June 13, 2012 / 9:25 PM / 5 years ago

Analysis: Canada's venerable Liberals seek to avoid annihilation

OTTAWA (Reuters) - Canada's once-powerful Liberal Party, long seen as the "natural government party," is struggling to avoid annihilation in a political landscape that has squeezed it from left and right.

The center-left Liberals produced popular leaders like Quebecker Pierre Trudeau, who had an almost-unbroken 15 years running the world's second largest country.

But a brutal first-past-the post electoral system that squeezes out smaller parties has relegated the Liberals to a distant third place in Parliament, after they lost seats to the New Democratic Party (NDP) on the left and the governing Conservatives on the right.

They rank a dismal third in opinion polls.

"I frankly don't think the party has much of a chance of staying alive," said Peter Newman, an author and journalist who has chronicled Canadian history for half a century.

Newman's latest book, "When the Gods Changed: The Death of Liberal Canada," was published in 2011.

The challenge for the Liberals is to convince voters on the left that they are not just NDP-Lite, and to persuade voters on the right that they would do a better job of managing Canada than the Conservatives, who have been in power since 2006.

The Conservatives advocate low taxes, eliminating the budget deficit and tough policies on crime while making it easier to gain environmental approval for oil pipelines and other projects.

The NDP wants higher corporate taxes and fewer budget cuts and has opposed the Conservative tough-on-crime agenda. It says Canada has taken in too much money from its oil sands production, driving up the Canadian dollar and hurting manufacturers.

The Liberals have often echoed the NDP, though with nuances, for example, advocating smaller corporate tax hikes. But they have launched no major initiatives to distinguish themselves from the NDP, which has taken on the role of Canada's official opposition for the first time in its history.

"It's not sufficient to say, 'We're neither left nor right, we're in the middle,'" said Stephen LeDrew, Liberal Party president from 1998 to 2003.

"The Liberals of the 60s, 70s, 80s and 90s didn't get elected just by saying, 'We're in the middle.' They got elected by putting forward platforms or personalities which resonated with people."

TEA PARTY VS OCCUPY

Some Canadians now say they will not waste their votes on the Liberals, just as for decades they spoke about not wasting votes on the NDP. The Liberals are around 21 percent of decided voters in opinion polls, while the NDP and the Conservatives are neck-and-neck at around 34 percent.

Interim Liberal leader Bob Rae, who made the surprise announcement on Wednesday that he would not run for the permanent leadership of the party, said he remained optimistic and still felt that many Canadians would support the Liberals.

"Do they want to be forced into making a choice between the Tea Party and the Occupy Movement, and people saying, 'Here's your two choices'? I don't think so," he said.

He accused both NDP leader Thomas Mulcair and Conservative Prime Minister Stephen Harper of engaging in "phony divisive politics" which Canadians will reject.

But Rae said the party would have to "get its act together" and unite behind an effective, forward-looking leader to build support ahead of the October 2015 election.

It was an unspoken allusion to bitter rivalry between supporters of former Prime Minister Jean Chretien and those of his deficit-slashing finance minister, Paul Martin, who went on to become prime minister. The infighting helped Harper end 13 years of Liberal rule, and it still simmers.

TRUDEAU TO THE RESCUE?

Some hope that Trudeau's son Justin, 40, a leading Liberal in Parliament, will run for party leader to try to recreate the Trudeau-mania of his father, an idea he is considering.

Another idea on the left has been a Liberal-NDP merger, or at least an agreement to run only one candidate in each electoral district, to avoid splitting a left-of-center vote.

The NDP, now firmly in the driver's seat, has rejected a merger or cooperation before the next election. "My role is to unite all the progressive forces under the NDP banner," Mulcair said on Wednesday.

While many in the Liberal Party are horrified at giving up their party, which has run Canada more than any other, to a merger-cum-NDP-takeover, Rae has been open to the concept.

But he says it won't happen while Mulcair heads the NDP. "It's not a great idea to keep knocking at the door when nobody's home," Rae said.

Newman said one of the biggest strikes against the Liberals is that they have little money and no party organization in about 100 of Canada's 308 electoral districts.

Part of the penury is Chretien's own doing, as he sharply limited corporate and union donations and made up for it with public funding for political parties, based on the number of votes a party gets in a federal election.

Harper is phasing that subsidy out, a move that will hurt the Liberal Party much more than the Conservatives, who have a broader base of small donors.

"I'm not saying it's dead," Newman said. "I'm saying it's dying."

Reporting by Randall Palmer; Editing by Janet Guttsman and Christopher Wilson

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