ON FOREIGN AFFAIRS AND
DES AFFAIRES ÉTRANGÈRES ET
DU COMMERCE INTERNATIONAL
[Recorded by Electronic Apparatus]
Tuesday, April 4, 2000
The Chair (Mr. Bill Graham (Toronto
Centre—Rosedale, Lib.)): Colleagues, we're starting
late, and I apologize for that. We have with us this
morning, from the department, Jim Wright, Ann Collins,
and Robert Brooks; and from CIDA, Mr. Wallace and
This is the first consideration of our trip to the
Caucasus with the assumption that it's going to happen.
We've distributed to all of you a nice little white
in both official languages, with colourful maps. These maps will
surely leave members wanting to go on this trip and to be
Thank you very much for coming, Mr. Wright. I know
you have to be out of here right at about five minutes
to twelve, so maybe if you have to go, you can slither
out and leave your colleagues here to take the heat
while you're gone.
Voices: Oh, oh!
Mr. Jim Wright (Director General, Central, East,
and South Europe, Department of Foreign Affairs and
International Trade): There's never heat from this
committee, absolutely right.
The Chair: This is a departmental overview to hear
any observations you have about how you feel the
committee could contribute to Canada's foreign policy
in the area and your present views of it. Thank you
for coming. Would you like to lead off?
Mr. Jim Wright: Thank you very much, Mr. Chairman.
It's a great opportunity to be here today to address
the committee as you begin your work examining Canadian
interests, opportunities, and policies in one of the
most fascinating areas of the world. We've already
provided committee staff with an extensive package of
briefing material, including country notes and
political and economic briefs, and we have worked with
the research staff as they've assembled material for
I do not intend to deal with this in a detailed
fashion, but I propose to give you a broad strategic
overview of the region and Canada's interests and
policies, and then to invite members to put questions
to our team.
The eight countries that constitute Central Asia and the
Caucasus share much of their history, share many common roots, and
share a desire to use their newly won independence as a springboard
to the future. Yet, they have many qualities that make each unique,
be it Armenia's Christianity, or Kazakhstan's size, or Tajikistan's
This is not a part of the world in which Canada has
been extensively engaged. Since the collapse of the
Soviet Union, Canada's presence, however, has been
changing and evolving, influenced initially by our
commercial interest. The vast mineral riches of the
Tien Shan mountains and the enormous hydrocarbon bounty
of the Caspian Basin have been a magnet for the
worldwide mining and petroleum companies, joined by
Having been initially attracted by the promise of
mineral wealth, our interests have grown to embrace the
breadth of our peace and security interests and our
commitment to share Canadian values abroad. Our
efforts are limited to some extent by our modest
representation in the countries of central Asia and the
We are also constrained by the pace of reform. In the
west we are familiar with the rapid and successful
transformation of political and economic life in
central Europe. The process of transition in central
Asia and the Caucasus has been much slower. There's no
surprise here. These were the remote outposts of the
Soviet Empire, communist command economies totally
controlled from Moscow. When the communist system
collapsed in 1991, these countries were left on their
own. Reluctantly independent in some cases, they were
starting from a much lower base. With no tradition of
democracy—quite the opposite in fact—and no working
market economy, they have had a much tougher row to
It is a mistake to view Central Asia and the Caucasus as a
monolithic whole. While there are similarities, likewise these are
many deeply significant differences. We view the region as two
distinct entities - Central Asia and the Caucasus. Just to confuse
matters however, we need always remain aware of the concept of the
Caspian Basin, which brings Russia and Iran into the mix with
Azerbaijan, western Kazakhstan and Turkmenistan.
The rugged mountains of the Caucasus have ensured a
complex and convoluted ethnic, linguistic, and
religious mixture that lies at the root of the region's
problems. National Geographic might have stated
it best, and I quote:
A refuge since the last period of Eurasian glaciation,
the Caucasus region has been a gateway for travel,
trade, and conquest. Yet even as regional and imperial
powers have for centuries contested influence, the
Caucasus has remained a redoubt of peoples whose
identities are tied to the 50-some languages they
speak. (...) The persistence of the enduring
identities of ethnic groups has been aided by the
rugged terrain and by societies whose loyalties are to
clan and family as much as nation or region. Past
attempts, especially by the former Soviet Union, to
assimilate or dominate the Caucasians have been largely
We can see that in spades today. Tensions between Armenia and
Azerbaijan have been fuelled by the volatile mixture of ethnic
rivalries and religious differences. Georgia's difficulties with
its break-away region of Abkazia, and the regions of Ajaria and
South Ossetia underscore that the continuing ethnic conflict is a
constant threat to stability. The ongoing and tragic conflict in
Chechnya further complicates life for Georgia.
Oil has defined the Caucasus since the first visit of
Marco Polo. It was the prize that eluded the Germans
in World War II. It is the prize that has drawn the
seven sisters and their rich cousins to invest billions
of dollars. It is the prize upon which hope for
regional economic salvation is being built.
Is there a Canadian interest? Narrowly defined, yes.
Canadian oil and gas companies, oil field supply firms,
and pipeline builders and operators have a well-defined
interest in winning contracts and concessions in the
More broadly defined, yes again. The potential for
riches is significant, but this can only be a good news
story if these riches contribute to the improvement of
society in these countries on a broad basis, and by
extension contribute to regional stability. If the
bonanza benefits only a few, we must expect a widening
poverty gap, growing discontent, and increasing
instability. We must also be cognizant of the need to
see wider regional benefit from the bonanza, involving
economic spinoffs in have-not states such as Armenia,
but extending to the North Caucasus as well.
In the course of your study, you will come face to face with
the realities of ethnic conflict in the region. Nagorno Karabakh is
perhaps the most difficult, and cannot be resolved without both
goodwill and creative solutions. The Armenian Foreign Minister,
Vartan Oskanian, was in Ottawa last September and Minister Axworthy
visited Yerevan in October for the state funeral of the Armenian
Prime Minister and other political figures tragically killed in the
National Assembly. Bilaterally through our relations with Armenia
and Azerbaijan, and multilaterally through the OSCE, we are trying
to build goodwill, but peace remains elusive. The views of the
committee would be particularly welcome. Equally, the enduring
problems in Georgia have defied resolution through traditional
means, and again a fresh view from the committee might generate
some ideas for creative solutions.
Central Asia is a region of more benign history and
geography. Flowing from the Kipchak and Chaghatai
Khanates of the Mogul Empire, the essentially
Turkic peoples of central Asia occupy a broad steppe
stretching from the Caspian eastward to the Tien Shan
mountains. Semi-arid to true desert, the vast expanse
of land gives rise to the nomadic sheep herders of
popular imagination. This region of secular Muslims
served as the buffer between the Russian Empire, and
later the Soviet Union, and the more fundamentalist
forces of Islam to the south. Even today central Asia
represents a check on the fundamentalism found in Iran
For a variety of reasons, not all positive, the vast
store of minerals and hydrocarbons in central Asia lay
Today this represents the
opportunity, but if topography punishes the Caucasus,
geography pillories central Asia.
A land-locked region separated by vast distances from
markets and cost-efficient transportation, the
tremendous opportunity offered by the mineral riches
has been squeezed by the technical and economic
difficulties of moving product to market.
As a result of this, there is a premium on high value, low
weight products such as gold and other precious metals, and the
world's leading miners can be found here. Canada's gold mining
companies have a noticeable presence - Barrick, Placer Dome and
Teck Corporation to name three.
Cameco Gold is the most active of all with its stake in the
Kumtor mine in the Kyrgyz Republic. At nearly US$350 million, this
remains Canada's largest single investment in the former Soviet
Union. However, many other mineral opportunities remain undeveloped
Central Asia also represents a major human rights
challenge for the international community and for
Canada. It remains home to a number of repressive
regimes and some of the least reformed economies left
over from the collapse of the Soviet Union.
Some would argue that Turkmenistan and Uzbekistan
are countries where democratic pluralism and human rights
have been sacrificed for the sake of self-preserving
political stability by a close-knit ruling elite. Much
like the Caucasus, clan is paramount. The
preservation of clan privilege takes precedence over
national interest, and this colours much of the daily
machinations of government. Even in the most
reformed state, the Kyrgyz Republic, clan privilege is
rarely far from the surface.
In terms of common problems and threats in both of
these regions, paramount among the internal threats
are the environment, human rights, ethnic tension, and
the lack of infrastructure. External challenges
include drug trafficking, terrorism, Russian attention
to the “near abroad”, Turkish and Chinese interests, and of
course Islamic fundamentalism.
I do not want to dwell too much on these points, but a
quick review may provide signposts for committee
members in their work.
The environmental degradation wrought by the central planners
of the Soviet Union has laid waste to vast reaches of the Caucasus
and especially Central Asia. The polluted wetlands and shorelines
of Azerbaijan is a vivid reminder of this. The slow, albeit ever-
increasing, disappearance of Caspian sturgeon, the desertification
of the Aral Sea, the nuclear wasteland of Semipalatinsk add
evidence to the legacy wrought on the region. Remediation is beyond
the capacity of individual countries in their current economic
Poor human rights plague most of the territory. The
exercise of clan privilege, lack of democratic
traditions, and perhaps less recognition of self-worth
of individuals provide a background that has spawned
societies that show little respect for dissent or
democratic pluralism. Preservation or accumulation of
personal and family privilege can often be the
paramount concern for leadership. This is of course
somewhat of a generalization, and the reality is closer
to varying shades of grey than either black or white.
Nevertheless, there is a theme that runs throughout
central Asia and the Caucasus that questions the human
rights record of these countries.
Clearly, there is international agreement that the
track records of Uzbekistan, Turkmenistan and
Azerbaijan constitute poor human rights practices.
Even those acknowledged as having the best records,
Armenia and the Kyrgyz Republic, still have some
distance to go before reaching genuinely acceptable
Ethnic tension is another theme. I spoke earlier
about the conflicts in the Caucasus and the
relationship to ethnicity. Central Asia similarly
suffers tensions within the complex mix of
nationalities and indigenous ethnic groups, as well as
having a difficult time accommodating ethnic Russians.
This of course is another legacy of the former Soviet
Union. Borders of the constituent republics of the
U.S.S.R. were set arbitrarily by Stalin and had as a key
goal to preserve some semblance of ethnic identity for
the republics, balanced by assured ethnic tensions.
As I noted earlier, Nagorno Karabakh is one of the
more difficult challenges. Here ethnic tension gave
rise to violence and armed rebellion. Efforts to ease
this tension, however, ran up against the twin
principles of territorial integrity and the right of
self-determination, the key principles behind the OSCE.
From this distance we can see how Azerbaijan's
reliance on territorial integrity to guide its actions
and claims runs afoul of the right of
self-determination by the Karabakh Armenians.
Equally, we can see how Karabakh Armenians claiming
self-determination undermines the territorial integrity
of Azerbaijan. This does not lend itself to an easy
Crime and corruption are the consequences of an
economic system that did not work. The inability of
the communist system to provide the basics led
ultimately to its self-destruction and left behind a
system that breeds corruption. Drug trafficking is the
most profitable outward manifestation of this
corruption. Transnational crime has become a major
international problem and preoccupation.
Central Asia, with its vast expanse of geography,
provides a path for the movement of illicit drugs from
the poppy fields of south Asia to Russia and western
Europe. The economic privation of the region ensures a
continuing supply of confederates all too willing to
The loss of empire has been difficult for the Russian people,
and they continue to struggle with it. The Russian notion of the
"New Abroad" says it best - it represents an important
psychological distinction for Russians between the lost republics
and longer established independent states. The Commonwealth of
Independent States, or CIS, is in fact an institution that tries to
compensate in part for Russia's loss. The Russians thus feel a
compulsion to be engaged in regional affairs as peacekeepers as in
Georgia, or in providing border troops to assist Tajikistan.
Regardless, the key is that Russia continues to try to carve out an
active role for itself throughout the region, even as economic
relationships often evolve in the opposite direction.
Iran also has a growing role in the region, and one
that we may see change over the next few years. Like
Russia, Iran shares a portion of the Caspian Sea. Unlike
Russia, Iran has no imperial baggage as it seeks to
develop greater influence in central Asia in
particular, based in large measure on shared religion,
with a strong measure of commercial self-interest.
As an oil producer and as a littoral state, Iran has
significant interest in the development of Caspian
Basin oil and gas. Iran, along with Russia, has been
championing the view that the Caspian underwater
resources are a shared asset among the five littoral
states, not a surprising stance for a country with a
relatively lesser share of those resources.
Iran also sees itself as a potential conduit for
Caspian oil and gas, a prospect inhibited by continuing
U.S. sanctions. Reform in Iran and a commensurate
softening of American restrictions could change the
Iran also represents a face of Islam. The Taliban
in Afghanistan represent another, and their
fundamentalist fervour presents a challenge to the
largely secular Islamic states of central Asia in
We would be remiss if we did not mention Turkey, a country
that wields important influence as a newly opened gateway to the
Caucasus and Central Asia. On the western edge of the region,
Turkey with its historical and linguistic links plays a key role as
a model of secular development in an Islamic region, and as a
market especially for Caspian oil and gas, and supplier of modern
goods and services. Turkey also has a stabilizing influence on the
regional security stage as a military power and NATO and OSCE
member. However, the ever present risk of further destabilizing
ethnic conflict within the Caucasus is another potential dark cloud
affecting Turkish interests. Moreover, friction with Armenia over
Nagorno Karabakh and interpretation of the tragic events during the
collapse of the Ottoman empire continues.
As I stated at the outset, Canadian engagement in the
region has been initially influenced by commercial
interests, most notably in the mining and petroleum
sectors. It's hardly surprising that Cameco Gold
of Saskatoon is the largest single Canadian investor in
the former Soviet Union and the largest foreign
investor in the Kyrgyz Republic. I understand
members of the committee will have an opportunity to
visit the Kumtor Mine during your tour.
Cameco is not alone, however. Other mining companies
have been very active, notably in Kazakhstan, but perhaps
without the returns that Cameco has enjoyed.
In the Caucasus, Canadian firms have been
successful in Azerbaijan, developing onshore oil fields
and providing helicopter services to offshore
platforms. In fact, Azerbaijan's passports are printed
We have new business opportunities in Armenia, for
example, through First Dynasty Mines of Vancouver. And
the Canadian presence in Georgia is making a significant
impact on their petroleum industry.
You, the committee members, will have an opportunity
later to hear from some of the companies that have been
active in the region, to learn about the problems
they face and how we, both the companies and our
embassies, have been working to develop solutions.
We need to be mindful that these are difficult markets
where patience is an essential corporate asset and
where the rules of business are not always transparent.
Moreover, government has a direct role in assisting
businesses, particularly should they encounter
Canadian diplomatic support is an essential part of
the formula for success in markets all around the
world, but especially in these emerging economies. I know
they will be able to share with you their sense of
the tremendous opportunities that exist for companies
willing to make an investment in time and money to work
with regional governments in a responsible manner.
Canada's engagement, however, is much broader than just
commercial self-interest and we have been working hard to expand
our activities to embrace the full breadth of Canada's foreign
policy. The 1997 Ashgabat Conference that Canada actively supported
in Turkmenistan was a major stepping stone towards the conclusion
of the Ottawa Convention on Anti-personnel Land Mines, and reflects
our efforts to promote the human security initiative throughout
Central Asia. At the present time, of the eight countries, only
Turkmenistan has signed the Ottawa Treaty, meaning that much work
remains to be done on this front. We have also provided support and
assistance to the Central Asia Peacekeeping battalion, and through
the Military Technical Assistance Program (MTAP) and by
contributing to NATO's Partnership for Peace, we have been working
to build regional stability.
We work very closely with CIDA to guide the direction
and evolution of CIDA's nascent, modest, but growing
technical assistance program as a key instrument in
supporting Canada's overall foreign policy goals in
this region of the world.
You'll have an opportunity to be briefed by
Stephen Wallace on CIDA's activities in the region.
As central European countries are successful in their
transition, there is a growing opportunity to devote
more attention to central Asia and the Caucasus as more
money becomes available. Together with CIDA we have
identified the desirability of increasing efforts on
human rights in civil society while maintaining
programs on conflict resolution, the environment, and
governance. There is strong agreement between us on
these priorities, and these are sectors where Canada has
value-added expertise to contribute.
Canada funds at
our embassies are used to support projects at the
community level, such as assisting NGOs focused in the
human rights area. We have also provided strong support for
the activities of the Organization for Security and
Cooperation in Europe. This is a key institution that
has been very effective in building acceptance of
democratic values and institutions throughout Europe.
By posting Canadian officers at key missions from time
to time, participating in election observer missions
such as in Georgia, Kazakhstan, the Kyrgyz Republic, and
Armenia and in other activities to support and encourage
the development of democracy and stability in the
region, Canada has been able to encourage the work of
the OSCE and to advance the transformation of the
region. We do not hesitate to raise human rights cases
in the OSCE council, as the recent case of imprisoned
Turkmenistani dissidents relates.
Canada has also been very active in supporting
programs to deal with severe environmental problems of
The Chair: Mr. Wright, I don't like to
interrupt you, but we also appreciate your support
for the OSCE Parliamentary Assembly, which enables
discussion of these issues to take place among many
of the members around this table.
Mr. Jim Wright: You are absolutely right, Mr.
The Chair: I don't like to forget the existence of
the parliamentary assemblies. We find that governments
tend to ignore them as a rule, so
I'm just reminding you of that.
Mr. Jim Wright: Not at all.
I remember how active the chairman was in Istanbul in
fulfilling his responsibilities in this respect. You're
absolutely right, Mr. Chairman.
The Chair: That's a helpful plug for both of us.
Thank you. We both get our time.
Mr. Jim Wright: With respect to Canadian
representation in this region of the world,
Canada maintains only one embassy in the region of Almaty,
Kazakhstan. Accredited to the Kyrgyz Republic and Tajikistan, this
small mission manned by two Canada based officers was established
initially as a trade post. This had evolved into a full service
embassy, and this evolution will continue this summer when CIDA
assigns a Canada based officer who will be responsible for the
growing technical assistance program in Kazakhstan, Tajikistan and
the Kyrgyz Republic.
Coverage of the other countries is shared between the
embassies in Ankara and Moscow. Ankara, with its
historic and commercial links to the Caucasus, has
responsibility for Azerbaijan, Georgia, and
Turkmenistan. Our embassy in Moscow covers off Armenia and
Uzbekistan. In the longer term, we of course hope to
be able to expand our network of embassies and
consulates. However, overall resource constraints on the
part of the Canadian government generally make this
impossible at this juncture.
In sum, Mr. Chairman, central Asia and the Caucasus
might well represent the last frontier of the wild
east. In the modern version of the great game we are
seeing a struggle for control of the vast richness—oil
and gas, gold, uranium, and other valuable minerals—but
we are also seeing two regions struggle to come to
terms with history, culture, religion, newly found
independence, democracy, pluralism, and market-based
economies. No easy task.
Canada has always maintained
an interest in central Asia and the Caucasus, but our
engagement has been constrained by the distance,
remoteness, and the realities of human resource
limitations. Over time, this is changing. We welcome
the initiative of the committee to undertake this study
and we are looking forward to your findings.
My hope, Mr. Chairman, on the assumption that
the committee goes to the region, is that you'll have an
opportunity to meet the political and parliamentary
leadership in these countries while also being
introduced to important non-governmental organizations
working in the Caucasus, in central Asia, meeting with
international organizations, the OSCE, the World Bank,
IMF, and meeting with Canadians who are there, the Canadian
business community and others.
You'll have an opportunity to assess the political and
economic landscape. You'll be able to also assess the
extent to which you think these countries meet the
agreed standards of international behaviour that they
have all undertaken to do. You'll have a chance to
look at the extent of Canada's engagement, modest at
the present time in the Caucasus and in central Asia,
and to offer advice to
us in terms of our political, trade, and technical
Mr. Chairman, that concludes my statement. Thank you
The Chair: Thank you very much, Mr. Wright. I
take it that your colleagues from the department who
are here with you won't be making any statements.
Mr. Jim Wright: Yes.
The Chair: We'll just go straight to Mr. Wallace
for the perspective of CIDA.
Mr. Stephen Wallace (Director, Southern Europe, Central Asia
and Humanitarian Assistance, Canadian International Development
Agency): Thank you very much, Mr. Chairman, members of the
committee. I'd like to begin by introducing my colleague Jean
Couturier, who is a CIDA manager responsible for the Caucasus and
We welcome the study that you are undertaking. You will be
focusing your attention on a large and complex area, one that
represents one of the last great frontiers of Canadian cooperation.
We wish to thank you for this opportunity to discuss with you at
greater length CIDA's role in the region and the lessons learned
from working in partnership over the years with over twenty
Canadian and multilateral organizations.
Mr. Chairman, the first thing to say about our program
is that poverty is not our main focus as it is
elsewhere in the world. In central and eastern Europe
and in the former Soviet Union, transition is our key
mandate, specifically transition to the market economy
and transition to democratic pluralism. As you will
see throughout your studies and hopefully your visits
to the region, many challenges remain on both these
Our experience has demonstrated the fit between
Canadian capability and the regions' needs. We share
similar resources, climate, and landscape. It is why,
for example, Kazakhstan has approached Canada and has
requested assistance in the preparation of its national
agricultural strategy. It's also why Kyrgyzstan has
asked us for assistance in developing their
environmental management capacity. It's also why
western Canada has a particular interest and relevance
in that part of the world.
Canada's cooperation program is built on partnership.
This partnership has up to now featured mainly an
economic and technical training agenda. This was a
natural extension of the interest of Canadian resources
companies who have also co-financed several of our
A notable exception is the Aga Khan Foundation, with
deep roots in Tajikistan, and some highly
effective programming to match. Another is Armenia,
where strong ties with the Canadian Armenian community
have generated high-quality cooperation opportunities.
A key lesson from our economic cooperation experience
is that we can often make the most difference when our
actions strengthen the general business environment as
opposed to the directed business interests of
CIDA, therefore, has a particular role to play to
ensure that policies, laws, and regulations make sense
and are applied fairly and transparently, that basic
economic institutions work, and that workers are
equipped to meet the demands of the global economy.
These, Mr. Chairman, are the basic building blocks of
sustainable trade and investment and they are the basis
for addressing key aspects of governance and
A second lesson we have learned is that while regional
cooperation is intrinsically valuable from a
developmental perspective, it can also have a powerful
peace-building impact. It's why most of our
initiatives in the Caucasus involve at least two
Such modest-scale actions as working on health issues in
cooperation with the Canadian Society for International Health or
providing training activities in Central Asia along with the
University of Saskatchewan can help to initiate a dialogue and to
A third lesson, Mr. Chairman: we need to make
creative use of such mechanisms as the Canada Fund and
the Peace Building Fund, which can provide timely,
high-visibility solutions to local problems and which
can play particularly useful roles in areas such as
human rights. We look forward very much to the work of
the committee in examining these possibilities.
Traditionally, Canada's multilateral involvement in this
region has been significant. We must endeavour to join efforts with
other stakeholders and use our modest resources as a springboard
for action on a larger scale. Undoubtedly you will be reviewing the
operations of key agencies such as the OSCE and the programs of the
United Nations and World Bank.
As Mr. Wright has described, it is a region of
compelling issues, of emerging challenges and
It is clear that our early focus on economic
cooperation and technical training must evolve to
address compelling challenges in areas such as
peace-building and human rights. We have already taken
some steps in this direction.
I am pleased to announce that we are also developing a
specific program to address climate change issues,
given the importance of the region both as a source and
a sink for greenhouse gases.
We will also need to take into account the clear
differences between the Caucasus and central Asia, as I
alluded to earlier.
It needs to be underlined, however, that we are
limited in our potential response by relatively modest
means, a weak presence on the ground, and few
historical ties. As Mr. Wright has also explained,
however, we are working on all three. These limits
compel the need for careful choices as we consider
Our programs are unique in that we take an interactive
approach. Generally speaking, our Canadian partners take the
initiative of developing their projects and then of submitting them
to us for funding assistance. Obviously, it's important that we
maintain an ongoing dialogue with them on changes taking place in
the region and that we be very selective about the projects that we
choose to finance.
Interest in Caucasus and in central Asia by Canadian
partners has grown rapidly, Mr. Chairman, far
outstripping our annual budget of $4 million. This
interest has broadened from the initial private sector
resources focus to encompass new initiatives with a
decided peace-building dimension. We believe this
interest reflects a distinctive Canadian approach, one
that values partnership, that cuts across public,
private, and NGO sectors, and that recognizes the
importance of a strong civil society and the rule of
We try to focus our involvement on sectors where, as
Canadians, there is some value added. Often this value added
feature is the fact that we are perceived as interested
stakeholders without any hidden agendas.
As you can imagine, Mr. Chairman, that is a fairly rare
feature in that part of the world.
Canada has the capacity, the experience, and the
reputation to tackle many of the emerging issues of the
region, be it environmental degradation, ethnic
conflict, human rights, corruption, or the widening
disparity gap, which has marginalized an increasingly
large proportion of the region's population.
We have the opportunity to give practical expression
to central Canadian tenets of human security,
peace-building, and democratic development. This can
mean direct action, such as de-mining in Georgia,
refugee return in Azerbaijan, conflict resolution among
water users in the Ferghana Valley of central Asia, and
the reintegration of former combatants in Tajikistan.
Canada's cooperation program is already involved in
each of these endeavours, but we will need to be much
more fully engaged in order to make a significant
Mr. Chairman, the Caucasus and Central Asia present some
formidable challenges which extend well beyond the borders of the
eight countries in question. We will spare no effort to support the
work of the committee and we believe that your study will prove
very useful in terms of setting priorities for the future. We will
now be happy to answer your questions. Thank you very much, Mr.
The Chair: Thank you very much. That's very
helpful, Mr. Wallace. Your statement about the
resource issue, for one, from your perspective, is
obviously very helpful because that's one we'll be
Before we go to colleagues, let me ask a
question. It comes out of Mr. Wright's observation
that investments in the region require patience.
Patience is another word for deep pockets. You don't
have patience unless you have huge resources. That's a
matter of fact.
Mr. Wallace, from your point of view, you talk about
Canadian trade and investment links too. This
committee did a report a couple of years ago about
small and medium-sized businesses and access to foreign
markets. We put an accent on the role that our
immigrant population can play in contacts. I've talked
to various people from, say, Armenia; there's a large
Armenian population here. Have we already any programs
in place to facilitate those contacts so that we get a
small and medium-sized presence there—which will also
help democracy-building and people that are familiar
with it—as well as the Camecos and others who can
afford to be there because they have the deep pockets?
This is maybe just a reflection I have, but it's a bit
of a violon d'Ingres of mine, a bit
of a hobby horse, because I bring it up
every time. It seems to me that the committee is
interested in that issue and that we're always trying
to find out where the rubber hits the road, if there
are any extra resources being put into it. It seems
logical to be doing it, but we never can find out
whether we are doing it or not. I wondered whether
CIDA was doing any better than anybody else.
Mr. Jim Wright: Maybe I can start, and I'll ask
Robert Brooks from the department to pitch in if I'm
What I would say is that by and large your approach
and your definition are probably about right. Most of
the companies are sizeable companies that are strong
enough to be able to look after themselves in the short
to medium term. They're not all Camecos. A lot of
smaller enterprises are there as well. But I don't
think we have seen yet enough of the ethnic community
in Canada becoming engaged with their small and
medium-sized enterprises and going back to promote
trade and commerce, to promote investment, and also to
promote some of the political change and social change
and reform we are looking for there. You see it a
little bit, but by and large the companies in question
are fairly self-sustaining, and I'm not sure the extent
to which they're connected to the ethnic communities in
Robert, why don't you pitch in?
Mr. Robert Brooks (Deputy Director, Eastern Europe
Division (Belarus, Caucasus, Central Asia, Moldova,
Ukraine), Department of Foreign Affairs and
International Trade): I'd simply say the only two
communities sizeable enough to play a role as you've
outlined, Mr. Graham, are the Armenian and Azerbaijani
communities. In fact there is a Canada-Azerbaijan
Chamber of Commerce in Toronto, and we've worked quite
a bit with them in promoting. They have an interest in
going beyond the commercial ventures, as does the
Armenian community, but they're the only two. The
other communities are still very small in Canada.
The Chair: Thank you.
Mr. Stephen Wallace: Thank you. Perhaps I could
just highlight three programs we are operating through
CIDA at the present time.
First, committee members may be aware of the
activities of the Canadian Executive Service Overseas.
It is a group of retired executives who operate all
throughout central and eastern Europe. They are
present in the Caucasus and central Asia, and very
often they act as an entry point for Canadian business
relations. We've found that very valuable. I hope
you'll have a sense of this when you're over in the
Second, we have a business cooperation program called
Renaissance Eastern Europe, which has tended to match
up medium-sized enterprises in the Caucasus and central
Asia. That one is as strong as the relationship
between the Canadian business partner and its local
partner. Where you have strong relationships, you have
good potential. Mr. Brooks has talked about Armenia
and the special relationship there involving the
Canadian-Armenian community. We've seen lots of
activity on the small and medium-sized enterprise side
as a result.
We have two other projects in the Caucasus, one with
St. Mary's University on small and medium-sized
enterprise training, and the other with World Vision on
the development of a small and medium-sized enterprise
capacity locally. Through these projects, we are
starting to branch out, at least in the Caucasus, with
the Canadian business community, and we believe there
is some good potential there.
So we have a number of small vehicles. They're modest
in scope, but they offer some opportunity as entry
points for small and medium-sized enterprises.
The Chair: Thank you, Mr. Wallace. Actually I
understand you're preparing a list of programs
available in the region, and that will be distributed
to the members.
So, members, you'll get that. It's not in your books
at the moment, but it's coming.
Thanks. That's helpful.
Ms. Francine Lalonde (Mercier, BQ): Well then! That's my
initial reaction to your presentations which have given way to a
slew of questions. Mr. Wright, your conclusion caught my attention.
You stated the following:
Central Asia and the Caucasus might well represent the last
frontier of the "Wild East". In the modern version of the Great
Game, we are seeing a struggle for control of the vast richness -
oil and gas, gold, uranium, and other valuable minerals.
Through its actions, is Canada striving to participate in this
great game which involves a struggle for control?
As a sub-question, could you be more specific about the
actions in which Canada is involved in this region? In order to
understand these actions and Canada's role, we need to have a clear
sense of the multilateral efforts underway, in particular a clear
understanding of the activities of the World Bank and of all other
Mr. Jim Wright: I'll start and then turn it over
to my colleagues here to pick up the second part of
It's fair to say there are many Canadian
companies—I've named but a few here—interested in
some of the commercial opportunities out there with
respect to the Caucasus and central Asia. But the
prospect of controlling these resources is not a
realistic one, certainly not as far as Canada is
concerned. We'll be a player. We have value-added
expertise in numerous areas of resource extraction in
the hydrocarbon industry. But for developing
especially the oil and gas reserves in the Caspian
Basin and elsewhere, you're not talking about millions
of dollars of investment; you're talking about billions
of dollars of investment.
To the extent that happens—and there's a lot of
debate out there in terms of pipeline diplomacy, which
companies will be successful, and which routes will be
approved—Canada will be a player, but I suspect more
on the margins in terms of supplying equipment to the
successful bidders. My assumption is that it will not
be one company that will have a controlling interest in
any of these projects. Simply, the projects are much
too vast to control this.
The other comment I would make is that while
governments will have strategic interests in the
routing of some of these different pipelines, whether
it's through Russia, under the Caspian, or through
Iran, and in how these hydrocarbons are taken from the
Caspian, whether it's through Georgia, Azerbaijan, or
Armenia.... There are lots of political questions
there, but in the final analysis, I think the judgment
of the Canadian government is that it's the marketplace
that will determine what routings are approved here,
because in the final analysis it's the private sector
that will pay for these pipelines, not governments.
Yes, we have a stake. Yes, we have an interest.
Stephen talked about common climate and common
resources developed here in Canada that are available
in the countries of central Asia and the Caucasus. So
it's natural that Canadian companies would have an
important stake. But do we anticipate that these
companies will play a leading role and have a
controlling share in the development? No. I think
we'll be one of many, many actors on the ground there.
And I think these projects are going to take an
awfully long time to come to fruition. That will be
guided to a certain extent by developments in the
international market in terms of availability of oil
and gas, but these resources are an enormous distance
from the marketplace. How commercially effectively
these can be developed, only time will tell.
Robert or Ann, do you want to add to that?
Mr. Robert Brooks: I'd just say we often use the
term “the great game II”. Where the great game was
between Britain and Russia for control of central Asia,
today it's between the BP Amocos and the Lukoils
and the Royal Dutch/Shells of the world as to how the
resources are going to be divided up.
It is a geo-strategic game that's being played at an
extremely high level, and as Mr. Wright indicated, with
a very, very high price tag attached to it. For the
Caspian Sea development drilling rigs, we're looking in
the range of $9 billion to $10 billion U.S. total. We
talk in terms of multiple tens of billions of dollars
when we talk about pipeline routings. So it's well
beyond the scale of the kinds of companies we've
attracted into the marketplace.
But that said, to reply to another portion of the
question, there is a very heavy engagement of the
international financial institutions. The World Bank
in particular is active. Within central Asia in
particular the Asian Development Bank is active. The
members of the five central Asian countries, with the
exception of Tajikistan, I believe, are all members of
the Asian Development Bank, which is a little unusual
in our parlance, because we usually talk about the
European Bank for Reconstruction and Development, which
is active in the Caucasus.
So there is a very active engagement of the world
The Chair: Thank you.
Mr. Stephen Wallace: With respect to our multilateral actions,
I would just quickly like to say that our involvement is rather
special. Since our resources are fairly modest and since we have a
limited number of workers on the ground, we need to rely in some
cases on multilateral agencies in order to ensure this cooperative
I can give you four or five examples of cooperative relations
that have been forged, the first with the UN High Commission for
Refugees. Your committee is no doubt aware that Azerbaijan has the
highest number of refugees or displaced persons in the world. The
United Nations and its High Commission for Refugees play a vital
role in the Caucasus and in Central Asia and we support their
Furthermore, the World Food Program is very active in the
Caucasus and in countries like Azerbaijan. This region of the world
has been especially hard hit by crises and shortages of
agricultural products in recent years.
We already mentioned the special work being done by the OSCE,
which is focusing in particular on security and peace-building
initiatives. Canada is actively working with these councils and in
the case of Azerbaijan, has even offered to finance the
administration of their offices.
I'd like to make one final comment, further to Mr. Brooks'
remarks about the World Bank and our leverage. We work with the
World Bank in part to position Canadian businesses to take
advantage of major contracts awarded by these institutions. One
example is the energy sector contract awarded to SaskPower in
Kazakhstan. Together with the World Bank, we are funding a regional
social policy reform project. This partnership between Canada and
the World Bank enhances our profile and gives us a certain amount
of clout that enables us to genuinely exercise some influence in
this area. Thank you.
Mr. Jim Wright: During the course of your visit to the
Caucasus and Central Asia, you will have an opportunity to meet
with representatives from virtually every one of these
Ms. Francine Lalonde: Are we to understand from reading your
document that we must take into consideration not only development
issues, human rights and political solutions to existing problems,
but the extent of our presence in the area and the race in which
large corporations are involved? Because every time a similar
situation unfolds, we tend to see an escalation of human, political
and development problems. Yes or no?
The Chairman: Yes or no? I assume you have a reason for asking
Mr. Jim Wright: I suppose it's little bit of the
chicken and the egg. With prosperity, certainly there
is an enhanced opportunity for quality of life to
improve in these countries.
Certainly from the perspective of most if not all of
these countries in central Asia and the Caucasus, they
are holding out for a much better quality of life for
their citizens and much better social services and
better work opportunities, to the extent that these
commercial opportunities start to take root.
At the same time, both bilaterally through our
programs with CIDA and multilaterally through our
efforts with the OSCE, we are trying to encourage the
process of political reform, respect for human rights,
offering the kind of training and support for the kind
of society that we know they want to become. But
tradition, history, and culture have made that
transition extremely difficult.
I would argue that the two go hand in hand. One
complements the other. At least that's what we would
like to see.
A voice: That's what we're all trying for.
The Chair: Dr. Patry.
Mr. Bernard Patry (Pierrefonds—Dollard, Lib.):
Thank you, Mr. Wright.
Mr. Wright, in your presentation you mentioned,
on page three, the future of these very
fragile democracies. In a certain way it passes through
energy development. You mentioned:
The potential for riches is significant, but this can
only be a good news story if these riches contribute to
the improvement of society in these countries on a
broad basis, and by extension contribute to regional
My question is regarding the original competition for
the future route of this pipeline. Last November, in
the OECD summit in Istanbul, Azerbaijan announced an
agreement in principle for the construction of this
pipeline passing through Georgia, then Turkey and the
Mediterranean Sea to reach the sea there. This is in
competition with Georgia, who would like it to pass
through Georgia and get to the Black Sea. And on the
other side you have Turkmenistan, who would like to
build a pipeline under the Caspian Sea and to reach
Azerbaijan, but Azerbaijan has already found
some new gisements de gaz naturel.
And on another side you have this blue corridor, the
corridor Russia would like it to pass through.
There are many, many people for this. We all know
that the country where this pipeline is going to pass
will be favoured economically from the transit fees and
by the development over there.
My question is very simple:
what can be done to ensure that the benefits of development in the
energy sector are shared equally by countries and also by domestic
interests? What is the status of the project announced by
Azerbaijan involving the construction of a highway?
Mr. Jim Wright: You make it sound like such a
Mr. Bernard Patry: I have no clue about the
Mr. Jim Wright: The answer is much more complex,
I don't pretend to be an expert on pipeline diplomacy.
I am familiar with many of the competing routes you
have talked about. I was in Istanbul with Mr. Graham
and the Prime Minister and Mr. Axworthy, so I too heard
reference to the Baku-Ceyhan pipeline, as it's
We are operating under the assumption that while
Canada and the Canadian commercial sector will play a
role in this development, we're not at a level where
we're going to be playing a leading role or a highly
influential role in terms of the routing that will be
finally agreed to. But we are operating under the
assumption that we are talking about multiple
pipelines. We're not just talking about one pipeline.
I think the world requirements in terms of hydrocarbons
will be such that we will see two, three, four
different routes that will eventually be approved.
One of the reasons why you're going to see that is,
first, because market forces will dictate that. And
secondly, it will happen because there will be
sufficient energy demand in the region that there will
be a multiplicity of markets that will come to the
fore, not only interested in accruing some of the
benefits from the routing of pipelines through their
countries, but also recognizing that they too have
energy needs, and while they may be met right now,
largely from Russia, there's an overdependence for many
of these countries on supplies of oil and gas from
Russia, a dependence they want to see reduced over
I think our expectation would be that the
routings—plural—will be dictated by the marketplace,
and that there will be sufficient development and
opportunity that you will see some of the benefits
spread more regionally. How far that is spread,
frankly, will depend largely on the marketplace. We
have seen some proposals that go so far as to suggest
that additional supplies of gas in particular could go
north and through Ukraine into western Europe.
I don't pretend to be an economist and to be able to
forecast whether this is commercially feasible or not.
Ukraine has a very distinct interest in making this
happen to facilitate greater energy independence on the
part of Ukraine, but also to take on some of the
benefits that will be associated with those countries,
the benefits from pipelines going through their
I think the hope and expectation is that there will be
multiple pipelines, multiple beneficiaries, and that
the region as a whole will look more promising in ten
or twenty years' time.
Mr. Bernard Patry: I have a question regarding Armenia.
As you undoubtedly know, Montreal is home to a large Armenian
community. Most of its members live in the West Island. Armenia is
still struggling to deal with the aftermath of the 1988 earthquake,
the conflict with Nagorno Karabakh and the collapse of the Soviet
economy since 1991.
Armenia has expressed a desire to join the World Trade
Organization. In your opinion, would this present any problems?
Mr. Robert Brooks: Canadian policy on WTO
accession has always been the same: we have strongly
encouraged Armenia and other countries in the region to
join the WTO because it is an important part of the
transition process. We've provided assistance to quite
a number of countries, including Armenia.
Quite frankly, of all the countries in the region,
Armenia is among the top two or three in terms of how
seriously they have dealt with the issue of transition
and how hard they've worked. Early accession is
something we strongly favour for all of the countries.
Armenia in particular has done the right things to move
their accession forward.
Mr. Bernard Patry: Thank you.
The Chairman: Thank you, Mr. Patry. Ms. Debien.
Ms. Maud Debien (Laval East, BQ): Good afternoon, ladies and
gentlemen. Mr. Wright, I'm inspired by something you said on page
12 of your presentation. Under the heading Canada and Canadian
Policy, you state the following:
As I stated at the outset, Canadian engagement in the region has
been initially influenced by commercial interests, most notably in
the mining and petroleum sectors.
That's quite a statement. Every time a country, Canada
included, gets involved in natural resources development, whether
in countries under authoritarian rule or in developing nations,
it's a safe bet that human rights will always take a hit, if you'll
pardon the expression. There is almost a direct connection.
Mr. Wallace, earlier you spoke of refugee populations. As you
know, large numbers of people are often displaced by development in
the mining and petroleum sectors. In the process, people are often
turned into refugees in their own country.
Ms. Beaumier could have told you about a situation that the
Sub-committee on Human Rights and International Development is
currently looking into as part of its study of Africa. Very serious
problems are affecting the great lakes region, particularly areas
in which Canadian companies are involved in mining operations. Just
look at the problems of Talisman in the Sudan. My fear is that
within the next few years, we will be facing similar problems in
the countries that are the focus of this study.
You know as well as I do that Talisman is only the tip of the
iceberg. Before we encounter a similar situation here, will the
Canadian government adopt a clear and open policy and bring in a
mandatory code of conduct for companies? If this doesn't happen, in
four or five years' time, this committee will be grappling with the
same human rights issues as it is facing today.
I'm anxious for the Canadian government and Foreign Affairs
officials to exert their influence on the minister so that the
whole human rights issue can finally be addressed, bearing in mind
the involvement of Canadian companies in natural resources
development in developing countries and those under authoritarian
I'd like to know where you stand on this matter. Are you in
favour of the idea of bringing in a mandatory code of conduct?
Mr. Jim Wright: It's a very timely and very
important question. I'd like to start with the
specific and then perhaps move to the general.
Of course Canadian interest in terms of central Asia
and the Caucasus.... I used the language in the
statement carefully when talking about the engagement
first of the Canadian commercial community. And it's
true. As you well know, our Canadian government reaches
far and wide, but our representation traditionally in
central Asia and in the Caucasus has been pretty
Since the breakup of the former Soviet Union
there has been a greater degree of interest on the part
of the Canadian business community. With that degree
of business community, the Canadian government started
to become more interested, but our interests are much
wider than simply trade and investment. I made very
specific reference to that in the statement as well.
To the best of my knowledge, I am not aware of
Canadian business investment in central Asia or in the
Caucasus that has exacerbated a refugee problem in the
area. I'm just drawing the parallel to the situation
in respect to Africa, where there is a problem.
Having said that, of course, there is growing interest
among governments, businesses, and other interested
groups that corporations might play a role in
safeguarding the health and safety of their workers, in
protecting the environment, and in contributing to
the advancement of human rights of those in the
communities where they do business abroad.
In addition to the work of the Canadian government in
international fora—and by that I think I'm referring
specifically to the OECD and the International Labour
Organisation, the ILO—to develop multilaterally
anchored norms in this area, the Canadian government is
actively encouraging Canadian businesses to consider
how they can contribute to promoting corporate social
responsibility in their overseas operations. The
approach is to facilitate the development and promotion
of business-initiated codes of ethical conduct that
reflect Canadian values, including international norms
and standards relating to the protection of the
environment, labour standards, and human rights.
The only other point I would make is that engaging the
business community in corporate social responsibility
and initiatives provides a good opportunity to promote
awareness of international norms and standards relating
to the protection of the environment, labour standards,
and human rights.
So I think the answer to your question is, yes, this
is increasingly a concern of the Canadian government
and, I'd like to think, of the Canadian business
community as well.
Mr. Robert Brooks: There is one other important
distinction to keep in mind when we talk about the
former Soviet Union. Under the communist system,
social services such as health care and kindergarten
care for children were the responsibility of the
corporation, and so the company town was very much the
case. Canadian companies and other international
companies, when they're investing in the former Soviet
Union, central Asia, the Caucasus, Russia, or Ukraine,
are often tasked to take on assuming these corporate
responsibilities. So we find Hurricane Hydrocarbons,
for example, in Kazakhstan, which runs a community
centre and a variety of other activities associated
with keeping the community together.
So there is an involvement by Canadian companies and
other international companies in the social welfare of
the people in the absence of state intervention in many
of these countries.
The Chair: Merci.
Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.):
Thank you, Mr. Chairman.
I welcome the witnesses.
Mr. Wright, I've been listening to your presentation
here. You talk about the Caucasus, and you say “oil
has defined the Caucasus” and that “the potential for
riches is significant”, albeit there's ethnic conflict
and the problems with Georgia. Then you get into
central Asia, and you talk about “a variety of
reasons, not all positive”, that you have a “vast
store of minerals and hydrocarbons”. You then say
Central Asia also represents a major human rights
challenge, a number of repressive regimes,
least-reformed economies, clan is paramount, drug
trafficking and terrorism, polluted wet lands,
desertification of the Aral Sea, nuclear wasteland,
exercise of clan privilege, poor human rights
practices, ethnic tension, violence and armed
rebellion, crime and corruption, and again you mention
drug trafficking, and also fundamentalism.
And that's the one I want to go to. It sounds
challenging, to say the least. Tell me why a Canadian
company would want to go there. Is that potential for
riches so much greater? From what I understand,
there's no rule of law. What sort of protection do they
have? They have a Canadian embassy away off in Moscow
to help them out.
So I have a few questions. First of all, can you give
me a sense geographically of the size of what we're
talking about here and compare it to Canada?
Secondly, how is Canada viewed in the region? Does
anybody there know where Canada is? If we go there,
will they say “Oh yes, you Americans”? I want to know
that for security reasons.
Thirdly, again the rule of law: Why would a Canadian
company want to go there? Is the potential so great
that they want to get in there?
Lastly, you talked about the oil and gas and you said
how the marketplace would rule there. Just looking at
this, I would suggest that probably either greed or the
power of the United States in the European Union would
be the final determiner rather than the
marketplace. I don't see any place for a marketplace
in that sort of area.
Mr. Jim Wright: First of all, let me say that
recognizing that this is a bit of a new frontier and
that this is a first certainly for this committee, we
wanted to ensure that the presentation we made to you
today was as pointed as possible, because it is a challenging
environment in which to do business.
There was no
point in painting a rosy picture when you were going to
go there and see that things were going to be quite
different. So it's very important that the committee
knows exactly what it's getting in for.
Secondly, in terms of the size of the country in
question, I think central Asia is probably about half
the size of Canada geographically, at a guess. I'd
have to look at a map, but I think that probably
approximates what we are looking at here.
Thirdly, why go, and why are we engaged on the ground? I
think there are three reasons.
First, as we stated in our opening remarks, Canadian
companies are obviously going there to do business.
They're going there to make money for Canadians. That's
not a bad thing, and if it can be done in a way that
benefits that local society, that improves their
quality of life, that contributes to these countries
becoming more successful and being able to offer a
level of service to their own people, that's a very
I think a key objective for Canada in terms of central
Asia and the Caucasus is political stability. We're
going to have political stability there only if some of
the problems related to quality of life are addressed
and if help and creative ideas are introduced by
parliamentarians, by foreign governments, to try to
solve some of the intractable problems that these
countries have been living with, that is part of their
history, part of their culture, part of the clan
mentality. If there were simple solutions to these
problems, they would have been found a long time ago.
So they can't be called upon to answer all of these
problems themselves. It will have to involve a
concerted effort on the part of the international
community and, I think, of Canada, as a member of the
UN Security Council, as a member of the OSCE, as a
member of the OSCE Parliamentary Assembly, trying to
help the reform process—parliamentary reform,
government reform. Your visit is further evidence of
Canada's commitment. We're trying to give something
back to this region. We're not going there simply to
strip away natural resources and to make money; I think
we're genuinely trying to give something back to that
society, and the leadership that your committee is
showing here is very important.
How is Canada viewed in central Asia and in the
Caucasus? I think quite positively. I think Canada
has played and continues to play a unique role, and
it's not just because of the investment we have made in
this particular country or that particular country.
That's a factor, and that's a positive factor. But it's
what Mr. Brooks was referring to, about some of the
companies giving something back to society there. It's
about the programs that Stephen Wallace and CIDA have
been contributing and are starting to develop.
This is work in progress. We have to remember that
our engagement in central Asia and the Caucasus is not
that old. The flexibility that's starting to come our
way as countries in central Europe are graduated from
our technical assistance programs—those kinds of
finances that have been made available by the
Government of Canada to CIDA now can be redirected to
these economies that are facing a much more difficult
transition politically and economically.
So I think there is an important role for Canada to
play. I think that role is recognized by the countries
in question. In respect to Armenia and Azerbaijan,
there is specific acknowledgement for our contribution
because of the connection with the diaspora in
Canada, which does make it a little bit unique.
So I don't undersell the significance of the mission
that the committee is about to undertake. It will make
Mr. Stephen Wallace: Thank you.
Mr. Speller, I've spoken briefly about the business
environment and the work that needs to be done in
supporting that context in central Asia and the
Caucasus, and if I had to give a grade on where they
are right now, I would say somewhere around C+. But it
used to be a D not very long ago, so it's at least
going in the right direction.
I think what you will find is a fairly familiar set of
laws, of regulations and policies and ways of operating.
What you won't find is implementation in a way that is
transparent, consistent, and timely. I think that's
the major challenge facing that area of the world. But
considerable work has been done over the last several
years in at least putting the basic framework in place.
We now have to sort of shift gears and move more into
that side of things.
Ms. Ann Collins (Director, Eastern Europe Division,
Department of Foreign Affairs and International Trade):
If I could add, Mr. Chairman, following the break-up
of the Soviet Union we definitely did see genuine
interest on the part of Canadian companies in a number
of the new republics in central Asia. As a result, by
the companies going there and Canada having commercial
interests, we then play an advocacy role and a role in
encouraging these governments to put in place
investment climates and investment regimes based on the
rule of law, transparency, and predictability.
Therefore, whether it be through the work we do in
helping them prepare for WTO accession or other
projects relating to putting in place domestic
legislation that creates a more predictable and
transparent investment climate, those types of
improvements are part of the transition process, part
of the transition to a market economy, and that will
also then trickle out into other areas of their
legislative framework. So by the companies going in,
and in partnership with the work we do, we support that
Mr. Jim Wright: I would note that this committee
has travelled before to much more challenging
destinations than central Asia and the Caucasus. I've
travelled with many of the members to Bosnia, for
example, where the environment at the time of that
visit was somewhat more challenging than what is on
offer this time around. That is not to diminish the
many hurdles that are out there, but I think it's going
to be a highly instructive visit for the committee, for
Parliament, and, through you, for the Canadian
The Chair: You'll recall, Mr. Wright, that in
Bosnia we allowed you to get off the bus first. And we
stayed behind you and never stepped off the road unless
Ms. Pauline Picard (Drummond, BQ): Mr. Speller, I have a
answer to your question as to why Canadian companies decide to set
up operations in these regions. It's because they want to promote
Canadian values, not to mention that this gives them tremendous
Mr. Wallace, CIDA would need to have double its current level
of resources to meet the demand for funding of short-term projects
in areas such as community development, health and so forth. Given
the many constraints listed by Mr. Speller, have programs in this
area sponsored by the international community and by CIDA had
successful outcomes? Have you done any follow ups?
Mr. Stephen Wallace: Thank you for the question, Ms. Picard.
At the outset, I pointed out that CIDA's mandate in Central Europe
and in the former Soviet Union was not the traditional mandate of
trying to alleviate poverty. In the Caucasus and Central Asia, our
role is to provide direct support during the democratic transition
to a market economy. Aside from providing humanitarian aid to the
most disadvantaged and vulnerable people in the region, for
example, refugee populations, we are mainly involved in promoting
change and new opportunities under the difficult circumstances
alluded to by Mr. Speller. We have been working in the region for
five years on all levels, that is in terms of policies, laws,
institutions and regulations.
We have developed what we think are very valuable partnerships
which have resulted in direct changes in the region. However, this
is a long, drawn-out process. As I said, we have made some progress
in recent years, but the going is fairly slow. In my view, we need
to continue focussing our attention on reforms if we truly want to
see some concrete results in the medium and long term.
Ms. Pauline Picard: Can you give me some concrete examples?
Mr. Stephen Wallace: Yes. In the natural resources sector, for
example, the Canadian firm of Macleod Dixon has revised all of the
country's investment codes. This has resulted in improved
transparency and in bringing the codes in line with international
standards for foreign investment.
Elsewhere in the Caucasus, in Georgia and Azerbaijan, for
example, we support efforts under way to join the World Trade
Organization. We offer technical assistance through the Centre for
Trade Policy and Law of Carleton and Ottawa universities, to help
these countries adopt international standards and meet the
commitments that go along with joining the organization.
Through our work with the Organization for Security and Co-
operation in Europe, we are also involved in electoral reform
efforts. We work with partners in various fields of endeavour.
Certainly, if our presence on the ground was greater and if we
had a little more experience and some additional resources, we
would be able to do more. However, I do believe that Canada is
beginning to make its mark.
Ms. Pauline Picard: Thank you.
The Chairman: Ms. Picard, you indicated that officials from
the Centre for Trade Policy and Law would be in Georgia at the same
time as us. We will therefore have an opportunity to meet with
Canadians working in this field and to get a better understanding
of the work that is being done.
Ms. Augustine, followed by Mr. Rocheleau. We have to wrap up
at 12 noon sharp, and Mr. Wright has to leave a few minutes before
Ms. Jean Augustine (Etobicoke—Lakeshore, Lib.): I
will be brief because most of the questions that I
jotted down were answered.
Mr. Chairman, I'd like to ask who, in a very concrete
way, are the partners on the ground with CIDA? How can
international efforts be further coordinated? Also,
since we hear that the major limitation on development
is the geography, the fact that there is no
international ocean to move any kinds of goods around,
what are the regional trade links among the countries?
Are they part of ECO, the Economic Cooperation
Organization that was formed in that area? Also, what
is happening to encourage small enterprises to develop
and to move goods and other kinds of services in some
collaborative and cooperative way in the general
region? And is CIDA a player in that regard?
Mr. Stephen Wallace: Thank you very much, Madam
I think that CIDA partners can be split, really,
between Canadian and multilateral partners. In terms
of Canadian partners, there is a range that goes from,
for example, in Tajikistan, with the Aga Khan
Foundation, which is working at very much the
grassroots level. You'll see that with CARE Canada.
You see that with World Vision in the Caucasus as well.
Then you move along from that kind of grassroots
action, including Canadian Feed the Children, for
example, on refugee support, through to the
institutional and capacity-building area where you find
an awful lot of Canadian universities, particularly
western Canadian universities and institutions: Olds
College, Southern Alberta Institute of Technology,
University of Saskatchewan, Alfred College, St.
Mary's, and McGill University. There you find an awful
lot of attention being put on the kind of training and
capacity development that is linked to a market economy
and the democratic transition.
Then you move along the line to the
policy regulatory area, where you get specialized legal
firms, such as Macleod Dixon, involved in some
elements. The Centre for Trade Policy and
Law is involved in that.
I'll move to the second part of your question,
which is, when you are dealing with real problems of
geography and lack of investment over the last 10
years in economic infrastructure, how do you move
forward to position that area of the world to play its
rightful role? Canada does not have the resources to
play a major role. What we can do, with very modest
amounts of money, is help position Canadian firms, such
as the SNC-Lavalins of this world in
Turkmenistan and the SaskPowers in Kazakhstan, to
play useful roles on the essential infrastructure side,
which can tap into the large-scale resources from
international financial institutions.
You're trying to mobilize enough
effort so that you have minimal levels of investment,
but investments as part of a context that makes
best use of those investments.
We operate on about four levels on this, but, I must
repeat, with fairly modest increments of money. Our
average-sized project is only in the range of a few hundred
thousand dollars. We're not talking large sums of
money here. But they try to target those four elements
along the way where Canada can play a useful role.
Mr. Robert Brooks: Just to talk a little bit about
your question on trade directions, it's important to
remember that all of the countries of central Asia
and the Caucasus were part of a Soviet industrial
complex. The Soviet industrial complex was based
on the principle that all of the constituent activities
would benefit the centre in Moscow. So you have
within the organization small, discrete units
that don't produce anything other than parts for a
greater whole, and that greater whole was controlled
The consequence is that you still have the lingering
need for enterprises within these countries to continue
to do business with their former Soviet partners. The
best example is the electronics industry. The parts
were made in large plants in Armenia and shipped off to
Russia. But it was only the parts. It was never made into
One of the great challenges is to try to reorient that
manufacturing into western standards so that they can
sell to the Sonys, the General Motors, or the Motorolas
of the world. The other thing is to try to use those
to build finished products within the area.
We work quite diligently, and Canadian companies are
attracted to these kinds of opportunities. That's a
direction we've been taking in working with a lot of
the small and medium-sized enterprises.
The Chair: Actually, that's a very interesting
observation, because that's what we found as well when we went
to the former Yugoslavia. Everything was run
from Belgrade and Serbia. So you'd go to a little
country like Macedonia, and they'd say “We didn't make
anything for ourselves.” Their whole trade patterns
have been blown up because they're not allowed to go to
Serbia any more, and they can't go anywhere else because they
don't have anything. There's no local industry that
is functional. When the whole thing falls apart,
everything falls apart. The same thing has happened in
the former Soviet republics.
I won't get you to answer
Mr. Robert Brooks: I was just going to say that my
favourite one, though, is the manager of the Kharkiv
tractor factory, who was asked to make some more
tractors, and he said he needed diesel engines. They
said “You've been putting diesel engines in these
tractors for the past 25 years.” He said “Yes, but I
don't know where they come from.
They just show up at the dock.”
The Chair: A command economy problem, exactly.
Mr. Yves Rocheleau (Trois-Rivières, BQ): Do we have to stop at
The Chairman: I'm sorry, but yes, we do.
I think you wanted to make the point, Mr.
Paradis, that we want a list of the projects CIDA
is involved in, and I understand that list will be
Mr. Denis Paradis (Brome—Missisquoi, Lib.): We would like a
list of CIDA projects, and perhaps also a list of projects in which
CIDA is participating along with the World Bank and other agencies.
The Chair: We're adjourned until 3.30 p.m.,
when the two ministers and Mr.
Otunnu from the United Nations will be appearing.
Thank you very much.