ENGAGED IN A FIGHT for their upcoming elections, the Canada's Liberal party has become mired in a series of political embarrassments that now has involved a reluctant U.S. State Department, even while the Martin government grapples with yet another finance scandal.

Problems for the Liberals started early in the campaign, and revolve mostly around the aides to current Prime Minister Paul Martin, who is trying to overcome the stain of the Sponsorship Programme corruption within his party. Scott Reid, one of Prime Minister Martin's advisors in the PMO, lost his temper when Don Martin, of the Calgary Herald, pressed Reid for an interview with his boss during an event at the National Press Club. Reid told the reporter that "Alberta can blow me." Granted, the Liberals didn't count on winning too many ridings (the term for Parliament districts) in the western province, but still. Reid has yet to apologize.

The prime minister's advisors have been just as rough with their own supporters. Engaged in a debate over a Conservative proposal for a per-child daycare tax allowance, Reid told a television audience this money, meant to benefit the working-class Canadians who make up the Liberal base, was just as likely to go towards booze. "Working families need care that's regulated, safe and secure," he said. "Don't give people 25 bucks (a week) to blow on beer and popcorn. Give them child care spaces that work."

Fellow Martin advisor John Duffy seconded the criticism of the working class, telling the same audience that the Conservative plan had nothing to stop parents from spending their money as they saw fit, and not just on beer and popcorn, but on such frivolous family purchases as "a coat or a car or anything."

So Liberal party activists must have heaved a sigh of relief this week when Martin and allies turned away from domestic affairs and returned to attacking the United States on trade and the environment. Liberals are hoping that a dose of anti-Americanism will appeal to Canadian patriotism--despite Martin's promise last election to build a more "mature relationship" with Canada's largest trading partner.

Martin used the recent environmental conference in Montreal to excoriate the Bush administration: "To the reticent nations, including the United States, I'd say there . . . is such a thing as a global conscience and now is the time to listen to it," he told the gathering.

The sudden and sharp criticism brought the reluctant U.S. State Department out for a rare public message of warning. David Wilkins, the American ambassador to Canada, replied that Martin may need to "thump your chest and criticize your friend and your No. 1 trading partner constantly" in order to fight for his own survival, but warned that his words will have a "long-term impact." Martin shot back that he intends to "defend Canada. Period."

BEHIND ALL OF THIS maneuvering is a drumbeat of corruption allegations. The current Liberal finance minister, Ralph Goodale, has come under fire regarding the November 23 release of his policy statement on income trusts. A few hours prior to the release of that long-awaited statement, a few investors made some sudden and unusually large trades that reaped large benefits from the new policy. The Canadian television network CTV reported from several sources that investors heard that the policy statement would come out that evening, even though Goodale's office insisted they told no one about the timing of the report.

One such company, Medisys Income Trust, traded at 3,400 percent of its normal volume, increasing its value 25 percent ten days later. Medisys, it turns out, was founded by Sheldon Elman--who also happens to be Prime Minister Martin's doctor. One of the company's primary investors is Liberal Senator Leo Kolber, who sits on the Medisys board.

No one knows who bought or sold the shares, but the stock went from $10.80 to over $13 by December 9 when, just two days before the Goodale announcement, Medisys had been downgraded by investment analysts to a "negative."

Canadian watchdogs want the Ontario Securities Commission to open an independent investigation to see if insider trading caused the unusual volume of sales on November 23.

Edward Morrissey is a contributing writer to The Daily Standard and a contributor to the blog Captain's Quarters.

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