Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 1 - Evidence - Meeting of September 29, 2011
OTTAWA, Thursday, September 29, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:35 a.m. to examine and report on the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
The Chair: The Standing Senate Committee on Foreign Affairs and International Trade is here to continue its study of, and to report on, the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters.
We have heard several witnesses from several quarters, and we are very pleased today to have before us Mr. Robert Wood. Mr. Wood has worked with the Economist Intelligence Unit since 1997. His specialization is sovereign currency and banking sector risk in Latin America. He is responsible for the Economist Intelligence Unit's coverage of most of the key economies in the region and, in particular, Brazil. That is why we are very pleased that he is here to contribute to our study.
His academic background is in the politics and economic development of Latin America, and he has degrees from the University of Bristol and the University of Sussex.
We are very pleased that you are here. I know that you know a bit about our study and some of the witnesses, and we look forward to your comments. Welcome to the committee.
Robert Wood, Senior Editor/Economist, Economist Intelligence Unit: Thank you. On behalf of the Economist Intelligence Unit, it is an honour to be called to give testimony before this Senate committee on Brazil.
As you say, I have been working for the Economist Intelligence Unit for over a decade, looking at Latin American countries and, in the last three years, specializing in Brazil. I would like to give some very brief opening remarks on economic policies and performance and the political environment in Brazil, and then touch on foreign affairs. Then I will open it up to hear what your key interests are, and we will take it from there.
In terms of economic policy, Brazil has, in the last 10 to 15 years, stabilized its economy. It has also established a relatively solid macroeconomic policy framework that has paved the way for higher growth rates than in the past. This has also made it more resilient to external shocks, as was evidenced after the collapse of the Lehman Brothers bank in late 2008. Brazil, if you like, had a good crisis.
This macroeconomic policy framework, which other large Latin America countries have also implemented, consists of an inflation targeting regime; a floating exchange rate, which is to a certain degree managed, particularly in recent times with pressures on the currency to appreciate, which policy makers are concerned about; and as the anchor, a relatively prudent fiscal stance. These are the three pillars of Brazil's macroeconomic policy framework. Brazil, as you may know, suffered a period of hyperinflation in the late 1980s and early 1990s. This policy framework, which was begun by former President Henrique Cardoso in the mid-1990s, has helped Brazil to grow at faster rates.
In terms of economic policies other than macroeconomic policies, Brazil seems to be pursuing a relatively active industrial policy. Although they always had a fairly mixed economic model, in recent times we have seen a greater willingness to pursue active industrial policies. We see this through a very strong role for the state development bank in providing loans to different sectors of the economy and, to a certain extent, in pursuing a policy of promoting national champions not only in Brazil but also as Brazilian companies seek to engage in trade and investment abroad.
In terms of trade policy, as one of the members of Mercosur, Brazil is bound to a degree by the terms of Mercosur's policies, so it has been unable to pursue and has not pursued that route. In terms of securing bilateral free trade agreements, countries such as Chile and Mexico have been very successful and have a raft of bilateral FTAs that have helped them to increase trade. Brazil, through Mercosur, has been less active in that role and has pursued instead a multilateral approach through the Doha Round of trade negotiations. For many years, Brazil, through Mercosur, has been in the process of talks with the European Union on a bilateral bloc between Mercosur and the EU, but that has not gone anywhere. Mercosur's specific concerns are around agricultural access in the European Union market.
In terms of economic performance, Brazil is the seventh largest economy in the world, overtaking Canada a few years ago. It is a $2-trillion plus economy. According to our forecasts at the Economist Intelligence Unit, by 2030 Brazil could well be the fourth largest economy in the world, overtaking Japan and being behind China, the U.S. and India. In the next decade, Brazil should also become the fifth largest economy.
In the last few years, with this improved macroeconomic framework, we have seen faster growth, typically lifting the growth rates from around 2.5 per cent in the decades prior to 2003, when Brazil was still trying to stabilize its economy, to 4 to 4.5 per cent and slightly above. Although Brazil's potential growth rate is obviously still exposed to the vagaries of the global economy, given economic cycles, it is my view that Brazil can grow by 4.5 per cent for the next five years without too much difficulty.
Over the last few years in Brazil there has been rapid growth in both export and import trade. Brazil has been quite fortunate in that prices of its export commodities have risen sharply thanks to demand from China. We see this continuing to be a positive supportive factor for China in the medium and long term.
Foreign direct investment flows have also taken off, not only going into Brazil — $48 billion of inflows last year — but also FDI outflows from Brazilian companies engaged in M&A and other activities in overseas countries, including, of course, Canada. Expect these trends to consolidate over the medium and long term as Brazil becomes the fifth or fourth largest economy in the world.
Briefly on politics, because I think the Senate is more interested in the economy and economic policy, Brazil has seen a consolidation of its democracy since the end of military rule in the mid-1980s. There is still a lot of work to be done, particularly in strengthening political institutions and rooting out corruption in the public sector, but it seems to be on the right path.
One of the key issues in the political system in Brazil is that it has a very fragmented political party structure with more than 20 parties in its National Congress. There are also a lot of regional politics, which complicate the overall picture. The highly fragmented structure of congress means that it is difficult for policy makers to pursue ambitious radical reforms and push them through National Congress. In the Rouseff government, we are seeing an attempt to push forward on progressive reforms on a very incremental basis. There are some structural reforms that would benefit Brazil in the longer term, and some issues need to be addressed.
In terms of foreign affairs, in line with the rise in its economy, Brazil has sought a greater role on the international stage, particularly through the G20. Brazil really wants to punch its weight on the global stage. As you may well know, Brazil aspires to secure a permanent seat around an expanded UN Security Council one day.
Those are my opening remarks.
The Chair: Thank you. You have touched on many of the points that we are concerned about.
Senator Downe: In your assessment, where would Canada fit in terms of Brazil's priorities?
Mr. Wood: Is that in terms of an export and foreign investment market?
Senator Downe: Every government has set priorities. Brazil is a rising presence and the largest presence in South America. They are trying to establish links with Turkey and Egypt and other countries on different issues. I guess my concern is how far down is Canada on Brazil's list of things they intend to complete.
Mr. Wood: In the past few years Brazil, particularly under former President Lula da Silva, has pursued a strategic policy of south-south cooperation. This is part of a political project coming from his workers party to satisfy their political desires to see greater independence from advanced economies and as a way to catapult Brazil onto the global stage via Brazil having a greater role within the BRIC, for example. Although many within the BRIC have different national interests, Brazil feels that as a bloc they might be able to gain greater leverage over the advanced economies in order to reform, for example, international financial institutions. I think that has been one of Brazil's interests.
My specialization is not on Canada, but Canada has been, I understand, quite active in the G20. Brazil has also been very active trying to get more power over to the G20 rather than the G7 grouping. Ultimately, that depends on the global power gain, but if Canada is supportive of Brazil's aspirations to play a greater role, then I think that would be well received by the Brazilians.
More generally, there are economic areas where Canada and Brazil have quite complementary interests. I am thinking of agriculture, energy and renewables. We have seen this in terms of Prime Minister Harper's visit in August to Brasilia and Ms. Rousseff's signalling that she will come to Canada. We are seeing closer relations between the two countries anyway. During those meetings, there were advances on the bilateral agenda and there were several issues there that have already been picked up and will go forward.
Senator Downe: If you are on the Brazilian side of the table, your country is rising; regionally your competitor would be Mexico, I assume, but internationally you look at Canada, which is a member of the G8, but you have a larger economy. Would Brazil not be trying to replace Canada in many of these international forums? We are a rotating member on the Security Council. They want to be a permanent member.
Mr. Wood: I would say that they would continue to try to pursue their own interests of making Brazil more important in these global fora. Canada, my understanding is, also aspires to a permanent seat around the UN Security Council, so there would certainly be some rivalry there, depending on how that Security Council would be expanded if it ever comes to pass.
To that extent, certainly in that body it would be seen as a rival.
Senator Finley: I have been in Brazil several times. It is an exciting place. I love the country dearly. I have certainly listened to many very rosy prognostications on the subject of Brazil and this economy and its trading status within the world.
However, recently I have read or heard of a number of initiatives taken by the Brazilian government, such as finance, which would indicate perhaps that there is a serious road bump in its international outlook, creating almost a siege mentality. I think your magazine described it as almost a siege mentality. They have recently increased, effectively, the import duties on cars by some 30 points. They have taken other steps. Yesterday Ambassador Bell three times used the word "irritants," terry cloth and various other things. If I recall correctly, in your magazine you attributed Chinese military uniforms as being a serious irritant to the Brazilian economy.
They seem to be starting to put up barriers. There is a sort of almost "buy Brazil" mentality. They are doing what they can to ensure that imports are very tough to come by. In addition to which, they would appear to have adopted almost a Chinese game where they are using their central bank with very good credit terms to allow expansion outside Brazil by Brazilian corporations, for example, in the meat processing trade.
Also, we see there are new rounds of wage negotiations starting and the Sai Paulo steelworkers, for example, have had a 10 per cent increase, which in today's society is pretty serious. We also note that they have changed rural ownership laws significantly in the last 12 months. Many foreign investors may have already lost a great deal of money in this particular marketplace.
Is this just a bump in the road or do you see Brazil perhaps retreating into almost a siege mentality? These sorts of indicators do not say to me that this is a real good secure stable place to go and invest.
Mr. Wood: In my opening remarks I touched on policy-makers, industrial measures, the use of the state development bank, the promotion of national champions. That has been a trend. It was a trend before the Lehman collapse. After then the developmentalists, who are sort of a wing of policy-makers who believe in an expanded role for the state in the economy — not just regulation, but in guiding the economy and also actively involved in productive sectors — felt vindicated by the policies that helped Brazil rebound from the global recession in 2009 in 2010. That strengthened the hand of the developmentalists. We have been seeing, in terms of management of the exchange rate, more active policies.
Also, in terms of industrial policy, we have been seeing greater protectionism. You mentioned the rise in one of the taxes that effectively raises the tariffs on imports for car plants already set up in Brazil. This has raised some concerns.
The bigger picture would be that, having seen that Brazil's economy is now taking off or at least growing more quickly — 4, 4.5 per cent a year is sustainable over the medium term over the next 10 years — policy-makers are starting to look at, particularly as that has attracted a lot of interest from foreign countries, and starting to feel pressure from domestic producers, domestic interests. I think at the margin you will see more of these protectionist measures, which, to a certain extent, will raise eyebrows and will raise concerns among foreign investors.
That said, given the growth dynamics, given Brazil's young population, the fact that Brazil is on course to be a $4 trillion economy in the next decade and to continue growing, Brazil will nevertheless be a very attractive destination, but policy-makers are currently taking quite active measures and listening to the concerns, for example, of locally set up car manufacturers. In the last two or three years, before the Lehman collapse, we saw a strengthening of the real and a wave of imports, particularly from China. Brazil has a well-diversified economy and a large manufacturing sector. The manufacturing sector has been very concerned about this wave of imports, particularly from China, because of the competitiveness and the hit to their companies. The policy-makers have listened and responded.
Earlier, before this particular tax measure on car imports, there were attempts to reduce the costs of doing business for certain light manufacturers, such as footwear and textiles, which have been most exposed to increased foreign competition combined with appreciation of the exchange rate.
To sum up in terms of industrial policy, I do think the Brazilians want to see that their economy is growing, and they are prepared to take certain measures in response to competitive pressures.
In terms of macroeconomic policy, in my opening remarks I indicated that the macroeconomic policy framework that was set up and is working quite well for Brazil is based on a fairly prudent fiscal policy, inflation targeting, but it is quite a skewed policy mix; the mix between fiscal policy and monetary policy is quite skewed. You have quite an expansionary fiscal stance, which has to be counterbalanced by high interest rates. This government is unlikely to make much in the way of advancing on reducing the fiscal expansionary stance, which would enable interest rates to fall and would reduce pressure on the currency in structural terms.
What we have seen recently is an end, perhaps a premature end to the tightening cycle because inflation is running above the central target; inflation is running at 7.2 per cent on an annual basis, which is quite a premature end to the tightening cycle. We saw a surprise 50 basis point cut in interest rates at the end of August, and that has raised concerns that the central bank, under pressure from the government, is becoming a bit more tolerant of higher inflation. There are some concerns in this policy framework, which can still do with some perfecting.
The upshot of having high interest rates is the increased pressure on the exchange rate. Brazil has benefited a lot from the commodity supercycle, the very high prices. That has contributed to the strengthening of the currency, together with high interest rates. There is this fear in Brazil that it will suffer from Dutch disease, as it is called, and you would see a narrowing of the industrial base. I would not be surprised to see more measures at the margin, particularly while the currency is strong; it has been quite volatile in the last few weeks.
Senator Finley: You do not see this really as a long, thought-out process. We are not going through a sort of John A. Macdonald policy, with high tariffs. I seem to recall Canada going through that a while ago.
Is it true that Brazil's debts are as level to GDP as the highest in the G20?
Mr. Wood: It is certainly very high, and I would not be surprised if it is the highest in the G20. I could provide the comparisons with the G20 to this committee down the line. They are very high, currently 6 per cent of GDP. This goes back to the skewed policy mix, with very high local interest rates. The benchmark central bank rate is now 12 per cent, and the market is worried that the central bank was lowering too quickly.
As I mentioned before, although Brazil has implemented this sound policy framework, fiscal policy remains still too expansionary. There has not been sufficient consolidation on that side to provide a more favourable policy mix. The upshot of high interest rates is high debt service costs, 6 per cent of GDP. They eased last year to 5 per cent of GDP because of lower interest rates in the prior period. This is a lot more than Brazil is spending on infrastructure investment, which perhaps has gone up to around 3 per cent of GDP recently. It is more than it is spending on its flagship conditional cash transfer program, less than 1 per cent of GDP.
It is a structural weakness in terms of Brazil's outlook. If they could bring down the debt, then debt services would come down and that would free up more resources to invest in social and infrastructure areas.
Senator Finley: How has Brazil, either federally or state, approached minimum wages? Is there a minimum wage structure in Brazil at any level of the government?
Mr. Wood: Under the Lula government when it came into power in 2003, the Workers' Party adopted fairly active income policies through a raise in the minimum wage. Because this coincided with Brazil's break-out phase of faster growth and because it coincided with the commodities boom, which delivered a lot of national income to Brazil, there were above inflation rises in the minimum wage. Although they weighed on the economy, the economy was able to absorb them. I think had the economy been going through a weaker period of growth, then it would have been more problematic for businesses.
However, there was an informal setup under the Lula government, which has been formalized for the next four years under the government of Rousseff. Because the minimum wage serves as a benchmark for other wage rises, if one were to take the view that wage rises should be in line with productivity gains, what we are seeing in Brazil is something different. It is more in line with the formula they use, which is as follows: For 2012, it will take real GDP growth from two years prior — 2010, which was 7.5 per cent — and on top of that add inflation using one of its measures of inflation from the previous year, being this year. If that will be around 6.5 with 7.5, you are looking at a fairly high gain in the minimum wage.
President Rousseff, early on in her government, committed herself to continuing with this income policy. It would be subject to review down the line, but I think what we are seeing are labour unions emboldened by the Brazil growth story, particularly by the minimum wage rise, which will materialize next year. We are already seeing quite a lot of wage disputes across certain sectors; the postal service is currently on strike.
That is also a factor of the tightening labour market. Unemployment has fallen to 6 per cent, which for Brazil, is very low indeed.
These are growing pains for Brazil's economy, but they need to be addressed.
Senator Nolin: Thank you very much for joining us today, Mr. Wood. You are helping us add more weight to our study on Brazil.
In 2010, the World Bank Group created a country index based on ease of doing business. Brazil ranked 127 of 183 countries. First of all, do you attach a lot of credibility to this type of ranking? Second, I have a more specific question about the financial and banking system compared to what goes on in Canada.
Mr. Wood: That is referring to the World Bank's ease of doing business in Brazil and the headlines in 2006. The Economist Intelligence Unit also has a similar business environment ranking, where we are looking at similar indicators, and Brazil also does not perform that well in terms of the ease of doing business.
The World Bank's review was specifically focused on administrative issues, whereas we are also incorporating market opportunities and broader issues.
I think there are problems with respect to doing business in Brazil. There is still and has been for over a decade talk of a "custo Brazil," the extra cost of doing business in Brazil. That goes from companies having to hire an army of tax lawyers to file their annual tax claims. It includes the amount of red tape and logistical difficulties. Since that report came out — again, we have Brazil growing more quickly than in the past — all of a sudden, Brazil is coming up against the obstacles of not having invested in upgrading its infrastructure. It got its macroeconomic policy and fiscal house in order with favourable demographics, and, helped by China's insatiable demand for commodities, we have seen faster growth in Brazil, but they did not make the investments in infrastructure.
Many areas still pose above average costs on businesses. That is to a certain extent a deterrent. Companies look at those costs, try to mitigate them and look at opportunities available otherwise in Brazil to decide whether to operate in Brazil.
The World Bank, in their particular report, looked at these issues from time to time, and no doubt they will be doing a review of Brazil. I would not expect that much in the way of improvements in terms of some of the red tape bureaucracy issues on the tax front, either, because there has not been much in the way of reform there. There are countries in South America — Colombia, for example — that have made faster reforms in recent years and have gone up in the rankings in the World Bank study.
Senator Nolin: In one of your answers to Senator Finley, you mentioned the financial crisis. By comparison, Canada came out of the crisis rather well. Our highly regulated banking system stood up well in protecting us.
How does the system in Canada compare to the one in Brazil?
Mr. Wood: My area of expertise is more on Brazil than Canada. I would agree with your view that the financial systems of both Canada and Brazil held up quite well to the pressures from the first round of the international global financial crisis in 2008. To answer your question fully would require specific comparisons of the different regulatory environments of the two different financial systems.
I would be happier to comment on my view of the Brazilian banking system. They had crises in the past, as did other countries in Latin America, and they have learned from these crises. Going into the crisis in 2008, Brazil's banking system was well capitalized. Their capital requirements are much higher than in other countries. Provisioning is strong, and supervision is strong. Financial institutions were not able to dabble in the exotic instruments that brought down some of the financial institutions in advanced economies. I would say supervision is fairly strong in Brazil, regulation is fairly strong, and the large banks in Brazil have been and continue to be profitable. It is a sound banking system.
I think that will stand Brazil in good stead should the global economy endure another recession going forward.
Senator Fortin-Duplessis: I would like to thank Mr. Wood for being kind enough to appear before our committee. I have two questions for him.
In addition to the central bank's decision to continue raising interest rates in order to curb Brazil's inflation, one of the first decisions made by the new president, Dilma Roussef, was to implement a $31-billion austerity program. You did not talk about that in your presentation. Do you think that the president's measures will achieve that objective?
Mr. Wood: Brazil's response to the crisis was to lower interest rates in 2009, offer tax breaks and endure a narrowing of the fiscal surplus. Essentially, fiscal policy was quite stimulatory in 2009, and it remained, I would say, too stimulatory in 2010, when the economy was already recovering. That stimulus made the economy grow 7.5 per cent in 2010.
My view would be that that was above Brazil's potential, so Brazil had been growing too quickly, and the decision by the incoming Rousseff government to make fiscal savings was welcomed because it signalled a determination to rebuild the primary fiscal surplus to around 3 per cent of GDP. The underlying level had narrowed to 2 per cent of GDP, which is deemed too low to continue to do enough to lower public debt to GDP ratios in the longer term. That was well received.
Fiscal performance this year has been good, but I would argue that it is mainly due to very strong revenue growth, thanks to the rebound last year. Profits from companies and individuals related to a strong economy the year before. As a result, I think the fiscal targets this year are likely to be achieved. Just before the central bank cut interest rates at the end of August, President Rousseff announced a further 10 billion real of savings this year, effectively raising the primarily surplus target. This was enabled by the strong revenue performance. There has been some spending restraint this year. However, some of that restraint has fallen on areas which have negative effects on growth, so investment spending has not grown as quickly as it otherwise would have done.
For this year, the fiscal form is strong. Going into next year, I would be cautious about saying as much because revenue will be suffering from a weaker economy. Brazil is now growing at below potential. On the one hand, it is an adjustment to above potential growth in 2010 and the policy tightening, the industrial sector suffering from a stronger currency and also, going forward, from a weaker global economy. We will see Brazil growing a bit more slowly in the next 12 to 18 months. That will affect revenue. At the same time, you have spending pressures, for example this large rise in the minimum wage, which has knock-on effects on public spending commitments and the need to make these infrastructure upgrades, particularly in preparation for the World Cup in 2014, but generally to upgrade infrastructure.
Senator Fortin-Duplessis: My next question has to do with consumer credit growth. There is a 22 per cent increase in the default rate on bad loans. It is also the sharpest increase in nine years. How do you explain the easy access to credit in the country and the increase in the default rate?
Mr. Wood: The bigger picture is that Brazil is coming from quite a low penetration of credit in the economy. A part of the stabilization process and the deepening of capital markets allowed credit to grow from around 25 per cent of GDP six or seven years ago to 48 per cent of GDP currently. That is quite a rapid rate of growth in recent years. That is despite this very high interest rate.
Overall rates of credit growth were quite rapid before the Lehman collapse, around 30 per cent year on year. Although the overall portfolio is growing around 18 and 19 per cent now, consumer credit might be growing slightly faster. It has come down from the much more rapid rates of credit in the past. Essentially, there are some concerns over the risk that this could lead to an increase in bad loans. Consumer bad loans with the consumer loan portfolio are relatively high, but Brazil's banking system is able to support these ratios because of its high profits and its strong position.
The government has been trying to bring down credit growth. It was keen to stimulate credit as one of the counter cyclical policies after the recession and now it has been trying to tame growth, so they have been reducing credit terms regarding car purchases, for example. It is slowly coming down. There are concerns particularly among the lower income households who, perhaps in the past, have not had access to as much credit. That is a segment that the authorities are looking at closely. If bad loans were to rise there, I would say that it would not pose systemic risks to the whole of the banking system because it is quite solid.
In terms of the risks, employment generation is still quite strong; I think it will ease going forward because of the weaker economy. Central bank interest rates are now in an easing cycle; I would expect another 1 per cent or 1.5 percentage point cut. That will reduce interest rates, so that improves debt servicing capacity for households.
Particularly among the lower income segments, who are getting credit for perhaps the first time, this is a cause for concern. The central bank is now starting to look at smaller credit disbursements and to monitor them more closely.
Senator De Bané: Mr. Wood, what is the percentage of GDP due to exports of Brazil?
Mr. Wood: It is relatively low. In terms of merchandise and goods, it is around 10 per cent of GDP, around $260 or $270 billion. I could get the exact figure.
Senator De Bané: No; that is enough. It is about 10 per cent.
I understand there has been substantial improvement for the people who are living below the poverty line since, in particular, Mr. Cardoso and President Lula. What is the percentage of Brazilians who are below the minimum poverty line, approximately?
Mr. Wood: I would have to get the precise figures to you, which I could do. The focus has been on the rise of around 35 million poor people into the lower middle class. The definition of the middle class in Brazil is quite generous. It is for households who earn more than at least two times the monthly minimum wage. The monthly minimum wage is around 545 real, which is around $360 U.S., double that.
Senator De Bané: Where are those poor people located geographically when you look at the big picture of Brazil?
Mr. Wood: I think still in the northern east, although the northeast has benefited most from these conditional transfer programs. Bolsa Família, the flagship program for 12 million households, has benefited mostly households in the northeast. I think you will still see problems in the periphery of the main cities. The south tends to be wealthier, but the north, despite the improvements, is still weaker on that front.
Senator De Bané: There are several trade agreements among the different Latin American countries. Has the European Union, despite all those Pan-American trade agreements, made some special overtures to woo Brazil? I noticed, for instance, a few years ago, on the occasion of the national day of France, that the only foreign leader they invited and made the guest of honour was Lula.
What are the major players in Europe doing to strengthen their trade relations with Brazil? Is there anything significant there?
Mr. Wood: First, within the framework of the EU-Mercosur free trade talks, those have not been going anywhere. They began more than a decade ago. On the European side, I think there is resistance from the agricultural lobby. Brazil and Mercosur countries would be looking for improved access for their agricultural products in the European Union as a quid pro quo for improved access in manufacturing.
I do not think that the Brazilian manufacturers are particularly keen on another wave of trade liberalization. That is one reason we have not seen much action between the EU and Mercosur.
Senator De Bané: So they are not more successful than Canada in concluding something with the European Union?
Mr. Wood: No, and talks with the EU have gone on for quite some time.
The Chair: I am not sure that is good. We are going to change that dynamic.
Mr. Wood, thank you for coming. You have certainly given us a lot of information. We have touched in a general way, and you have certainly fleshed it out. I must say that going through your list of issues that Brazil faces in this economic time, many of them are the same that Canada is facing, including consumer debt.
I think this is the first time we have had the wealth of detail on the functioning of the system and looking at the political imperatives from the Brazilian point of view. That has been extremely helpful to our study. Thank you for this information.
You said you might be able to forward some of details. Please forward them to the clerk.
Thank you, Mr. Wood, for the work you are doing, the attention on Brazil and the information that you have shared with us today.
As our next witness, we are very fortunate to have with us Dr. Douglas Bland. He is associate professor and former chair in Defence Management Studies in the School of Policy Studies at Queen's University. His research is concentrated in the fields of defence, policy-making and management at national and international levels, organization and functioning of defence ministries and civil military relations.
Dr. Bland is a graduate of the Canadian Army Staff College and the NATO Defense College in Rome. He holds a doctorate in public administration from Queen's University. He was a 1992-93 NATO fellow. I think Dr. Bland can cover practically anything that we have to concern ourselves with in the defence structures within Brazil, the neighbourhood and in relation to Canada.
Thank you for taking the time to come before us. You have testified previously before committees, so you know that a presentation is welcomed, followed by questions.
Dr. Bland, the floor is yours.
Douglas Bland, Former Chair, Defence Management Studies, Queen's University: Thank you Madam Chair. I am pleased to be here and speak to you. I hope I can be helpful to your deliberations and perhaps guide you into some areas that are not necessarily foreign policy, but defence policy is foreign policy in a different way.
I have to give you a technical note before I start, Madam Chair. I served 30 years in the Canadian Armed Forces, mostly as a tank officer in armoured units, as a gunnery instructor and I had fun blowing up things with big amounts of ammunition. After I left the Armed Forces, I was rewarded for that service with two hearing aids and it is taking some time to get used to these devices. Sometimes when I am speaking people will say that I am speaking very quietly and I thought I was shouting. Madam Chair, if I fade away a little bit, give me a signal or say what my wife always says to me, which is, "Will you please speak up?"
The second thing I will say is that I am not a Latinist in the traditional academic sense with broad experience in all the topics and themes of Latin America. I have travelled through the area and spoken to military and other audiences in Central America, the northern tier of South America, Cuba, Mexico and the Caribbean. I am still working on and off teaching courses at the Center for Hemispheric Defense Studies in Washington. Their focus for the last 15 years is to try to build up and reinforce the concept of civil control of the military. That is my background.
I want to go to the foreign policy aspect and talk from a conceptual framework, if you will, in my few minutes here.
Throughout most of Canada's history, foreign and defence policies have been anchored in one central concept, which is that Canada is a North Atlantic nation. The Canadian Forces, for instance, have always been designed in strategy, alliances and capabilities to operate within the North Atlantic region. In my view this orientation has become weaker since the end of the Cold War. In fact, I might say the concept of Canada and the North Atlantic nation is a historic cliché and perhaps not as relevant as it ought to be.
What I have been preaching for several years, as my colleagues say, is that Canada conceptually can no longer be considered simply as a North Atlantic nation. We need to consider ourselves now as a western hemispheric nation. When we talk about this term, I do not use it simply in a geographic sense. Rather, it is a fundamental political and strategic concept that should inform and shape Canada's foreign and defence policies into the future, much as the idea that Canada is a North Atlantic nation informed and, some would say, commanded Canada's foreign policy and defence policies until recently.
It is important to understand that if you accept the idea that Canada is a western hemispheric nation, it does not mean that we simply apply to this hemisphere or to our policies the same subordinate ideas, strategies, policies and Armed Forces structures that we had when we considered ourselves simply a North Atlantic nation. Let me explain briefly again, by concentrating on the security and defence aspects, where this concept that Canada is a western hemispheric nation might take us.
First, in the Americas, and I include Mexico, the history of warfare is different from the history of warfare in Europe. As Latin Americans tell you, and they like to tell you, in Europe and in European history, you fought wars between nations. In Latin America, you fight wars inside nations. Their armed forces may be structured to pose as an armed force preparing to defend the nation from aggression from outside, but they spend most of their time as defenders against coups, insurgencies, and threats to peace, order and good government. It is the military, not the governments, that defines these things.
Second, in Latin American military history, the military has always considered that it is the saviour of the nation. The concept is, in fact, a code of honour within the military profession. They consider politicians, when they consider them at all, as merely citizens, civilians without honour. Military coups, which often occur in Latin America, are not just a rush for power by the armed forces. Instead, they are seen by the armed forces leadership as acts to save the nation from incompetent politicians. In some states, the military's place above the government is written into their constitutions. When we go to a Latin American meeting understanding that coups are something illegal, and we say, "Well, you guys are always committing coups," they will point to the Constitution and say that these are entirely legitimate acts and that is the responsibility of the armed forces to protect the nation, even from itself.
Things are changing slowly. We can talk about what is prompting the military to change somewhat, but it is important for policy-makers in Canada to understand the central importance of civil-military relations and the military's place in these societies. This awareness is especially important if civil governments in the region become unstable, for instance because of economic or criminal activities, and the military then feels it is necessary to step in to correct the problem.
I listened with interest to your first speaker. One of the so-called root causes of insurgencies and coups d'état in Latin America is a sudden decline in wealth, an economic crisis that withdraws support from economic programs and so on. The government loses control. There are riots in the streets, and the military moves in and stays in. The history is there. It is something looming out there in the distance.
These two realities — that insecurity in South and Central America arises mainly from internal causes and that the military plays a central role in national policies and state stability — have major effects on most important national policies in Latin America. These effects must be carefully considered as Canada contemplates its future in the hemisphere.
What does this mean for Canadian foreign and defence policy and perhaps the Canadian Forces?
There are a number of major vulnerabilities to Canada arising out of the region and out of the question of whether or not we become a de facto western hemispheric nation. I will list them briefly.
First, there is increasing violent drug trade. Its effects on the region and on our society are growing.
Second, there is the rise of criminal states, or criminally directed states, namely Mexico. We have a war on our borders, just south of the United States, in which 20,000 people have been killed in the last couple of years. It is not as dominant in the news, but that same problem exists all across Central America especially.
Third, there is a huge population expansion, with a young population growing. The social, political and economic instabilities that may arise in the future are cause for concern. We will perhaps see a surge of refugees and other immigrants heading our way. These instabilities are very difficult to counter. The Canadian Forces deployments in the region will, for the most part, not require large NATO-style land forces. There are few occasions where Canadian army units will be deployed in that region, except in some of the small states. We did that recently in Jamaica. We may do it there and in some of the small countries again, mostly to help them combat drug criminals.
On the other hand, there is a high demand, in our own interests, for surveillance and interception capabilities in the Caribbean Sea, along the west coast of Central America and Mexico, and on approaches to Canada from these regions.
My assessment is that if Canada were to accept fully the concept that it is a western hemispheric nation, the security consequences of that would require, for the first time in our history, an armed force dominated in all respects by naval and air units, not army units.
I am wearing my regimental tie today, but loyalty has its limits. If we become further engaged in Latin America, we are going to have to make choices on defence policy commensurate with our foreign policy.
Let me tell you a little story from a course I was teaching at the Center for Hemispheric Defense Studies in Washington. There was a small audience of officials, military people and politicians from the smaller countries in the region along the north tier of South America, Central America, the Caribbean and so on, though not Cuba, of course.
We had a panel, and sitting beside me was a representative from the Pentagon. We were talking about defence administration — who decides who gets what and where the money goes. He gave a very interesting lecture to these people about how you organize yourself to spend $500 trillion every year, how big the organization has to be and how the planning process works. As he finished, a politician from, I think, Honduras said, "Please, sir, in our ministry of defence we only have 17 officials." The point is that Canada has a significant opportunity here to be something important in Latin America; that is, we can be "not" the United States. I am not talking just about our record versus the record of the United States in the region — the historic conflicts. We can be not the United States in just the way this Honduran politician asked. We have the smaller scale, scope and limitations of public administration and budgeting. We can talk to these people — and we are talking to them and have talked to them — about how to manage armed forces and how to have the civil authority actually be the civil authority. The United States, for all kinds of reasons, is not always welcomed in governments and public meetings in the Americas.
That was my attempt to bring defence policy and foreign policy together for you, and I am pleased to answer your questions.
The Chair: Thank you, Dr. Bland.
For clarification, you said that if we are going to go into this hemisphere, in our interests we should be concentrating on air force and navy and not army. I understand that, but for technical transfers of our experiences and our know- how on the ground, which you seem to be talking about now, would that be a shift from the army to the police? In Haiti and in other countries, we are involved with transferring intelligence/police duties if the threats are internal.
Mr. Bland: That is an important point. What we may transfer and assist in, especially the smaller countries, is the transfer of the concept of the whole-of-government approach to national security problems. National security problems or vulnerabilities are about, as we all know, police matters, legal matters, criminal matters, military matters and so on.
The Chair: Natural disasters.
Mr. Bland: We have been trying, not always successfully, in Canada to develop this whole-of-government approach to these things and we can carry that concept into regions and societies where security means military and the military decides what the problem is and how it will be addressed, not governments.
Senator Wallin: Our focus is on getting our trade house in order, north-south in this region. Militarily we have seen a little bit of that. For example, Haiti was a pretty interesting example of Brazil stepping up and Canada being able to step in. Realistically, given the state of the militaries in the region and what they are primarily used for, as you outlined, do you see that as being anything more than a one-off or that at some other time this might be a part of a coalition of the willing on some event but that there is not really a structure, there is not really a mechanism there for it to be anything more than that, once you take America out of the equation?
Mr. Bland: There are structures that tend to or try to help join the Latin American countries into defence arrangements, places they can talk, chiefs of defence, committee meetings annually, those kinds of things. The OAS brings people together. The Centre for Hemispheric Defense Studies in Washington was organized by President Clinton specifically to encourage the study and the transfer of ideas about civil control in the military and public administration and defence budgets and so on from the United States, and Canada a little bit, into these countries.
The structure is very iffy when you compare it to the North Atlantic Alliance and the membership there and the bureaucracy — sometimes too big a bureaucracy — that manages the alliance's affairs. There is not that sort of overall structure and I do not think you will see one soon. Many of these countries are not all that friendly to each other and they have different aims, but in Brazil's case, Brazil from a military point of view has a large arms production system. We could buy fighter airplanes from them if we wanted and they would be happy to sell them to us.
What Brazil is doing now is trying to become not a Latin American nation but a world nation, as we have already seen. An interesting project — and I am a bit out of date on it and I am not sure how far advanced it is — they are building a major naval facility in the northeast coast of Brazil, and they are launching a huge shipbuilding program to make Brazil at least a South Atlantic nation. They are aiming outwards from this thing.
They are interested, of course, like many nations, in becoming involved in so-called peacekeeping operations or policing operations around the world. They have worked with Canadians since 1956 in these kinds of missions, but there is no concerted Latin American defence strategy or organization.
Senator Downe: I want to follow up on your comments about Brazil reaching out. On the one hand, as you explained, the major role of the military is to protect the state from internal problems, but on the other hand, Brazil is trying to have a prominent position in world bodies. I noticed earlier this year the government reduced the defence budget dramatically by over $2 billion. Is that not against what they are trying to achieve internationally?
Mr. Bland: I think what they are doing is redistributing the defence budget. In many of the countries — Chile under Pinochet, for instance — the defence budgets were manufactured by the military themselves. They owned industries. They owned factories. In Pinochet's days in Chile, the defence budget was set by the price of copper. The military owned the copper. That is how things functioned.
Many of these countries, Brazil I think still, have large conscription, large land forces, expensive even for them in personnel cost. I think you will see that they are shifting resources from some these traditional areas into things like naval forces and their air industry.
Senator Downe: Your view is that they will be increasing their capacity. Will they try to expand their home-grown military production?
Mr. Bland: I think so. You can see that working. They have had a defence industry for themselves for a very long time, for some reasons because they could not get stuff from the United States. In Peru and Venezuela, for instance, there is a large Chinese connection to a lot of this business going on. What is on the surface in the discussion of defence policy and defence budgets and so on might not actually be what is going on.
Again, the military has a very strong position when civilian governments start talking about their business. I said things are changing in civil-military relations. Some countries — Brazil, for instance, and Peru, where I was lecturing on this a few years ago — have now put in civilian ministers of national defence, but when you talk to their officers, they think that is a really odd thing to do, to have someone as incompetent as a civilian to be the minister of national defence. At the time I was in Peru, they were trying very hard to put that concept into play. The civilian minister of national defence was, of course, a former general, so he may have changed clothes. When I was talking to this large audience, myself and some Americans and some British people interested in civil-military relations, officers one after the other got up from the audience to say, how could you be so foolish to have a civilian minister of national defence? I will not go into specific ministers of national defence, but the point I made to them is that we are an old democracy, a liberal democracy, and the civil authority, that is elected members of Parliament is the civil authority, have always been directed by a civilian minister of defence and we fought several large wars successfully under this system.
That puts them down a little bit, but they still are not keen on that and again, it runs afoul of the central concept from the Spanish days that the military is the saviour of the country, the king and the army, not these civilians.
Senator Downe: I hope they did not read the media reports last week about various defence ministers' instructions in Canada being ignored by the military bureaucracy over the last number of years, but we will set that aside for a moment.
You mentioned China. China is a very large trading partner with Brazil now. Are they involved in military procurement with them?
Mr. Bland: Yes, I think so. I do not have the figures, but China has been active in those businesses for some time, not just in Latin America but in other countries.
If I may, I wrote the study, poorly reported by the Canadian media, about people deceiving the Minister of National Defence. I have a copy in my bag here if anyone is interested.
The point is that when Senate committees, house committees, academics or non-government organizations write reports, send them to the Department of National Defence in the period we were looking at through most of the 2000s, they are dismissed, denied, put away, ignored by public servants acting for their ministers and telling the politicians the truth they want to hear. Annoying people like me get short shrift from that organization, but not the military. The military tries to tell the truth to politicians.
If I may, chair, in one instance a commodore, senior officer in the navy, wrote a briefing note to then Minister Eggleton about a study done by the Conference of Defence Associations Institute and, unfortunately for him, he said in his briefing note that because the CDAI had used departmental information that they got through Access to Information Act, and so on, their conclusion that the Armed Forces were steadily declining has to be taken as true. The next day he wrote an apology to the minister for saying such a thing. That study is about that.
I have some hints about making your reports work better, but it is all about making the dog bark.
The Chair: I think that may be another study. We will go back to Brazil, if you do not mind. I have a long list of questioners.
Senator Downe: I am particularly interested in your comments about the reserve and the good news is we have the chair of the Standing Senate Committee on National Security and Defence here. I am sure she took note of that.
Senator Fortin-Duplessis: Mr. Bland, I enjoy having your opinion on the subject of defence and the situation in Brazil.
In 2008, one of Brazil's defence objectives was to increase the country's surveillance capability. That probably required new aircrafts in order to increase troop strength by transferring the 22,000 soldiers from the south to the Amazon. They also wanted to strengthen their navy.
On February 16, 2011, Minister Nelson Jobim — Brazil's Minister of Defence — announced that the government was going to cut the defence budget by roughly $2.4 billion U.S. and that discretionary spending will be set at 26.5 per cent of the total defence ministry budget.
Those cuts are obviously part of the government's measures to ease inflationary pressure.
In your opinion, how will this announcement affect Brazil's short-term and long-term plans of modernizing its army?
Mr. Bland: I think that what they are attempting to do, as I mentioned before, is to redistribute the defence budget while reducing it, but their main effort, again, is going to be withdrawn from the idea of building a traditional infantry, army and tanks and so on, for inside the country, and more to move into very high-tech weapon systems in the air force and in the navy and to build new bases in the North.
The move of the armed forces from the southern part to the northern part of Brazil is a reflection, I think, of the notion that the great threat to their country, once thought to come from their bordering states in the south, has passed. What they see now is a need to dominate the northeastern areas, the Amazon and so on, and to expand into that part of the country that in some respects is not greatly settled. They have units, and I have been to them in the midst of the Amazon at Manaus and places like that, but they are very small units. Now they are moving forces away from their borders, away from the traditional concept of what militaries are supposed to do, and put them back in amongst the people and into those areas. The reductions I would bet, when we have a look at them, will be in personnel but not in high-tech equipment.
Senator Fortin-Duplessis: So the $2.4 billion in cuts will have no impact and everything will keep working in the same way?
Mr. Bland: If they are indeed making a shift from the old traditional national army, based on the army, into more efficient and more effective technical services like the navy and the air force that will give them an outreach, you can argue that the efficiency of the armed forces will improve even as its budget declines somewhat.
Senator Fortin-Duplessis: Thank you very much.
Senator Nolin: Mr. Bland, thank you for accepting our invitation.
Could you first tell me why Brazil still requires compulsory military service?
Mr. Bland: The usual reason for conscriptions in these kinds of countries, and in Italy, for instance, is not to build up large operational forces but for a social experiment. It is a social need. You take people who live in far parts of these very large countries, and do not know each other and do not travel very much, and some of the poorer populations from which people get drafted, are not well educated in what the nation is about, and move them into the armed forces to mingle them together.
I refer to Italy. It was always common, when kids were drafted into the Italian army, that the Sicilians went to Milan and the guys from Milan went to Sicily, so they could create this idea of nation and country. This happens in many Latin American countries, especially the very large ones.
Senator Nolin: In August, the Prime Minister was over there and he and the president issued a statement. Let me read for you a part of that statement:
They took note of progress in the bilateral dialogue and cooperation on defence issues. In this context, they welcomed the realization of the next Political-Military Talks . . . as well as the current negotiation of a legal instrument to provide a framework for Brazilian-Canadian cooperation on Defence.
What are those talks?
Mr. Bland: I am not exactly sure.
Senator Nolin: They take note of a realization of talks.
Mr. Bland: Again, I assume that what the Prime Minister is speaking about there is not military cooperation in the sense of running large operational training missions together, and so on, but has to do with helping to increase the civil authority's control over the armed forces by importing into that country, or exporting from us to those countries, some of the concepts we have for civil-military relations.
Second, as you say, there is a big industrial market for hardware, and the cooperation between Canadian defence establishments, or industries and so on, with the Brazilians is important. I believe that is where we are headed. These kinds of conversations between chiefs of defence, visits to Canada by their people, and the visit to and the participation in some of our larger conferences on these kinds of issues at Queen's, is normalizing relations between us. In the last few years we have had many Brazilian officers come and make presentations and explain their policies and their brand new national defence policy, which was written by the military but accepted by the government. This is also helping to normalize civil military relations in the country.
Senator Robichaud: Mr. Bland, did I understand your answer to Senator Downe correctly when you said that, even though some South American countries have civilian ministers of national defence, the military officers still think that they have the supreme authority? Is that the case in Brazil? Is there a change in the officers' attitude toward civilians when it comes to controlling military activities?
Mr. Bland: In Brazil, Peru and Chile, I think, the adoption of what we would call our concepts of civil military relations have taken root. How deep the roots are is hard to say. The very important change in Chile, for instance, is occurring in the civilian population. Their expectation that the military is subordinated to the government of the day is an important factor in giving the civil authority some clout in the country. Pinochet's army and his thugs, and so on, disgraced their armed forces for a long time. The performance or lack thereof of the Argentinian army during the Falklands War and their record of disappearances and attacks on civilians discredited the armed forces in the eyes of citizens. As citizens become more aware of the relationship between armed forces and liberal democratic societies, those old ideas, while they may still be in the Constitution and in the traditional ideas of the military's place as saviour of the country, are becoming harder to sustain.
One of the things that was important in the development of American policy towards Latin America during Bill Clinton's time as president and the creation of the centre, and so on, was the idea that the Americans, who are the big players, would go to their military counterparts and convince them that if they wanted to have the resources and the support of the United States and the United States' armed forces, then had to get in line with the way civil military relations were run in the United States and other countries.
That is a big lever. I think it is taking root in some countries. However, there are still a lot of difficulties. Although Mexico is not a Latin American country, they have had these same problems throughout their history. They now have a real problem on their hands. Some of the drug gangs, like Los Zetas, are military units that went rogue and are taking over parts of the country. If we enter a period of some sort of significant instability in the region, then the military may want to reassert itself. We will see how that turns out.
Senator Robichaud: Have you seen a change in attitude in Brazil?
Mr. Bland: Yes, I think so. The acceptance of a civilian minister of national defence, even if he was a former military officer, has strengthened the hand of the civil authority in the countries.
You have to understand that previously, the military had no responsibility or accountability to the government, to the Parliament. They acted on their own because in some places the Constitution allowed them to. They were expected and they were told, from the day they were young officer cadets until they were generals, that they were the saviour of country in all aspects. That idea is flowing away, partly because Canada and the United States, and so on, have reinforced, through conferences and meetings with Brazilians, with politicians from other countries and with the military from other countries, that their system is not the proper system.
Senator Johnson: President Lula considered it a great achievement to create the Union of South American Nations. One of their key aims was to promote regional stability and also military and economic integration. This has been followed by the establishment of CELAC, which did not meet this year but I assume will meet next year.
How will the bringing together of these nations without Canada and the United States — they are not involved in this — be an effective military in that region with this union? It is becoming stronger and our research tells us as well that there are closer links with CELAC and Africa to ensure that the South Atlantic also becomes weapons of mass destruction free zones. They are not willing to work with Canada or the United States in this respect. Is that clear or not?
Mr. Bland: I think that they do not see a particular need to work with Canada in these things. They see a need individually, but maybe not as a group, to work with the United States.
Senator Johnson: This affects the OAS in that region, then, does it not?
Mr. Bland: Yes, but military people, politicians, meet in international organizations and discuss, talk about, maybe decide something or other, but they are all individually sovereign. Where they want to go and have a chat is in Washington. That is the centre of resources, and so on. Now, and I guess Brazil is a good example, they also want to be independent, sovereign states in the United Nations, in Europe, with the European Union, and so on. They are reaching that, but the idea of an EU of Latin America is a very long way away.
Senator Finley: I have a question to follow up from Senator Robichaud's. Earlier in your presentation, you talked about the structures of Latin American militaries being inward looking as opposed to being outward looking. Of course, that is notwithstanding wars caused by soccer matches, which has actually happened. You talked about drugs. What would cause a coup in South America generally these days would be drugs, criminally directed nations, the huge population expansion or general instability. None of these things, to me right now, seem to apply to Brazil to any particular degree. The reason for having this study is to investigate commercial business, trade issues with Brazil.
In your opinion — and it is a very simple answer, I think — do you believe that Brazil is in any imminent risk of a military coup?
Mr. Bland: No.
The Chair: Dr. Bland, you said the western hemispheric concept would be in Canada's interest, if I understood you well, yet we are not really talking about military. I believe that historically the reason we did not talk military to military, nor government to government, on military issues was because of the dictatorships, the coups, et cetera. If I understand you, in the last number of years there has been a trust base, where your university has reached out and had seminars that incorporated Brazilians.
Are you suggesting, therefore, a western hemispheric concept of security, which would not be the old military type of security per se but that would incorporate a broader definition of security in the way that I think NATO is struggling to define it more broadly; and that this is an opportune time now, as you say, with the change to civilian oversight, et cetera? Would this be an appropriate time for Canada to be at the forefront of developing this concept of security, mutual reinforcement on our borders, the drug issue, natural disasters, whatever they are, because we are impacted in the western hemisphere together?
Mr. Bland: Yes, that is part of it. I will go back to the concept, as I said, from the beginning of Canada until the end of the Cold War, and as we are drifting away from it, in some respects. Canada, as a North Atlantic nation, was the fundamental concept that developed our diplomacy, our approach to trade, and our relationships with Europe and with the First Nations of the North Atlantic Alliance. It has not always been a military concept. It is a foreign policy concept. That is where our bread and butter was, so to speak — in the North Atlantic. That is where our roots were, our concepts, and the types of government.
If we consider ourselves also a western hemispheric nation, then we can apply these ideas of partnership, connection, institution building, and so on, not just about the military but in all sorts of ways, in trade and so on, as we are doing. We can certainly help influence the security policies of these regions in our own interests, not in their interests, necessarily.
You are quite correct that in most of our history we have had nothing to do with South America, especially Central America, because there was nothing there that interested us much. We are a North Atlantic nation, and that is the way we faced, and now we are facing even a little bit into the Pacific.
As an example of the change, in 1990, at the end of the Cold War, during that period there were no Canadian Forces military attachés posted south of Washington. At that same time, there were 27 military attachés posted into Europe. Since the end of the Cold War, we now have at least seven or eight military attachés permanently stationed in the region, some of them covering several countries, and an active interaction at that level with the Chief of the Defence Staff. General Walter Natynczyk has been to Brazil several times. They visit here and we visit there. It is much more like the interchange you might have seen, or still see, between our North Atlantic partners and our hemispheric partners.
The Chair: It is up to us, therefore, to define what mutual interest is now in the hemisphere.
Mr. Bland: I think so. That should be a set of recommendations that a committee of Parliament or the Senate might want to propose to someone, how to build that interconnection, in our own interests but also in the interests of building prosperity, security and human rights in the hemisphere.
The Chair: You have covered a broad field of issues that you have put on our plate, and we thank you for giving us your perspective on defence and security from a very different point of view. I heard you loud and clear, both on your message and in your volume. Thank you, Dr. Bland, for appearing before us.
Senator Robichaud: On a more technical note, is there a way to make sure the interpretation system works properly in both languages before the meetings start? It can get annoying for us and the witnesses to try and play with the system.
The Chair: Senator Robichaud, I have already alerted the clerk to that. You have been in the Senate longer than I have, I think, or about the same as I have.
Senator Robichaud: No.
The Chair: Not quite as long. However, you have been around Parliament. We have asked for this before. I understood that all the equipment is pre-tested before we sit down. I have gone the extra mile to ask, through the clerk, that they test individual speakers and to advise me, as well as witnesses, which channel is English and which channel is French.
There appears to have been some breakdown of that system today, also with the fax machine running while we are being televised. We have to catch up with modern technology again. I will reiterate the message that has already been sent, and you might help me with that by addressing it to our committee that is in charge of these communications. We need to provide feedback to them.
Thank you for noting this on the record. It is important to continue to ensure that we make our witnesses comfortable and that we can hear in whichever language we choose to receive the information.
Thank you, Dr. Bland.
The meeting is adjourned until next week.
(The committee adjourned.)