Stephen Harper played the China card and won the pot. Why are his opponents still going all in?

I have been relatively silent about Stephen Harper standing up to Communist China this month, in part because so may have been willing to stick up for him (second and second items), and also in part because my schedule this week has been thoroughly wrecked. This has allowed me a chance to explore one of the lesser discussed aspects of this issue: the political consequences for Harper and his government in the (expected) 2007 elections.

Now, I should make clear, this corner has been with the Conservatives since the last election campaign, largely in anticipation of things like Harper's show of political strength on Communist China. One other aspect of the Conservative government that has gone widely underreported is its crackdown against both Communist espionage and Beijing's overseas intimidation of Chinese-Canadians (third item). So, one would expect me to think this issue is a political winner for Harper. I'm just confused why almost no one else seems to see it that way, especially the supposedly hyper-rational, ultra-pragmatic Liberals.

From my perspective (admittedly, 1500 miles south of the nearest Canadian), the Liberals and their Bay Street "engagement" allies are in a politically dangerous (for them) feedback loop. When Harper first began to make clear he would treat Communist China very differently from previous PMs, the Canadian business community went into anti-Harper overdrive. Those of us who see Wall Street in action whenever Communist China comes up were not surprised by this. However, Bay Street went way overboard from a political perspective, going so far as to criticize attempts to build relations with Taiwan, and even being dismissive of the Dalai Lama, who remains the most prolific recruiter of anti-Communism in the democratic world's collective left wing.

More importantly, Bay Street doesn't seem to understand just how much it has helped Harper by ripping him.

Harper has now run for Prime Minister under the Conservative banner twice, in 2004 and 2006. Both times, Harper "underperformed" on election day. Upon closer examination, there were at least three major factors that prevented Harper from defeating Martin in 2004, and achieving a majority government in 2006.

One: In the West, Reform and later Canadian Alliance voters concerned over the old PC "backroom boys" and their Bay Street money sources taking over the new Conservative party stayed home or went to other parties. This was most obvious in British Columbia, where the Conservatives actually have less than half the MPs.

Two: In Ontario and the Atlantic provinces, large numbers of traditional NDP voters were convinced to vote Liberal as the lesser of two evils. Thus the Liberals managed to win a majority of MPs in every English speaking province east of Manitoba.

Three: Rural francophone voters, whatever they thought of the Liberals, were just not comfortable with the Conservative Party, so they stuck with the Bloc Quebecois. This was not so noticeable in 2006 because the Quebec City suburbs were comfortable enough with the Conservatives to elect them as MPs in all 4 of their ridings.

These three problems are not exactly a surprise. Conventional wisdom has been talking about them for years, with many worried about how Harper could ever solve them. I would humbly submit that Bay Street did it for him. Here's how.

One: How many old guard Reformers are looking at Bay Street's carping of Harper and thinking, "Well, I guess this isn't a Mulroney redux after all"? The answer to that question may not be known until Election Day 2007, but it could very well mean a half-dozen BC ridings going from red/orange to blue.

Two: If the MPs are any indication, the ChiCom issue is one where the Liberals are isolated, not the Conservatives. So long as this remains an issue in 2007 (given the matter of Canadian aid to Communist China, that can be a sure bet come budget time) and the Conservatives stick with their anti-Communist stance (I'd call this a safe bet), would-be NDP voters hearing the "Conservatives are too scary" mantra over and over again will wonder why the richest men in Canada seem to like the Liberals and the bloodthirsty Beijing regime so much. Some of them may even decide the Conservatives are the lesser of two evils, though probably not enough to make a difference in a riding. More importantly, these voters will be more likely to decide the Conservatives can't be that bad (and the Liberals can't be that "safe") and stick with the NDP. The impact on Ontarian and some Atlantic Liberal MPs could be devastating.

Three: The impact may not be so strong with Quebec voters, but a foreign policy issue where they are more likely to agree with Harper over the Liberals can't hurt.

So why can't Bay Street see they're probably creating more voters for Harper than converting people away from him?

Here's where the "feedback loop" comes in. If I have Canada's relatively new campaign finance laws right, corporate contributions are out of bounds - except in leadership campaigns. Even if I am wrong on that (and please, let me know if I am), the fact is Canada's richest businessmen and executives have been hearing a lot more Liberals begging for money than Conservatives, since the former is in the middle of a leadership race. Thus, the politicians that have Bay Street's ear these days are mostly all Liberals, who just happen to agree with the business community's support for "engagement" with Communist China. Since none of the other three parties have leadership issues, they're spending a lot less time in financial centers of power, creating the unusual situation where the three parties who reflect the anti-Communist-China majority in Canada (Conservatives, NDP, and Bloc) are heard far less often than the one party with the minority view, the Liberals. So whenever Bay Street goes after Harper, the politicians begging them for money encourage them - and since they're not paying attention to anyone else, they actually assume the Liberals speak for the country.

The problem for Bay Street is that the Liberals don't speak for Canada on the issue of Communist China; the Conservatives do. As Bay Street keeeps reminding Canadian voters of this, Harper becomes more popular, and the prevailing headwinds he faced in 2004 and 2006 become far less powerful.

How long this will continue depends on Bay Street; it may come to its senses and settle down. Until then - for Harper and those who support him - with enemies like these . . .

Cross-posted to the Shotgun