Afghanistan Committee on Feb. 15th, 2011

[Claude Bachand, Bloc, Saint-Jean, QC]

Mr. Arora, earlier, you partially explained the procedure from the Canadian point of view. I do not know if you can answer my next question. In your view, are Afghan authorities able to fend off what I call “natural resource predators”?

I know that the Chinese have a strong presence in Afghanistan and are anxious to become established there. That is also certainly the case with some Canadian companies whose activities have been known to be on the dubious side, to say the least.

From what you know of the Afghan system of allowing access to foreign capital, legislatively or otherwise, do you believe that Afghanistan has what it takes to make sure that permits will be issued in a way that will benefit Afghans? Given that their legislation is a bit too loose, is there not a danger that some natural resource predators will make off with the goods, if I may use that expression?

[Anil Arora]

No, I am not aware of the policies, nor of the way the government in Afghanistan works. What I am aware of, as you are too, is that it has been a few years since the government opened the doors to competition by allowing exploration by other countries with a view to determining the interest in developing the resources.

As you know, the Afghan government has received a number of proposals, including one from Canada, but nothing came of it. There will be other occasions, of course. As I said just now, it is really up to the companies to decide if the risk is worth it or not.

[Claude Bachand, Bloc, Saint-Jean, QC]

Was it Rio Novo Gold that showed interest at that time?

[Anil Arora]

I think there were three companies. I am not an expert in that area.

[Claude Bachand, Bloc, Saint-Jean, QC]

Rio Novo Gold expressed a lot of reservations because of the climate of insecurity and the lack of regulation. Do you think that it may be premature for Canadian companies to move forward? You seem to be saying here that companies do not want to move too quickly because of the risks associated with making investments in the country. You can understand that too. Do you share their opinion that it is a little too risky at the moment?

[Anil Arora]

I have no opinion on that. It really is up to the companies to make that decision.

[Claude Bachand, Bloc, Saint-Jean, QC]

Fine, thank you.

[The Chair, Conservative, Garry Breitkreuz]

Thank you very much.

Mr. Obhrai.

[Deepak Obhrai, Conservative, Calgary East, AB]

Thank you very much, Mr. Chair, and welcome to the committee.

The purpose for which we have asked you to come here is to look at the post-2011 involvement of Canada in Afghanistan, as you know, the non-military portion of it.

Up to now, CIDA and everybody else have been investing in good governance and schools, the priorities that came out of the Manley commission. The committee is looking at that. We have just received, from the Library of Parliament, information pertaining to natural deposits and mining in Afghanistan. One area that Canada can focus on, when this committee looks at it, is to see how we can assist the Afghans in the exploitation of these resources, so that it is a source of income and stability for that country.

Experiences have shown that if there's no good governance, the exploitation tends to be under corruption, and the people do not see the trickle-down benefit of these natural resources that exist there.

This committee wants to look at how Canada can help, because of our record. We have an excellent record of corporate social responsibility along with the mining companies out there. We are considered world experts, and I hope we are better than the Australians.

The issue is, how can this committee look at your department to see how your expertise can be of assistance to Afghanistan's development of these resources for the benefit of its people? We are trying to tie the two now. Of course, you've given us your excellent presentation of what you do in Canada, but this committee wants to look at this issue.

What are your thoughts, and what can you suggest to us that would actually enrich areas where Canada could be beneficial in the development of these resources in Afghanistan?

[Anil Arora]

Certainly, that's at the core of why we're here, to share the Canadian experience and why it is that the industry is so successful in Canada, and that the Canadian industry is so successful outside. I talked in my opening about good governance being one of the prerequisites, if you like, in our own experience and in the experience of many other countries, as a precursor, number one, and a good competitive environment that allows for the sharing, if you like, of the resources at all levels of government.

Having a very good economic and fiscal regime allows, for example, in our case, municipal governments to receive property taxes. They benefit from it. Local communities out there have impact benefit agreements with companies, for example, as is the case with our first nations communities, and so on.

[Deepak Obhrai, Conservative, Calgary East, AB]

How can you as a department...? Let's start with one small step. This is a major thing. This is a country that is at ground zero. Governance is bad; things are bad. Give the committee a sense, from your experience, of small steps that we in Canada can take, from your department, that would form the basis of the long term and the short term. Give us some short-term objectives, from your experience, that you think we should have.

[Anil Arora]

First of all, in my view, Afghanistan is not unique in trying to capitalize on a resource it has and trying to make sure it benefits their population. As I said right up front, we are willing, and we have in the past...we have a track record of sharing our expertise.

There's no magic formula in terms of how we've developed our resource in a responsible way in Canada. Through the various multilateral organizations that I talked about earlier, we've shared that very openly. In fact, other countries as well—Australia, the U.K., the United States, some of the Scandinavian countries--also contribute very openly. The literature is prolific on various websites on those organizations, and so on.

We openly encourage our Afghan colleagues to make better use of the dialogue that exists already, and to take advantage of the intergovernmental forum on mining and minerals, for example. There are 43 countries that belong to it. It's a voluntary organization, and they share “the secrets”. We share very openly about good governance, competitive environment, fiscal regimes, a regulatory environment, a competitive strategy that looks at exploitation of the resource, doing it in an environmentally friendly way, and making sure there is good stewardship of those resources. These are hallmarks, if you like. These are the absolute pillars that any government looking to build its regime and its framework should take into account.

A lot of the successful countries that have been able to bring increased quality of life to their citizens have built on those things. So I think it's about taking part in those discussions. They're very open, and they openly allow other countries to join and to share freely within that knowledge.

The reason I also think that's the better strategy is that every country is unique. Some of the remote kinds of issues that Afghanistan is going to face are very different from the kinds of issues Canada faces in our remote areas. We may not be able to simply say here's the recipe, why don't you photocopy it and paste it in your regime? They would benefit from other countries that have environments...that have other issues, that are in various stages of development. I think they can provide a lot of that expertise and assistance that would allow Afghanistan to try to build its capacity in a very uniform way.

[The Chair, Conservative, Garry Breitkreuz]

Sorry, we'll have to wrap it up there.

[Deepak Obhrai, Conservative, Calgary East, AB]

So this organization you're talking about would be the first step, for us to encourage the Government of Afghanistan to join them, right?

[Anil Arora]

There are a number of them: the United Nations Commission for Social Development, the intergovernmental forum on mining and minerals, and there's the ICMM, which I talked about earlier. There are a number of these institutions out there, and I think they should fully participate in those.

[Deepak Obhrai, Conservative, Calgary East, AB]

Thank you.

[The Chair, Conservative, Garry Breitkreuz]

Mr. Harris, please.

[Jack Harris, NDP, St. John's East, NL]

Thank you, Chair.

Thank you for joining us, to our guests, and thank you for your presentation.

Has your department been asked to provide any assistance or lend any expertise to the Government of Afghanistan to help them with technical assistance or to assist in developing a mineral regime for their country? I did hear you say that you were asked—or somebody was here in 2008 and asked—and the only response seems to be that you've had some dialogue. I'm not criticizing you for that, but when you were asked by Mr. Obhrai about what particularly you could do, it seemed to be more of the same. I don't want to make too strong an analogy here, but we could tell the Afghan people, for example, that having a good education system will help them with economic and social progress, but that's not what they need. Are there any programs that you have? Are there any projects that you're undertaking here? Are there any hands-on things that you're doing or could do? I'm not saying that you haven't been asked to do them, that you don't have the mandate to do them, but we're looking at what it is that Canada could do to help the Afghans in the governance issues. For example, the Minister of Agriculture in Afghanistan happens to be an Afghan Canadian who develops a fair bit of his own expertise here in Canada, and he's actively working to help build a good agriculture system and whatnot.

We could suggest, for example, that the Government of Canada could help by having some expertise from your department or that you could bring together from other governments in Canada—because there's a lot of expertise around this country—to provide assistance to Afghanistan. I'll just give one example from the World Bank, which notes the long lead time for the development of a mine, the lack of support infrastructure, and the need for the Afghan government to develop effective revenue management and benefit-sharing policy: they are identifying the problem that they need to have a policy development. They need to work out some of these issues that you're talking about in terms of revenue and benefit sharing in order for this economic development to take place. And this is not old news; this is September 2010, so it's relatively current.

Is it possible that your department would be able to or be in a position to provide more than just the dialogue you're having with the ambassador and so on, to actually develop a program or project and say, okay, we have some people who are prepared to work in Afghanistan with you to help develop these policies, identify some of the roadblocks, etc.? Is that something that you think, if given the request from the Government of Canada, you would be able to provide?

[Anil Arora]

You've raised some specific questions about what we were specifically asked for. Again, I wasn't there, but certainly in 2009 we were asked specifically for three things. One was chemical analysis equipment for analyzing mineral samples; mineral exploration equipment to define areas of potential before opening up to private sector investment; and training and scholarship support for ministry staff and students. So those are the specific requests that were made.

Specifically, the first one, chemical analysis equipment, obviously has a price tag associated with it. Certainly neither my sector nor the department is funded to do that, and that is something that others like CIDA, for example, would have to provide the resources to be able to do.

[Jack Harris, NDP, St. John's East, NL]

So there are specifics. These seem to be fairly basic. So from those three requests I can assume that the level of expertise and even equipment is pretty basic in Afghanistan right now. If Canada were interested, for example, in supporting the development of the mineral sector in Afghanistan, these things could be done. These have already been requested, but it requires money that you don't have the ability to dispense. Is that what you're telling us?

[Anil Arora]

It's Afghanistan that's asking us for this equipment.

[Jack Harris, NDP, St. John's East, NL]

I understand.

[Anil Arora]

Should the money be made available? This is equipment that's available in the Canadian private sector, and they certainly could provide that equipment to Afghanistan.

[Jack Harris, NDP, St. John's East, NL]

Did they ask Canada to get engaged in providing training and perhaps scholarships for Afghans to come to Canada to study? Was that the idea?

[Anil Arora]

Correct. Again, there we work with various Canadian universities, because my department doesn't do the training itself. We provide the links, for example, to Queen's University or other institutions—