NEWS ANALYSIS : New Canadian Era Dawns With the Demise of Tories : Election: Prime Minister-elect Chretien faces divisive times. He must work with Quebec separatists, rightists.

Canadians woke up Tuesday to a political landscape like none ever known here.

They found a new prime minister at the head of a powerful majority Liberal Party government, the all-but-total disappearance of Prime Minister Kim Campbell’s Progressive Conservatives and the sudden rise to federal prominence of both Quebec separatists and alienated, right-of-center English-speakers from the West.

The Progressive Conservatives, who used to represent the ideological right in Canada, were virtually annihilated Monday night. They kept just two seats, down from 153, in the 295-seat House of Commons, signaling that the traditional voice of fiscal conservatism and a pro-business ethos will be silenced, at least for the time being.

The Liberals, headed by Jean Chretien, claimed 178 seats, although recounts were still in progress in several districts.

There has been little serious speculation so far about the Tories’ regenerative powers; neither they nor any other party in Canadian history has fallen so far in a single election.

The Tories’ destruction was, in part, the result of nine years of limited austerity measures that, although they did not go far enough to please staunch economic conservatives, were tough enough to bring about a lingering recession, 11% unemployment and widespread public disillusionment--even despair--about the country’s future.

In addition, the Tories hurt themselves with gaffes and flawed campaigning. At one point in the campaign, Campbell told surprised listeners that she could not possibly get specific about her economic plan--she was too busy campaigning to develop one.

The epochal changes have left the separatist Bloc Quebecois with more power at a federal level than Quebec nationalists have held in Canadian history. There are undoubtedly divisive times ahead, although an independent Quebec is still not in the cards--not yet.

The situation “bodes very ill for the relationship between the next Canadian government and Quebec voters,” warned Montreal author Jean-Francois Lisee.

“Quebec voters have no stake in Chretien, and Chretien owes nothing to Quebec voters,” he said. “So there’s going to be very little give there, and very little honeymoon.”

Still, even now the Bloc Quebecois has neither the institutional power nor a clear mandate to take Quebec out of Canada.

For Quebec to achieve independence, two other obstacles have to be negotiated successfully: First of all, voters in the province would have to elect a pro-sovereignty provincial government, replacing the current, federalist Liberal regime in Quebec City.

Provincial elections are scheduled for 1994, and the reigning Liberals are vulnerable because their leader, federalist Premier Robert Bourassa, is seriously ill and has said he is stepping down. But polls suggest that Quebecers are, at the moment at least, less willing to cast their votes for provincial sovereigntists than they were for federal counterparts.

And then, even if the sovereigntists did win the next provincial contest, they would still have to call a referendum in the province and sell the voters on secession. The last time Quebecers were offered the independence option, in 1980, they rejected it.

But even if Quebec is not about to break free, that does not mean peace, quiet and harmony are about to spread across Ottawa. On the contrary, as the second-largest party in the House of Commons, the Bloc has the right to open--and set the tone of--the debate held each day in Parliament.

Bloc leader Lucien Bouchard is certain to press for Quebec’s unique interests on most issues--to the extreme displeasure of English-speakers everywhere else in Canada, who are bone-tired of Quebec’s incessant complaints and demands.

“The rest of the country doesn’t want to hear about this, doesn’t want to deal with it,” said Joseph T. Jockel, director of the Canada Project at the Center for Strategic and International Studies in Washington.

That is true in spades of the many Canadians who voted for the Reform Party, which originated as a protest movement of disgruntled English-speakers in Western Canada who believed the federal government was concentrating too lovingly on the wishes of Quebec.

The presence of the Reform Party in the House of Commons, in numbers almost equal to those of the Bloc Quebecois, is likely to polarize the linguistic debate in Canada, said Jockel, who called Quebec’s support for the Bloc “a wake-up call for English Canada.”

Monday’s electoral result has also left Canadians with the unsettling question of whether Chretien has either the political will or the ideological commitment to guide the Canadian economy back to health. He is an experienced deal-maker, but the left-right configuration he will have to work within has been warped in ways that will take time to figure out.

The traditionally pivotal Canadian left, for instance, was all but wiped off the map when the social-democratic New Democratic Party finished a dispiriting fourth. But rightist hard-liners have suddenly appeared in force, in the form of the Reform Party.

The Reform Party is calling for drastic social-spending cuts that go far beyond what Chretien has any intention of doing.

Meanwhile, Monday’s repudiation cost the Progressive Conservatives their official status as a party and their access to government financing--by law the fate of any group that wins fewer than 12 seats in the House of Commons. Luckily for the Tories, one of their two candidates to hold on to their seats was Jean Charest, a popular young Quebecer who served as former Prime Minister Brian Mulroney’s environment minister.

Charest is ambitious, politically astute, fluently bilingual and well liked within what remains of the Tory hierarchy. If anyone can use a toehold in Parliament to help the shattered party rebuild, it is he.

No one doubts that Chretien has the experience necessary to cope with the unprecedented new opposition he will encounter in Parliament. But most analysts believe he will prove unwilling to embrace the fiscal austerity most economists here now regard as essential.

“Unwinding the federal budget deficit must be the main challenge of the new prime minister,” said Peter Morici, professor of economics at the University of Maine and director of Canadian studies there. He and many other analysts believe that it was the late-1960s-through-early-1980s Liberal governments of Pierre Elliott Trudeau that overspent and left Canada with its yawning budget deficit.

Chretien, significantly, held important economic Cabinet portfolios during those years.

“In some ways, it’s justice” that Chretien must now clean up the public finances, Morici said.

Walsh reported from Toronto and Turner from Shawinigan.