Canada's Hub for International Affairs

The Think Tank

Next Steps on Energy

Michael Howlett | July 4, 2014

Following intense debate over Canada’s use of its own natural resources and the conduct of its mining companies abroad, the Canadian International Council is curating a project on natural resources over five weeks to examine Canada’s future policy environment for domestic resource extraction, energy security, and international regulatory standard-setting. The project will glean its insights from a variety of stakeholders from government, the private sector, and nongovernmental organizations in order to present a number of perspectives to better explain the challenges that we face moving forward and to delve into some of the controversial aspects of international, national, and provincial politics.

Below is the seventh response from Professor Michael Howlett and Nigel Kinney of Simon Fraser University the immediate steps that Ottawa should take to lessen its reliance on natural resources and fossil fuels. More …

Unlike many countries, Canada is in a very favourable position vis à vis its internal energy uses and its supply of energy resources. In this sense, Canada is similar to countries like Norway or Qatar—or even Saudi Arabia and Venezuela—in that ‘reliance’ doe not mean, as it does in countries like the Ukraine, Germany, China or Japan, being at the mercy of foreign suppliers like Russia or Iran. Rather ‘reliance’ here generally concerns (a) reliance on energy exports to generate wealth and (b) the mix of energy types consumed domestically and the impact this mix has on other goals and areas such as climate change or environmental protection.

The first issue has been addressed in the previous questions. While it may be possible to continue to export large amounts of natural gas, oil, and coal in a responsible way that minimizes climate change impacts from mining and transportation and even offsets aspects of their use in other countries through, for example, tree planting and forest preservation and other carbon neutralization techniques, none of this is being done by the current Harper government and little hope is held out for positive progress in this direction without a change in government.

On the second issue, there are two large steps Canada can take to alter the existing mix of internal use. The first is to promote off-fossil fuel development through greater investment in renewable resources including wind, solar, geothermal, and hydro-electricity combined with efforts to conservation in key areas such as home heating and residential and commercial use. Many provinces, led by their provincial utility companies have embarked on such projects and have enviable track records but have received little help, if any, from the federal government. By the National Energy Board’s most recent figures, Canada’s electricity production is trending in the right direction with a majority of new projects now coming from ‘green’ sources such as wind, solar, geothermal, and hydro (nuclear projects being a more controversial aspect of this mix). This is in sharp contrast to oil production, which has increased exponentially over the past decade with even larger increases projected over the next 20 years. Much of this oil production, of course, is strictly for export, and is never fully refined, let alone used, while on Canadian soil.

The second and equally vital step would be for Ottawa to enact a federal carbon trading or taxation program to curb both carbon production and consumption. Again, the provinces have led the way in this area as a carbon tax program has been enacted in both British Columbia and Quebec with varying degrees of success. Quebec’s tax has been viewed as mostly unsuccessful, which has been attributed to its tax being too minimal to promote off-fossil fuel use. British Columbia’s carbon tax, on the other had, has been largely effective in reducing emissions while redistributing much of the resulting revenue back to individual consumers in a ‘win-win’ scenario for both citizens and the environment. Indeed, British Columbia’s provincial tax could be used as model for the federal government to curb the nation’s reliance on natural resources. An improvement to this program would see a larger portion of the revenue funneled towards green energy sources or other programs aimed at reducing consumption of natural resources as opposed to returning all of the funds to consumers.

A second, related option would be create a cap and trade program similar those created in the United States (to address the problem of acid rain), the EU, and recently in Japan. Cap and trade systems usually involve a greater amount of planning and regulatory involvement to implement but have proven to be equally effective to a carbon tax in reducing emissions while generating funds which in this case go to companies which reduce emissions by the greatest amount. The implementation of a carbon tax/cap and trade system combined with a shift of investment away from oil and natural gas towards renewable energy would put Canada back on the path toward a sustainable future—at least as far as its domestic consumption is concerned.

Clark Talks Old Days of Canadian Diplomacy, Looks to the Future

Former PM calls for new Canadian partnerships in trade and innovation
Louis Turcotte | July 3, 2014

Joe Clark may not have spent as much time as he wanted in the Prime Minister’s chair, but Canada’s youngest prime minister can still channel the statesman inside him when he wants to. His detractors didn’t get the last word when he left politics a decade ago. He is as eloquent as ever, as he showed guests of the Canadian International Council’s National Capital branch on June 17, 2014.

“We are, in this country, inescapably international,” Clark told a packed room at Ottawa’s Sheraton Hotel. “And what’s interesting is that we are becoming more so, through trade, through the transforming force of immigration, through the very nature of the modern world.”

Building on Canada’s fabled diplomatic past, he outlined his prescription for a stronger Canadian presence on the international stage. More …

“We are in the middle of a new world,” said Clark, “[and] in this new world, Canada has to assess with clear eyes what exactly our assets are, what will make us strong, what can allow us to contribute more than we might have in the past.”

Clark is an unapologetic member of the old guard of Canadian international relations. He recalls a country that punched far above its weight in the world, one that held significant influence in matters of global importance in the past. He extolls early Canadian emissaries who contributed to the creation of NATO, spurred on the General Agreement on Trade and Tariffs (GATT), and helped write the Universal Declaration of Human Rights.

But Canada faces a very different world today.

“For a long time, we were able to ride on the strength of [our] hard power assets,” said Clark. “We became a member of the Group of Seven for one principal reason: at the time (after WWII), we had the seventh largest GDP in the world, and that was our ticket into a cockpit that allowed us to have an influence over a wide range of international issues, economic and otherwise.”

“We will never have the seventh largest GDP in the world ever again.”

This is not the end however, but a chance to remake Canada’s international presence anew, according to Clark.

First and foremost, Canada will need to reexamine its international relationships.

“[We have to recognize] that the world has changed, and the people with whom we speak regularly should consequently change, so it affects our capacity to understand and respond to, and lead, small-l lead, in international affairs,” said Clark.

Indonesia, South Korea, Turkey, and Mexico: all fast-growing economies with which Canada has yet to engage seriously in terms of trade. To Clark, this is but a precursor of the full list of countries Canada should be approaching for closer relations.

“We have to balance our natural pull to traditional allies. We have to keep our traditional alliances in place, but not be confined by them, and reach beyond them,” said Clark.

The former prime minister also called for increased Canadian cooperation with non-state actors. While evolving technologies brought on a significant decrease in deference towards traditional bulwarks of influence and truth, civil society may yet hold the key to Canada’s international aspirations.

“We all know that power is shifting in the world, and what is interesting about it is that power is not only shifting among states, but between states and non-state actors,” sais Clark.

“The Gates Foundation is far more innovative than most governments. Greenpeace has more influence on public policy than many national governments do. Non-governmental organizations of all kinds play an increasing role in the way the world works and is shaped.”

And Canada, he said, would do well to consult them in future partnerships, if not heed their advice.

Climate change, Africa, ASEAN and Iran; there is no subject to which Clark does not apply his insights on international affairs. His wisdom touches on every subject, and never ceases to impress critics and supporters alike.

One thing is certain: Joe Clark may yet have the last word.

Watch Joe Clark’s address to the Canadian International Council, An Evening With Joe Clark.

Rethinking post-Mosul Iraq

Marina Ottaway | July 3, 2014

“There is an Iraq before Mosul and an Iraq after Mosul,” officials of the Kurdistan Regional Government (KRG) have been repeating for the last several weeks. And they are right. The take-over of most Sunni areas of Iraq by ISIL (or by IS as it now prefers to be called) represents a paradigm shift. The old Iraqi state no longer exists and it cannot be restored in the same form.

Nowhere is the extent of the change more evident than in Kurdistan, of course. In the space of a few days, the KRG was able to realize its long-term goal of annexing the city of Kirkuk, its oil fields, and other Kurd-inhabited areas around its perimeter. De facto, Kurdistan is no longer part of Iraq. As officials in the region point out, Iraq is hardly a neighbor any longer. Kurdistan only shares a fifty-kilometer border with territory Baghdad actually controls, but a one thousand-kilometer border with IS-held territory. With control of the old Kirkuk oil fields and the new ones sprinkled all over (as well as a direct pipeline to Turkey,) Kurdistan is economically viable. More …

Change has been dramatic in other parts of Iraq as well. Large parts of the Sunni-majority provinces are now part of the caliphate proclaimed by IS on June 29, 2014. The caliphate as a functioning state is a figment in the imaginations of IS leader Abu Baqr al-Baghdadi, but it is no fiction to note that Baghdad no longer has a say in those provinces, that governors and members of the provincial councils have sought refuge elsewhere, and that the Iraqi government is no longer paying salaries of government employees. It is also true that urban centers are mostly controlled by a combination of IS cadres, tribal leaders, and former Baathists, unless they are battle zones like Tikrit. Finally, the border between Syria and Iraq has ceased to exist because IS controls all of the border posts.

The fighting so far has not touched the Shia majority provinces in the south of Iraq. Oil production and exports are continuing unhindered although some international companies have started to thin out personnel. There, provincial councils and governors are still in charge. But the balance of power among Shias has been affected by Maliki’s appeal to the dormant Shia militias to mobilize once again to protect Baghdad and the Shia holy places and provinces. Whether or not the militias can help the army stop IS, they are a new political force to be reckoned with. The largest of the militias, the Mahdi Army of Moqtada al-Sadr, repeatedly challenged the government between 2004 and 2008 and was only brought under control, and officially disbanded, with the help of U.S. troops. It is difficult to imagine that this time the Mahdi Army and other militias will battle IS under the command of Iraqi army officers and then quietly disappear again.

Rethinking assumptions in post-Mosul Iraq

Many of the assumptions that have guided the international community’s Iraq policy since 2003 need to be re-examined in light of the new realities. Abandoning some of these assumptions is difficult because it also means acknowledging the failure of what the United States and other countries have tried to do for over a decade. Here are the five assumptions they need to be reconsidered most urgently.

Assumption 1: There is no purely military solution in Iraq, thus the formation of an inclusive government is key.

It is true that there is no purely military solution and that the narrow-based and corrupt Maliki government will never provide a political incentive for all Iraqis to come together against IS. But the assumption that a sufficiently inclusive government can be produced by the parties that competed in the April 30 parliamentary elections and have done nothing but squabble since needs to be discarded. The formal democratic process in Iraq has always been incredibly slow and ineffective and this must also be addressed. Above all, at present the political parties do not represent the political forces that need to be part of a coalition that might keep the country together or at least prevent IS from becoming permanently implanted. Distasteful as this may be, such political forces include, in addition to the various political parties, former Baathist officers, Sunni tribal militias, and Shia militias. Thus, the intense politicking taking place in Iraq concerning the choice of a new prime minister, president and speaker of parliament, let alone the forthcoming fights about which party controls which ministry, is largely irrelevant to producing an inclusive coalition.

Assumption 2: Maintaining the unity of Iraq is paramount to protecting the interests of Iraqis, the stability of the region, and thus the interests of the United States and its allies.

At this point, both the stability of the region and the unity of Iraq are fiction. The question that needs to be asked is whether stability could be restored more easily by trying to force unity on Iraqis at all costs or by accepting the post-Mosul reality. It is the same dilemma that confronted the international community in Yugoslavia and then in Bosnia. As in the Balkans, there are no easy or straightforward answers, but it is time to start thinking outside the unity box about what kind of architecture would serve everybody’s interests best—or least badly.

Assumption 3: Independence or autonomy within a loose confederation for Kurdistan is not a realistic option; no matter how much Kurds want it. Turkey will oppose it and Kurdistan is dependent on financial transfers from Baghdad.

Such assumptions are based on outdated information. Turkey’s position has evolved incredibly fast and so has Kurdistan’s financial situation, thanks to the rapid growth of the oil and gas industries. Presently, denying the KRG a pathway toward statehood is unrealistic if they are to play a role in removing IS from power in western Iraq.

Assumption 4: Sunnis are not interested in autonomy, they are the ultimate Arab nationalists and defenders of Iraqi unity.

Sunnis are not unanimous on this point, and there are plenty of indications that many are reconsidering the benefits of unity. The realization that Sunnis are a minority, just like the Kurds, and that by choosing autonomy Kurds have been more successful in protecting their interests has caused a political recalculation. Before the crisis, provincial councils of several Sunni-majority provinces voted in favor of forming semi-autonomous regions similar to Kurdistan and many more are likely to now given recent developments.

Finally, the most important assumption (number 5) to be discarded is that the “pre-Mosul Iraq” still exists.

It’s Time for Canada to Leave the Monarchy

Paul Heinbecker | July 2, 2014

It is time to prepare to turn the page on Buckingham Palace. Fealty to the British monarchy is an anachronism and a drag on Canadian foreign policy that confuses many and delivers little. In cutting ties we would not have to disrespect the royal family or disavow our own history; we would just have to acknowledge how far we have evolved as a society since the sun set on the British Empire and how far apart we and the monarchy have grown, and will continue to grow apart. More …

For most of the past half century, I had the rare privilege of serving in the Foreign Service of our unique country. During that service I came to see ourselves as others see us, and the experience was gratifying. As Ambassador to the United Nations, whenever I took the microphone in the Security Council or General Assembly I was given a respectful hearing because of the people and their values that I formally represented, and because of the constructive foreign policy carried out in their name. Canada was regarded as the most successful country on the planet in integrating foreigners into our society and making diversity a strength, all the while safeguarding the rule of law, protecting the interests of our minorities, albeit with some regrettable lapses with respect to aboriginal Canadians, and promoting progress abroad. As Prime Minister Mulroney’s foreign policy adviser, I saw the high regard with which Canada was held overseas in fighting Apartheid in the Eighties and in promoting German unification in the Nineties, often in conflict with London. As Canadian Ambassador to the UN, I saw the respect Canada enjoyed when Prime Minister Chrétien withstood British (and American) pressure to join in the catastrophic 2003 Iraq war.

In international relations, fealty to the British monarch delivers us precisely zero benefit in the conduct of Canadian foreign policy and at the same time associates us with a checkered British colonial legacy. Under the Crown, Britain’s accomplishments include standing up to authoritarianism and fascism in two world wars and giving the world its most common voice. But historic wrongs were committed in the name of the Crown, errors that have become part of the political DNA of many ex-colonies and integral to their national identities, not just a dim, distant memory as it is here. British and other European colonization carved up Africa with little reference to the people who lived there; the consequences are still felt today. The lucrative UK-driven opium trade addicted millions in China in the 19th Century (Source: History of the East India Company, British Library) to the benefit of the British Exchequer. In India, when a Century of British rule ended in 1947, life expectancy was just 31 years, less than half what it was in the UK then and half of what it is in India today [K. Sujatha Rao, former Secretary of Health and Family Welfare, Government of India]. Literacy was 12%, a sixth of what it is now [Census of India, 2011]). The Sykes-Picot Treaty, the self-serving British-French redrawing of the map of the Middle East after World War I, brought the peace to end all peace and remains a major factor of instability in the seemingly perpetual war that creates so much misery there and threatens to engulf us, as well.

The Monarchy adds celebrity and lustre to Britain’s reputation but not to ours (ask any American or African which country William will be King of). It generates confusion in the minds of bemused foreigners what our relationship with London actually is, why we do not have a Canadian head of state, why we would want a British King and whether we really are independent, necessitating endless explanations that the Crown is a kind of legal convenience and historical artefact in Canada, even a convenient fiction. At the front door of our foreign ministry in Ottawa, foreign visitors encounter a huge portrait not of John A. Macdonald or Robert Borden or even Lester B. Pearson, for whom the building is named, but of Queen Elizabeth, resplendent on the recently named “Sovereign’s Wall’’. At every Canadian mission abroad, portraits of the Queen adorn the lobbies, necessitating further explanation for the benefit of confused foreigners.

The royal family is under no illusion about what they are—British—where they live—Britain– and who they represent —the United Kingdom. When I was posted to Bonn in the Nineties Queen Elizabeth paid an official visit to Berlin. For protocol reasons apparently, ambassadors from Commonwealth countries were convened to Berlin from Bonn, at their countries’ expense, to greet the Queen. In addition to the political purposes of her visit to Germany, the British emphasized that the Queen was visiting Germany to promote the interests of British industry. Because there were Canadian firms in Germany that could use some high level support, because she was formally our Queen too, as Monarchists never tire of affirming, and as my credentials in fact said that it was in her name and on her behalf that I was accredited as the Ambassador of Canada to Germany, I decided to test how much all this meant in practice.

Not much, as it turned out. I drew up a list of Canadian firms and asked an Aide at the Photo-op (only the British Ambassador was welcome to speak with the Queen) whether while promoting UK business, the Queen could perhaps put in a good word for Canadian business as well. It was evident from his startled reaction that such an idea had never occurred to him. Years after the Berlin visit, after Kate and William had been given a rapturous welcome to Canada, they headed to Hollywood, where it was announced they would be promoting British artists. Plus ca change.

The same young royal couple named their first born, the inheritor of “our” throne, in part after Lord Louis Mountbatten, the Vice admiral who planned the raid on Dieppe in World War II, the bloodiest disaster in Canadian military history in which 60 % of the force was killed, wounded and captured in one day. Today’s Canadians were too distracted by the couple’s celebrity to comment or too polite or too little aware of our history.

Elizabeth has a long connection to Canada, forged initially in the desperate days of World War II and maintained through a score of visits here since. She takes a significant and sympathetic interest in our country and enjoys the respect of many Canadians and the admiration of most. The next royal in line for “our” throne from the semi-dysfunctional Windsor family, however, Prince Charles, checks none of those boxes. His visit to Canada this spring went virtually unnoticed by Canadians and his eventual ascent to “our” throne has been banished from the consciousness of his not so loyal subjects here. Nor is it sure that when he finally gets the keys to the Royal Rolls his interest in Canada will be as benign as his mothers’.

The link to the monarchy notwithstanding, in the 147 years since Confederation Canada has progressed in virtually every way possible—we are richer, healthier, safer, more populous, better educated, better connected, and more capable than ever before. Canada is one of a small handful of states capable of helping make the world a better place as General Romeo Dallaire has recently observed. That is the Canada that Canadians have created and it is the Canada that the vast majority of our approximately 10 million immigrants since colonialism ended in the mid-Fifties have chosen to join. It is not the Canada of monarchical nostalgia.

Yet, when we celebrate the 150th anniversary of Confederation in 2017, an asterisk will remain on Canadian independence. How do we bring this anachronism to an end when we are manacled to the Crown by a constitution that requires the agreement of all of the legislatures of the provinces and both Houses of the federal parliament to change? We should start by treating the Governor General as the de facto Head of State in all ways that the constitution does not actually preclude. In the current incumbent, as with his predecessors, we are fortunate to have a highly regarded, exceedingly successful and distinguished bilingual Canadian who already personifies the values and aspirations of Canadians and Canada better than any royal, including Elizabeth, ever could. He has even played hockey. We should simply ask him to perform the ceremonial roles of Head of State. This would include travelling abroad to represent Canada as de facto Head of State on all matters of state for example anniversaries of D Day, and to promote non-partisan Canadian interests such as Canadian education (and hockey) while abroad. At home he would acquit himself of all regal duties not specifically required by law that the Monarch herself do. His title would remain, simply Governor General, out of deference to our history.

Further, we should amend the Citizenship Act to change the Oath of Citizenship to require new Canadians to swear allegiance not to “to Her Majesty Queen Elizabeth II, Queen of Canada, Her Heirs and Successors “ but to Canada, and to the Canadian Constitution and rule of law. And when the day comes that Canadians are ready to change the Constitution in order to reform the Senate, we should change the process for selecting a head of state while we are at it. There are plenty of models to choose from; for example, the 1050 elected members of the federal parliament and legislative assemblies across the country could be formally empowered to elect a Governor General from among the members of the Order of Canada, for a fixed term. All powers vested in the Monarch would be invested in the Governor General. In the meantime, we should prepare for that day by taking down the portraits of the royal family and curtailing, not encouraging their highly political and not inexpensive visits to Canada. Last and not least we should elect the government that will make these changes.

This piece also appeared in and the Globe and Mail.

Don’t Freeze Out Emerging Markets From Currency Swaps

Brett House | July 2, 2014

On the 70th anniversary of the July 1, 1944 Bretton Woods conference – the landmark gathering that created the International Monetary Fund (IMF), the World Bank and later the World Trade Organization (WTO) – it’s hard to know whether it’s the best or worst of times for multilateralism.

On one hand, as American political scientist Daniel Drezner details in his recent book, The System Worked, international co-operation trumped fear, nationalism and protectionism in response to the 2008 financial crisis and rescued the world from a 1930s-style economic death spiral.

On the other hand, more recent events belie any notion of a golden age of internationalism. The WTO is being undermined by mega-regional trade deals and protectionism is on the rise. Emerging markets are getting side-swiped by the end of quantitative easing. Europe remains consumed with its own existential problems, while Southeast Asia, the BRICS and Latin America consider regional alternatives to the IMF.

No wonder U.S. president Truman once quipped that he was fed up with two-handed economists. More …

Yet, one of the biggest complications for Bretton-Woods multilateralism goes largely unnoticed: a new web of currency-swap lines between the world’s major central banks.

A swap between central banks allows them to exchange their currencies at prevailing exchange rates with an understanding that they’ll reverse the swap at a predetermined rate at a fixed future date. A country in distress can fire up its printing press, mint some of its own money, swap it for a stronger currency, and use these dollars, euros or pounds to service its debt or pay for imports.

During the 2008 crisis, the so-called C6 – the U.S. Federal Reserve, the Bank of England, the ECB, the Bank of Japan, the Swiss National Bank, and the Bank of Canada – created a network of bilateral swap agreements to ensure they would be able to draw on each others’ funds in the advent of a liquidity crisis. In 2013, the C6 moved to make these arrangements permanent.

That’s great for them, but it’s as if the cool, rich kids are freezing out the nouveau riche strivers, the smaller nerds and the classmates from the wrong side of the tracks.

Left to its own devices, the rest of the world has to self-insure against sudden droughts of liquidity by accumulating vast foreign exchange reserves and building competing regional arrangements.

Between 1996 and 2013, emerging market reserves soared from 9 to 27 per cent of their collective GDP. China’s hoard is a whopping $3.8-trillion (U.S.): 41 per cent of its GDP and twice the size of Canada’s economy.

Every excess dollar held in reserves is a dollar that could have been used to pay down debt or drive investment. IMF staff estimate that excess reserves cost emerging markets around 0.5 percentage points of growth each year during the first decade of the 2000s.

The cheaper option – exploiting economies of scale by pooling reserves amongst the IMF’s 188 members – also gets undermined and, along with it, the IMF’s efforts to anticipate and prevent future crises.

Furthermore, when large economies intervene in currency markets to acquire rainy-day funds, it’s nearly impossible to distinguish between countries accumulating reserves for self-insurance and others acting to depress the value of their currencies and make their exports cheaper. Either way, other small, open economies with flexible exchange rates, such as Canada, get hurt.

Left out of the C6 and rocked by the “taper tantrum” as the U.S. Fed slows its asset purchases, some emerging markets want to channel central bank swaps through the IMF. Canada should join them.

During the IMF-World Bank’s spring meetings in April, Singapore’s Tharman Shanmugaratnam, chairman of the IMF’s highest governing committee, called for “quick assistance, quick liquidity at times of crises to well-managed countries without conditionality.” Implicitly, it was a call for a very short-term IMF lending window to cover three to six month liquidity needs: in short, a swap.

India Reserve Bank Governor Raghuram Rajan more explicitly noted that existing swaps could be moved into the IMF, thereby spreading associated credit risks more widely and dampening the political pressures that weigh on bilateral and regional arrangements.

The prospect of new IMF financing raises fears that incentives for countries to implement good policies could be weakened. Indeed, the money would have to be of sufficient size and with few strings attached: the limits on past IMF swap-like facilities, such as the Short-Term Liquidity Facility, were too tight and they were eliminated for lack of use.

But any new IMF lending facility would be available only to countries with decent track records and it would provide financing for no more than six months. That’s enough time for markets and the IMF to assess whether a country faces a liquidity hiccup or more profound problems that require a traditional IMF program and debt restructuring.

Instead of the IMF committing upfront to huge, balance-sheet busting lending programs that pay off private creditors and saddle crisis-riddled countries with even more inflexible official debt, as happened in Greece, a “wait and see” approach with a short-term IMF swap would allow the costs of fighting a crisis to be shared more equitably between private and public creditors.

That’s a win on three fronts: the international system gets stronger; the costs to the IMF (and Canada) of fighting future crises get reduced; and private lenders get an incentive to stop overlending to marginal countries.

The power of C188 trumps the exclusivity of the C6.

Canada’s Long Legacy of Multilateral Sustainable Development

Andrew Grant | June 27, 2014

Following intense debate over Canada’s use of its own natural resources and the conduct of its mining companies abroad, the Canadian International Council is curating a project on natural resources over the next five weeks to examine Canada’s future policy environment for domestic resource extraction, energy security, and international regulatory standard-setting. The project will glean its insights from a variety of stakeholders from government, the private sector, and nongovernmental organizations in order to present a number of perspectives to better explain the challenges that we face moving forward and to delve into some of the controversial aspects of international, national, and provincial politics.

Below is the sixth response from Professor Andrew Grant of Queens University discussing Canada’s role in UNFCCC process and its impact for our local natural resource strategy. More …

Canada has a long legacy of seeking to promote economic develop goals around the globe via bilateral and multilateral aid programs as well as active participation in and financial contributions to intergovernmental organizations. When ‘sustainable development’ began to enter the lexicon of development agencies as a result of greater concern for the environment in the 1980s, Canada was a global leader. For instance, the 1987 Montreal Protocol sought to reduce (and later eliminate) chlorofluorocarbons (CFCs) in the atmosphere. Building on the momentum of the Montreal Protocol, Canada was one of the first countries to ratify the United Nations Framework Convention on Climate Change (UNFCCC) in December 1992. Throughout the 1990s and well into the 2000s, Canada was able to continue to exert its influence as a ‘middle power’ on the world stage in order to help provide a variety of global public goods ranging from protecting the environment to prohibiting the use of landmines to preventing the trade of conflict diamonds. While the term ‘middle power’ may not have achieved official adoption in government circles, it was an accurate description of Canada’s active role in global discussions to provide global public goods that in turn promoted human development.

In 2006, Canadian foreign policy began to exhibit a change of priorities. On the one hand, Canada’s support for the eight Millennium Development Goals (MDGs) continued, with particular emphasis on reducing child mortality and improving maternal health (number four and five on the list, respectively). One of the key outputs promulgated during the June 2010 Group of Eight (G-8) summit meetings in Muskoka, Ontario, Canada, was the ‘Muskoka Initiative’, which generated a total commitment of $7.3 billion towards improving the overall health of women and children. On the other hand, Canada has either tempered its support for or withdrawn from other global governance initiatives (i.e., the Kyoto Protocol in December 2011). Despite its early leadership in helping to establish UNFCCC more than two decades ago, Canada’s withdrawal from the attendant Kyoto Protocol sends a clear signal that the government lacks confidence in the efficacy of the UNFCCC process. On balance, we can expect Canada to build on the good will and political capital gained from its pivotal leadership roles on conflict diamonds (e.g., via the Kimberley Process) and improving the health of women and children (e.g., via the Muskoka Initiative) to continue to lead global discussions that seek to provide global public goods that are related to development. However, as regards sustainable development and environmental issues within the UNFCCC process more specifically, it is highly unlikely that Canada will take a leadership role—at least in the near future.

Principles and Prejudice

Foreign policy under the Harper government
Gerd Schönwälder | June 26, 2014

This essay was originally published by the Centre for International Policy Studies.

Few would dispute that the foreign policy of the Harper government constitutes a decisive break with that of its Liberal predecessors. Gone is the Canadian penchant for dialogue, negotiation and compromise, which were formerly expressed in decades-long support for multilateralism, the search for fair and equitable solutions to the world’s problems, and such Canadian-inspired institutions as international peacekeeping. Instead, the Harper government sees the world as divided between friends and foes, enthusiastically embracing the former but refusing to “go along” just to “get along” with the latter. Billed as more “principled” than before, Canadian foreign policy has acquired a much sharper edge, taking sides (as in the Israel-Palestine conflict), putting more emphasis on the use of force (as in Afghanistan), and sometimes obstructing (as opposed to facilitating) key international negotiation processes, particularly around climate change. More …

Yet despite these differences, the past and present perspectives have important things in common. Both political camps have stood up for what they considered to be core Canadian interests abroad, but more importantly, interest calculations have never been the sole driver behind their respective strategies. Rather, both Conservative and Liberal foreign policy makers have been influenced—often quite strongly—by their underlying values, ideologies, and belief systems. As such, both variants are examples of a value-based foreign policy, which can be distinguished from purely interest-driven, so-called ‘realist’ versions. Values, albeit sharply diverging ones, are critical drivers behind both Conservative and Liberal foreign policy making.

Since values are rooted in personal and political preferences, it is no surprise that critics have disagreed with the Harper government’s foreign policy U-turn, with some calling the resulting policies “bitter” and “small-minded”. But aside from such disagreements over what values exactly should guide Canadian foreign policy making, there are other pitfalls in value-based foreign policies.[1] For example, they can become overly zealous, as sometimes seen in U.S. foreign policy (most recently its ill-fated campaign to forcibly install democracy in Iraq). Such campaigns are rarely successful and often—Iraq being a case in point—lead to huge additional costs and other entanglements. Countries lacking the overwhelming military force of the U.S., including Canada, can fall into a similar trap by adopting an overly rigid moral attitude towards their adversaries. Such an attitude can quickly degenerate into empty grandstanding and a net loss of influence on the international stage if remaining avenues for dialogue and negotiation are cut or drastically reduced.

A further problem arises when the principles and standards that inform value-based foreign policies are applied selectively, creating the impression that individual countries are measured against different yardsticks. At best, this will undermine the credibility and persuasiveness of those holding and promoting the respective values—be it democracy, human rights, the rule of law or religious freedom—opening them up to accusations of playing favourites and not being fully committed to these values themselves. At worst, it will provide support to those that see any normatively-based foreign policy merely as a sham and a cover for other more self-interested foreign policy goals, especially the promotion of economic and strategic interests. Such accusations have been levelled at the U.S. for a long time but others, including Europe and Canada, are not immune. Consistency and even-handedness are therefore essential ingredients to any value-based foreign policy.

To avoid these and other pitfalls, and to successfully promote normative positions in the international arena, governments need to ensure that their foreign policies pass three critical tests:

  • First, the values that these policies are based on need to be clearly stated; better even, they should be spelled out formally, such as in a foreign policy statement or a government white paper. Such clarity is both indispensable to ensure government accountability and necessary  in order for citizens in democratic societies to give informed consent to their government’s external conduct.
  • Second, there must be effective means for advancing these values in the international arena. These have to be made explicit, including by identifying (or creating) specific policy instruments, by setting aside the necessary budgetary resources and by securing buy-in from key constituencies. Failing that, a value-based foreign policy is quickly reduced to empty statements of principle.
  • Third, the standards and principles underlying a value-based foreign policy need to be applied transparently and impartially, including when establishing compromises and trade-offs between value-based positions and other vital foreign policy interests. Such balancing of competing goals is inevitable in any country’s external affairs, but it doesn’t have to contradict or nullify the commitment to normative foreign policy goals.

To date, the Harper government’s foreign policy has come up short on all three of these basic tests.

Clearly stated values

The Harper Government has never explained in sufficient detail what its shift to a more “principled” foreign policy actually means, and and how its own values differ from those advanced by previous governments. Instead of an updated foreign policy statement that would have spelled this out—the previous one by Paul Martin’s Liberal government dates back to 2005—the Conservatives have relied on successive public speeches and media interviews, chiefly by Foreign Minister John Baird but also by Prime Minister Stephen Harper himself.

For example, in September 2011, just a few months after the Conservatives had won their first majority, Baird told the UN General Assembly that Canada would cease to “go along” in order to “get along.” The Prime Minister, in his January 2012 television interview with the CBC’s Peter Mansbridge, spelled this out further, expressing fear and distrust of Iran’s theocratic regime and reaffirming his government’s unyielding support for Israel. In a further address to the UN General Assembly in September 2013, Baird insisted on the same two themes while also renewing his earlier pledge to support the rights of religious and other minorities. Then, in his historic speech before the Knesset in January 2014, Harper took Canada’s unquestioning support for Israel to a new level, effectively likening all criticism of Israel to anti-semitism.

If nothing else, these pronouncements aren’t short on determination: “double standards”, “moral ambiguity” and “moral uncertainty” are all forcefully rejected. Much time is spent outlining what Canada would not, or no longer, do (coddle dictators, appease aggressors, participate in UN committees headed by unsavoury regimes) and how it would punish transgressors (through boycotts, sanctions, even military action if undertaken in concert with its allies).

But curiously, both Baird and Harper are at pains to stress their support for a whole range of traditional Canadian values—freedom, democracy, human rights, the rule of law, justice, to name a few—which are held across the political spectrum. Presumably, this implies that previous Liberal governments aren’t or weren’t equally committed to these same values and principles. That’s worth arguing over perhaps, but it is highly doubtful that “principle,” taking a stance, and refusing to budge when pushed alone can account for such stark foreign policy differences as on the Palestine problem, Iran’s nuclear ambitions, climate change, development assistance, the role and purpose of evidence-based research and a host of others. At the very least, these differences suggest fundamentally diverging interpretations of commonly held values, if not different values altogether. The Conservatives owe it to the Canadian voting public, including their own constituents, to make these distinctions clear.

Some might say that in an age of shortened attention spans and 140-character tweets, the kind of political shorthand employed by the Conservative government is all that can be expected. After all, why would governments spend precious resources elaborating detailed policy platforms that no one ever reads, when it’s easier and more efficient to reach citizens through media interviews, public statements and social media?

They would be wrong: In democratic societies, citizens have a right to know in detail what their governments stand for. Not only that: they need to know how different values are related, whether certain values count more than others, and what thresholds need to be crossed before normative preferences turn into foreign policy action. Only when equipped with this level of detail are citizens in a position to take informed decisions, including giving or withholding consent from their government regarding its foreign policy conduct. Left in the dark, citizens will make these choices based on emotional appeal or their own preconceived notions, which invites knee-jerk reactions to very complex questions. They may also disengage from the political process altogether if they judge it to be biased and impenetrable, which might appeal to populists and dictators but shouldn’t appeal to democrats.

Effective means for advancing values

The second test—concerning the means and mechanisms by which foreign policy values are advanced in the international arena—is best broken down into two parts, focusing on the defence and the promotion of such values. To date, the Conservative government has clearly leaned towards the former, stressing numerous times that its approach to Canada’s external relations was “principled” and that it wasn’t prepared to let those who violated these principles go unpunished.

Indeed, the punitive element in the Conservative government’s foreign policy—the stick, so to speak—has been much more apparent than the carrot. For example, Canada boycotted the UN-sponsored Conference on Disarmament when North Korea took over the rotating presidency in June 2001, and again when Iran did so in May 2013. More recently, Canada took a similar line with Sri Lanka when Prime Minister Harper protested its human rights record by refusing to attend the 2013 annual meeting of Commonwealth heads of state and government in Colombo. Aside from boycotts, Canada has used economic sanctions against the regimes of North Korea, Myanmar and, of course, Iran, where its unbending attitude towards the multilateral negotiations to limit Iran’s nuclear program put it in a different camp than all its traditional allies except Israel. And while Canada stopped short of openly endorsing the use of military force against Iran (although signaling it would understand if others went ahead to defend themselves), it did participate in the NATO-led intervention in Libya in 2011, helping to remove Colonel Gaddafi’s regime from power.

To be fair, the Canadian government sometimes had little choice but to take these tough positions. Few would argue, for example, that the sanctions against North Korea were unjustified, given the scale of the violations of international norms committed by the regime. And military action to defend Libyan civilians against indiscriminate attacks was defensible at least initially, although the mission quickly went beyond its mandate and was justly criticized as a result.

Still, there are legitimate doubts regarding the effectiveness of Canada’s hard-hitting approach. While it may sometimes be necessary to isolate and indeed punish regimes that violate human rights norms, a stance so uncompromising as to cut off all avenues for dialogue and negotiation is generally not useful, especially when one’s means for enforcement are rather limited. Specifically, it is debatable whether Canada’s foreign policy over the last few years has resulted in greater respect for the values purportedly driving it, and whether Canada’s role in defending these values has given it greater clout in world affairs.

On both counts, the answer seems to be no. More often than not, Canada’s approach did not produce the intended results, be it greater respect for international human rights norms among the members of the UN Human Rights Council, a more considerate attitude by Sri Lanka’s government towards its vanquished Tamil minority, or a greater willingness by Iran to restrict its nuclear ambitions. Rather, the Canadian government’s rejectionism, combined with an evident lack of hard power resources to enforce its point of view, put it firmly on the sidelines and excluded it from key international processes. (This is most obvious in the case of Iran, where international negotiations led by some of Canada’s closest allies have been proceeding without meaningful Canadian participation.) Painting such issues as a choice between “standing up against evil” in the world versus “appeasing dictators” may play well with domestic constituencies, but is misleading to say the least, and in the end amounts to empty rhetorical thunder.

The picture doesn’t look much brighter when it comes to actively promoting a Canadian values agenda via dedicated foreign policy instruments. This is largely because such instruments have either not been created or have ceased to exist. The Harper government notably failed to implement the recommendations contained in a 2007 report by the House of Commons Standing Committee on Foreign Affairs and International Development (SCFAID)—and those of a subsequent four-person advisory panel it had itself established in 2009—to set up a new Canadian agency dedicated to supporting democratization processes abroad.[2] It also allowed the Democracy Council, a loose-knit forum of government departments and public agencies that could have served as a building block for a new agency, to fade away. The government moved aggressively against the Montreal-based International Centre for Human Rights and Democratic Development (also known as “Rights and Democracy”), a Canadian public agency founded by an act of Parliament in 1988, closing it down after provoking a rift within its board of governors.

The one exception to this general trend is the Office of Religious Freedom, which was newly established on the remnants of Rights and Democracy within the foreign affairs department. However, almost three years after it was first announced, the new Office is barely operational and still has to issue its first call for proposals from its limited $5 million budget.

In the absence of dedicated policy instruments, values can of course be advanced by embedding them in other foreign policy objectives. The Conservative government has done so, for example, by listing the promotion of democracy and human rights together with contributing to effective global governance and international security under Canada’s foreign policy priorities. There is nothing wrong with this practice as long as it understood that such linkages aren’t automatic; in fact there are often strong tensions between normative and other foreign policy goals. For instance, the quest for security and stability can work against the democratic aspirations and legitimate rights of populations demanding a greater say. The pursuit of economic and commercial interests—such as in mining, a core sector for the Canadian economy—can run up against local communities’ concerns for their health and environmental wellbeing.

Conversely, normative goals can become diluted to the point that they are almost meaningless. A quick glance at DFATD’s International Development Project Browser reveals a bewildering assortment of titles under the sector heading “democratic governance”, including “Catastrophe Risk Insurance Facility” or “Energy Sector Capacity Building.”[3] Such diversity makes it difficult to impossible to distill relevant results. Embedding values in other foreign policy objectives therefore requires a deliberate and well-thought-out strategy to ensure that they remain relevant and aren’t pushed aside. No such strategy currently exists in Ottawa.

Transparent and impartial application

The third and final test, which relates to the standards and principles that underpin values-based foreign policies, should not be misunderstood as a call for absolute neutrality. That would be impossible because any normatively-based foreign policy revolves around a specific set of values it aims to defend and promote.

But at the same time, it is critical that these standards and principles are applied transparently and impartially, for at least two reasons. One is that a failure to do so risks undermining the values—which might come to be seen as empty rhetoric or a cover for other less benign foreign policy interests. (For example, democracy promotion policies by the U.S. and Europe are sometimes attacked as self-serving and insincere. If true, this would lend credence to claims by authoritarian states—such as Russia in the current Ukraine crisis—that they are merely defending their interests, just like the West.)

Second, a lack of transparency and impartiality in application of values undermines the credibility and influence of those professing to hold them. This might not be a concern for bigger, more powerful nations with ample hard power resources (whose application can lead to a host of other problems, but that’s beside the point here). However, it cannot be in the interest of smaller, less powerful countries (including Canada) that are more reliant on a rules- and norm-based environment.

Again, Canada’s foreign policy comes up short. One obvious cause for concern is Canada’s posture towards the Middle East, which is a far cry being impartial. Provoking repeated accusations of double standards, Canada’s unconditional support for Israel and its indifference to the rights of the Palestinians has severely damaged the country’s moral stature in the region, robbing it of its hard-won capacity to serve as a go-between in the Palestine conflict. Canada’s stance has also restricted its influence in broader areas, such as the building of more democratic societies following the Arab Spring (without gaining any increased leverage on Israel proper, it should be added).

Another more complex issue exists too: that of balancing normative against other foreign policy objectives. No country can be expected to sacrifice all of its interests in favour of the values it espouses; sometimes compromises or trade-offs are necessary. For example, the costs of intervening militarily to stop human rights abuses elsewhere (e.g. Syria) can be prohibitive, or the benefits of trading with autocratic countries (e.g. China) too large to pass up.

But this doesn’t mean that normative considerations are simply thrown overboard when they become inconvenient. Rather, what is needed, in addition to red lines that simply cannot be crossed, are clear rules of engagement for less clear-cut situations where continued engagement may be preferable. Such rules are essential for managing relations with big authoritarian powers like Russia or China, but also with recently-democratized states whose human rights practices are still patchy, or for situations where autocratic rulers subvert and undermine existing democratic frameworks without violating the constitutional order outright. Enabling engagement while exerting influence or offering assistance, such rules need to be grounded in a firm commitment to contribute to positive change whenever possible and—crucially—to do no harm oneself.

In Canada’s present foreign policy, there is little evidence for the existence of such a rules-based framework. Rather, full-throated declarations of principle sit side-by-side with foreign policy initiatives that say little or nothing about normative goals. In such circumstances, the latter often get shoved aside (and indeed, there is some evidence that despite its rhetoric, Canada is soft-pedalling its human rights critique of China or Russia).

There is also a huge potential for tensions between Canada’s stated principles on the one hand, and its recent drive to help Canadian businesses compete better in the international marketplace (which, in and of itself, is not a bad thing). For example, Canada’s latest external trade promotion strategy, released in late November 2013 and dubbed the Global Markets Action Plan, promises to harness “all Government of Canada diplomatic assets to … support the pursuit of commercial success by Canadian companies and investors”. However, the strategy is silent on the social, environmental and indeed political implications this might have in partner countries. Canada’s “Economic Growth Strategy,” as set out by then-Minister for International Development, Julian Fantino, in his November 2012 speech to the Economic Club of Canada, likewise highlights the “opportunities for Canadian businesses working in foreign markets,” vowing to “help … make countries and people, trade and investment ready.” Fantino did mention the “Canadian values of compassion and generosity” in his speech,[4] although, presumably, such considerations have little place in business decisions regarding investments, profit levels, and shareholder revenues. Unsurprisingly, his announcement that CIDA would provide support for Canadian mining companies to enter into mutually beneficial partnerships with local counterparts has been attacked by a range of observers as self-serving and wholly in the interests of Canadian industry.

In conclusion: three tests failed

To sum up, values-based foreign policies aren’t just about the underlying standards and principles and whether these are right or wrong. (That is of course a critical aspect, and it would be interesting to examine what impact the social conservatism of its core clientele has had on the foreign-policy outlook of Canada’s current government.) To be credible as well as effective, such policies need to lay out clearly and in detail the values they are based on, the means by which these values are being protected and promoted, and how compromises and trade-offs between these values and other foreign-policy objectives are negotiated. Short of passing these three tests, values-based foreign policies run the risk of becoming irrelevant or being seen as a cover for other foreign policy goals that have little or nothing to do with moral standards or principles.

Canada’s current foreign policy has fallen into this twin trap. Frequent invocations of Canada’s principles, accompanied by solemn pledges not to cave in to pressures from those that do not share them, have yielded little by way of concrete results. A tendency by Canadian policymakers to paint the country as a moral leader—most recently in the Ukraine crisis—when actual resources committed barely keep pace and often lag behind those of its key partners, has not been lost on the latter. It is no surprise then that in most domains that matter on the world stage, Canada has actually lost influence: it is now punching below, and no longer above, its weight.[5]

Moreover, Canada’s full-throated defence of moral standards at times appears one-sided, and is often curiously detached from its increasingly aggressive economic posture. Putting the pursuit of economic and commercial opportunities squarely at the centre of Canada’s foreign policy, sometimes without even attempting to address potential socioeconomic, environmental, or other implications, raises uncomfortable questions regarding the depth of the country’s commitment to normative standards and principles.

Rather than advancing it, these trends have eroded Canada’s status as a moral leader on the world stage.


1. For more detail, see, Alan Johnson, “A Values Based Foreign Policy in a Dangerous World: An Interview with Anne-Marie Slaughter,” Democratiya, no. 10 (autumn 2007), pp. 130-158, or Jack Snyder, “One World, Rival Theories,” Foreign Policy, no. 145 (November-December 2004), pp. 52-62.

2. For more detail, see, Gerald J. Schmitz: Canada and International Democracy Assistance: What Direction for the Harper Government’s Foreign Policy?, Occasional Paper Series No. 67, Centre for International and Defence Policy, Queen’s University, Kingston, ON (August 2013).

3. The relevant OECD statistics, under the broad heading “Government & Civil Society,” show a precipitous decline in bilateral Canadian ODA funding over the last few years. While not corresponding directly with the categories used to describe Conservative government’s foreign policy priorities, this at least suggests a broader decline in funding precisely for those values that the government says it is advocating.

4. There is no agreement on just what “Canadian values” are. Other than the versions offered by Ministers Fantino and Baird—referenced above—the Overseas Development Assistance Accountability Act (ODAAA) mentions “[the] values of global citizenship, equity and environmental sustainability”. The left-leaning Broadbent Centre recently released a major study claiming that Canadian values are progressive values, notably pointing to “equality, sustainability and justice.” While “centrist” might be a more appropriate label, most Canadians do seem to hold values decidedly to the left of those espoused by the current Conservative government.

4. This is true notwithstanding exceptions such as child and maternal health in developing nations. Outside of such specific sectors, Canada’s role in shaping broader trends in international development has shrunk, in line with falling Official Development Assistance (ODA) contributions.

Economic Diplomacy: Time to Get Down to Business

Benoit Maraval | June 26, 2014

Depending on whom you ask, “Economic Diplomacy” is either the new cornerstone of foreign policy or a partial and distorted vision for how to effectively bolster a country’s economic and commercial interests.

Since 2006, economic growth has been a key priority for the Harper government, underlying everything from domestic policies on immigration and job creation to the expansion of duty-free ports and an ambitious trade agenda.

Announced in late 2013, the government’s Global Markets Action Plan aims to ensure all diplomatic assets promote Canadian business. The Honourable Ed Fast, Canada’s Minister of International Trade, says the Plan “represents a sea change in the way Canada’s diplomatic assets are deployed around the world.”

Six months later, what impact, if any, does this plan on Economic Diplomacy have on Canadian interests at home and abroad? More …

On June 3, 2014 thePANEL debated this issue with high-level panelists speaking in front of a packed auditorium at Ottawa’s Library and Archives.

Noting the challenges and opportunities of pursuing economic diplomacy, William B.P. Robson, President and CEO of the C.D. Howe Institute highlighted the risk of “subsidizing exports” while Rt. Hon. Perrin Beatty stressed the vital importance for Canada’s diplomatic service to take a more active role in supporting Canadian businesses abroad. Moreover, Beatty stressed that The Global Markets Action Plan aims first and foremost at “equalizing the playing field a little bit” with other countries’ governments, the United States for instance, that “help their companies every way they can”, he said. But the United States is far from being the only country that is deploying its diplomatic assets in a way that drives its economic interests.

Learning from the French?

A year before the Harper government’s announcement of the Plan, in late 2012, France was described by the UK as “the best at pushing its national interest,” especially in the areas of economy and international commerce. Although at first sight France’s trade balance of goods—with a €61.2 billion deficit in 2013—would not suggest the same conclusion, the French government’s foreign-affairs vision has increasingly shifted its focus to commerce. This shift has become even more visible since the incumbent Foreign Minister Laurent Fabius took office two years ago.

Fabius, who has served as France’s Prime Minister and Minister of Economy in previous French governments, laid out a strategic direction for France’s foreign policy called “economic diplomacy.” Since its inception, the French Ministry of Foreign Affairs and International Development boasts the appointment of nine high-level negotiators with key partners (China, Brazil, Russia, Japan, the United Arab Emirates, Algeria, Mexico, India, and the Balkans) and six ambassadors assisting small and medium-sized firms in their search for business opportunities abroad. In Paris, contacts with companies have almost doubled, from 400 to 700 regular meetings.

Even if a number of significant contracts have been officially concluded in the framework of this new policy (for instance the successful bid by Alstom to deliver 3600 passenger cars to 600 South-African trains), it is difficult however to assess precisely and quantitatively the direct influence those measures had on French exports.

A common endeavour

Perhaps one of the most significant achievements of the new policy is the structural reform that was put in place in order to strengthen the collective support for France’s economic interests. Abroad, economic committees have been created in more than 130 countries. Chaired by the French ambassador in the country, the work of the committees builds on a comprehensive approach and is designed to shape the way French economic interests are pushed forward locally by bringing together public and private stakeholders.

Whilst Trade and Foreign Affairs have already been melded in Canada, Ottawa would do well to adopt the same sort of holistic approach to better advocate the country’s commercial interests in emerging markets if it is to meet the self-imposed objective of doubling the 11,000 or so small and medium-sized Canadian firms currently operating in emerging markets.

Canadian defence industries at the forefront

With 109,000 Canadians working for the defence and security industries, the development of exports in this sector is one of Ottawa’s priorities. “The government recognises that to sustain a healthy domestic industrial base, we need to tap into the global market” National Defence Minister Rob Nicholson told executives from Canadian defence industries last month in a speech at the defence and security trade show in Ottawa. “We have a network of defence attachés who […] have helped identify opportunities for Canadian industry and have helped facilitate contact,” he added. Typically, this network should connect with a local overarching body under the supervision of the Canadian ambassador in a system similar to what the French government is currently implementing.

With a potential total investment of CAD $490 billion by the government over the next decades, the Canadian defence industry represents a tremendous opportunity for Ottawa to create Canadian jobs while building a coherent technological and industrial base that could help Canada take a stronger role among defence exporters.

In 2011, the defence and security sector generated more than 12.6 billion dollars for the Canadian economy. Of those 12.6 billion, the government wants to increase the foreign-revenue portion which amounts to $6.4 billion (51 per cent).

However, if the government has repeatedly expressed its wish to make Canada a bigger defence exporter, it remains unclear whether it is willing to make the necessary decisions. Albeit rich with more than 2,000 firms according to a 2012 report by KPMG, the current defence and security industrial base remains divided and nothing thus far indicates that current defence acquisition programmes will harmonize the government acquisition process and the industry.

The way forward

Beside some small structural and organizational reforms, Canada needs, above all, to clearly identify a roadmap and to draft precise guidelines defining what Ottawa’s economic diplomacy priorities are, what these entails and how they fit into the government’s other priorities in foreign policy such as international law, human rights, and defence. Notwithstanding the national sovereignty considerations that make defence exports a unique area of international commerce, there is an increasingly fierce competition between major markets in defence and security. However, as we have recently seen in the case of Russian executives Chemezov and Sechin or when it comes to sensitive exports of defence and security equipment, commercial ties will undoubtedly raise legitimate concerns as to the way Ottawa articulates Canada’s economic interests abroad vis à vis its long-standing policy on human rights. Chrystia Freeland, MP underscored this question of values during Tuesday’s thePanel debate noting, “we need to be prepared if the moment comes—and it’s always a balance, but sometimes there’s a tipping point—to pull out, to sacrifice our economic interests when our values are at stake.”

If the strengthening of defence exports is one aspect of a multi-facetted strategy to promote Canadian growth, “economic diplomacy” also entails a wider range of resources that can be leveraged. Building on the provisions of the 6-year old Global Commerce Strategy, Ottawa should maintain its efforts in identifying and negotiating new free trade agreements after those with the European Union and South Korea are concluded. The development of foreign direct investments as well as the country’s appeal in terms of tourism are of particular relevance and should be added to the complete skillset Canada must showcase abroad. As former deputy minister of Foreign Affairs and International Trade Len Edwards said during the debate, “economic Diplomacy is not a new concept, but it is important for it to remain a broad one.”

This is what economic diplomacy is all about: adopting a comprehensive approach and leveraging the country’s skills by connecting existing networks and resources to maximise Canada’s economic influence worldwide. In that sense, the Global Markets Action Plan is a welcome initiative to help boost Canadian exports. Six months after the plan was launched, it may be time to review how it is being implemented and how it might be further strengthened. Canada must enhance its capacity to push forward its commercial interests in emerging markets, while remaining consistent with other priorities including the country’s commitments on human rights which remain a strong guiding principle of Canada’s long-term foreign policy.

The CIC’s National Capital Branch sponsored thePanel debate featuring Carole MacNeil, Host of CBC News Now; the Honourable Perrin Beatty, President and Chief Executive Officer of the Canadian Chamber of Commerce; Chrystia Freeland, MP; Len Edwards, former Deputy Minister of Foreign Affairs and International Trade; and William B.P. Robson, President and CEO of the C.D. Howe Institute.

Blair’s Deluded Take on ISIS

Ramesh Thakur | June 25, 2014

Two years ago, Nobel Peace Laureate Desmond Tutu condemned the ‘immorality’ of the Iraq invasion: ‘in a consistent world, those responsible for this suffering and loss of life should be treading the same path as some of their African peers who have been made to answer for their actions in the Hague’. Like the indestructible Terminator, former British Prime Minister Tony Blair popped up recently to deny that the lightning advance of the bloodthirsty and ruthlessly efficient ISIS (Islamic State of Iraq and al-Sham, covering the Levant across Iraq and Syria) could be blamed on the invasion of Iraq in 2003. Rather, in his parallel universe, the fault lies in not intervening in Syria last year to topple President Bashar al-Assad. More …

A War of Choice

Are we to admire Blair for his chutzpah or condemn him for his shamelessness? He calls to mind Philip II of Spain of whom was said: ‘No experience of the failure of his policy could shake his belief in its essential excellence’. Blair was widely ridiculed for his jaw-dropping claim, especially as Western intervention would effectively have been in support of the extremists. Syria’s military has been battling them with more fight and success than shown by Iraq’s army despite more than a decade of the best training that Coalition forces could provide.

George W. Bush, Tony Blair and John Howard took their countries to a war of choice to terminate Saddam Hussein, against the massive weight of popular, elite and global opinion. They insisted their judgment was superior and they would answer to history. It seems that history is giving its verdict and their nemesis is ISIS which has fought, tortured and killed its way through large swathes of Iraqi territory and captured many key towns. Against its ferocious onslaught the Iraqi military melted away faster than ice cream in the desert heat.

How do we impress on U.S. neoconservatives and their fellow travellers the enormous disparity between the vision dreamed, the goals pursued, the means used and the results obtained? Eleven years later, conventional wisdom holds the war was one of the gravest foreign policy blunders of modern times. What remains inexplicable is why so many of the hawkish commentators who called it so disastrously wrong in 2003 continue to be darlings of the U.S. media as expert commentators on the Middle East.

The Conflict’s Costs

Between 200,000 and one million Iraqis have died as a result of the war, including ‘excess deaths’ caused by degraded health facilities, the flight of doctors and reduced access to nutrition. The economic costs include almost two trillion dollars in federal government spending and double the amount when future health and disability payments for veterans are added. The war accelerated the military, financial and moral decline of America. The big strategic victor was Iran; in effect President Bush helped Iran to win its 1980–88 war with Iraq after a two-decade pause. The Middle East democracy project has suffered reverses; democracy cannot be imposed by bombers, helicopter gunships and tanks.

Saddam Hussein’s regime was the most secular in the whole region. His strongman rule was brutal but effective in imposing stability. His removal set off a train of pernicious consequences. It reduced the political space for secularists and promoted a hardening of zero-sum religious identity, which in turn sparked increasingly ruthless sectarian fighting that in a vicious cycle reinforced sectarian hatred. The poison of the hatred and killings seeped deep into Iraq’s body politic, as Nouri al-Maliki foolishly marginalised Sunnis from state structures and institutions, and then spread rapidly outwards to surrounding countries. By now it has engulfed the entire region with a deepening Sunni–Shia schism that sees Iran as the champion of the Shias and Saudi Arabia and Turkey as the two Sunni nodes. ISIS has been bankrolled by Saudi Wahhabi fundamentalists and other conservative Gulf States. They too must now fear blowback from the jihadist monster on the loose.

Future Prospects

President Barack Obama is right to be extremely circumspect about returning to the discredited and destabilising military option for resolving an internal Middle East crisis. Clearly US diplomats and soldiers will be protected. Beyond that, options range from doing nothing (on the reasoning that Washington no longer has a dog in the fight) to another full-fledged military intervention.

The first at least will have some support in U.S. policy and commentariat circles; the last will have no support beyond the few who are yet to see a war they don’t like, learn nothing and forget everything. A Reuters-IPSOS public opinion poll published on 19 June showed a solid 55-20 majority against U.S. intervention of any kind.

Options in  between include drone strikes; military strikes by U.S. planes and missiles stationed in the region; intelligence and logistical support for Iraqi government forces; cooperation with Iran against a common enemy; and acceptance of a tripartite split of Iraq into Shia, Sunni and Kurdish components rather than the nightmare of a united ‘Sunnistan’.

Meanwhile the crisis confirms the urgent need for parliamentary consent to be converted from an optional add-on to a legally binding requirement before a democracy goes to war. It should not be possible for a headstrong prime minister to wage war – the most solemn foreign policy decision of all – based on whims or personal convictions.

A version of this piece was originally published by the Australian Institute for International Affairs.

High Tension on the High Seas

Avoiding disaster in the South China Sea
Meredith Kravitz | June 25, 2014

Last week a group of Philippine troops joined their Vietnamese counterparts on a sandy isle in the South China Sea to drink beer, eat food, play sports and enjoy cultural performances. This seemingly lighthearted rendezvous — with its games of volleyball, soccer and tug-of-war on teams of mixed nationality — was anything but. The military outpost where they met is at the heart of a brewing maritime conflict that has pitted China against its Southeast Asian neighbours. And Vietnam and the Philippines were there to make a point.

This display of Vietnamese and Philippine unity on Southwest Cay in the Spratly archipelago was a clear rebuke to Beijing for its recent confrontational behaviour in the South China Sea. Last month China inflamed regional tensions by towing a state-owned oil rig into disputed waters off the coast of Vietnam. Weeks later, Hanoi released a video of a Chinese ship ramming and sinking a nearby Vietnamese fishing boat.

A spokesperson from the Chinese Foreign Ministry called the Vietnamese-Philippine romp a “clumsy farce” and accused Manila and Hanoi of escalating the South China Sea dispute, a farcical statement in itself given that all regional players – save China – have displayed intentions to resolve their differences peaceably. Indeed, this was probably Manila and Hanoi’s main point: to show the world that they are willing to negotiate with one another in good faith – that, and to make China look like a bully. It worked. More …

It also points to something that often goes unremarked in discussions on the South China Sea dispute, particularly those that tend to frame the issue as a simple conflict over resources. The truth is that China’s goals and interests in the South China Sea differ considerably from its regional neighbours. And understanding China’s unique concerns is necessary for finding potential political solutions to the conflict.

The South China Sea dispute is not just your classic resource conflict in which each party is jostling for the largest piece of the pie. Sure, Vietnam, the Philippines, Malaysia, Indonesia, Taiwan and Brunei all want their fair share of the sea’s riches – its islands, fisheries, and the oil and gas deposits that lie offshore. But these sorts of disputes are amenable to compromises, concessions, quid pro quos and other negotiated solutions. Beijing is not merely interested in the South China Sea’s natural resources; if it were, this would be a much easier conflict to resolve.

What China is primarily concerned with is control over the strategic maritime routes that run through the South China Sea and bring with it a whopping 80 per cent of Chinese oil imports – the lifeblood of its economy. And who currently underwrites the security of these strategic sea-lanes? The U.S. Navy, of course.

China’s Malacca Dilemma

The South China Sea is the world’s foremost maritime artery for international commerce and energy supply. Over half of the world’s seaborne trade passes through its waters. Its major chokepoint, the Malacca Strait, connects the petroleum-rich Arabian Peninsula to the west with the emerging Asia-Pacific economies in the east. Nearly all of China’s imported energy travels along this narrow channel of water. Each year, as China grows hungrier for the oil that passes through, the stakes become higher.

China has long recognized this strategic risk, commonly referred to as the “Malacca Dilemma.” In a 2003 speech to the Communist Party leadership, President Hu Jintao identified China’s dependence on the Malacca Strait as a critical threat, and called for new strategies to hedge against the vulnerability. It should come as no surprise, then, to find that over the past decade China has been attempting to diversify its energy supply channels and solidify its presence in the South China Sea.


In 2009, China and Myanmar inked a deal to put down more than 500 miles of oil and gas pipelines from Myanmar’s western coast to China’s southwestern Yunnan province, effectively bypassing the Malacca Strait. The gas pipeline was completed in 2013, but the oil pipeline, meant to be operational by July 2014, has been put on hold. It is one of China’s many recent cutbacks in energy development due to decreased demand. Still, capacity will surely rise in the future, and while China may no longer grow as hastily, diversifying its energy supply routes is a prudent and logical move.

Also logical is Beijing’s attempt to plant its flag in the midst of its most critical waterway. That is why, as antagonistic as it may seem, moving an oil rig into the Paracel archipelago is hardly irrational. And it is also not China’s most ambitious move in the South China Sea to date. Last week, the Philippines revealed that China is in the process of building Dubai-style artificial islands near Johnson South Reef – a contested outcrop in the Spratly archipelago currently occupied by China. Philippine officials say that construction began in February 2014, and they speculate the artificial maritime outpost will serve as a Chinese military base and airstrip. Beijing justified its construction activity based on sovereignty claims, but the move purportedly violates a 2002 ASEAN agreement in which member states and China agreed to maintain the status quo in disputed areas until a settlement had been reached.

All of this suggests that, while the natural resources of region are undoubtedly attractive, they are not the sole, nor the most critical of Chinese interests in the South China Sea. And this makes finding a mutually agreeable solution to the conflict much more difficult. Territory is divisible; maritime boundaries can be negotiated and drawn. But the security of maritime trade and energy routes is far less tangible. Understanding China’s anxieties over its Malacca vulnerability goes a long way to explaining its recent behaviour in the South China Sea.

Not that this is any consolation to China’s neighbours. In fact, they are becoming ever more weary of China’s actions, and more vocal about it too.

A multipolar seascape

At last month’s annual Shangri-La Dialogue in Singapore, the United States, Japan, and the Southeast Asian nations were openly critical of Beijing’s recent activities in the South China Sea, which they view as destabilizing the region. In his keynote address, Japanese Prime Minister Shinzo Abe emphasized the importance of international law and saluted the “efforts of the countries of ASEAN as they work to ensure the security of the seas and the skies, and thoroughly maintain freedom of navigation and freedom of overflight” — a less-than-subtle jab at China’s blanket claims to the South China Sea and regular incursions into ASEAN exclusive economic zones. The United States and its Asian allies pledged stronger defense ties, and though the United States made powerful declarations in support of its commitment to Asian maritime security, many commentators were openly doubtful whether such pledges would hold up under more precarious circumstances. How much longer can the United States play balancer in the region?

As Robert Kaplan points out in his new book on the conflict, Asia’s Cauldron: The South China Sea and the End of a Stable Pacific, the U.S. Navy is downshifting, at least relative to the dramatic growth of China’s People’s Liberation Army (PLA) Navy. For China’s littoral neighbours in the South China Sea, it is an open question whether they can continue to rely on the United States to secure their maritime environment. That is not to say that China is poised to directly confront the United States or completely take control. A multipolar seascape in which no single state dominates, but where China may be able to effectively impinge upon U.S. naval access, is the more likely scenario, argues Kaplan — and a far more dangerous one, at that. While a new, multipolar balance of power in the South China Sea may be able to keep the shipping lanes open for business, it would also be inherently unstable.

Still, there are good reasons to take a less ominous view of the future. Though the PLA Navy is growing exponentially, its single, refurbished Ukrainian aircraft carrier is hardly a match for the U.S. Navy’s nineteen. It is also useful to remember that the notion of ‘decline’ has a stronger impact psychologically than it does materially. As Joseph Nye Jr. has pointed out, “the word ‘decline’ mixes up two different dimensions: absolute decline, in the sense of decay, and relative decline, in which the power resources of other states grow or are used more effectively.” Here we are talking about the latter. And China is not the only Asian state that is growing: India, and even the Philippines and Indonesia, may end up dampening China’s meteoric rise.

Let us also not forget that China, like all other nations, depends on peace and order in the global commons for the free flow of goods and resources for its continued growth. Regional harmony is essential to its economic development. Beijing has every financial incentive to ensure the stability of the South China Sea, given the economic and reputational costs of disruption. Even a short-term diversion of trade flows and interruption to supply chains would cost billions of dollars and have a cascading global impact, with China bearing the brunt of these.

Today, global economic interdependence impels cooperation in the Asian maritime environment, despite continuing challenges. And China’s current behaviour in the South China Sea is making cooperation amongst the Southeast Asian nations ever more attractive. The Vietnamese-Philippine rapprochement in the Spratlys is just the most recent case-in-point.

Sunday in the Spratlys

The Spratly archipelago, where Vietnamese and Philippine troops met last week, is a group of more than 100 islands and reefs in the southern South China Sea, portions of which are claimed by China, Taiwan, Vietnam, the Philippines, Malaysia and Brunei. The islet of Southwest Cay has particular historical salience.

Known as Đảo Song T Tây in Vietnamese, or Pugad in Tagalog, the scenic isle has changed hands numerous times over the past century. Before the Second World War France occupied the Spratlys, but lost them to Japanese control in 1939. More than a decade after the war ended, France transferred them to South Vietnam in the process of decolonization. In 1968, the Philippines took control of both Northeast Cay and Southwest Cay, but their occupation of the latter did not last long. In 1975, South Vietnam took over.

As the story goes, Philippine soldiers charged with guarding Southwest Cay ventured over to Northeast Cay to attend the birthday party of a commanding officer. Upon their return they discovered a South Vietnamese flag occupying their flagpole, along with a company of soldiers on the ground. Several months later Vietnam had unified, built up their defenses on the island, and any plans for Philippine re-occupation fell by the wayside.

That Hanoi and Manila would choose Southwest Cay as the location of their get-together speaks volumes. In a region where historical embarrassments regularly stymie viable solutions to stubborn political problems, this sort of level-headedness is refreshing indeed. But it isn’t all that surprising: Vietnam and the Philippines find strength in numbers. China has been following a divide-and-conquer strategy toward its Southeast Asian neighbours for some time now, shunning multilateral negotiations with ASEAN and insisting on dealing with territorial disputes bilaterally, knowing than none can compete on its own. Together, Hanoi and Manila at least stand a chance.

And there is another reason for this demonstration of unity – a wider global phenomenon independent of the ‘Rise of China’ context. Counterintuitive as it may seem, the resource abundance of the South China Sea itself provides Vietnam and the Philippines with some very clear incentives for cooperation over conflict.

Make oil, not war

With vast improvements in deep offshore oil and gas technology over the past decades, more and more long-standing maritime boundary disputes in resource-rich waters are being resolved – if only so the countries in question can start drilling.

Norway and Russia’s maritime border in the Barents Sea was settled in 2010, after decades of protracted disagreement; now, their national oil companies are exploiting the Arctic waters together. And despite speculation that the countries bordering the Caspian Sea would devolve into a Great Game-style rivalry over offshore oil and gas deposits, Russia, Kazakhstan, and Azerbaijan have agreed upon their mutual maritime boundaries, leaving Iran and Turkmenistan as the major holdouts. Even in the eastern Mediterranean, where Israeli and Lebanese waters meet, maps are being drawn up and submitted to the United Nations in lieu of duking it out militarily. This is almost shocking for two countries that have battled for decades over a scrap of land that most likely belongs to neither. It makes sense though, given the preponderance of Israeli naval power. The same type of asymmetric warfare that works for Lebanese-based forces on land has little effect at sea.

To The Hague

When confronted with a militarily superior force, appeals to international law are a natural recourse. To wit, the Philippines has taken China to The Hague over Beijing’s sweeping claims to the South China Sea.

Manila is seeking a ruling on China’s “nine-dash line” – the tongue-shaped lion’s share of the South China Sea over which Beijing claims it is inviolably sovereign. The area includes the entirety of the Paracel and Spratly island groups, and the Scarborough Shoal off the coast of the Philippine island of Luzon. Manila argues the nine-dash line is contrary to the United Nations Convention on the Law of the Sea (UNCLOS), and a majority of western legal scholars agree. But the issue has never been formally adjudicated until now.

The Permanent Court of Arbitration has given China a December 15, 2014 deadline to respond. Thus far, Beijing has simply stated that “it does not accept the arbitration initiated by the Philippines” and it will not be participating in the case. China’s refusal to participate does not, however, bar the court from proceeding with its judgment, and if Beijing fails to submit a response a decision may be made swiftly in Manila’s favour. For Manila, it would be a PR victory. But, politically, would it really matter?

One is tempted to fall back on the old Thucydidean refrain, “the strong do what they will and the weak suffer what they must.” Indeed, Robert Kaplan calls the Philippine appeal to international law “the ultimate demonstration of weakness.” But this is perhaps shortsighted. While it is true that the court’s ruling may have little, if any, impact on the ground, it would be imprudent to think China is immune to international opinion.

After Vietnam released the dramatic video of a Chinese vessel crashing into and sinking a Vietnamese ship, Beijing responded by appealing to UN Secretary General Ban Ki-Moon in a letter detailing China’s legal claims to the Paracel archipelago. Vietnam, for its part, rejects China’s claim, and argues that both the Chinese vessel and oil rig are within its UNCLOS-mandated 200 nautical-mile exclusive economic zone.

And the South China Sea is not Beijing’s only ongoing maritime dispute. In the East China Sea, Beijing is in a row with Tokyo over the Senkaku/Diaoyu Islands. As James Manicom notes in his new book, Bridging Troubled Waters: China, Japan and Maritime Order in the East China Sea, China claims that the Japanese-controlled islands fall within the natural prolongation of its continental shelf and thus within its jurisdiction, and has submitted evidence to this effect to the United Nations’ Commission on the Limits of the Continental Shelf (CLCS). While China and Japan differ on the fundamental legal principles that apply to their maritime border dispute, China still makes appeals to some aspect of existing, codified international law. Clearly Beijing sees some value in the international legal order.

Odd one out

It is easy to be pessimistic. The Philippines might win its case at The Hague, but to little effect. China may continue its oppositional behaviour by building military outposts, drilling oil wells in disputed waters, and needling its neighbours until one day when — by design, error or accident— the already simmering dispute boils over into violence.

But if last week’s Vietnamese-Philippine rapprochement in the Spratlys is any indication of the future of Southeast Asian international relations, we may very well see the littoral nations of the South China Sea pool their resources, settle their maritime boundaries, and along the way develop deeper political and economic ties, leaving China the odd one out.

And make no mistake; China is inherently the odd one out. Its energy needs far surpass any of its neighbours, and its near-total reliance on the South China Sea for its oil imports is a genuine, and understandably worrying vulnerability. Any political resolution to the South China Sea dispute must recognize China’s unique dilemma, and to a reasonable extent accommodate its concerns.

Of course, it is possible that China will decide that no amount of accommodation will suffice — this is a common prediction in the grand narrative of the future of Asia-Pacific, one in which China creates a new regional (or global) order, with a rulebook to its own liking.

But if Beijing truly sees itself as a revisionist power, it has a terribly long way to go. China may be on the rise, but a unipolar international system with China at its helm is nowhere on the horizon. And this bodes well for the littoral nations of the South China Sea. There is still time to strengthen ties, forge a stronger security community, piggyback on the still-hegemonic U.S. Navy, and sue China for a peaceful settlement. Disaster may yet be averted.

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