WI Jean Chretien loses St-Maurice, 1997?

In the 1997 election Chretien came uncomfortably close to losing his seat of St-Maurice to the BQ and their star candidate. Later it would be discovered that the money funnelled to that riding was illegal, but at the time no one knew. Let's say that things go worse, the Liberals win 7-8 less seats and thus a minority. One of those seats is Chretien's. The most recent precedent is Mackenzie King, who was twice defeated in his own riding as PM (York North, Prince Albert) and sought reelection in another riding without resigning. Would Chretien do the same or would the humiliation be too great? I highly doubt he'd cede willingly to Paul Martin, though at that stage Martin's covert rebel campaign was just about to be seeded.
 
I'd wager that one of the Chretien Liberals in a super safe riding would stand down in short order for Chretien to regain his seat in a by-election just like what happened with King. However, like you said this is going to widen the chasm within the Liberal Party much earlier than OTL making their 1997 minority mandate a much less stable period than OTL.

Now obviously their most likely/historical choice for a coalition would be the NDP. But I can't help wondering what it would look like if the Liberals and the PC formed a coalition....
 
A formal coalition involves obligations on both sides that neither Charest nor Chretien would be willing to undertake, including PCs in the Cabinet. (There has never been a formal coalition in Canadian history) Perhaps a non-aggression pact on matters of confidence like Martin had and Harper currently has with Layton, but the PCs are going to bleed their centrist voters to the centrist Liberals, the conservatives having mostly gone to Reform or sat out. I don't see how that works, when Chretien can call another election in late 1998 or early 1999. Butterflies could well mean that Martin takes over in the late 1990s if he keeps a lid on his machinations, as Chretien notes in his memoirs. It was trying to force Chretien out rather than letting him go on his own steam (to quote Dief) that sparked the Liberal civil war if Chretien is to be believed. I don't have Martin's memoirs, so I don't know his side of the story.

NDP: Alexa McDonough is not going to team up with the deficit-hawkish, Third Way Liberals who are more conservative than the PCs and second only to Reform.
 
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