Proceedings of the Standing Senate Committee on
National Security and Defence
Issue 2 - Evidence - Meeting of October 24, 2011
OTTAWA, Monday, October 24, 2011
The Standing Senate Committee on National Security and Defence met this day at 4:01 p.m. to examine and report on Canada's national security and defence policies, practices, circumstances and capabilities (topic: Protecting Canada from Iranian attempts to acquire dual-use technology).
Senator Pamela Wallin (Chair) in the chair.
The Chair: Ladies and gentlemen, welcome to this meeting of the Standing Senate Committee on National Security and Defence. Today we are tackling a new area, so we will try to lay out some of the ideas for you here.
The Prime Minister has called Iran probably the most significant threat to global peace and security today. Just this weekend, U.S. Secretary of State Hillary Clintonwarned Iran to be careful not to miscalculate U.S. commitment in the Middle East region. It was a tough word of warning to Iran's leader, President Ahmadinejad, who had stated again that he would not only continue to be in Iraq but also would probably step up his activity.
This concern is very real. Obviously, the U.S. does not want Iran to meddle in Iraq after the U.S. withdraws all of its combat troops by the end of this year. The U.S. is also worried about the alleged plot by Iran to murder the Saudi Arabian ambassador on U.S. soil in Washington. Just a few days after that story broke, the Canadian Minister of Foreign Affairs imposed sanctions on five Iranian nationals believed to be complicit in the assassination plot. Of course, there is ongoing concern that Iran will develop nuclear weapons; we believe they hold stockpiles of enriched uranium. However, Iran has not had, to our knowledge, the high technology it needs to make a bomb. That technology often has other legitimate uses; herein lie the issue and our interest in it.
Iran has worked secretly to get this so-called dual-use technology from abroad, and one obvious target is Canada's booming energy sector. Iran knows that Canada and other countries will cooperate to prevent this from happening by various means, including sanctions and export controls. These national security measures are managed by our Department of Foreign Affairs and International Trade, so we have asked representatives from the department to be with us today. A bit later we will hear from two academics who will take a look at the state of play inside Iran.
From Foreign Affairs and International Trade, let me introduce David Sproule, Deputy Legal Adviser and Director General; Roland Legault, Deputy Director, United Nations, Human Rights and Economic Law Division; and Paul Galveias, Senior Export Controls Officer. Mr. Sproule, please set the stage, if you would. People were almost surprised to hear about sanctions being imposed and moves coming so quickly. Can you tell us what they are and what the structure is?
David Sproule, Deputy Legal Adviser and Director General, Foreign Affairs and International Trade Canada: I would be happy to, Madam Chair. Speaking generally, two statutes confer regulatory authority on the Governor-in-Council to impose a wide range of sanctions. One is under the United Nations Act, and the second is under the Special Economic Measures Act, SEMA. The UN Act authorizes the Governor-in-Council to make orders and regulations that are necessary or expedient to implement decisions of the Security Council of the United Nations, calling upon member states to impose sanctions. International law requires Canada to implement these decisions of the Security Council, and the UN Act provides a convenient mechanism to meet this obligation.
Virtually all UN sanctions decisions are implemented by this means. The only exceptions are travel bans imposed by the Security Council that are implemented through our Immigration and Refugee Protection Act. The second statute, SEMA, authorizes the Governor-in-Council to impose sanctions even when the UN Security Council has not taken such a decision. To do this, there are two steps. First, there must be a recommendation of an international organization or an association of states of which Canada is a member that calls upon its members to take economic measures against a foreign state; or second, the Governor-in-Council must be of the opinion that a grave breach of international peace and security has occurred that has resulted, or is likely to result, in a serious international crisis. The SEMA authorizes the Governor-in-Council to impose a wide range of sanctions in relation to a foreign state, including banning dealings in property, imports and exports of both goods and services, the docking of ships, and the landing of aircraft.
Where Canada, for whatever reason, is not ready to impose sanctions under either of these acts, the Export and Import Permits Act provides authorization to impose export controls. There are two types of export controls: the Export Control List and the Area Control List. The Export Control list is a list of goods that cannot be exported without a permit from the Minister of Foreign Affairs. Goods are categorized by lists, such as the munitions list, the non-nuclear proliferation list, and the nuclear-related dual-use list. The Governor-in-Council may place upon the Export Control List any goods he deems it necessary to control for the purposes set out in the Export and Import Permits Act. The Area Control List is a list of countries to which no export of goods or technology may be made without a permit from the Minister of Foreign Affairs. It applies to all goods in export to those countries, including food, medicine and other humanitarian goods. However, unlike the SEMA, it does not apply to any imports or exports of services. The Governor-in-Council may place on the Area Control List any country to which it deems it necessary to control the exports of any goods or technology. North Korea, Burma and Belarus are currently on the list.
With the exception of the Area Control List, Canada has taken action against Iran under all of these authorities. The UN has imposed severe sanctions against Iran, all of which Canada has implemented through the regulations implementing the UN resolutions on Iran. Furthermore, Canada has substantially extended these sanctions through the Special Economic Measures (Iran) Regulations, including by imposing an additional ban on exporting most items on the Export Control List. This sets out in general terms the framework for our import controls and sanctions.
The Chair: We can respond based on the alleged actions in Washington and the information that came from that. I think the words were that there was believed to be a legitimate connection, so we could single out these five individuals believing it to be a national security threat in some way.
Mr. Sproule: Yes. Mr. Legault, would you care to respond?
Roland Legault, Deputy Director, United Nations, Human Rights and Economic Law Division, Foreign Affairs and International Trade Canada: That is correct. The reason we could do it so quickly in the case of Iran was that the Governor-in-Council had already made a finding that the situation in Iran amounted to a grave breach of international peace and security that had resulted, or was likely to result, in a serious international crisis. That decision was taken in July 2010 as a result of continued Iranian progress in its nuclear proliferation activities. With that already in place, adding those five names was simply a matter of amending the regulation to add five more names. It was a very easy matter.
The Chair: Mr. Galveias, do you have any comment you would like to make in reference to the Export Control List, separate and apart from, and the speed with which it can move or the circumstances?
Paul Galveias, Senior Export Controls Officer, Foreign Affairs and International Trade Canada: The Export control List and the Export and Import Permits Act are quite responsive in that they set out a list of fixed goods on which controls are exerted. Should the Governor-in-Council want to add items to that list, it is possible; it is a fairly responsive system. We work in close concert with the SEMA regulations, so when an application comes in, it is looked at from a number of different facets at the same time.
The Chair: Simultaneously.
Mr. Galveias: Absolutely.
Senator Dallaire: Where is the arms limitations section at DFAIT with respect to this arms control group? Does that still engage in policy matters? I understand that there is a legal dimension. Are they involved in the sanctioning process from a policy point of view?
Mr. Sproule: Yes, absolutely, senator. In consultation with the applicable geographic division, they would usually discuss and make recommendations insofar as the application of various types of economic actions are concerned. Of course, getting back to the UN Act, there is an automaticity about those types of sanctions imposed. Once the UN Security Council imposes those sanctions, member states have an obligation to implement them.
Senator Dallaire: The Government of Iran, through its president, has articulated quite genocidal statements in respect of Israel, not forgetting the fact that they are doing the same toward the Baha'is in Iran. We have seen Israel react in the past beyond its borders to what it perceived as a threat to its country by either delivery means or systems that could create havoc and ultimately destroy that country. From a legal perspective, where is Canada in respect of offensive action by Israel, for example, to destroy existing facilities in Iran?
Mr. Sproule: I am not sure where we are. I am not qualified to speak about where we are from a policy point of view. Generally speaking, if some action were to be taken on the economic side, we would await a Security Council resolution; or if we wanted to do something unilaterally, we would probably choose the SEMA to impose some sort of sanctions of the sort I described in my comments.
Senator Dallaire: We have seen that country take offensive actions against other countries when it has perceived a threat, particularly mass destruction, which has potential in this case. Does the Government of Canada have a position on this, or will it simply turn to the UN on any action that would be taken, potentially, by Israel against Iran on its nuclear facilities?
Mr. Sproule: Fortunately or unfortunately, senator, you are meeting today with two lawyers and a technical specialist.
The Chair: I do want to say that these gentlemen are not here to make or announce government policy. It was to give us a briefing on what rules exist and the nature of those rules in various circumstances. I appreciate your constraint.
Senator Lang: I would like to begin by referring to the dual-use technologies. This is an area that most Canadians would not understand if they were listening to this program as we try to unfold what is happening in the world and how Canada fits into this situation. Could you explain to us how our system of laws and regulations and resources compares to other countries when we come to pay attention to the controlling of dual-use technology?
Mr. Galveias: Thank you for that question, senator. We are a world standard in export controls. Canada engages in a number of bilateral and multilateral institutions. The primary one that impacts our controls on dual-use goods is the Wassenaar Arrangement. It is an arrangement of 40 like-minded states, of which Canada is a member. It looks toward limiting the proliferation of arms and ensuring that the movement of certain goods, including dual-use goods and technology, only goes toward destinations where they do not pose harm to the members of the arrangement or to general peace and stability.
When we are speaking about dual-use goods, we could start with a definition. A dual-use good is an item that has both civilian and military applications but is not specifically or specially designed for military use. For example, we all see people on the news, like journalists or photographers, wearing body armour. The level of protection that the body armour would offer would define it as dual use and therefore suitable for police, military and civilian use and not optimized for military. A higher level of vest would be a military piece of equipment. Dual-use items are items we could commonly see, including cryptographic and night-vision equipment and things along those lines. Our list for export controls, Group 1: Dual-Use List, is derived from the mutually agreed to list of goods at Wassenaar. It is a comprehensive process that arrives at a dense list of items that are controlled. Canada is very well placed in terms of our ability to control dual-use goods.
Senator Lang: One of the areas that may be of interest to a country such as Iran, from a dual-use technology point of view, would be the technology we are developing in the oil sands. Some of these various pumps and related devices can be used both in a military and in a civilian sense.
How are we situated, from an enforcement point of view, if someone has come to Canada with the idea of looking at our technology and taking it to some place like Iran? Where does our enforcement lie as far as that is concerned? Do you feel our enforcement is satisfactory to ensure that that does not happen?
Mr. Galveias: I am in a regulatory position. I cannot speak to how enforcement would be managed or whether or not the people who do it feel their measures or tools are adequate to the task. You would have to ask the enforcement bodies. I can tell you that the Export and Import Permits Act does set out stringent penalties for diversion of goods or export without authorization. A person coming to Canada seeking to export goods that require a permit would, in the absence of one, be in violation of Canadian law.
Mr. Legault: There is an addition to that. The Export Control List is, as Mr. Galveias was explaining, developed to go after specific technologies. In the case of Iran, in 2010 Canada looked at what Iran was looking for in the world market and banned a large number of items that are not subject to export controls because they do not reach the generally accepted threshold of usefulness in either military or nuclear applications. Given the situation that Iran is in, with the sanctions that are already being applied at the UN level, we understand they are also searching for what we call sub-threshold items.
To give a very simple example, think of a certain quality of steel required to work in a nuclear plant. If you had trouble acquiring that quality of steel, you might be willing to accept the risk of working with something slightly below that. There are no export controls in the export control regime on those sub-threshold items. We have banned their export under the regulations passed under the SEMA. That is one of the steps we have taken to try to expand on Canada's regime applicable to this type of item.
Senator Lang: Are there areas of legislation that should be strengthened or broadened, either from the regulatory body or from the enforcement side, so that we can widen the net to prevent any of this information or technology, real or otherwise, being taken from Canada and utilized in a place like Iran?
Mr. Legault: As far as exports of goods are concerned, the SEMA is very flexible. It allows us to ban everything and anything. Using the SEMA, we can ban all trade with Iran, or we can ban only trade in eyeglasses. As far as the simple issue of banning export, we do have that covered through the SEMA. As Mr. Galveias said, I am not the best-placed person to give you assistance with broader questions of what else might be added.
The Chair: The question of standards of evidence for prosecuting people, which we have had discussions about in other contexts, is a separate issue.
Senator Lang: That is under homeland security?
The Chair: Public Safety, I am sure.
Senator Nolin: Mr. Legault, since we are concerned about Iran, from the answers you have just given, could you explain to us what the scope, the magnitude of Iran's involvement is?
Mr. Legault: It would be preferable to put this question to our geographical group dealing with Iran. According to the legal experts, Iran is very active around the world seeking certain products that would be useful for its nuclear efforts. As for the exact level, I'm sorry, I don't have that information.
Senator Nolin: A while ago, I heard Mr. Galveias talking about his inability to provide an answer on the application of the law. Are you better able than he to provide this information?
Mr. Legault: It depends on the law.
Senator Nolin: I'm referring to two entities, two legal documents that have a legislative influence on Canada. Let us talk about the application of these laws. Have many people been prosecuted in Canada? What are the consequences of these prosecutions?
Mr. Legault: That is a very big question, because there are criminal prosecutions, where we seek to put someone in prison, but that's pretty rare. It happened once with Iran recently in a case that occurred here in Ontario. That was with Mr. Yadegari.
Senator Nolin: What were the implications?
Mr. Legault: He was looking for pressure transducers. These are small devices that measure pressure in a nuclear reaction and that may also send it to someone working separately, obviously, for safety reasons. That happens pretty rarely. Lots of products presented at the border, to be exported to Iran, for example, must be accompanied by an export permit — that's Mr. Galveias's work — or a permit issued under the Special Economic Measures (Iran) Regulations. So there are two types of permit.
Occasionally, a product must be accompanied by both; otherwise it's one or the other. These products, when they get to the border, are stopped by the Canada Border Services Agency and the agency asks us whether this product requires a permit. Basically any product that arrives at the border, which isn't food, clothing or that sort of thing, and which is being exported to Iran, is stopped by the agency and they consult us to find out whether a permit is required. If the answer is no, the export continues. If the answer is yes, the person is informed that the operation requires a permit, and the person may then apply for such a permit from the department. If the minister says no, there are several options, but it is the agency that makes the decision. It has to decide whether to take the product, seize it and impose fines or other sanctions. Otherwise, there are two options: simply returning the product to the exporter without taking any action this time or undertaking an investigation that may lead to criminal prosecutions.
Senator Nolin: You mention only one criminal prosecution recently or in recent years. Is that because the activity — the question I asked you at the beginning — is it because the magnitude, the scope of activities between Iran and Canada is minimal or because very few such activities have been brought to the attention of the agencies implementing the laws?
Mr. Legault: I am sorry, I do not know the answer.
Senator Nolin: Thank you.
The Chair: In the Yadegari case you mentioned under the UN Act and the Export and Import Permits Act, what was he found guilty of attempting to do? Was it just an export violation? What is the crime?
Mr. Legault: He was trying to export pressure transducers. These are items that are on the Export Control List and therefore require an export permit and are also banned for export under the SEMA.
The Chair: That is the nature of the crime. It is called trying to export something that you should not.
Mr. Legault: There are several violations built into that. There are offences for failing to abide by the prohibitions in the SEMA regulations. That is an offence in its own rite, punishable at a maximum by five years in prison. There is an offence for failing to abide by the terms of the Export and Import Permits Act, and I believe that runs up to 10 years in prison. There are offences under the Customs Act for lying to customs officials, failing to present proper documentation on export and a number of other related offences.
It is because there are so many offences wrapped into this single action of trying to export something that required a permit without that permit that customs has so much leeway in deciding what action to take. If they are looking at it and not seeing what looks to them like a criminal matter, they will not proceed criminally. They have other options for dealing with the same activity.
Senator Nolin: What was the sentence?
Mr. Legault: I think that it was 20 additional months. He had been in prison for about eight months. I have the document here, so I can check.
Senator Nolin: So his freedom was taken away during the procedures?
Mr. Legault: Yes.
Senator Nolin: And he got 20 months more?
Mr. Legault: I think that is right, I am just checking.
Senator Nolin: Our researchers can check the exact number.
Senator Lang: I want to follow up on the question the senator just asked about how much the Iranians are involved in this type of clandestine manoeuvre in Canada. Is it very small or is it large? You said you did not know. It would seem to me that Foreign Affairs should have an idea if this is a major problem. In most cases, they will not be applying for export permits, I would not think. I would like to get an indication of how much involvement we have to be concerned with in Canada. Most Canadians do not have knowledge of that, but those that are paid to know this obviously are watching and hopefully apprehending individuals who are involved in this.
The Chair: We will put that to our next guests as well, but does anyone have a comment on that?
Mr. Sproule: I am very confident that my colleagues in other departments and other parts of the department follow this very closely and could probably give you a precise answer. This is not within our purview, so we would not be in a position to be able to respond to your question. These things are tracked.
The Chair: We will be following it up, not to worry.
Senator Day: Gentlemen, thank you for being here. As I understand, your role is at the front end in making lists and making recommendations about what should be on lists that prohibit trade in particular areas as opposed to the back end that some of us have been interested in asking questions about, who is violating and what steps should be taken against those that you may consider have violated the regulations and the lists that have been generated previously. Do I understand your role correctly?
Mr. Sproule: Yes. It is fair to say that we are the people who implement our laws and our regulations to ensure that those are obeyed. There are consequences for those who break the laws. In terms of investigation and surveying and gathering information on the breadth of the problems, colleagues from elsewhere in the department or other departments undertake that.
Senator Day: Who is charged with doing that? Is it your group within Foreign Affairs that has technical people who would analyze what is going on in the marketplace out there and say, "I think these guys are doing something that is in violation of our Export Control List," for example?
Mr. Galveias: There is a separation between those who would be involved in marketing or commercial applications and those who are in the regulatory function. Within the export controls division, we have a technical section of engineers. Whenever a good is detained at the border by the Canada Border Services Agency, CBSA, and they wish to get a determination of whether or not the good falls under the Export Control List or under other areas of control, they are the people tasked to evaluate against the control list whether this falls under the ECL under the EIPA. When we find out the classification of a good under the Export and Import Permits Act and determine whether a permit is required or not, when a permit is required for a destination like Iran, we would then consult with our peers both within the department and intergovernmentally so that, while we may not be focused on the same issues, those who have tangential issues would have the opportunity to say, "This matters to me from a geographic perspective, or from a security perspective." They would be able to take that information and say, "What do I need to do with this or what perspective do I need to take from it?" When we do consult on export permit application, we are looking at more than just, "Is this good able to go to this destination based on a control list?" We are looking at it from very clear criteria of whether this is a desirable export or not. In the case of Iran, with the number and degrees of control that are placed on it through SEMA and through the Export and Import Permits Act and attendant regulations, on it, it is a very comprehensive process.
Mr. Legault: I can build on that a little. There are other people within Foreign Affairs plus a number of other departments who are interested in the whole question of counter-proliferation. There is a nuclear non-proliferation division in the Department of Foreign Affairs, and they are the primary group responsible for the policy around how to prevent nuclear proliferation.
At the same time, there are also people at CBSA at the front line looking for items, but there is also a counter proliferation section at CBSA that looks at the kinds of questions of what is leaving the country and what we should be keeping our eyes open for. There are counter proliferation groups at CSIS and CSE, at DND, at the RCMP, and that is what comes to mind immediately. We actually meet on a fairly regular basis to talk over issues of counter proliferation concern. Typically, Iran is first and foremost in the discussions.
Senator Day: That is interesting. It is interdepartmental, and you meet and talk with one other. Presumably that interdepartmental group would make a recommendation to the executive, the Governor-in-Council. If you felt that let us take the example you gave of the steel that is not quite of the quality that fits under the general already established prohibition but could well be used for a reactor type device, you would make that recommendation to the Governor- in-Council that that should be added to the list?
Mr. Legault: Right. We as the lawyers are the people who draft the recommendation and put the whole package together, but the technical expertise that underlies the regulation is spread out interdepartmentally.
Senator Day: The knowledge that this good could be used, even though not on the list and therefore should be probably on the list, comes from the technical people within these various departments; is that correct?
Mr. Legault: Yes. That is correct.
Senator Day: You have referred to regulations, and Senator Nolin and I are interested in maybe more of the legalese than some of the rest of the committee. Mr. Sproule, you went through the list listing the various statutes and regulations and how one flows from the other. If we could have a copy of that list, that would be helpful to make clear in our minds the flow. You talked about the UN sanctions and how we are obligated to follow those, and then the non-UN sanctions under the SEMA, the Special Economic Measures Act. Would it be possible to have that list, first?
Mr. Sproule: We would be happy to give you some briefing materials on those.
Senator Day: Just the various acts and how it flows. It was not clear to me, but do the Export Control List and the Area Control List flow under the Export and Imports Permits Act, or is that a separate list?
Mr. Sproule: They fall under the EIPA.
Senator Day: In my mind, I was trying to decide how much of this is executive privilege, whereby the executive can do it without Parliament having spoken on it in any way, and how much of it is delegated through Parliament having passed these various pieces of legislation, and then Parliament's only other look at it is when a regulation is changed and something is added through our committee that looks at regulations.
Mr. Legault: All of the regulations we have talked about, the Iran SEMA regulations, the UN regulations on Iran, the Export Control List and the Area Control List, are all regulations that are passed on the basis of a grant of power from Parliament to the Governor-in-Council.
I do not know on the Area Control List and Export Control List but, in the two statutes that grant the sanction making power, the UN Act and the SEMA, Parliament has imposed a tabling requirement on the regulations, which gives a chance for members of Parliament to look at the regulations shortly after they are passed. We have to table with both the house and the Senate within five sitting days in the case of SEMA regulations and as early as conveniently possible under the UN Act.
Senator Day: Do they become effective after that period for review or effective immediately with an opportunity to look at it after the fact?
Mr. Legault: Every regulation I have worked on has come into force on registration, and without prepublication, because there are too many risks around diversion and avoidance if you tell people you are about to freeze their assets. They are not pre-published. They come into effect on registration. We announce them essentially immediately after they are registered, and then there is this tabling period. The tabling provision in the SEMA specifically creates a process for Parliament to review the regulation, but of course Parliament retains ultimate authority on all of these matters in any event.
The Chair: Could you give us a couple of other examples? You have referenced the steel, and I think there are some obvious ones if they were a nuclear plant, but are there other things? We will get a longer list, but off the top of your heads?
Senator Day: Another example was the pressure device.
Mr. Legault: The pressure device is a very good example. Mr. Galveias should probably take this up as well, because he has much more of a technical mind than I have. The pressure transducer in question was actually at issue in the case as to whether or not it met even the standard in the regulation, let alone the standard that you would normally see for a nuclear plant. Obviously the court agreed it did meet the standard in the regulation, and that is why a conviction was entered in the case.
Mr. Galveias: I am not cognizant of what Iran is looking for in terms of desirable goods, but in terms of dual use goods, as mentioned before, you could have goods on cryptography for communication or coding. You could have types of steel, goods that just fall short of standard for the Export Control List for Group 1, for example, for the pressure transducers or for valves or for any number of different things that have different applications. It is quite the list. We would be more than glad to provide a copy of list itself.
The Chair: That will be helpful. It would be good to append that.
Senator Plett: In October of 1983, a suicide attacker with an Iran-sponsored terrorist organization, Hezbollah, drove a bomb-laden truck through a U.S. Marine Corps barracks in Beirut, killing 241 people. In 1980, Islamist students had taken over a U.S. embassy in Tehran. In December 2010, a Subcommittee on International Human Rights of the house Standing Committee on Foreign Affairs and International Development issued a report that was not only strongly critical of Iran's domestic human rights practices but also the more general threat it poses to international peace and security.
I think everyone around the table knows that if Iran ever perfects their nuclear weapons, they will immediately test them on Israel. I do not think that is any secret. Now I know that —
Senator Dallaire: Forgive me. Let us not make generalizations.
Senator Plett: It may not be there, for the record. I know you are not part of Defence, but my question is this: From what I understand now, we restrict certain things. We are not going to sell them pressure inducers, and we will not sell them fertilizer. Why on earth would we be doing any dealing with Iran when we know they are the enemy of the entire free world? Now, please do not say you are not the people to ask about that.
The Chair: They may not be the people to ask about this.
Senator Plett: I made the comment on Israel. They do not need to comment on that. I am just asking the question. Why are we dealing with countries that pose a threat to international peace and security?
The Chair: Does anyone want to try and tackle it in the sense of whether there are any other examples of places where we have basically shut down trade or where sanctions are total and complete? I know it is impossible for you to answer that question directly.
Mr. Galveias: The Area Control List is the mechanism by which all goods and technology are controlled for export. Right now, North Korea, Burma and Belarus are three destinations where all goods require an export permit, and the minister has the authority to grant a special authorization for humanitarian goods, for example, and everything else just does not go. That is an example of three places where we have extensive controls in excess of what we have under SEMA.
Senator Plett: Is Korea a larger threat to us than Iran?
Mr. Galveias: I am not in a position to comment, senator.
Senator Plett: It sounds like it is.
The Chair: It is just that decision has been made. That is on the books. This is not in your bailiwick. The question is whether we would make Iran number four on that list.
Mr. Galveias: That is not within our purview.
The Chair: Yes.
Senator Plett, do you have any other comments?
Senator Plett: No.
Senator Mitchell: I would like to have an idea of the magnitude. Do you have any idea what the total economic value of exports to Iran was before sanctions and what portion of that now is under sanction?
Mr. Legault: The information is available, but I do not have it with me. It is tracked by the geographic division. Certainly, we can get that to you. I know it has been under discussion of late. I believe the numbers have gone down fairly substantially. We recently saw the European numbers. They have essentially the same sanctions and their trade figures have stayed almost constant from 2010 to 2011.
Senator Mitchell: I would like to know the magnitude of the costs involved and what percentage of that cost will comprise penalty or pain to that country.
Mr. Legault: We can provide that information.
Senator Mitchell: I notice in the list under SEMA that prohibited among other things is "making any new investment in the Iranian oil and gas sector, or providing or acquiring financial services for this purpose;"
Currently is there Canadian investment? This implies there cannot be any more investment. Is there existing Canadian investment that continues?
Mr. Legault: I would have to double-check that. I am not aware of any offhand. We see a lot of it going through, so we often know, but I cannot rely entirely on my memory to give you a solid answer on that. Certainly, I can look it up and get that information for you.
Senator Mitchell: This might be a naive question but do export sanctions capture the operation of a Canadian firm that is already in place? I just want a general comment.
Mr. Legault: Yes, they do that, as long as it is Canadian. All of the sanctions under both the UN Act and the Special Economic Measures Act apply to persons in Canada and to any Canadian outside of Canada. A corporation's nationality for our purposes is determined by its place of incorporation. If it is created or continued under the laws of Canada or a province, it is Canadian and is subject to following the rules that we impose in these sanctions and to following those rules everywhere in the world.
Senator Mitchell: I would be very interested in knowing what level, if any, there might be of Canadian oil and gas exploration and production in place before these sanctions were imposed; that could be very relevant.
The flip side of the coin is what we do about Iranian assets in Canada. Are there significant Iranian assets in Canada, and have we frozen them or are we considering freezing them?
Mr. Legault: Assets that have been frozen under the Special Economic Measures Act and the UN Act are limited to assets of persons, both entities and individuals, who have been explicitly designated. There are about 340 entities and individuals who have been designated under the Special Economic Measures Act. The UN Act designations are actually taken by either the United Nations Security Council or by the committee of the Security Council that was created to oversee the operation of Iran sanctions. I have not looked at the list lately to see its length, but it is another decent number; so you are looking at several hundred individuals and entities.
Any assets they have in Canada would be frozen, although I am not aware of any significant amount. At least as important and possibly more important is that our asset freezes are not simply a law that says any assets shall be frozen if they are in the hands of a Canadian. Rather, we prohibit any dealings in the property of a designated person, which includes making any goods available to that designated person. In addition to having to freeze any assets that you have on hand, it is also illegal to make anything available to them or to participate in a transaction that is in any way about their property or that would benefit them. It is an extremely broad prohibition.
Senator Mitchell: As a small subset of that, if an Iranian firm invested in enterprises in Canada and made money on which they paid taxes in Iran, as long it was not being prohibited we would not be too worried about that.
Mr. Legault: It would depend on the individual or the entity. If they were listed, it would be illegal, as would the financial transaction involved in transferring the funds back.
Senator Mitchell: What would happen if they wanted to invest in our oil industry now?
Mr. Legault: I believe there is a prohibition on investment in the oil industry, but I will have to double-check the regulations to be sure.
The Chair: I believe that is true.
Senator Manning: Coming back to the opening remarks about the UN Act, I believe you said that most allies follow it to the letter of law when something comes forward. Are any questions raised about it? Is there any dispute when the UN Security Council or someone within the UN places sanctions? Are the sanctions followed pretty much to the word?
Mr. Sproule: Yes because there is a legal obligation to do so.
Senator Manning: Is it international law?
Mr. Sproule: Yes.
Senator Manning: When Canada stands alone on its issues, apart from the UN Act, Special Economic Measures Act or other act, how does it compare with its allies in terms of laws, regulations and resources when it tries to control sanctions? Are laws much different in allied countries or are they pretty much the same? How do we compare to other countries in those terms?
Mr. Legault: It depends on the country, in short. For example, in the case of Burma, Canadian sanctions are much more severe than the sanctions, to my knowledge, imposed by any other country in the world. In the case of Iran, Canada's sanctions, while unilateral, were not taken in a vacuum. We had quite a large effort working with like- minded countries, principally Western European nations, the United States, Australia, not New Zealand, I believe, and a few other less-expected countries, including some in the Middle East. The intent was to try to come up with a less- than-UN but more-than-unilateral series of sanctions that not necessarily everyone agreed to within exactly the same letter but that at least were designed to achieve the same end. Canada, the United States, the European Union and Australia all have sanctions. They will not look exactly like our Special Economic Measures Act regulations but they are broadly similar and go toward the same end.
As we go forward with the existing sanctions, we continue in discussions with the same allies to look for ways of improving what we have.
The Chair: You might want to add to that. I believe your view was that Canada was a kind of model in some areas.
Mr. Galveias: I cannot speak to how we rank in terms of our actions on Iran, but in terms of our consistency in the list of goods we seek to control over all in exports, we are certainly a leader.
Senator Manning: How often is the prescribed list of goods under the Special Economic Measures Act reviewed? What causes it to be reviewed? Who reviews it? How do you add or take away from that list as things go forward?
Mr. Legault: On the Special Economic Measures Act, essentially the same group that I was talking about earlier helps to develop the recommendation. Essentially they constantly monitor what new items might be of interest. The list promulgated in July 2010 has not been modified since. It is a very long list with hundreds of items, but we are always looking at the possibility of changing it. It is a fair bit of work because an amendment involves the same process as doing the list in the first place, which means that a new regulation has to go before the Governor-in-Council and be approved by the Governor-in-Council. It can be done quickly if there is sufficient pressure to do so but, under normal time frames, it is a fairly lengthy process.
Senator Dallaire: To be clear, when you say "regulation" you are talking about the list of materiel and sub-special list. Any amendments to that list must be done in the regulation through the Governor-in-Council. Is that correct?
Mr. Legault: That is correct.
Senator Dallaire: That is the means of oversight whereby staff cannot alter a list without it being reviewed. Is that correct?
Mr. Legault: That is correct.
Senator Dallaire: In the past, we have sold nuclear capabilities with our CANDU reactors to countries that that have used the technology to build weapons. Have the rules changed so that the technology we are selling to country X cannot be used or sold to Iran or North Korea, for example, for that purpose? We have seen what has happened in Pakistan, I believe, with people selling off technology and scientific information.
Mr. Legault: The rules around that kind of proliferation are governed very differently. Canada is a member of the Nuclear Non-Proliferation Treaty, which imposes obligations on nonnuclear weapon states, like Canada, when they trade in what is called, in our case, "Canadian obligated nuclear material." For example, when we export uranium to a nonnuclear weapon state, we have to do it subject to certain guarantees that are overseen by agreements with the International Atomic Energy Agency. There is a fairly comprehensive system of agreements in place. There is the multilateral agreement that oversees the whole thing, the Nuclear Non-Proliferation Treaty, and then there are bilateral agreements between members of the NPT with the International Atomic Energy Agency and between themselves as well. When Canada sells nuclear material to a country, we would have a nuclear cooperation agreement with that country and all of that would be under the overall aegis of the IAEA. It is a separate topic and is enormously complicated. I confess that although I manage the lawyer who does it, I do not do it myself. I would not be the best person to give you advice on it.
Senator Dallaire: The sophistication on nuclear capabilities that could be turned into nuclear weapons and then used is international. Why do we not have a similar capability on small arms proliferation?
The Chair: These are not questions that these gentlemen can answer, senator.
Mr. Galveias: I can give one example. Canada is unique in that section 4.1 of the Export and Import Permits Act establishes an Automatic Firearms Country Control List, which permits the export of automatic weapons from Canada only to those countries with which we have an intergovernmental defence production and, I believe, research arrangement. Currently there are 31 or 32 countries on that list. Any other destination may not receive such items. We are exceptional in the fact that we have such a list within our export control regime of permissible destinations only and excluding all others, as opposed to excluded destinations.
Senator Dallaire: I was seeking to have that on the record. Thank you.
Senator Lang: I want to follow up on Senator Dallaire's question about sending products from Canada through the Special Economic Measures Act that are just below the threshold for the purpose of nuclear but might be strictly directed for the oil industry.
My question is this: Why would the Iranians apply for an export permit knowing that they will have to go through this process and all of the scrutiny? If I were Iranian, would it not be to my benefit to go through a second party, perhaps in Europe or elsewhere, to get these inductors or other products through three or four parties before they comes to me? In that way I can obtain them and not have the scrutiny I would face if I were to apply directly to Canada? What do we have in place to control that type of purchase to prevent products from going through three or four parties before ending up in Iran, which we are trying to prevent from happening in the first place?
Mr. Legault: The answer to the first question is that of course they do that. We have systems in place to try to monitor where things go after they arrive where they were declared to be going. Some of that is intelligence-related and some of it is diplomatic-related. We might hear that something that was supposed to go to Germany was subsequently re-exported to Iran, or other country. That triggers an internal watch on the activities of the company involved in the export to keep a closer eye on subsequent exports in an effort to ensure that anything being sent goes to where it is declared to be going.
The specifics of how all of that is done falls under the Canada Border Services Agency, which is charged with enforcing the customs side of such activity. The CBSA would be able to provide a detailed answer on how they try to prevent that sort of avoidance.
Senator Lang: Does the company that made the initial business arrangement bear any legal responsibility if the purchaser of the material or technology redirects it? Is there any legal responsibility at this end?
Mr. Legault: If the person participated in the transaction knowing what the end result would be, the answer is yes, under the UN Act. If the person did it wilfully, the answer is yes under the SEMA. It would be determined in court and A question before the judge would be whether or not the person had the requisite level of mens rea in order to be convicted of the offence.
Senator Lang: Have we had any prosecutions of that type?
Mr. Legault: We had one recently.
The Chair: We talked about it.
Gentlemen, I know we put you in an awkward position, but we needed to start somewhere. Thank you for laying out the sanctions and the regime around that. For obvious reasons we will pursue this. I thank David Sproule, Roland Legault and Paul Galveias.
We are continuing our discussion of the whole issue of dual-use technology, the relationship with Iran and what tools Canada has in its tool kit to deal with this. We have heard from witnesses from Foreign Affairs and International Trade. They are looking at the legal framework as it exists as sanctions against unacceptable trade with Iran. We will continue to look at Iran's attempts to acquire this so-called dual-use technology by looking at the Iranian regime itself and at the sanctions imposed against Iran by the UN, of which Canada, of course, is part but has a separate structure.
Peter Jones will tell us about Iran and its power structure. He is an associate professor at the Graduate School of Public and International Affairs at the University of Ottawa. He has a long resume, if you want to look at it, but we will only mention the mini version.
Also joining us is Andrea Charron, who has just published a book on UN sanctions. She is a research associate, Centre for Security and Defence Studies, Norman Paterson School of International Affairs at Carleton University.
Neither one is an expert in dual use, and that is not why they are here. Dr. Jones is widely regarded as an expert on the Iranian regime, and Professor Charron can speak to us about the use and power of sanctions. She has said in some written documents that Canada's sanctions regime could be used as a model, but it is also time to look at our machinery, and it is easier to inspect the tires when the car is not moving. That is why we are trying to do this as well. Welcome.
I gather you both have some opening statements that would you like to make. Dr. Charron, would you like to go first?
Andrea Charron, Research Associate, Centre for Security and Defence Studies, Carleton University, as an individual: Thank you. Iran has been operating outside of internationally agreed laws and norms governing nuclear technology and weapons for many years. The tool most often employed by the UN Security Council and individual states to address these breaches to peace and security has been the application of sanctions, coupled with multi-party negotiations.
In the late 1980s, the council called for a voluntary ban on chemical products used to make chemical weapons against both Iraq and Iran for their continued used of them in the Iran-Iraq war.
In 2006, the International Atomic Energy Agency informed the council that Iran was in breach of its reporting obligations under the Nuclear Non-Proliferation Treaty because the IAEA was unable to conclude that there were no undeclared nuclear materials or activities in Iran. In response, the council called on states to prevent the transfer of material and technology that could contribute to Iran's enrichment related activities. Failure by Iran to comply would result in the council's adoption of binding measures under Article 41 of the charter. Since Iran refused to cooperate with the IAEA and did not establish full and sustained suspension of all enrichment related and reprocessing activities, the council decided to apply four waves of mandatory sanctions against Iran in late December 2006. The UN mandatory sanctions include a ban on nuclear and ballistic missile technology products and dual use material, a ban on the export or procurement of any arms and related material from Iran, a ban on the supply of seven categories of heavy weapons and related materials to Iran and an asset freeze and travel ban against individuals and an asset freeze against entities associated with Iran's nuclear program, the Iranian revolutionary guard and the Islamic Republic of Iran shipping lines and associates.
The council has also banned Iran from acquiring an interest in any commercial activity in another state involving uranium mining, production or use of nuclear materials and technology and has recommended that states caution their nationals to exercise vigilance when doing business with entities incorporated in Iran or subject to its jurisdiction.
Finally, there is a voluntary call for states to prevent the provision of financial services, including insurance or reinsurance, or the transfer of any financial or other assets or resources that could contribute to Iran's proliferation sensitive activities.
Canada has adopted the necessary national legislation to comply with all of the mandatory and voluntary sanctions currently in effect against Iran. In addition, Canada has limited its diplomatic relations with Iran and designated additional individuals and entities subject to an asset freeze and travel ban, not only because of the nuclear weapons concern but because of Iran's record of human rights abuses and a recent assassination attempt against the Saudi ambassador to the United States. These measures are above and beyond what is currently required by international law.
The Chair: Thank you for that opening statement.
Peter Jones, Associate Professor, Graduate School of Public and International Affairs, University of Ottawa, as an individual: Thank you for the invitation to appear before the committee. In the brief time I have to make opening statements, I would like to make two overriding remarks.
The first point is that the Iranian government is extremely complicated and complex. There are really two parallel structures within the Iranian constitution, sort of a republican side of the government and a religious or theocratic side. The two exist very uneasily together, and they jockey for power.
Though I think it is sometimes the case that we in the West tend to look at Iran and see someone called the president and see a Parliament and we think that is the government of Iran, in fact it is the religious side of the government that is more powerful under the supreme leader. It is the supreme leader who has overriding responsibility under the constitution for the theocratic mission of the Islamic republic, if I can put it that way, and he has access to a complicated web of patronage and institutions such as the revolutionary guards and so on, which really are the place that the factional fighting of Iranian politics takes place.
The key factions in Iranian politics, as we understand it, are really four in number. First, the traditional conservatives tend to be people who are most resistant to reform and most still affected by the ideas of Ayatollah Khomeini, who founded the revolution. They are highly suspicious of any rapprochement with the West and Israel. The supreme leader is thought to be most comfortable with this faction, although he is supposed to be above and beyond day-to-day politics.
The second are what I would call the pragmatic conservatives. These are people who tend to be willing to tolerate limited reform in the spheres of economic and, to some extent, foreign policy, tending towards pragmatic goals, such as a cautious warming of relations with the West in order to facilitate the economic growth of Iran, but they have been generally conservative in terms of liberalization of the political system in Iran. Former president Rafsanjani is a key figure in this, although he tends to reinvent himself whenever he needs to.
The third is a relatively new group called the principlists. They include many of the people who fought the Iran-Iraq war, many of the younger people who have been shut out of the power structure after the revolution. They advocate a return to the teachings and doctrines of Ayatollah Khomeini. They are deeply suspicious of political and social liberalization. They profess to be suspicious of any openings with the West, and they espouse the idea of redistributing the wealth away from those who have gotten fat since the revolution.
Last are the reformists, who are generally regarded as the weakest faction in Iran. They are a combination of reform-minded clerics, technocratic officials, and so on, who favour a less oppressive social policy, greater economic liberalization and a more liberal approach to foreign policy. Former president Khatami is a leading member of that.
When you look at Iranian politics, it is best to think of it as a four-way matrix. On one axis, you have the republican and religious sides of the government. On another axis, you have the factions that are fighting it out, the issues of patronage, and institutions like the Revolutionary Guard, which are very important. It is this constant interplay of factions, ideas and groups that makes up Iranian politics.
The second main point I would make is that Iranian foreign policy today has many elements from the Shah's day, even as it has new elements from the post-revolutionary government. We tend to think there was a break, and that is not necessarily the case. The perception of many Arab countries in the Persian Gulf that Iran is bullying them is something that goes back to the Shah's day. We tend to forget that the nuclear program began under the Shah. When the Shah began that program, there were many people who felt he was also seeking a nuclear weapon, under the cover of a civilian program. This is not to excuse any of this or to say that it is good. It is just that there was not this marvellous sort of life under the Shah and this terrible life since then.
Obviously, the attitude towards Israel is new, and completely unacceptable, since the days of the revolution. However, I would say that it is not shared by the majority of the people of Iran, at least in my experience of going there. It is not even shared and held across the majority of the factions. The point I would make is that the shrill pronouncements we hear from Ahmadinejad should not necessarily be taken as indicative of all Iranian attitudes. I do not think they are. I think the reality is more complicated than that. If you look at the record, they have tended towards being fairly cautious in their actions, even as they have been rather bombastic in their words. I think the primary objective of this regime is to stay in office.
The Chair: I wondered if you had watched Ahmadinejad's interview, on the weekend, with CNN. He was maybe a little less shrill than usual, but he was being translated. It reminded me of the weapons-of-mass-destruction debate because the questions were posed as to where Iran is in terms of building a nuclear weapon and why they have their stockpiles of uranium, et cetera. He said that they are an open book, that all the investigators are there, and that there is no way you could possibly know more now other than by coming into his own office to look at things. Can you give us your assessment of that?
Mr. Jones: I think that is nonsense. I think they have tried to deceive the International Atomic Energy Agency for many years. I think it is clear that they have been playing games with the international inspections regime. I think there are elements of the nuclear program they are trying to hide From time to time, when it becomes clear they are about to be discovered, they announce that they have been doing this and that. They are playing a very complicated game.
I think the underlying question is whether or not they are trying to build a bomb. Many people who study Iran — and I think I can count myself in this category — think they are trying to acquire the option to be able to do so. They have not necessarily decided to go ahead and do so. There are several countries in the world that are in that category. It is not clear to me that if they were able to build a bomb, they would, necessarily. It is certainly not clear to me that they would use it against anyone. I think the reality is more complicated than that.
The Chair: Do you have any comments on the regime, in general, as you look at it through your lens?
Ms. Charron: He is the expert.
Senator Dallaire: The Americans are thawing a bit in regard to Iran and negotiations. Dr. Jones, you wrote an article for Foreign Policy, in April of 2009, titled "How to Negotiate with Iran." Could you give us the highlights of your argument? I am taking for granted that you refer to the negotiations with Iran led by the United States.
Mr. Jones: When President Obama came to office, he spoke in those terms. He said, "It is time to see if we can have a dialogue with Iran" and so on. It does not seem to have happened. There are a variety of people who will say that that is because the Iranians do not want to talk to the Americans. Certainly from the point of view of the supreme leader, it would threaten the basis of the theocratic regime to have a dialogue with the U.S. There are others who will say that the Americans went about it all wrong. They appointed a group of people to run this dialogue who were interested in creating the mechanisms to punish Iran if it did not come to the table. They became so obsessed with creating those mechanisms that they were never able to persuade Iran to come to the table. I think the jury is out on that.
The great tragedy of U.S.-Iran relations over the past thirty year is that they tend to be two ships that pass in the night. When one is ready to talk, the other is not. President Khatami was genuinely trying to initiative a dialogue when he was president, and President Bush was not interested. This may be another case of that having happened.
In terms of the broader questions of negotiating with Iran, I think we have to step back and take a look at the cultural reality of Iran-Persia and the historical reality of Persia. As I said in my opening remarks, there are many elements of the current Iranian regime that are, when you strip away all the theocratic rhetoric, historically Persian. One element is a suspicion of outsiders. There is an interest in outside ideas and a willingness to debate and discuss, but a suspicion that outsiders are here to pillage and dominate the country. There is a wariness of dealing with outsiders, which has been there historically and not just since the revolution. There is some justification for it in Persian history.
There is a great sense of the significance and importance of Persian culture. I sense that the rest of the world does not accept that and is not prepared to allow Iran to exercise what it feels should be its rightful place in the world, which is as a leading culture and civilization. Some would express that as a chip on the shoulder. Others would say it is more complicated than that.
There are a variety of cultural and historical things that go together to make up an approach to the outside world. When you combine them with the really vicious, internal, factional infighting that goes on in Iran, it is very difficult for a group that wants to change the Iranian approach to these issues to come to the fore and to have the kind of influence or power it would need to make fundamental changes to foreign policy.
Senator Dallaire: It has competition with Turkey in the region. It argues that, with Turkey being so close to Washington, Iran has a far more intellectual, if not geopolitical, leadership in the Arab world, particularly in this Arab revolution. Are there not actions being taken by them to instill their presence amongst the now fragile Arab states, which could shift what might have been Turkey's opportunity, and push it right out of the window?
Mr. Jones: There is no question that Iran would like to have a lot of influence in the Arab world. That is the case, but that was the case under the Shah as well. That is not new.
I think we also have to remember that most of the Arab world and Iran subscribe to different aspects of the Muslim faith, Suni and Shiite. There are some significant differences there. There are also ethnic differences between Persians and Arab. The idea that large numbers of Arabs want to follow the Iranian lead is wrong. Where there is a potential for difficulty is if the Iranians are able to infiltrate the Islamic movements in the Arab world and to bring them around to their way of thinking. They have done that with some of the extremist groups they sponsor in terror against Israel. I am not sure they will succeed in a broader attempt to try to infiltrate and dominate the politics of many Arab countries, particularly if they go in the direction of some form of pluralism and democracy, and if people are looking at the platforms of these Islamic political parties and at who their sponsors are. Having an overt sponsorship from Iran would be a problem for many of these parties.
Senator Dallaire: In relation to sanctions and human rights, I would argue that the actions in Iran taken against the Baha'is are approaching the threshold of genocide; certainly massive abuses of human rights are ongoing. That angle to their make-up should not be taking more of a dominant thematic in how we are negotiating with them and working the whole sanction dimension, which is not purely the technical one, but in fact a fundamental philosophy in terms of minorities in a country.
Ms. Charron: On the sanction front, the Security Council has not been able to make agreement to sanctioned countries based solely on human rights records. When it comes to North Korea and Iran specifically, they have stayed very much on line, which is about nuclear non-proliferation. They do not add on those extra things. That is up to individual states. The United States, the EU and Canada will tackle sanctions and add additional measures, and they are tied to different objectives. It is getting at the human rights record.
For the Security Council, they tend to stay with one issue area. When we are talking about conflicts in Africa, it is about stability and stopping the fighting. When it is "rogue" states, it is getting after the non-proliferation.
Senator Dallaire: My question remains, we are conscious of 600,000 Baha'is being specifically targeted for elimination. Does that not introduce an angle to our foreign policy in regard to Iran that goes beyond the technical dimension?
Ms. Charron: I can speak on the UN side. The UN Human Rights Council now, for the first time, has sent an envoy to look at Iran. I have no doubt they will look at that section, but that is separate and apart from the Security Council and what the sanctions are doing.
Senator Lang: I think we are all very concerned about the human rights situation that has developed in Iran and the little bit we hear about it. We do not hear a lot, but what we do is horrific, if they are taking place on daily basis as some people say they are.
Ms. Charron, in dealing with the sanctions, we have talked about the nuclear non-proliferation aspect of sanctions, but then you also go on in your comments to talk about the financial services and advice to companies that are dealing in Iran.
What is your position? Do you think that Canada should broaden at least Canadian sanctions to Iran in the area of financial services and other services and take a further leadership role in that area as opposed to the present situation that exists?
Ms. Charron: There are the optics and the politics of trying to do more. Certainly I think, for the Canadian public, they would maybe like to see that, but there is also the practicality of implementing these sanctions.
If you look now, the lists are very long. One of the problems now, not only with UN sanctions but sanctions generally, is they are so complicated and require such skill and effort to understand all the different shipping manifestos and deciding which actually applies on which list. It is getting very complicated.
You have to ask yourself if sanctions are the best way to get at an issue like human rights. Sanctions now, by their very nature, try as best they can to protect the Iranian people. That is a comment that has not been made yet. The more sanctions you put on states, the more likely there are unintended consequences that will punish the Iranian people as opposed to the elites that have the power structure to make changes to behaviour.
That is something that the P5 pledged in a white paper to the president of the Security Council, saying, we, the P5, will always consider the unintended humanitarian impacts now when we put in place sanctions, which essentially takes comprehensive sanctions off the table. That is something we need to consider.
The Security Council, with the primary responsibility for peace and security, has essentially gotten rid of one of their most coercive tools, which are comprehensive sanctions. They made that decision because of the effects on Iraq, on the Federal Republic of Yugoslavia and on Haiti. By making the decision not to use them anymore, is that still valid when talking about an Iran or a North Korea? That is something only the Security Council can answer.
The Chair: Or countries independently, by taking unilateral action.
Senator Lang: What is your position? Do you feel what we are doing is adequate, or should we be broadening our sanctions? I understand that side of it, but on the other side of the coin we know that there are horrific human rights violations taking place on a daily basis. We know we have a country — a rogue state, if you want to describe it that way, like Senator Plett referred to earlier — that is a real threat to the region and, in some ways, maybe the world.
Do we sit by and continue just on the one aspect of sanctions or do we broaden those sanctions or do you have an alternative? Are there other steps we can take, primarily in the Western World, to put further pressure on the Iranian government?
Ms. Charron: The issue is whether or not we add additional sanctions. Ahmadinejad is not someone who seems to be terribly pressured by these measures, so adding additional ones — especially by Canada — will not make him wake up tomorrow and say, "Gosh darn it, now I got the message." It is not the way it works. We can apply more sanctions because we, as Canadians, will feel good about it, but we then have to consider the unintended consequences.
For instance, one of the items on Canada's list is open, dual-ended autoclaves. Autoclaves are also used in medical scenarios. The longer our list gets, we may feel like we are driving home the message to Ahmadinejad, that he has to mend his ways, but who will it really impact? It may actually harm the people we are trying to protect even more.
Senator Lang: Could I follow up on the premise of sanctions? The premise of the sanctions is not to make the leadership feel good or bad about it; the idea of the sanctions is so the people generally in the state that you are bringing these to will eventually start to rise up or attempt to rise up from within, as opposed to sitting back and letting life take its course and the elite run the country.
Ms. Charron: That is the not the purpose of sanctions. The UN Security Council has been very specific about this. This is not about regime change. This is about bringing Iran back into the international community and to obey the laws that have been agreed to, and that they themselves have signed on the dotted line to respect when it comes to non- proliferation.
However, sanctions are not an end in themselves, they are not the smoking gun, and they are always done in parallel with negotiations. That is where you see the to and fro. Sanctions only work if you have the ability to turn them on, tune them and turn them up in consultation with negotiations. If you hit them hard with everything you got, you have nothing in reserve to go back to the next time.
Sanctions are not a magic bullet. There has not been a case yet where we have come up with the magic sanctions to make someone automatically turn over.
There is, however, a lot of evidence to suggest that if we are patient, consistent and persistent, it does matter. We are seeing a lot of effects on the Iranian economy that will matter for Ahmadinejad down the line, and could then be what induces them to change.
Mr. Jones: I have a couple of points about sanctions and human rights. I think it is fairly clear to anyone who studied the Iranian state or the Iranian economy, to the extent we can understand it, that the primary beneficiary of the sanctions so far has been the revolutionary guards, their business enterprises and a group of so-called charities known as the bonyads. These are large state institutions, ostensibly there to distribute money to the poor, but they are foundations to dominate the economy on the part of the elites. They have been the beneficiaries of sanctions because other avenues have been closed down. They have been able to extend their control over the Iranian economy. Sanctions may still be the right thing to do, but that has been one impact.
Another impact is that other countries, such as China, have stepped in to fill gaps. The greatest sanction one could impose against Iran, which would have an immediate and enormous effect, would be if no one would buy their oil, but that will not happen because India, China and other countries are dependent on their oil. So that is a problem.
With regard to human rights, I am certainly not going to defend the Iranian human rights record — it is terrible in many ways — but if they were sitting here they would say that in Iran women have many rights and many opportunities that they do not have in many Arab countries. They can drive; they can vote; many Iranian professors and doctors are women and so forth. They would say that we have relationships with many Arab countries and do not talk to them about these things. It is a complicated picture.
With regard to the Baha'i, there is no question that they are persecuted. I am not sure that I would necessarily use the term "genocide." In international law that has a rather specific meaning, and I do not think that that is what we are dealing with here.
Senator Dallaire: Not yet.
Mr. Jones: I do not think it will be, but persecution, no question. Again, the human rights issue is a little more grey than black and white.
Senator Plett: I have a supplementary question on sanctions. Mr. Jones may have already answered it to some extent, but I will ask it of Ms. Charron.
I agree with you that if Canada threatened Iran with more sanctions it would not necessarily have an impact, but we are a significant player at the UN. Aside from China and India probably not listening to these UN sanctions, they will continue to buy Iranian oil. However, there is always strength in numbers, and if the UN would impose sanctions, I do not think they would ignore that and say that they will have no impact on them. They would have significant impact.
What is your comment on Canada trying to lobby the United Nations to impose larger sanctions?
Ms. Charron: Canada is not on the Security Council and it is the Security Council that makes that decision. Yes, we certainly would continue to speak with the U.S., France and the U.K., who are on the council, to say that Canada may or may not be in favour of more sanctions. That is up to the government to decide.
However, the UN Security Council has done some very smart things with their sanctions, which need to be recognized. For instance, they banned Iran from selling small arms, which is one of their big money-makers. Canada should be saying that we want the report of the panel of experts made public, which it is not, because it has a list of many violations that China and Russia do not want to have in the public. When these things are put out in public, people do take notice.
UN sanctions have a lot of potential good. They could make a difference, but it is not quick. Sanctions are not a quick fix. It takes time. Look at South Africa.
The Chair: Who will not release that list?
Ms. Charron: It is the committee first, and then the Security Council decides whether to make it public. Successive members in the latest committee report have said that it should be made public, but because Security Council committees work based on consensus, essentially everyone has a veto. China has done this in the past, especially with North Korea. They do not want information in the public. The panel of experts are separate. They are experts in their own right and they do a lot of great digging and make excellent recommendations. Canada should saying that we need that report made public.
Senator Mitchell: I am very interested in your last comment. Why is it that Canada is reluctant to demand in public that this report be released? Is it because we do not want to offend someone?
Ms. Charron: They may have. I am not privy to the conversations that go on at our permanent mission in New York. They may have, but also it is easier to make those comments when you are a member at the table, and we are not on the Security Council currently.
Senator Mitchell: By virtue of the fact that we lost the seat on the Security Council we are limited in what we can do in this important area.
Ms. Charron: We just have to do it in different ways. We do not have a direct voice on the Security Council.
Senator Mitchell: Is it conceivable that Canada could begin to speak out and say we want to see this report released? Is that not the right thing to do?
Ms. Charron: We could, but that is not a decision I can make.
The Chair: Your point was, I think, that the five members get to decide. If China decides to veto it, we can ask until we are blue in the face.
Ms. Charron: That is right. We can insist, and many Security Council members have insisted, but it is a decision that has to be made by the Security Council and no one can override them. The Security Council is the trias politica of the UN.
Senator Mitchell: Canada could make speeches and make presentations in the General Assembly and say that this is wrong, that we need to see this, that we need to put pressure on the nations that may be facilitating whatever it is that Iran wants to do.
Ms. Charron: We could, but we also maybe should have an idea of what is in the report. It could very well say that Canada has some explaining to do as well. That is the thing; we do not know.
Senator Mitchell: We would like to know that.
Is it possible that Canada is not pushing publicly because there is a possibility that Canada has some explaining to do?
Ms. Charron: Canada has many things on their plate. This may not be, in the grand scheme of things, the number one priority. If a report comes out, will it change the world? No. However, I and many others would like to know what the panel of experts have found vis-à-vis Iran, who is very good at evading sanctions.
Senator Mitchell: Under SEMA certain things are prohibited, and the wording is kind of interesting. Maybe there is nothing to it, but it says that Canada has imposed sanctions prohibiting the making of any new investments in the Iranian oil and gas sector.
Does that mean that there is a lot of ongoing, already-in-place Canadian investment in the Iranian oil and gas sector?
Ms. Charron: I cannot speak to that, but SEMA can capture all the voluntary sanctions that the Security Council has recommended. We cannot do that through our United Nations act. We have the SEMA because it can get the voluntary ones. The Security Council, too, has said that it is recommended that all states be vigilant to look at the sort of dealings they are doing with companies generally to ensure that they are comfortable with that association. The SEMA is probably picking up on that wording of the Security Council.
Mr. Jones: To the best of my knowledge, there is very limited Canadian involvement in this sector in Iran. There are one or two smaller companies that have thought about being involved in Iran, and I think one or two have admitted it publicly. The names escape me now and I would have to look them up, but they are small companies.
Many Canadian companies that are subsidiaries of larger American companies are caught up in the American sanctions and rules. If they were to try to trade with Iran, they would be severely penalized. As well, many companies that are wholly Canadian and not American owned fear that their ability to operate in the U.S. would be very seriously compromised if they flouted the American sanctions law. This is a case where the American sanctions law has caught a number of Canadian companies that may want to be active in Iran.
Ms. Charron: The U.S. sanctions have extra-territorial reach, whereas Canada's do not. We can go after Canadian companies. U.S. sanctions can go after non-U.S. companies, and we are seeing that. Many European gas and petroleum companies said that it is not worth working in Iran because that would impede their ability to work elsewhere because of the U.S. sanctions. The same is true for Lloyd's of London, which will not insure any of the Iranian shipping companies. The sanctions are starting to work, but it takes time. Sometimes we forget that patience is required. We want immediate effect.
Senator Mitchell: Professor Jones, you mentioned that perhaps the priority of the government is to survive in office. I have a couple of questions on that.
Were sanctions or other elements to bring that government down, what would the alternative look like?
You also said that it is not clear that they actually want a nuclear weapon; they have not made that decision. Is this playing with it somehow an assistance to their survival in office, and if so, how?
Mr. Jones: I think it is better to talk not so much about the survival of the government but the survival of the system, because governments come and go. The survival of the theocratic Islamic republican system is what they are concerned about. Certainly at the higher levels, the supreme leader and so on, that is the main objective.
It is not so much a question of what is the alternative to the present government of Ahmadinejad, because he will be gone in a couple of years anyway; there is a term limit. It is a question of what the alternative is to the present system. I am afraid it is rather difficult for me to imagine how that system will be washed away. I wish I could imagine that. Certainly in 2009 there was a massive public uprising that showed everyone the extent to which the system is unpopular, but it is not like Libya where it was based around one man. Loyalty to him was the key thing. In Iran there are a number of institutions that run across the body politic. They all have interests in the continuation of the present system. They have different ideas of what that system might look like 10 years from now; they argue over that.
If someone could identify for me the magic bullet way to get rid the system, I would be for it, but I do not think it is there. It is a question of trying to persuade a significant number of the institutions that comprise the system that a better future lies down a certain path than trying to imagine removing the Iranian system.
With regard to the question of nuclear weapons, that is a question that is highly debated among those who follow Iran. Are they trying to get a nuclear weapon and would they use it if they had it?
Probably most people who study the issue would say they are certainly trying to acquire the option to build a weapon, and that to some extent this attempt on their part is not just ideological. It has to do with the very realist, gritty nature of the position Iran finds itself in. We tend to forget that Iraq used chemical weapons against Iran in the war and no one came to its aid, even though we were supposed to under international treaties at the time.
They perceive themselves to be surrounded by hostile countries in a hostile region. Many of those hostile countries have nuclear weapons or have the capability. There are many who would say that the primary motivation of the Iranians to try to acquire a nuclear weapon or the capability has nothing to do with religion or ideology; it is just good old-fashioned realist balance of power stuff. That goes a bit too far. I think the two — ideology and realist assumptions — intertwine a bit.
The question is, if they were to build and test a weapon, what would that do to them in terms of a sanctions regime and their position in the world? If they were to get awfully close, and close enough that everyone knew they were close and then just sit pat, would that accomplish the aim? It depends on what you think the aim is. If the aim is this more realist dealing with threats that they perceive to them, then getting close and stopping might be enough. We do not know the answer to these questions.
Senator Mitchell: Could you tell me what Israel's take is on the stage of development? Israel would be a real litmus test. They have the biggest stake in this. They have not attacked yet to take it out. They must have some inhibition.
Mr. Jones: If you look at Israeli government statements on this, you will see a fairly consistent pattern that Iran has been 12 to 18 months away from a weapon for the last eight or nine years. This is not to deny the Israeli concern; it is a legitimate concern. However, it is difficult to tell how close they are.
Many people who study the Iranian nuclear program have made the point that in fact they are not in a race; they are in more of a stroll. It goes along for a while and then money runs out or they encounter a problem and then it stops; it goes along for a while. It is not a headlong rush to acquire the capabilities. It is a more of a circular meandering sort of way towards it.
In terms of the threat to Israel, many Israelis would quietly admit, and they do whenever I go to Israel, that they do not expect Iran to bomb them. They know that the response that Israel will send back will be absolutely devastating to the Iranian government, the system and the country as a whole and not just the Iranians. The Americans I am sure would also respond. If this regime's primary objective is to stay in power and survive, I think that the perceived threat to Israel on the part of many Israelis when talking quietly — when the microphones are on they will talk differently — when the microphones are off it is that the problem for Israel of living with an Iran that has a nuclear capability and that threatens Israel will be systemic and long-term. It may be the case that Jewish people who might think about immigrating to Israel will not, or that people there now will say to themselves, "I am not sure I really want to live here any more. This is a threat I am living with." Over time the ability of the Israeli state to assure its population that no matter what happens we will protect Israel will be perceived to have been weakened and that could have an impact on Israeli society. I think that is the crux of the real threat to Israel.
The Chair: Thank you for your comments on that. I appreciate that.
Senator Day: I want to go back to the human rights issue you were talking about earlier. Dr. Charron, you could comment on this. The UN Act is a delegation from Parliament to the executive to enforce any sanctions by the Security Council, if the Security Council decides that sanctions should be imposed. I want to ensure that that is only with respect to the Security Council and not with respect to other agencies of the United Nations such as the human rights agency.
Ms. Charron: The UN Act is our standing legislation that allows us to give effect to sanctions that are binding under article 41 of the charter, so not voluntary sanctions. When the Security Council says we think it is a good idea if you tried this, that has to be done by other legislation. It is just for the Security Council and article 41 binding measures.
Senator Day: It is just for the Security Council, but we can have sanctions and we do that are imposed by Canada against Iran, in this particular instance, under the Special Economic Measures Act. A separate piece of unilateral decision might be influenced by the suggestion of voluntariness, but they are separate from the United Nations Security Council; correct?
Ms. Charron: Yes.
Senator Day: Professor Jones, when you talked about China and India being one of the reasons that the sanctions are not as effective, in effect saying that China and India were breaching sanctions, are you talking about the sanctions that China had agreed to as a member the Security Council or other sanctions?
Mr. Jones: I am not sure I would say that they are breaching sanctions in the sense that buying Iranian oil is not a breach of any sanction. It is available in the open market. The point I was making was that if you want to have the most effective and rapid sanctions regime possible, if the international community came together and all agreed not to buy Iranian oil, the Iranian economy would collapse rapidly because that is the primary source of foreign revenue, but there is no stomach to do that. I was basically backing up Professor Charron saying there is no magic bullet because politically it cannot be agreed to.
In terms of violating the existing sanctions, I am not sufficiently expert to know if that is happening. I certainly would not want to put India in that category. There may be some Chinese entities dealing in things that the sanctions regime says they should not be dealing in, but I am not sufficiently expert to comment on that.
Senator Day: I want to differentiate between the sanctions that China had agreed to as a member the Security Council and the other sanctions. Are you suggesting that agencies in China are going against what the Chinese government has agreed to in the Security Council?
Mr. Jones: I do not know. One hears that there are agencies of the Chinese, arm's-length agencies that are doing business in areas they should not.
Ms. Charron: The U.S. has found individual Chinese that have violated U.S. sanctions. China and the U.S. do not have an extradition treaty and the U.S. has asked them to either extradite the individual or punish him. China has been very lukewarm about that.
We are not sure that China is actually being defiant in sending out the message saying do whatever you can to sanctions bust. One problem is that China does not have the same sort of professional bureaucracy that we have that can shut all the doors. It is not always a case of them being absolutely defiant. It is more the case that they cannot control all sections in Chinese society to prevent this sanction busting from happening. Getting hold of the report of the panel of experts would be helpful.
Senator Day: Much of this is reminiscent of Iraq. What sanctions were in existence 10 years ago? I recall the International Atomic Energy Agency was concerned that they were not being shown everything, and they wanted to return for another look. There was lots of speculation that proliferation was going on. Can you take us back and compare today's sanctions against Iran with those against Iraq 10 years ago?
Ms. Charron: You have to remember that Iraq is an example of Security Council "mission creep" in that the original comprehensive sanctions were because Iraq invaded Kuwait. We hit them hard with comprehensive sanctions, which were the precursor to using force to eject the Iraqi army. The Security Council then kept adding resolutions that started to look at the weapons program of Iraq. The first sanctions put in place were not designed for the express purpose of getting at the weapons but for the express purpose of ejecting Iraq from Kuwait because they had violated international law. The Security Council kept adding more sanctions and the United Nations Monitoring, Verification and Inspection Commission was created to look at whether Iraq had weapons. They were very comprehensive sanctions and very different from all UN sanctions put in place since 1995, which are targeted; and the sanctions against Iran are targeted. The Security Council is trying to pick what can bite a bit without unduly damaging Iranian society.
Mr. Jones: I cannot necessarily speak to the sanctions, per se, but I can speak to the weapons of mass destruction inspections regime, which was not a sanction but something imposed on Iraq after the war over Kuwait. It was extremely intrusive — much more so than the kinds of inspection regimes that countries voluntarily sign up to. Iran has voluntarily signed up to be inspected by the IAEA and other international bodies looking for WMDs. After the Kuwait war, Iraq had things imposed on it that were significantly more intrusive than anything that Iran or any other country is likely to agree to. It was a case of a defeated nation being told that it had to open its books and so on.
We know in retrospect that the United Nations Monitoring, Verification and Inspection Commission process and inspection regime work quite well, even though the Bush administration did not believe it at the time. At least for the last few years before the second Iraq war, Saddam had divested himself of his WMD capability. There is very little chance that Iran or any country will submit voluntarily to the kinds of inspections imposed on Iraq after the first Gulf war.
The Chair: He was pretty clear about that yesterday in his comments.
Senator Plett: You have answered my question about inspections; thank you. You both seem to be pretty much convinced that sanctions are not the perfect solution in this case. As a matter of fact, Dr. Jones, you certainly do not take the same approach that others take to the fact that Iran has nuclear weapons and, if they do not have them then the minute they have them, would use them. That being the case, if sanctions are not the answer, what is the answer? At the international level, what additional measures do you think could be taken, aside from weapons of mass destruction and human rights violations? What are the correct answers if sanctions are not the right thing?
Ms. Charron: I disagree because I think sanctions are necessary, but they are not a tool in and of themselves. They go along with negotiations and with a whole other range of measures that have to be put in place. If we were to get rid of sanctions, I do not think we would be doing anyone a favour. The Security Council is quite clear that the sanctions are in place and will stay. Possibly, we might have more measures in the future if Russia and China can come onside again.
Sanctions are a good option; force is not a good option. The next most coercive thing that the Security Council has in its tool box is the article 41 measures, which include sanctions and creating tribunals. Sanctions are the best option but we must be patient because it will take time.
Mr. Jones: I wish I knew the answer. Certainly, I do not want to imply that I am opposed to sanctions; I am not. To the extent that they can be brought into force and made tough and workable, I support them. Certainly, I support the activities of countries like Canada to keep technology out of the hands of the Iranians. I just do not think that there is a magic bullet. As Professor Charron said, it is many things in combination to put pressure and to try to isolate the system, not the people. Ultimately, change in Iran will come about when the Iranian people are in a position to demand it. I do not see that happening soon. I see it happening more incrementally and by degrees than necessarily as perhaps we saw it in Libya. I wish I could give a better answer.
Senator Day: Would you reintroduce or recommend the reintroduction of comprehensive sanctions, which are no longer being used?
Ms. Charron: No. The Security Council does not have the appetite for that because we have seen that it absolutely devastates the local community. As well, it could create the unintended effect of a rally round the flag by the people saying, " Maybe Ahmadinejad is right; they are trying to get after us and hurt us; carry on with that nuclear weapons technology because we need it."
Senator Day: Sanctions yes, but comprehensive sanctions, no.
Mr. Jones: I agree.
The Chair: It raises a question as we started this whole discussion because of the alleged assassination attempt in Washington and Canada's reaction to it, which put the spotlight on this. Why did they do it? Why would they want to shine the light on their faces at this time on this issue? Is it a mistake? Is it a misunderstanding? Why would they do it?
Mr. Jones: A lot of people are waiting to see the evidence that the Americans say they have and have not put forward yet. My take on this is that it is a very unusual thing for them to have done. Certainly, for the first decade or so after the revolution they were a sponsor of and directly involved in terrorist activities abroad in terms of assassinations and bombings and so on. Their actions were largely against Iranian dissidents abroad but, nevertheless, they did these things in Germany and elsewhere.
About the mid-1990s — 1996-97 — it seems to have been the case that former president Rafsanjani was able to make the case that it was not succeeding in exporting the revolution and that it was isolating Iran. Most people in the intelligence world take the view that Iran stopped being involved directly in terror at about that time. Certainly Iran remains a sponsor of terror, without question. They provide training, money and weapons to those who carry out these deeds, but have tended to step back and not want their fingerprints on this kind of activity when it happens. If they were involved in this alleged assassination attempt, it would signal a change, which we do not understand. Perhaps it is because there has been an internal shift in the balance of power in Iran and because radicals are more influential. We do not know yet. It is also the case that this may not be what it appears to be. Intelligence has been wrong before and people have jumped to collusions thinking that it is something that the Iranians or other people have done before. The Americans have made mistakes along these lines before, such as in the anthrax bombing case and in the case of Iraq's weapons of mass destruction. Certainly on the face of it, most Iran experts take the view that it is a crazy plot in that it involves all kinds of people that the Iranians have never dealt with, such as the Mexican drug cartels. It seems a bit farfetched, so I am waiting to see if it is true or not, frankly.
The Chair: Thank you for providing some context. We are out of time. Senator Dallaire, do you have a final point?
Senator Dallaire: It is okay.
The Chair: I thank you, Dr. Charron and Dr. Jones, for coming, particularly on such short notice, to give us some background,
(The committee continued in camera.)