberta on Price Levels and Only jurisdictional issues remain it is hoped that Energy minister Marc la Londe and his Alberta counterpart Merv Leitch will make a breakthrough on that Issue when they meet later this that would set the stage for a prime minister Trudeau Premier Lougheed meeting in from which they would announce the the agreement will provide for an immediate Sharp increase in Oil which will be Felt by Consumers from coast to the and Impact of higher Oil prices is expected to be offset by positive reaction to the the Lack of an agreement has been causing doubts about the and weakness of the for More than a one Side effect of the agreement should be a strengthening of the relative to another effect will be the godhead for two major Oil Sands involving billions of dollars Worth of investment and economic activity in As will the greater induce ment for Frontier and offshore exas the Dollar strengthens As a result of these officials the Bank of Canada will have a Little More Elbow room to reduce the Bank there is an element of How in mentioning a decline in inter est the Canadian rate will still have to be maintained at its traditional level above rates to prevent an outflow of not until interest rates decline can there be a substantial reduction in Canadian unless the govern into action by elections that saw Jim Coutta below lose and Koch Lasalle win shocked Trude Ati and Lougheed right Are expected to soon announce an Energy agreement worked out by Leitch and Lalonde Bottom far left that should help the a Oil Price split turns open into a backbiting Bazaar u v ment was prepared to impose Exchange it rates Are expected to decline in the months but not fast enough or far enough to take the heat off the Canadian the second major step in the Liberal scenario of action will be to produce a Long overdue it can be expected in perhaps even in Early october As the government Calls parliament Back ahead of sched ule to create the impression of responding to economic there will be two important aspects to the first is the question of fiscal or what size of deficit is the government recently received some Good news in that the deficit for the last fiscal year was some billion less than had been projected by finance minister Mac that announcement helped raise the Canadian Dollar from its 50 year with the Promise of major economic activity on the Energy and with acceptance of the View that budgetary policy must complement monetary pol icy in fighting it can be expected Maceachen will aim for a smaller that Means tax increases some of which will come from increased Oil tax revenues perhaps personal tax which have been talked about in Ottawa All the second major element in the budget is a form of Relief hardest hit by High interest officials agree this will be a but it is too Early to seriously speculate on what measures might be it is a major objective to find some Way of assisting homeowners who Are having to renew mortgages at cur rent sky High rates of another objective is to find a Way to assist Small businesses being ruined by High interest or it will be done remains to be but one Point is the thanks to spa Dina and Are finally aware there is a critical problem enveloped in High interest members of parliament Are Drifting through Ottawa this having been Home in the with horror stories about the damaging effects of High interest some Tell of suppliers who or will carry sufficient when a customer comes in for a badly needed machine or other essential he is told the product will have to be and cannot be delivered for a such delays Are killing Small businessmen and the Marvel of it All is that the government appeared blissfully unaware of the problems it had created until the results flowed in from Joliette and the question now is whether the next two months will produce the action that is being if it Doest there will be More election reverses in the by Bradley Graham the Washington Post years the organization of Petroleum exporting countries had the world on the puffing after rapidly rising Oil prices that helped push Western economies into another recessionary what was once a powerful Cartel has been reduced to a muddled club of 13 bickering and backbiting some of them now forced to beat a Price Retreat under the pressure of Slack demand and a world Oil just How muddled they Are became Clear during the five Days of intensive consultations among open Oil minis ters that ended Here Friday without agreement on How to bring Down prices i an orderly and dignified As might have been open was much better at pushing Oil prices up than it is at managing their no one likes to Back especially Oil producing countries accustomed to having their saudi Oil minister Ahmed Zakiya Mani has dropped his earlier boast about engineering the world glut in order to impose More moderate prices on his open that Only enraged the lower rates Yamani now says the glut would be around even if saudi production were and advises that the Best Way to solve the problem is for the higher priced open producers to lower rates and agree with the moderates on a unified he would automatically bring a drastic reduction in saudi that is More but open last week still got stuck on finding a Way to minimize the loss of face that some organization members incur in cutting the search for a workable Compro Mise concentrated on a proposed Benchmark of a slightly higher than the current open weighted average Price of the fact that open would consider raising prices during an Oil surplus struck observers As it also struck the saudis that for a different also re fused to go it simply did not want to lower its a sense of economic rationality appeared to return to the open talks on Friday when three fourths of the Mem Bers were said to be willing to accept Yamanis original offer to unify prices at a up from the current saudi and freeze the Price there until Venezuela says no but that was too much for Iraq and most whose Oil Humberto Calderon had been telling reporters that the voters Back Home would never accept a drop in Venezuela current Price of in a secondary dispute that complicated the main Price the three High priced North african producers could not agree on premiums for their High Quality especially hard hit recently by Export was willing to Settle for about above the while Algeria and Libya wanted to which would have amounted to a Price near the figure they now officially for All the divisiveness in talk of the Cartel splintering is Likely to remain just experienced observers saw the current dispute Over prices As among the most serious in the organizations 21year but open has shown itself Able to accommodate a wide diversity of nations and even a Oney Earold War Between two of Iraq and open has never been an homage Nous it combines Afri asians and latin americans in a setting that Yamani once described As resembling a Bazaar rather than an economic in the 1960s and open was bound together by the struggle against the Oil companies and their monopoly in All phases of the Oil but now that specs members have achieved nearly total control of prod pricing and Sale of their their various National interests Are coming More into the differences in interest can be like for Between the heavily populated open states of Iran and with their negligible financial and the sparsely populated states on the Western Side of the persian in addition to conflicting National there can be differences in economic the key question for open now is How much of the drop in the Oil Market is purely temporary open saw a similar softening of prices in 1975 that did not last but the saudis the current glut is not a simple repeat of structural changes have occurred in the Energy including a switch from Oil to other and greater the saudis other Oil sources open has greater Competition now from other Oil notably Mexico and the North sea near great specs share of world production has dropped from 63 percent in 1973 to under 50 its own production is Down to 21 million barrels a Day from 31 million just two years saudi Arabia has emphasized the need for stable and predictable open prices to give the world Confidence in Oil and keep Oil a competitive Energy but More hawkish open Mem Bers Are not yet convinced that their Days of calling Market tunes have saudi Arabia miscalculated this fact in agreeing to last weeks special meet not a the other nations have yet been sufficiently humbled by the Down Ward pressure on Oil prices lately to accept saudi for Price Reu Ifica the Cost of the meeting was thus another Public display of open Dinar Pepin defends cuts i passenger rail services when Federal transport minister Jeanluc Pepin announced the Elimina Tion and reduction of various rail services in late he was not the most popular politician in Western can a big loser in that the passage of time has not altered that general As the minister said to the press after a pointedly polite Exchange of views with provincial transportation minister Don we have made you a witness to our thoughtful there was Little disagreement about his prime reason for the he had come sign an agreement with or Chard which transferred acres of abandoned Canada rail Branch line property Over to that move was welcomed by the prov Pepin also announced Federal a of 1255 million to cover Western Canadas Prairie Branch line rehabilitation program up to As a Veteran the minister underlined the Many benefits of the lauding his governments commitment of about half billion dollars to improve the network and modernize Western rail Way service in order to carry the increasing amounts of exported As he pointed this agreement was special because of its three year form and the provision for inflationary the dome Arlene Billinkoff Cost while the details of the specific lines slated for work would not be made Public for another he obviously expected the province to Welcome the Federal move with open any improvement was but As the minister soon some Manitoban had not yet forgotten the cancellation and reduction of routes primarily in the West and the Mari coupled with the announcement that the Money saved would be used to modernize via rails equipment and service mainly in Ontario and Manitoban were concerned about the elimination of the Western super Continental service Between Winnipeg and Vancouver and its replacement by a series of Day routes Between Western another announcement later that month revealed that a three Daya week run Between Winnipeg and Thompson was also being cutting service in that area by 50 per understandably citizens of the North Ern and Western parts of the province were not but when Orchard attempted to inform the Federal Ter of that Pepin refused to be Many people agreed with the Federal he and some said the government had not gone far there were the traditional such As provincial transportation but they tended to disagree More with the style than the substance of the Orchard partially like other had wanted the matter to be sent to the Canadian transport with Public pid the minister believe be had the Legal right to rationalize the rail service through in without hearing the opinions of those who would be affected it was disconcerting he Pepin insisted there was no reason to have gone through the Etc since the Law already authorized the Federal government to make the Deci the commission often too susceptible to Public pressure and might not have made the desired Deci he and if his government had turned Issue Over to the Etc with a Cap on budgetary it would have appeared the government was telling the Independent body what to that action would have tied up the decision making process for Sev eral be and would have Cost the country even More u was better for the Federal govern ment to have made this change in one Pepin without leaving it to someone else to make the final the commission had studied ill those lines in the past and their financial problems were no mys without the Federal those deficits would have continued to grow and he was proud to Tike responsibility for that it would save million and Lead to a modernization of the after that Pepin was prepared to leave the news but Orchard had More to the Federal action merely aroused More he and provinces such As Manitoba were concerned about what would happen Pepins argument had a major he because if those changes were supposed to As Sist the National passenger rail what was being done for the West there was going to be More Money for the but the West seemed to have nothing to show from that decision except a reduction in he was especially concerned about the elimination of the second transcontinental Pepin noting that Orchard was giving the wrong impression when he said the West had lost a rail it had merely been some people May be upset because they were losing direct he admit but the decision had to be made and i happen to be the what we Are doing is quite Desensi Pepin insisted As the members of the press began to while the official news conference May have it was apparent that the two huddled at the Back of the room in deep had not yet ended their thoughtful doonesbury wans of Zow i m ;