Editing Jean Chrétien (section)

==Prime Minister (1993–2003)==
{{Main|Premiership of Jean Chrétien}}
[[File:APEC Summit 1993 - Jean Chrétien and Bill Clinton chatting.jpg|left|thumb|250x250px|Jean Chrétien with U.S. President [[Bill Clinton]] during the [[Asia-Pacific Economic Cooperation]] summit in [[Seattle]], November 17-19, 1993]]
On November 4, 1993, Chrétien became prime minister. While Trudeau, Joe Clark, and Mulroney had been relative political outsiders prior to becoming prime minister, Chrétien had served in every Liberal cabinet since 1965. This experience gave him knowledge of the Canadian parliamentary system, and allowed Chrétien to establish a very centralized government that, although highly efficient, was also lambasted by critics such as [[Jeffrey Simpson]] and the media as being a "friendly dictatorship" and intolerant of internal dissent.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 283–284.</ref> Chrétien liked to present himself as the heir to Trudeau, but his governing style had little in common with the intense bouts of governmental activism that had characterised the Trudeau era. The Chrétien government had a cautious, managerial approach to governing, reacting to issues as they arose, and was otherwise inclined to inactivity.<ref name="Martin-p97">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 97.</ref>

=== Quebec ===

==== 1995 Quebec referendum ====

{{main|1995 Quebec referendum}}

One of Chrétien's main concerns in office was separation of the province of Quebec, which was governed by the [[Quebec sovereignty movement|sovereigntist]] [[Parti Québécois]] for nearly the entirety of his term. When the [[1995 Quebec referendum|1995 Quebec independence referendum]] began in September, Chrétien was relaxed and confident of victory as polls showed federalist forces were leading by a wide margin.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 278.</ref> On October 8, 1995, [[Lucien Bouchard]] replaced the separatist [[premier of Quebec]], [[Jacques Parizeau]], as the ''de facto'' chair of the ''oui'' committee and, at that point, the support for the {{Lang|fr|oui}} side started to dramatically increase, aided by the {{Lang|fr|non}} committee's complacency.<ref name="Jeffrey, Brooke 2010, pp. 278-279">Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, pp. 278–279.</ref> In the weeks leading to the referendum on October 30, 1995, the federal government was seized with fear and panic as polls showing that, under the leadership of Bouchard, the ''oui'' side was going to win.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 126–128.</ref> On October 30, 1995, the federalist ''non'' side won by the narrowest of margins, with 50.58%.<ref>{{Cite web |date=2021-05-17 |title=1995 referendum on Québec’s accession to sovereignty |url=https://www.electionsquebec.qc.ca/en/results-and-statistics/1995-referendum-on-quebecs-accession-to-sovereignty/#anchor2 |access-date=2025-04-23 |website=Élections Québec |language=en-CA}}</ref>

==== Aftermath of referendum ====

On November 5, 1995, six days after the referendum, Chrétien and his wife escaped injury when [[André Dallaire]], armed with a knife, broke in the prime minister's official residence at [[24 Sussex Drive]]. Aline Chrétien shut and locked the bedroom door until security came, while Chrétien held a stone Inuit carving in readiness.<ref name="CE">{{cite news|url=http://www.thecanadianencyclopedia.ca/en/article/chretien-attacker-found-guilty/|title=Chrétien Attacker Found Guilty|last=Fisher|first=Luke|date=July 8, 1996|work=Maclean's|access-date=June 6, 2015}}</ref> Dallaire was 
a separatist who was angered by the result of the referendum.<ref name="CE">{{cite news|url=http://www.thecanadianencyclopedia.ca/en/article/chretien-attacker-found-guilty/|title=Chrétien Attacker Found Guilty|last=Fisher|first=Luke|date=July 8, 1996|work=Maclean's|access-date=June 6, 2015}}</ref>

In the aftermath of the narrow victory in the referendum, Chrétien started in late 1995 a new policy of "tough love", also known as "Plan B", where the federal government sought to discredit Quebec separatism by making it clear to the people of Quebec how difficult it would be to leave Canada.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, pp. 284–286.</ref> Though Chrétien had promised to enshrine recognition of Quebec as a "distinct society" in the constitution in order to win the referendum, this promise was quickly forgotten in the aftermath of victory with Chrétien arguing that the very vocal opposition of Ontario Premier [[Mike Harris]] to amending the constitution to recognize Quebec as a "distinct society" made that impossible.<ref name="Jeffrey, Brooke 2010, p. 284">Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 284.</ref> Instead, Chrétien had Parliament pass a resolution recognizing Quebec as a "distinct society", which had no constitutional force and was only a symbolic step.<ref name="Jeffrey, Brooke 2010, p. 284"/> Though Harris's promise to veto any sort of "distinct society" clause in the constitution made fulfilling Chrétien's commitment to put such a clause into the constitution impossible, Chrétien did not seem to champion the idea of a "distinct society" clause with any great conviction.<ref name="Jeffrey, Brooke 2010, p. 284"/>

In early 1996, the federal government launched an advertising program to increase the presence of Canada in Quebec, a policy that Chrétien believed would avoid a repeat of the near-defeat of 1995, and was to lead eventually to the [[Sponsorship scandal]].<ref name="Jeffrey, Brooke 2010, p. 287">Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 287.</ref> As part of his "Plan B" for combatting Quebec separatism, in a speech in January 1996, Chrétien endorsed the idea of partitioning Quebec in the event of a ''oui'' vote in another referendum, stating all of the regions of Quebec that voted ''non'' would remain part of Canada, regardless of what the Quebec separatists thought.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 143</ref> On February 15, 1996, Chrétien was confronted by a protester, Bill Clennett, during a walkabout in Hull, Quebec. Chrétien responded with a choke-hold. The press referred to it as the "[[Shawinigan Handshake|Shawinigan handshake]]" (from the name of his home town).<ref>{{cite news|url=http://edition.cnn.com/2001/WORLD/europe/05/17/politics.fights/ |title=Prescott not the first to pack a punch |publisher=CNN |date=May 18, 2001 |access-date=June 6, 2015}}</ref>

==== ''Clarity Act'' ====

After the 1995 referendum very narrowly defeated a proposal on Quebec sovereignty, Chrétien started to champion what eventually become the ''[[Clarity Act]]'' as part of his "Plan B". In August 1996, the lawyer [[Guy Bertrand (lawyer)|Guy Bertrand]] won a ruling in a Quebec court declaring that the sovereignty question was not just a political matter between the federal and Quebec governments, but also a legal matter subject to court rulings.<ref name="Martin, Lawrence p. 165">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 165.</ref> Following that ruling, Chrétien decided that here was a means of defeating the Quebec sovereignty movement and, in September 1996, ordered the Justice Minister [[Allan Rock]] to take the question of the legality of Quebec separating to the Supreme Court.<ref name="Martin, Lawrence p. 165"/> [[Stéphane Dion]] advised Chrétien that, if the federal government won the reference to the Supreme Court as expected, the government should draft a bill stating the precise rules for Quebec to leave—telling Chrétien if the people of Quebec could be shown how difficult it would be to leave, then support for separatism would fall.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 166.</ref> Along the same lines, Dion started to send much-publicised open letters to Quebec ministers questioning the assumptions behind the separatist case.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 167.</ref>

In December 1999 the Chrétien government tabled the ''Clarity Act'', which passed Parliament in June 2000. The ''Clarity Act'', which was Chrétien's response to his narrow victory in the 1995 referendum requires that no Canadian government may acknowledge any province's declaration of independence unless a "clear majority" supports a "clear question" about sovereignty in a referendum, as defined by the [[Parliament of Canada]], and a constitutional amendment is passed. The size of a "clear majority" is not specified in the Act. After the ''Clarity Act'' had passed by the House of Commons in February 2000, a poll showed that the federalist forces enjoyed a 15 percent lead in the polls on the question if Quebec should become independent, which Chrétien argued meant that the sovereignty option was now effectively off the table as Bouchard had always said he would only call another referendum if he could obtain "winning conditions", which he plainly did not possess at the moment.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 322.</ref>

=== Domestic affairs ===

In November 1997, the [[APEC|Asia-Pacific Economic Cooperation]] (APEC) [[APEC Canada 1997|summit]] was held on the [[University of British Columbia]] (UBC) campus in Vancouver. Students on UBC's campus protested the meeting because of the poor human rights practices of some of the attending leaders; one of the leaders most criticized was Indonesian President [[Suharto]]. Demonstrators tore down a barrier and were pepper-sprayed by the [[Royal Canadian Mounted Police]] (RCMP), with other peaceful demonstrators being subsequently pepper-sprayed as well. There was debate over whether the action was necessary. In response to Suharto's concerns about his "dignity" being called into question by protests, the Canadian government had promised him that no protesters would be allowed to get close, and in early August 1997, the PMO informed the RCMP that the prime minister did not wish for any "distractions" at the upcoming conference.<ref name="Martin-p198">Martin, Lawrence ''Iron Man: The Defiant Reign of Jean Chrétien'' Toronto: Viking Canada, 2003 p. 198.</ref> Later that day, Chrétien, when asked by [[Nardwuar|Nardwuar the Human Serviette]] about the use of pepper-spray, stated "...For me, pepper, I put it on my plate."<ref name="Nardwuar">{{cite AV media| people=Nardwuar the Human Serviette | title=Nardwuar vs. Prime Minister Jean Chretien (1997) | website=YouTube | date=12 September 2021 | url=https://www.youtube.com/watch?v=n9UQOOiuv5k  | format=video | orig-date=November 1997| location=Vancouver, BC | access-date=2025-03-31}}</ref> On August 7, 2001, the APEC report was issued by Judge [[Ted Hughes (judge)|Ted Hughes]]; it cleared Chrétien of wrongdoing, but stated that the PMO's Jean Carle had improperly pressured the RCMP to attack the protesters.<ref name="Martin-p328">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 328.</ref>

In August 1999, the Anglo-Canadian media magnate [[Conrad Black]] was due to receive a [[Peerages in the United Kingdom|British peerage]].<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 229.</ref> Two days before Black was to receive his title, Chrétien advised Queen [[Elizabeth II]] not to accord Black a title of nobility, citing the 1917 [[Canadian titles debate|Nickle Resolution]] whereby the Canadian House of Commons asked King [[George V]] not to grant any hereditary peerages or knighthoods to Canadians, thereby ensuring that Black was not raised to the peerage as he was expecting to be.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 229–230.</ref> A humiliated Black sued Chrétien for what he alleged to be an abuse of power, leading to the legal case of ''[[Black v Chrétien]]''.<ref name="Martin, Lawrence p. 231">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 231.</ref> In 2001, the [[Court of Appeal for Ontario]] ruled in Chrétien's favour, stating it was the prime minister's prerogative to advise the Queen not to raise Canadians to the British peerage if he felt so inclined, and therefore it was not an abuse of power as Black had claimed.<ref>[https://web.archive.org/web/20040811075839/http://www.geocities.com/noelcox/Black_v_Chretien.htm Black v Chrétien: suing a Minister of the Crown for abuse of power, misfeasance in public office and negligence]</ref> Black gave up his Canadian citizenship to accept the title.<ref>{{Cite web|url=http://www.cbc.ca/news/canada/conrad-black-to-renounce-canadian-citizenship-1.255288|title=Conrad Black to renounce Canadian citizenship}}</ref>

==== Electoral affairs ====
{{main|Federal political financing in Canada}}

In July 2003 Chretien passed a bill to reform the way elections are financed.<ref name="young04">{{cite book |url=https://www.ubcpress.ca/money-politics-and-democracy |title=Money, Politics, and Democracy }}</ref> In the previous century, the political parties were largely left to their own devices. After these changes to the [[Canada Elections Act]] (SC 2000), each vote obtained by a party was subsidized. The subsidy entered into effect on January 1, 2004, at $1.75 per vote (indexed to the [[Consumer Price Index]]) as part of a set of amendments made by the [[37th Canadian Parliament]] to the Canada Elections Act which for the first time set limits on political contributions by individuals and organizations (corporations, unions, non-profit groups). The per-vote subsidy was introduced to replace the reliance of political parties and candidates on corporate, union, and wealthy donors in order to reduce the political influence of such donors.<ref name="Party subsidy is democracy in action">{{cite web|url=http://www.timescolonist.com/news/decision-canada/Party+subsidy+democracy+action/4627850/story.html|title=Party subsidy is democracy in action|website=timescolonist.com|access-date=15 May 2019}} {{Dead link|date=May 2019 |bot=InternetArchiveBot |fix-attempted=yes }}</ref><ref name="pp">[http://www.thehilltimes.ca/page/view/qnakingsley-04-11-2011 Political parties could be forced to return to big money corporate funding if per-vote subsidies scrapped, says Kingsley]</ref><ref>{{cite web|url=http://www.mapleleafweb.com/old/features/parliament/party-finance/regulating-donations.html |title=Regulating Political Donations |website=www.mapleleafweb.com |archiveurl=https://web.archive.org/web/20071006014756/http://www.mapleleafweb.com/old/features/parliament/party-finance/regulating-donations.html |archivedate=2007-10-06 |url-status=dead |access-date=15 May 2019}}</ref> The law provides a refund for 50% of the expenditure on the most recent election campaign.<ref name="gm1">{{cite news |last1=Elliott |first1=Louise |title=PM's campaign finance bill passes easily |url=https://www.theglobeandmail.com/news/national/pms-campaign-finance-bill-passes-easily/article20449466/ |publisher=The Globe and Mail Inc |date=June 11, 2003}}</ref>

==== Social issues ====

In 1995, the Chrétien government introduced and passed the [[Canadian Firearms Registry]], also called the long-gun registry. This would require the registration of all non-restricted firearms in Canada. This [[gun registry]] would document and record information of the firearms, their owners, and their owners' licenses.{{Cn|date=March 2025}}

The government under Chrétien's premiership introduced a new and far-reaching ''[[Youth Criminal Justice Act]]'' in April 2003, which replaced the ''[[Young Offenders Act]]'' and changed the way youths were prosecuted for crimes in Canada. A flurry of major environmental legislation, including the ''[[Canadian Environmental Protection Act]]'', [[National Marine Conservation Area|''National Marine Conservation Areas Act'']], ''[[Pest Control Products Act]]'', and the ''[[Species at Risk Act]]'' were enacted. The cooperation of federal, provincial, and municipal governments also enabled Vancouver to win the bid to host the [[2010 Winter Olympics]].{{Cn|date=March 2025}}

In July 2003, Chrétien reversed his position on gay marriage, which he had previously been opposed to (in 1999 Chrétien had voted for a resolution sponsored by the Reform saying marriage was a union of a man and a woman only).<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking 2003 p. 420.</ref> After a Toronto court ruled that laws forbidding homosexual marriage violated the ''Charter of Rights and Freedoms'', legalizing same-sex marriage throughout Ontario, Chrétien embraced the idea of gay marriage and introduced a bill in the House of Commons that would have legalized gay marriage despite the very vocal opposition of the Roman Catholic Church with the bishop of Calgary warning in a sermon that Chrétien's "eternal salvation" was at risk.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking 2003 p. 421.</ref>

=== Economic policy ===

Chrétien canceled the privatization of Toronto's Pearson airport.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 76 & 161–162.</ref> The consortium that was due to take ownership of Pearson sued for breach of contract, which led the government to settle out of court in April 1997 for $60&nbsp;million in damages.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 163.</ref>

[[1994 Canadian federal budget|The first budget]] introduced by Martin, in February 1994, was described as a "mild and tame" budget focused only on the target of reducing the deficit to 3 percent of [[Gross national product|Gross National Product]] (GNP) within three years, and brought in modest cuts, mostly to defence spending.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 85–86.</ref> Until the terrorist attacks of September 11, 2001, the Chrétien government tended to be hostile towards defence spending with the government's white paper "Defence 94" declaring that in a post-Cold War world there would be less and less need for armed forces, which accordingly meant reduced budgets for the military.<ref name="Bland pp. 964–967">Bland, Douglas Review of ''Who Killed the Canadian Military?'' by J. L. Granatstein pp. 964–967 from ''International Journal'', Volume 59, Issue #4, Autumn 2004 pp. 966–967.</ref> Outside of defence spending, there were few cuts in the 1994 budget. In a radio interview with Ron Collister in March 1994, Chrétien stated: "To go to our goal of 3 per cent of GNP, all the cuts have been announced in the budget. There will not be a new round."<ref name="Jeffrey-p265" /> According to the diplomat [[James Bartleman]], Chrétien told him in early 1994 that major cuts to government spending outside of defence were out of the question, and instead he hoped that the economy would grow enough on its own that the deficit would disappear without any cuts.<ref name="Jeffrey, Brooke p. 246">Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010 p. 246.</ref> Chrétien's plans in early 1994 for economic growth were to increase exports by embracing globalization and free trade with as many nations as possible, arguing that the export offensive would stimulate the economy out of the early 1990s recession.<ref name="Jeffrey, Brooke p. 246"/> The 1994 budget was widely criticized by journalists such as [[Andrew Coyne]] as useless in even achieving its target of reducing the deficit to 3 percent of GNP within three years, let alone eliminating the deficit, and led to a celebrated clash between Coyne and Martin in the boardroom of ''The Globe and Mail'' newspaper.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, pp. 264–265.</ref> In April 1994, interest rates in Canada started a steady rise that would continue until early 1995.<ref name="Jeffrey-p265" />

[[File:Jean Chrétien, 1996.jpg|thumb|right|250px|Chrétien in 1996]]

Chrétien was not keen on making deep cuts to government spending, but given the crisis caused by the skyrocketing interest rates had decided "reluctantly" there was no alternative.<ref name="Jeffrey-p266">Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 266.</ref> Once he had decided upon making deeper cuts than he promised, Chrétien proved to be firm supporter of the new course, and supported Martin's cuts to other departments despite the complaints of the other ministers.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, p. 267.</ref> Chrétien's advisor Eddie Goldenberg later recalled that Chrétien was unyielding in the face of efforts by other ministers to "spare" their departments, and that Chrétien kept on saying "If I change anything, everything will unravel".<ref name="Jeffrey-p266" /> In a 2011 interview, Chrétien recalled about [[1995 Canadian federal budget|the 1995 budget]] that: "There would have been a day when we would have been the Greece of today. I knew we were in a bind and we had to do something."<ref name="Palmer 2011 all">{{cite news |last1 = Palmer |first1 = Randall |last2 = Egan |first2 = Louise |title = The lesson from Canada on cutting deficits |publisher = The Globe & Mail |date = November 21, 2011 |url = https://www.theglobeandmail.com/report-on-business/economy/the-lesson-from-canada-on-cutting-deficits/article4252006/?page=all |access-date = July 7, 2013 |location = Toronto |url-status = dead |archive-url = https://web.archive.org/web/20131011231848/http://www.theglobeandmail.com/report-on-business/economy/the-lesson-from-canada-on-cutting-deficits/article4252006/?page=all |archive-date = October 11, 2013 |df = mdy-all }}</ref> In order to silence objections from left-wing Liberal backbenchers and Cabinet ministers, Chrétien ensured that the Program Review Committee chaired by [[Marcel Massé]] that would decide what programs to end and which to cut had a majority comprising the leftist MPs [[Brian Tobin]], Sheila Copps, [[Sergio Marchi (politician)|Sergio Marchi]] and Herb Gray, people who would not normally be supporting cutting programs, and thereby underlined the seriousness of the crisis.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, pp. 267–268.</ref> It was only with the budget that Martin introduced on February 27, 1995, that the Chrétien government began a policy of cuts designed to eliminate the deficit in order to reassure the markets.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 103.</ref> Much of the Liberal caucus was deeply unhappy with the 1995 budget, arguing that this was not what they had been elected for in 1993, only to be informed by the prime minister that there was no alternative.<ref name="Martin, Lawrence p. 108">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 108.</ref> Chrétien himself expressed his unhappiness with his budget in a radio interview with [[Peter Gzowski]] in March 1995, saying about the budget: "It is not our pleasure sir, I have to tell you that. I've been around a long time. It's no pleasure at all. I'm not doctrinaire, a right-winger. I'm a Liberal, and I feel like a Liberal, and it is painful. But it is needed".<ref name="Martin, Lawrence p. 108"/>

The government began a program of deep cuts to provincial transfers and other areas of government finance. During his tenure as prime minister, a $42&nbsp;billion deficit was eliminated, five consecutive budget surpluses were recorded (thanks in part to favorable economic times), $36&nbsp;billion in debt was paid down, and taxes were cut by $100&nbsp;billion (cumulatively) over five years.<ref>{{cite web |url=http://www.fin.gc.ca/toce/2000/update01-1e.html |title=January 2001 Tax Savings |access-date=February 13, 2008 |archive-url=https://web.archive.org/web/20080108171644/http://www.fin.gc.ca/toce/2000/update01-1e.html |archive-date=January 8, 2008 |url-status=dead }}</ref><ref name="CanadianEncyclopedia">{{cite encyclopedia | url=http://www.thecanadianencyclopedia.ca/en/article/joseph-jacques-jean-chretien/ | title=Chrétien, Joseph-Jacques-Jean | encyclopedia=[[The Canadian Encyclopedia]] | access-date=June 6, 2015 | author=Bothwell, Robert}}</ref> Using the low incomes cut-offs after tax measure, the percentage of Canadians who had low income in 1993 was 14.1 percent; in 1995, when the budget was introduced, that figure had jumped to 14.5; in 2003, the end of Chrétien's time in office, that number had fallen to just 11.6 percent.<ref name=":1">{{Cite web|url=https://www.canada.ca/en/employment-social-development/programs/poverty-reduction/backgrounder.html|title=A backgrounder on poverty in Canada|last=Canada|first=Employment and Social Development|date=November 30, 2016|website=gcnws|access-date=May 28, 2019}}</ref> The share of Canadians living in persistent poverty (i.e. low income for at least 3 years out of 6 years) has declined by almost half since the mid-1990s to 2010.<ref name=":1" /> Social spending as a percentage of GDP fell from 20.35 percent in 1993, to 18.35 percent in 1995, eventually falling to 16.94 percent in 1997 and 15.76 percent in 2000, and eventually rising to 16.29 percent in 2003.<ref>{{Cite web|url=http://data.oecd.org/socialexp/social-spending.htm|title=Social protection – Social spending – OECD Data|work=OECD|language=en|access-date=May 28, 2019}}</ref> The 1995 budget, which was called by [[Peter C. Newman]] a "watershed document" that marked the first time in recent memory that anybody had made a serious effort to deal with the deficit, won a favorable reaction from the international markets, and a led to an immediate fall in interest rates.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 103–104.</ref> There were, however, undeniable costs associated with this endeavour. The cuts resulted in fewer government services, most noticeably in the health care sector, as major reductions in federal funding to the provinces meant significant cuts in service delivery. Moreover, the across-the-board cuts affected the operations and achievement of the mandate of most federal departments. Many of the cuts were restored in later years of Chrétien's period in office.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 429.</ref>

In March 1996, when the Chrétien government presented [[1996 Canadian federal budget|its third budget]], the backbencher Liberal MP John Nunziata voted against the budget under the grounds it failed to repeal the GST as the Liberals had promised in 1993 and singled out for criticism his former [[Liberal Party of Canada Rat Pack|Rat Pack]] colleague Sheila Copps, who had promised during the 1993 election to resign within a year if the GST was not repealed.<ref name="Martin, Lawrence p. 156">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 156.</ref> Chrétien's response was to expel Nunziata from the Liberal caucus.<ref name="Martin, Lawrence p. 156"/> However, the expulsion of Nunziata drew attention to the fact that Copps was still in office despite her promise to resign within a year if the GST was not repealed.<ref name="Martin, Lawrence p. 156"/> Chrétien first stated that Copps would stay in Parliament despite her promise of 1993, but then intense public pressure (together with a poll showing Copps would win a by-election) forced Copps to resign from the Parliament.<ref name="Martin, Lawrence p. 156"/> After resigning, Copps then contested the resulting by-election, where she won and then went straight back into the Cabinet.<ref name="Martin, Lawrence p. 156"/> To help defuse anger over the GST issue, in the spring of 1996 the Chrétien government moved to [[Harmonized Sales Tax|harmonize sales taxes]] (GST with provincial taxes) by signing an accord with three of the four Atlantic provinces; the other provinces were not interested in the federal offer to harmonize.<ref name="Martin, Lawrence p. 156"/>

In [[1998 Canadian federal budget|February 1998]], for the first time since [[1969 Canadian federal budget|1969]] a balanced budget was presented by the government.<ref>Martin, Lawrence ''Iron Man: The Defiant Reign of Jean Chrétien'' Toronto: Viking Canada, 2003 p. 203.</ref> Shortly afterwards, the Chrétien government introduced the National Child Benefit program for the children of low-income parents.<ref name="Martin-p204">Martin, Lawrence ''Iron Man: The Defiant Reign of Jean Chrétien'' Toronto: Viking Canada, 2003 p. 204.</ref>

=== Foreign policy ===

[[File:Jesse Flis, Bishop Georgije, Jean Chrétien and Patriarch Pavle.jpg|thumb|right|200px|Chrétien with Bishops and [[Pavle, Serbian Patriarch|the Patriarch]] of the [[Serbian Orthodox Church]], 1994.]]

==== Canada in the Yugoslav Wars ====

In 1999, Chrétien supported Canada's involvement in the [[NATO|North Atlantic Treaty Organization]] (NATO) [[NATO bombing of Yugoslavia|bombing campaign]] of [[Federal Republic of Yugoslavia|Yugoslavia]] over the issue of [[Kosovo]], even through the operation was unsanctioned by the [[United Nations Security Council]].  There had been an Anglo-American resolution asking for the Security Council's approval of the NATO bombing, but it was vetoed by [[Russia]]. The idea of bombing Yugoslavia caused some discomfort within the ranks of the Liberal party as the NATO campaign effectively meant supporting Kosovo separatists against a government determined to prevent Kosovo's secession from Yugoslavia. Chrétien was personally uncomfortable with the idea of bombing Yugoslavia, but supported the war because he valued good relations with the United States far more than he cared about Yugoslavia.<ref name="Martin, Lawrence p. 217">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 217.</ref> Chrétien's foreign minister at the time, [[Lloyd Axworthy]] justified Canada's involvement in the bombing of Yugoslavia on the grounds that allegations of massacres against ethnic Albanians in Kosovo made the use of force legitimate on humanitarian grounds, even without the approval of the UN Security Council.<ref name="Martin, Lawrence p. 217"/> Likewise, Chrétien was later to tell Lawrence Martin that it was far better to intervene in the internal affairs of Yugoslavia to stop human rights violations in the Kosovo region by Serbian forces than to do nothing.<ref name="Martin, Lawrence p. 217"/>

==== China ====

Chrétien was known to be a [[Sinophile]] and an admirer of the [[China|People's Republic of China]]. In November 1994, he led the first of four [[Team Canada Mission|"Team Canada"]] trade missions comprising himself and nine premiers to China (Quebec Premier Jacques Parizeau having declined to go), which had as their stated objective increasing Sino-Canadian trade. The Team Canada mission was meant to be the beginning of the export offensive that would stimulate the economy out of the recession, and also to achieve Chrétien's goal going back to the 1970s of a Canadian economy less dependent on trade with the United States.<ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010 pp. 246 & 251.</ref><ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 93.</ref> Under his leadership, China and Canada signed several bilateral relations agreements. The Team Canada missions attracted criticism that Chrétien seemed concerned only with economic issues, that he rarely raised the subject of China's poor human rights record, and that on the few occasions that he did mention [[human rights in China]] he went out of his way to avoid offending his hosts.<ref name="Evertt-p9-48">Evertt, Robert "The Federal Government, Politics and National Institutions" pp. 9–48 from ''Canadian Annual Review of Politics And Public Affairs, 2001'' edited by David Mutimer, Toronto: University of Toronto Press, 2007 p. 37.</ref> Moreover, Chrétien attracted criticism for presenting the case for improved human rights in purely economic terms, arguing that a better human rights record would allow China to join the WTO and thus sell more goods to the West. Chrétien argued that there was no point in criticizing China's human rights record because the Chinese never listened to such criticism, and instead were greatly annoyed about being lectured by Western leaders about their poor human rights record.<ref name="Martin, Lawrence p. 310">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 310.</ref> Given that Canada could not really do anything to change the views of China's leaders about human rights, Chrétien contended that the best that could be done was to improve Sino-Canadian economic relations while ignoring the subject of human rights.<ref name="Martin, Lawrence p. 310"/>

==== United States ====
[[File:APEC Summit 1993 - Jean Chrétien and Bill Clinton shaking hands.jpg|thumb|Chrétien shaking hands with US President [[Bill Clinton]], at the 1993 [[Asia-Pacific Economic Cooperation|APEC]] Summit.]]
{{See also|Canada–United States relations}}
Chrétien phoned U.S. President [[Bill Clinton]] in November 1993 to ask him to renegotiate aspects of NAFTA.<ref name="Martin, Lawrence p. 79">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 79.</ref> Clinton bluntly refused, saying that it had been extremely difficult to get Congress to ratify NAFTA, and if NAFTA was renegotiated, then he would have to submit the renegotiated treaty again for ratification, which was not something that he was going to do just for the sake of Chrétien.<ref name="Martin, Lawrence p. 79"/> Clinton informed the prime minister that he could either scrap NAFTA or accept it as it was, and that the most he could offer were a few cosmetic concessions like writing a letter saying the United States was not interested in taking over Canada's energy and water.<ref name="Martin, Lawrence p. 79"/> Chrétien chose the latter, and sought to portray Clinton's letter as a major American concession that constituted a renegotiated NAFTA, though in fact Clinton's letter was not legally binding and meant nothing.<ref name="Martin, Lawrence p. 79"/> Only treaties ratified by Congress are legally binding on the U.S. government and presidential letters impose only a moral obligation, not a legal one, on the U.S government.<ref>Brogan, Patrick ''The Fighting Never Stopped'', New York: Vintage Books, 1989 p. 283.</ref>

Following the [[September 11 attacks]], Canadian forces joined with a multinational coalition to pursue [[al-Qaeda]] in [[Afghanistan]]. U.S. President [[George W. Bush]] had also commended how Canada responded to the crisis. Among them included [[Operation Yellow Ribbon]] and the memorial service on [[Parliament Hill]] three days after 9/11. In January 2002, Chrétien together with the Defence Minister [[Art Eggleton]] were accused of misleading Parliament. When asked in Question Period if Canadian troops had handed over captured Taliban and al-Qaeda members in Afghanistan to the American forces amid concerns about the treatment of POWs at [[Guantanamo Bay detention camp|Guantanamo Bay]], Chrétien stated this was only a "hypothetical question" that could not be answered as the Canadians had taken no POWs.<ref name="CBC News">{{cite news | title = Eggleton confirms JTF2 has taken prisoners in Afghanistan | publisher = [[CBC News]] |date= January 30, 2002 | url = https://www.cbc.ca/news/canada/eggleton-confirms-jtf2-has-taken-prisoners-in-afghanistan-1.313599 | access-date = February 17, 2021}}</ref> Critics of the government, such as Joe Clark, then pointed out that in the previous week, ''The Globe & Mail'' had run on its front page a photo of Canadian soldiers turning over POWs to American troops.<ref name="CBC News" /> Eggleton claimed that he had only learned of the policy of handing over POWs several days after the photo had appeared in ''The Globe and Mail''.<ref name="CBC News" /> When pressed by opposition critics about his apparent ignorance of what was Canada's policy on turning over POWs captured in Afghanistan, Eggleton then claimed that he had not only forgotten that he had been briefed by senior bureaucrats that Canadian Forces were to hand over POWs to the Americans, but that he had also forgotten to inform the Cabinet.<ref name="Globe and Mail">{{cite news | title = The further shuffle Mr. Chrétien forgot | work = The Globe and Mail |date= May 28, 2002 | url = https://www.theglobeandmail.com/opinion/the-further-shuffle-mr-chretien-forgot/article754992/ | access-date = February 17, 2021 | location=Toronto}}</ref>

One year after the 9/11 attacks, Chrétien gave controversial remarks about what led to the attacks, suggesting they were a reaction to Western foreign policy. During the 2002 CBC interview, Chrétien said "I do think that the Western world is getting too rich in relations to the poor world. And necessarily, we're looked upon as being arrogant, self-satisfied, greedy and with no limits. And the 11th of September is an occasion for me to realize it even more. When you are powerful like you are, you guys, it's the time to be nice. And it is one of the problems—you cannot exercise your powers to the point of humiliation of the others. And that is what the Western world—not only the Americans but the Western world—has to realize." The comments were condemned by the new Official Opposition leader and the new Canadian Alliance leader, [[Stephen Harper]], who charged Chretien with [[victim blaming]], while the leaders of the New Democratic Party and Progressive Conservative Party did not interpret Chrétien's comments as critical of the United States.<ref name="Macleans">{{cite news | title = Poverty, terrorism and 9/11 | work = Macleans |date= September 9, 2011 | url = https://www.macleans.ca/politics/ottawa/poverty-terrorism-and-911/ | access-date = January 24, 2020}}</ref><ref name="CBC">{{cite news | title = PM slammed, defended for 9/11 remarks | work = CBC |date= September 13, 2002 | url = https://www.cbc.ca/news/canada/pm-slammed-defended-for-9-11-remarks-1.313414 | access-date = January 24, 2020}}</ref>

[[File:Chrétien and Bush shaking hands Sept 9 2002.jpg|left|thumb|250px|President [[George W. Bush]] and Jean Chrétien address the media before a 2002 bilateral meeting.]]

==== Refusal to join the Iraq War ====

Chrétien's government did not support the US-led [[2003 invasion of Iraq]]. His reasoning was that the war lacked UN Security Council sanction; while not a member of the Security Council, Canada nevertheless attempted to build a consensus for a resolution authorizing the use of force after a short (two- to three-month) extension to UN weapon inspections in Iraq. Critics also noted that, while in opposition, he had also opposed the first US-led [[Gulf War]], which had been approved by the UN Security Council and in 1999 supported NATO air strikes against Serbia, which had no Security Council approval. In order to avoid damaging relations with the United States, Chrétien agreed to another and larger deployment of Canadian troops to Afghanistan on February 12, 2003, in order to prove that Canada was still a good American ally, despite opposing the upcoming Iraq war.<ref>{{cite news | last = Spector | first = Norman | author-link = Norman Spector | title = Jean Chrétien's war | work = The Globe and Mail |date= July 16, 2009 |url = https://www.theglobeandmail.com/news/politics/second-reading/jean-chretiens-war/article787932/ | access-date = August 24, 2013 | location=Toronto}}</ref> Canada sent 2,000 soldiers to Afghanistan in the summer of 2003.<ref name="http">{{cite news | title = Chrétien's government rejected military's advice on Afghan deployment: ex-army chief | publisher = [[CBC News]] |date= October 18, 2006 | url = https://www.cbc.ca/news/canada/chr%C3%A3-tien-government-rejected-military-s-advice-on-afghan-deployment-ex-army-chief-1.606203 | access-date = August 24, 2013}}</ref> Twenty years later, in a French-language interview, Chretien recalled the personalities and events that led up to his refusal. At the time some in the business community were petrified that the US would look elsewhere for Canadian products; 85% of Canadian trade was with the US.{{Citation needed|date=June 2024}}

=== Defence policy ===

In 1993, Chrétien [[Canadian Sea King replacement|canceled the contract to buy the EH-101 helicopters]], requiring the search for new helicopters to start over, and paid a $478&nbsp;million [[termination fee]] to [[AgustaWestland]].<ref>[https://web.archive.org/web/20080921090301/http://www.casr.ca/id-mhp.htm Politics, Procurement Practices, and Procrastination: The CH-124 Sea King Helicopter Replacement Saga]</ref><ref>{{Cite news|url=https://www.nytimes.com/1996/01/24/business/international-briefs-canada-settles-claim-on-canceled-helicopters.html|title=INTERNATIONAL BRIEFS;Canada Settles Claim On Canceled Helicopters|date=January 24, 1996|newspaper=The New York Times|issn=0362-4331|access-date=September 22, 2016}}</ref>

In January 1998, Chrétien's government announced that the CH-113 helicopters would be replaced by a scaled-down search-and-rescue variant of the EH101, carrying the designation [[CH-149 Cormorant]]. Unlike the Petrel/Chimo contract which Chrétien had cancelled in 1993, these 15 aircraft were to be built entirely in Europe with no Canadian participation or industrial incentives. The first two aircraft arrived in Canada in September 2001 and entered service the following year. His Maritime Helicopter Project was supposed to find a low-cost replacement aircraft. The candidates were the [[Sikorsky S-92]], the [[NHIndustries NH90]] and the EH-101, although critics accused the government of designing the project so as to prevent AgustaWestland from winning the contract. A winner, the [[Sikorsky CH-148 Cyclone]], would not be announced until after Chrétien retired.<ref>[http://www.casr.ca/id-mhp.htm Politics, Procurement Practices, and Procrastination: the CH-124 Sea King Helicopter Replacement Saga] {{webarchive |url=https://web.archive.org/web/20131203020231/http://www.casr.ca/id-mhp.htm |date=December 3, 2013 }}</ref><ref>{{cite web|url=http://www.ctv.ca/servlet/ArticleNews/mini/CTVNews/20031030/Sea_Kings_031030?s_name=budget2005&no_ads= |title=PM defends record on grounded Sea King choppers |publisher=Ctv.ca |date=October 30, 2003 |access-date=January 28, 2011}}{{dead link|date=July 2021|bot=medic}}{{cbignore|bot=medic}}</ref><ref>{{cite news|url=http://www.cbc.ca/news2/background/cdnmilitary/seaking.html |title=Requiem for the Sea King |publisher=[[Canadian Broadcasting Corporation]] |date=November 30, 2008 |access-date=June 6, 2015}}</ref><ref>{{cite web |last=Windsor |first=The |url=http://www.canada.com/windsorstar/news/story.html?id=2b077397-f0f8-48e2-8a31-04695520e2d9 |title=Helicopter delays blamed on Chrétien |publisher=Canada.com |date=January 12, 2008 |access-date=January 28, 2011 |url-status=dead |archive-url=https://web.archive.org/web/20120826152806/http://www.canada.com/windsorstar/news/story.html?id=2b077397-f0f8-48e2-8a31-04695520e2d9 |archive-date=August 26, 2012 }}</ref>

=== Reelections ===
==== 1997 federal election ====
Chrétien called [[1997 Canadian federal election|an early election]] in the spring of 1997, hoping to take advantage of his position in the public opinion polls and the continued division of the conservative vote between the Progressive Conservative Party and the upstart [[Reform Party of Canada]]. Despite slipping poll numbers, he advised the governor general to call an election in 1997, a year ahead of schedule. Many of his own MPs criticized him for this move, especially in light of the devastating [[Red River Flood, 1997|Red River Flood]], which led to charges of insensitivity. Liberal MP [[John Godfrey]] tried hard to interest Chrétien in an ambitious plan to eliminate urban poverty in Canada as a platform to run on in the election, which was vetoed by Eddie Goldenberg and John Rae of the PMO, who convinced Chrétien that it was better to stick with an "incrementalist" course of small changes than risk any grand project.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 176.</ref> The Progressive Conservatives had a popular new leader in [[Jean Charest]] and the [[New Democratic Party (Canada)|New Democrats]]' [[Alexa McDonough]] led her party to a breakthrough in Atlantic Canada, where the Liberals had won all but one seat in 1993. Chrétien benefited when the Reform Party aired a TV ad in English Canada charging that the country was being dominated by French-Canadian politicians, which Chrétien used to accuse [[Preston Manning]] of being anti-French.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 181.</ref> In 1997, the Liberals lost all but a handful of seats in Atlantic Canada and Western Canada, but managed to retain a bare majority government due to their continued dominance of Ontario.{{Cn|date=March 2025}}

==== 2000 federal election ====
Chrétien called another [[2000 Canadian federal election|early election in the fall of 2000]], again hoping to take advantage of the split in the Canadian right and catch the newly formed [[Canadian Alliance]] and its neophyte leader [[Stockwell Day]] off guard. At the funeral of Pierre Trudeau in September 2000, the [[President of Cuba|Cuban President]], [[Fidel Castro]] happened to meet with Day.<ref name="Martin-p285">Martin, Lawrence ''Iron Man: The Defiant Reign of Jean Chrétien'' Toronto: Viking Canada, 2003 p. 285.</ref> Later that same day, Chrétien met with Castro, where Chrétien asked Castro about his assessment of Day and if he should call an early election or not.<ref name="Martin-p285" /> Castro advised Chrétien to dissolve Parliament early as he considered Day to be a lightweight, and as Castro was a leader whom Chrétien respected, his advice was an important reason for the election.<ref name="Martin-p285" /> Finance Minister Paul Martin released a 'mini-budget' just before the election call that included significant tax cuts, a move aimed at undermining the Alliance position going into the campaign. Chrétien formed a "war room" comprising his communications director [[Françoise Ducros]], Warren Kinsella, Duncan Fulton and Kevin Bosch to gather material to attack Day as a right-wing extremist.<ref>Martin, Lawrence. ''Iron Man'', Toronto: Viking, 2003, pp. 291 & 300.</ref> In the first weeks of the 2000 election, the Canadian Alliance gained in the polls and some voters complained that Chrétien overstayed his time in office and had no agenda beyond staying in power for the sake of staying in power.<ref name="Martin, Lawrence p. 292">Martin, Lawrence. ''Iron Man'', Toronto: Viking, 2003, p. 292.</ref> The fact that the Red Book of 2000 consisted almost entirely of recycled promises from the Red Books of 1993 and 1997 and various banal statements further reinforced the impression of a prime minister with no plans or vision for Canada and whose only agenda was to hang onto power as long as possible.<ref>Martin, Lawrence. ''Iron Man'', Toronto: Viking, 2003, pp. 290–291.</ref> However, the Liberal claim that Day planned to dismantle the health care system to replace it with a [[Two-tier health care|"two-tier" health care system]] along with a number of gaffes on Day's part in addition to Alliance candidate [[Betty Granger]] warning that Canada was faced with the threat of an "Asian invasion" (which furthered the Liberals' plan to paint the Alliance as a xenophobic and extreme right-wing party)<ref name="Harrison, Trevor p. 84">Harrison, Trevor ''Requiem for a Lightweight'', Montreal: Black Rose Books, 2002 p. 84.</ref> started to turn opinion decisively against the Canadian Alliance.<ref>Martin, Lawrence. ''Iron Man'', Toronto: Viking, 2003, pp. 290–294.</ref> Day's socially conservative views were also attacked by Chrétien as the Liberals claimed that Day would make homosexuality and abortion illegal. The New Democrats and Bloc Québécois also ran lacklustre campaigns, while the Progressive Conservatives, led by former Prime Minister Joe Clark, struggled to retain official party status. On November 27, the Liberals secured a strong majority mandate in the 2000 election, winning nearly as many seats as they had in 1993, largely thanks to significant gains in Quebec and in Atlantic Canada. Without Jean Charest as leader, the PCs who had done well in winning the popular vote in Quebec in 1997 fared poorly in 2000, and most of their voters defected over to the Liberals.<ref>Dornan, Christopher & Pammett, Jon H. ''The Canadian general election of 2000'', Toronto: Dundurn Press, 2001 p. 21.</ref>

=== Scandals and controversies ===

==== Shawinigate ====

{{Main|Shawinigate}}

In late 2000 and early 2001, politics were dominated by questions about the Grand-Mere Affair (or the [[Shawinigate]] scandal). Opposition parties frequently charged that Chrétien had broken the law in regards to his lobbying for [[Business Development Bank of Canada]] for loans to the Auberge Grand-Mère inn.<ref name="L'Affair Grand-Mere">{{cite news|title=L'Affair Grand-Mere |publisher=[[CBC News]] |date=January 25, 2006 |url=http://www.cbc.ca/news/background/chretien/shawinigan.html |access-date=August 26, 2013 |url-status=dead |archive-url=https://web.archive.org/web/20121023141848/http://www.cbc.ca/news/background/chretien/shawinigan.html |archive-date=October 23, 2012 }}</ref> Questions were especially centered around the firing of the president of the bank, François Beaudoin, and the involvement of Jean Carle, formerly of the PMO, in sacking Beaudoin.<ref name="L'Affair Grand-Mere"/> Carle served as Chrétien's chief of operations between 1993 and 1998 before leaving to take up an executive post at the Business Development Bank.<ref>{{cite web | title = So long, tough guy |work = Maclean's |date= January 25, 1998 |url = http://business.highbeam.com/4341/article-1G1-20335728/so-long-tough-guy |archive-url = https://web.archive.org/web/20131203003123/http://business.highbeam.com/4341/article-1G1-20335728/so-long-tough-guy |url-status = dead |archive-date = December 3, 2013 | access-date = August 26, 2013}}</ref> Chrétien claimed that Carle was not involved in any way with the loans to the Grand-Mere Inn, only to be countered by Joe Clark, who produced a leaked document showing that he was.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003, p. 314.</ref> After initial denials, Chrétien acknowledged having lobbied the Business Development Bank to grant a $2&nbsp;million loan to Yvon Duhaime. Duhaime was a friend and constituent to whom the Prime Minister stated that he had sold his interest in the Grand-Mère Inn, a local Shawinigan-area hotel and golf resort, eventually providing evidence of the sale—a contract written on a cocktail napkin. Duhaime was a local businessman with an unsavoury reputation and a criminal record, who received a loan from the Business Development Bank that he was ineligible to collect on the account of his criminal record (Duhaime did not mention his record when applying for the loan).<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 pp. 222–223.</ref> The bank had turned down the initial loan application, but later approved a $615,000 loan following further lobbying by Chrétien. When the bank refused to extend the loan in August 1999 under the grounds that Duhaime had a bad financial history, Beaudoin was fired by Chrétien in September 1999, which led to a [[wrongful dismissal]] suit that Beaudoin was to win in 2004.<ref>{{cite news | title = 'Shawinigate' bank exec wins dismissal suit | publisher = [[CBC News]] |date= March 3, 2004| url = https://www.cbc.ca/news/canada/shawinigate-bank-exec-wins-dismissal-suit-1.511667 | access-date = February 17, 2021}}</ref> It was revealed that Chrétien had never been paid for his share in the sale of the adjoining golf course, and criminal charges were laid against Duhaime. On February 19, 2001, the RCMP announced that there they did not find sufficient evidence to lay criminal charges against anyone in regards to the Grand-Mere Affair, and Chrétien accused Clark of waging a "witch hunt" against the Liberals.<ref name="L'Affair Grand-Mere"/> On March 2, 2001, the federal ethics counselor Howard Wilson cleared Chrétien of wrongdoing in the Grand-Mere Affair.<ref name="L'Affair Grand-Mere"/> On April 5, 2001, the ''National Post'' received documents purportedly from an anonymous source within the bank, indicating that Chrétien was still owed $23,040 by Duhaime for his share in the Auberge Grand-Mère.<ref name="Cosh 2010">{{cite web | last = Cosh | first = Colby | title = That pesky issue: but was it forged? | work = Maclean's |date= May 19, 2010| url = http://www.macleans.ca/2010/05/19/that-pesky-issue-but-was-it-forged/ | access-date = August 26, 2013}}</ref> The revelation of the Grand-Mère affair did not affect the outcome of the 2000 election. Chrétien and his circle believed that the breaking of the Grand-Mère story was the work of the Martin faction.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 297.</ref>

==== Sponsorship Scandal ====

{{Main|Sponsorship Scandal}}

The major controversy of the later Chrétien years was the [[Sponsorship Scandal]], which involved more than $100&nbsp;million distributed from the Prime Minister's Office to Quebec's federalist and Liberal Party interests without much accountability.<ref name="test">{{cite news|url=http://www.cbc.ca/news2/background/auditorgeneral/report2004.html|title=Auditor General's 2004 Report|publisher=[[CBC News]]|date=February 11, 2004|access-date=June 6, 2015}}</ref> On May 8, 2002, the Sponsorship Scandal broke when the auditor general, [[Sheila Fraser]], issued a report accusing Public Works bureaucrats of having broken "just about every rule in the book" in awarding $1.6&nbsp;million to the Montreal ad firm [[Groupaction]] Marketing Inc.<ref name="Martin, Lawrence p. 358"/> The money awarded to Groupaction in three dubious contracts appeared to have disappeared, and the firm had a long history of donating to the Liberals.<ref name="Martin, Lawrence p. 358"/> Opposition critics further suggested that the public works minister at the time, [[Alfonso Gagliano]], whom Chrétien had praised as a great patriot, was not just a mere bystander to questionable contacts associated with the sponsorship program that Fraser had identified.<ref name="Martin, Lawrence p. 358"/> In response to the public outrage, Chrétien argued in a speech in Winnipeg that all this was necessary to stop Quebec separatism and justified by the results, stating that: "Perhaps there was a few million dollars that might have been stolen in the process. It is possible. But how many millions of dollars have we saved the country because we have re-established the stability of Canada as a united country? If somebody has stolen the money, they will face the courts. But I will not apologize to Canadians."<ref name="Martin, Lawrence p. 359">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 359.</ref> Chrétien's argument that he had nothing to apologize for in regards to the sponsorship program, and his apparent condoning of corruption as justified by the results of saving Canada fared poorly with the Canadian public, which increasingly started to perceive the prime minister as an autocratic leader with a thuggish streak.<ref name="Martin, Lawrence p. 359"/> A poll taken later in May 2002 showed that over half of Canadians believed that the Chrétien government was corrupt.<ref name="Martin, Lawrence p. 361">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 361.</ref> The Sponsorship Scandal would tarnish Chrétien's reputation only a few years after he left office, and contributed to the Liberals losing their majority government in [[2004 Canadian federal election|2004]] and losing power altogether in [[2006 Canadian federal election|2006]].{{Cn|date=March 2025}}

=== Chrétien and Martin: Liberal Party infighting ===

Relations between Chrétien and Martin were frequently strained, and Martin was reportedly angling to replace Chrétien as early as 1997. Martin had long hoped that Chrétien would just retire at the end of his second term, thereby allowing him to win the Liberal leadership, and was greatly disappointed in January 2000 when Chrétien's communications director Françoise Ducros had fired "a shot across the bow" by confirming what had been strongly hinted at since the summer of 1999 in an announcement to the caucus that Chrétien would seek a third term.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 243.</ref><ref>Jeffrey, Brooke ''Divided Loyalties'' Toronto: University of Toronto Press, 2010, pp. 337–338.</ref>

Chrétien was due to face a leadership review in February 2002, but the Liberal national executive, which was controlled by partisans of Paul Martin, agreed to Chrétien's request in early January 2001 that the leadership review be pushed back to February 2003.<ref name="Martin-p326">Martin, Lawrence ''Iron Man'', Toronto: Viking 2003, p. 326.</ref> In agreeing to this request, Martin believed that this was the ''quid pro quo'' for allowing Chrétien a decent interval to retire with dignity sometime in 2002, an interpretation that Chrétien did not hold.<ref name="Martin-p326"/>

==== Rebellion and resignation ====

By early 2002, the long-simmering feud with Martin came to a head. A particular concern that had badly strained relations between the prime minister and the finance minister by early 2002 was Martin's control of the Liberal Party apparatus, especially his control over the issuing of membership forms, which he reserved largely for his own supporters.<ref name=":6">Jeffrey, Brooke ''Divided Loyalties: The Liberal Party of Canada, 1984–2008'', Toronto: University of Toronto Press, 2010 p. 367.</ref> In January 2002, Brian Tobin complained to Chrétien that the Liberal Party machinery had been "captured" by Martin's followers to the extent that it was now virtually impossible for anyone else to sign up their own followers.<ref name=":6"/> This posed a major problem for Chrétien as the Liberals were due to hold a leadership review in February 2003. However, it was still quite possible that Chrétien would win the review by a slim margin.<ref>Jeffrey, Brooke ''Divided Loyalties: The Liberal Party of Canada, 1984–2008'', Toronto: University of Toronto Press, 2010 p. 363.</ref>

In January 2002, an incident occurred which was to greatly damage Chrétien's relations with the Liberal caucus. After Chrétien reorganized the Cabinet in late January 2002, Liberal MP [[Carolyn Bennett]] criticised Chrétien at a caucus meeting for not appointing more women to the Cabinet.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 355.</ref> Chrétien exploded with rage at Bennett's criticism, saying that as a mere backbencher she did not have the right to criticise the prime minister in front of the caucus, and attacked her with such fury that Bennett collapsed in tears.<ref name="Martin, Lawrence p. 356">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 356.</ref> In February 2002, reflecting a growing number of Liberal MPs' displeasure with Chrétien, the Liberal caucus elected the outspoken pro-Martin MP [[Stan Keyes]] (who had already openly mused in 2001 about how it was time for Chrétien to go) as their chairman, who defeated pro-Chrétien MP [[Steve Mahoney]].<ref name="Martin, Lawrence p. 358">Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 358.</ref> Chrétien had expected Mahoney to win, and was reported to be shocked when he learned of Keyes's victory, which now gave Martin more control of the caucus.<ref name="Martin, Lawrence p. 358"/>
 
In late May 2002, Chrétien tried to curtail Martin's campaign for the leadership of the party by delivering a lecture to Cabinet to stop raising money for leadership bids within the Liberal Party. At what was described as a "stormy" Cabinet meeting on May 30, 2002, Chrétien stated that he intended to serve out his entire term, and ordered the end of all leadership fundraising.<ref>Jeffrey, Brooke ''Divided Loyalties: The Liberal Party of Canada, 1984–2008'', Toronto: University of Toronto Press, 2010 p. 372.</ref> Martin left his cabinet on June 2, 2002. Martin claimed that Chrétien dismissed him from Cabinet, while Chrétien said that Martin had resigned.<ref name=thestar>{{cite news|last=Delacourt|first=Susan|title=Chrétien memoirs take aim at Martin|url=https://www.thestar.com/News/Canada/article/266641|access-date=March 2, 2012|newspaper=Toronto Star|date=October 14, 2007|archive-date=January 7, 2009|archive-url=https://web.archive.org/web/20090107135914/http://www.thestar.com/News/Canada/article/266641|url-status=dead}}</ref> In his memoirs, Chrétien wrote that he regretted not having fired Martin a few years earlier.<ref name=thestar/>

Martin's departure generated a severe backlash from Martin's supporters, who controlled much of the party machinery, and all signs indicated that they were prepared to oust Chrétien at a leadership review in February 2003. To win the leadership review, Chrétien formed a team in early June 2002 comprising his close associates John Rae, [[David Collenette]], Jean Carle, and David Smith who were ordered to sign up as many pro-Chrétien ("Chrétienist") Liberals as possible for the leadership review.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 381.</ref> The open split, which was covered extensively on national media, increasingly painted Chrétien as a [[lame duck (politics)|lame duck]]. During the summer of 2002, a number of backbencher Liberal MPs associated with Martin started to openly criticise Chrétien's leadership, calling on him to resign now or suffer the humiliation of losing the leadership review.<ref name="Jeffrey pp. 375–376">Jeffrey, Brooke ''Divided Loyalties: The Liberal Party of Canada, 1984–2008'', Toronto: University of Toronto Press, 2010 pp. 375–376.</ref> Chrétien asked Jim Karygiannis, who had been so effective in signing up supporters for him in 1990 to repeat that performance, only to be told by Karygiannis that Chrétien had never rewarded him by appointing him to the Cabinet as he asked for many times over the years, had not even returned his phone calls to set up a meeting to discuss his possible appointment to the Cabinet and that he was now a Martin man.<ref name="Martin, Lawrence p. 383">Martin, Lawrence ''Iron Man'', Toronto: Viking 2003 p. 383.</ref> Karygiannis then called a press conference on July 13, 2002, where he called for Chrétien to retire "with dignity", rather than risk losing a potentially divisive leadership review and avoid having his career end that way.<ref>{{cite news|url=http://www.karygiannismp.com/dignity.html|title=Avoid convention bloodbath former loyalist tells PM|date=July 13, 2002|last=Harper|first=Tim|newspaper=Toronto Star|access-date=July 24, 2006|url-status=dead|archive-url=https://web.archive.org/web/20070929005402/http://www.karygiannismp.com/dignity.html|archive-date=September 29, 2007}}</ref>

After less than half the caucus committed to support him in August 2002 by signing a letter indicating their support for the prime minister in the up-coming leadership review, Chrétien announced that he would not lead the party into the next election, and set his resignation date for February 2004. Martin was not happy with the 2004 departure date, preferring that Chrétien retire at the end of 2002, but considered it better if Chrétien were to retire than having to defeat him at the 2003 leadership review, which would have been more divisive and would have established the ominous precedent of a prime minister being ousted by his own party for no other reason other that someone else wanted the job.<ref>Martin, Lawrence ''Iron Man'', Toronto: Viking, 2003 p. 391.</ref> Due to mounting pressure from the Martin camp, Chrétien no longer saw his February 2004 resignation date as tenable. His final sitting in the House of Commons took place on November 6, 2003. He made an emotional farewell to the party on November 13 at the [[2003 Liberal Party of Canada leadership election|2003 Liberal leadership convention]]. The following day, Martin was elected his successor. On December 12, 2003, Chrétien formally resigned as prime minister, handing power over to Martin. Chrétien joined the law firm, [[Heenan Blaikie]] on January 5, 2004, as counsel. The firm announced he would work out of its Ottawa offices four days per week and make a weekly visit to the Montreal office. In early 2004, there occurred much [[2004 Liberal Party of Canada infighting|in-fighting]] within the Liberal Party with several Liberal MPs associated with Chrétien such as Sheila Copps and [[Charles Caccia]] losing their nomination battles against Martin loyalists.{{Cn|date=March 2025}}