WASHINGTON (AP) – Canadian Prime Minister Stephen Harper on Sunday portrayed his country’s economy, heavily dependent on exports to the United States, as an increasingly troubled victim of the global recession.

Harper’s Conservative government routinely boasts that prudent financial regulation has inoculated Canadian banks and investment houses against the near collapse that afflicted the U.S. system last year, but he acknowledged in an interview with The Associated Press that growing unemployment was a deep concern.

Harper once predicted Canada would be the first country to pull out of the recession, but the United States’ northern neighbor has seen a dramatic increase in unemployment since the first of the year, much of it linked to contracting exports to the United States.

Canada and the U.S. share the largest trading relationship in the world. More than 70 percent of Canada’s exports go to the U.S., where consumers have heavily cut spending – particularly for automobiles, a key sector of the Canadian economy.

“We’re being dramatically affected by export markets, by precipitous decline in global output and employment, drops in commodity prices,” Harper said. “These are having very real impacts on Canada, impacts that are obviously not entirely within our control.”

As of the February report, Canadian unemployment stood at 7.7 percent, almost a full two points higher than where it was a year ago and the highest in more than five years.

Harper’s government will begin pumping $32 billion into the Canadian economy for capital investment beginning next month, but he said that would only “mitigate short-term effects” of the recession.

As he heads to London on Tuesday for the G-20 summit of the world’s largest economies, Harper said his key message, aside from fixing and regulating the global financial system, would be a plea against countries establishing trade barriers.

“The thing that keeps me up at nights the most are the risks of protectionism,” he said in his suite in Washington’s ornate Willard Intercontinental Hotel.

Should protectionism sweep the globe, he said, that could turn a ravaging recession into a full-blown depression.

As countries battled to save their own economies in the 1930s Great Depression, they threw up trade barriers to save homegrown industries only to accelerate and deepen the global economic catastrophe.

Harper said he believed President Barack Obama knew of those dangers.

“Everything President Obama said indicated he understands the risks there,” Harper said. “It’s the one thing that could be extremely detrimental to the global economy. If we undertake nationalist or protectionist policies, what we essentially will be doing is unwinding global growth and that can only be devastating.”

Obama’s first travel outside the United States as president was to Canada for meetings with Harper on Feb. 19. The new president’s economic stimulus plan raised concerns among U.S. trading partners for including “Buy American” clauses for recipients of government money, but Obama has assured that exiting U.S. trade agreements would not be affected.

Sounding very much like the Obama administration on the auto industry, Harper said the Big Three U.S. carmakers would have to come up with a bailout plan that convinces both Washington and Ottawa. The struggling automakers have major manufacturing facilities in Ontario, across the border from Michigan.

“Before we put large-scale, long-term taxpayer dollars into helping these companies, they and their stake-holders are going to have to make the decisions necessary to insure long-term viability,” he said.

Harper’s travels to Washington on Sunday and New York on Monday for media interviews caused some grumbling among Canada’s journalists, who indicated Harper was avoiding tough questions about the domestic economy.

The prime minister said that was not the case.

“I just gave two major television interviews before I left Canada, I’m also doing some Canadian media while we’re in Washington, so I think we’ve got a good balance,” he said.

“But look, as I’ve said, it’s a global economy with a global problem and a global solution and the prime minister of Canada must communicate globally,” Harper said, declaring that Canada had a good story to tell, including one about having the strongest banks in the world.


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