Interview with Canada's former-PM Chretien

Canada's former Prime Minister Jean Chretien gives Reuters an interview in Ottawa November 15, 2011.

OTTAWA (Reuters) - Jean Chretien, Canada's prime minister from 1993 to 2003, sat down with Reuters in his law offices to describe how his Liberal government eliminated the country's deficit in the 1990s, a dramatic fiscal turnaround that some other countries now seek to emulate.

Here are highlights from that interview.

ON CUTTING THE DEFICIT

"I said to myself, I'll do it. I might be prime minister for only one term but I'll do it."

"Right at the first cabinet meeting I said this had to be done ... Everybody knew that they had to face the music and they did it. They had no choice. There was no great debate. I had made my view clear."

"There would have been a day when we would have been the Greece of today."

"Promising miracles in public life is very dangerous. I had enough experience to know that."

"After we balanced the books we decided that the surplus was to be divided in two categories. One half for programs, the other half was divided between tax cuts and payment of the debt."

EXPERIENCE AS FINANCE MINISTER IN 1970s

"I had been in the cabinet with (Prime Minister Pierre) Trudeau. I had a nickname at that time, I was known as Dr. No."

"I remember one day I went to see Trudeau with the minister of finance of the day ... We wanted to cut C$500 million, it was a lot of money ... I was a boy scout type and I cut double. I cut more than a billion dollars because I wanted to prove myself, so I knew what it was about."

THE U.S. DEFICIT DEBATE:

"My father was a blue-collar worker and he knew that two plus two is four. And he will understand that you can't have two wars and a reduction of taxes at the same time."

"I watched the (Republican) debate on TV, they talked about who will cut taxes more than the others, when they can't even pay the rent at the end of the month. You go to any guy on the street, they'll understand that."

"The system is better in Canada than the United States because the prime minister runs the government and he also runs the House of Commons. If he fails in the House, there's an election."

BRITAIN'S AUSTERITY PLAN:

"I told them they made a mistake (by exempting some programs from the budget cuts)."

"I remember talking with a very senior person in health who said to me privately, 'I'm not very happy that I'm exempt' ... He needed the same pressure as the others."

"When I was talking in London a year ago they asked me why I didn't have any big strikes (when the government made major spending cuts). And I said, yes, I was wondering too. But one day I asked the heads of the unions, why didn't you guys go and strike? And I don't know if it was an insult or a compliment but they said 'we knew you would never change your mind.'"

DECISION NOT TO DEREGULATE BANKING IN CANADA

"One of our great successes in Canada was the banking system. This was probably the most important decision that my government ever made. And my cabinet was divided on that ... I had my reasons. My experience told me not to do it, not to permit the mergers and deregulation."

"It's one of the problems of today. The market makes too many decisions based on rumors, based on gossip. That makes me uncomfortable and they're playing a bigger role every day because of the better communications today."

"These guys with red suspenders in New York who have never been out of Wall Street. They're the ones who created the problem in 2008."

LIBERAL VALUES:

"It's part of Liberal values to be responsible. It's because you're responsible that you're preoccupied with poverty. But you can't cure poverty if you don't have a government that is financially healthy enough to do it."

(Reporting by Louise Egan and Randall Palmer; editing by Janet Guttsman and Martin Howell)