Foreign Affairs Committee on Feb. 28th, 2008

[The Chair, Conservative, Kevin Sorenson]

Good afternoon and welcome, dear colleagues.

This is meeting number 15 of the Standing Committee on Foreign Affairs and International Development of Thursday, February 28, 2008. Today we will have a briefing on the crisis in Sudan and investments.

In our first hour we will hear witnesses. From the Department of Foreign Affairs and International Trade, we have Ken Sunquist, assistant deputy minister, global operations, and chief trade commissioner; Scott Proudfoot, director Sudan task force; and Donica Pottie, director, human security policy division. From the Department of Foreign Affairs, we have David Angell, director general, Africa bureau; and from CIDA ,we have Louise Clément, acting director general, southern and eastern Africa directorate.

We welcome you.

In our second hour we're going to hear from a group on the Sudan issue as well.

I remind the committee that our intentions today are to have a very brief committee business meeting at the close of our meeting. This is to ratify and pass the steering committee report, or at least bring it forward to the committee for its consideration.

Mr. Sunquist will be making a statement, and then we will go into our first round.

Welcome, Mr. Sunquist.

[Ken Sunquist, Assistant Deputy Minister, Global Operations and Chief Trade Commissioner, Department of Foreign Affairs and International Trade]

Thank you. My colleagues and me are truly pleased to be here today.

I think it is propitious timing that we're here today. I do have a number of colleagues with me--more than you normally would have--and the rationale for that is that we weren't sure how wide your questioning might be, so we have a number of different groups within Foreign Affairs, from our corporate social responsibility, human security, and Sudan task force. We also have a colleague from CIDA regarding aid and development. So hopefully we can answer the full range of your questions and different issues.

We noted that the committee has an interest in the activities of Canadian companies in Sudan, and I think that was the starting point for us to be here. As the Canadian government does not currently promote investment or commercial activity in Sudan, there are very few companies active in Sudan. As a result, the information available on Canadian companies' activity--potential, real, or for the future--is somewhat limited, but we'll try to address any questions you might have.

Corporate social responsibility issues related to Sudan are also limited because of the number of Canadian companies active. However, the committee may be interested in the overall Canadian government approach and position on corporate social responsibility, upon which I'll elaborate a little bit later in my presentation.

The Government of Canada remains deeply concerned about human rights and the humanitarian situation in Sudan. Canada has repeatedly put on record its serious concern with ongoing human rights violations, in particular violence--including sexual violence--against women and girls, by all parties to the conflict in Sudan.

Canada is centrally involved in the efforts of the international community to find solutions that will lead to lasting peace throughout Sudan. To that end, since 2004 Canada has committed over $441 million in diplomatic, peacekeeping, humanitarian assistance, reconstruction, and rehabilitation projects. Canada has been a supporter of peacekeeping in Darfur. We were one of the principal donors to the African Union mission in Sudan, which contributed to mitigating the violence of attacks against civilians and to providing a more secure environment in which humanitarian actors could operate.

Canada continues to offer its support during the transition period from the African Union mission to the UN mission. We continue to call on all parties to the Darfur conflict to facilitate the deployment of the hybrid mission and to cooperate fully with its implementation. Canadian senior officials systematically raise their concerns with respect to the situation in Sudan, both bilaterally and in multilateral fora. Canada is also participating in international efforts to support the Darfur political process, and we continue to call on all parties to the Darfur conflict to participate in the renewed peace talks.

Restricted humanitarian access also remains a serious concern, and Canada consistently advocates for safe and unhindered humanitarian access to enable humanitarian actors to assist those in need without fear of violence, intimidation, or harassment. Canada regularly calls on parties to the conflict in Darfur to protect civilian populations and refrain from attacks and acts of violence against them and humanitarian workers.

The UN Security Council, through various resolutions, has also imposed an arms embargo against Sudan, subject to certain humanitarian and peacekeeping exceptions, as well as an asset freeze and travel ban against four Sudanese individuals. Canada has implemented these sanctions with regulations under the United Nations Act. We would fully implement other UN Security Council decisions should they decide to take further measures in relation to the conflict in Sudan.

On the commercial side, it is important to note that since 1992, Canada has withheld trade and commercial support under trade development programs to Canadian businesses wishing to do business or invest in Sudan. In 2007, Canada's overall trade with Sudan consisted of imports valued at about $65 million, about 99% of which was gold, and exports valued at about $210 million, about 82% of which were cereals, particularly wheat and foodstuffs for the people.

Also, on February 5, 2008, the Government of Canada supported motion M-410. If passed, this would require the Government of Canada and crown corporations to divest from corporations conducting business in Sudan, as well as from all funds and financial instruments invested in or operating in these countries, subject to certain humanitarian exceptions. This motion will be discussed further in the upcoming weeks, but if it is implemented, it could place further pressures upon the Government of Sudan, including economic pressure, to meet international standards of conduct.

However, given the level of Canadian commercial engagement with Sudan, the overall effects of a unilateral disinvestment measure on the Canadian and Sudanese economies may be minimal. To our knowledge, and utilizing available databases, the department has only been able to identify a limited number of companies with commercial activity in Sudan. For example, La Mancha is a Montreal-based affiliate of a French mining company operating a gold mine in Sudan. Skylink is providing aircraft in support of Canada's commitment to peacekeeping in Darfur.

It should also be noted that more than 100--I think it's 108--Department of National Defence-owned armoured personnel carriers are currently operating in Sudan under the UN mission. These armoured personnel carriers are being maintained by a Canadian company under contract with DND, so when you look at the commercial figures, you'll see that some of that--there's a bit of a spike--is because of things like the helicopters, the maintenance of the armoured personnel carriers, and other issues.

Understanding the Canadian presence in Sudan is of critical importance, and for that reason the department is still investigating whether other, if any, Canadian firms are doing business in Sudan. This will require some time and some resources to confirm, but it's an active file for us.

With respect to corporate social responsibility-related issues in Sudan, we encourage all Canadian companies to adopt voluntary CSR best practices and international standards.

With reference to Canada's broader and overall approach on CSR at home and abroad, our government and Canadian companies continue to play a key role in the promotion of best practices internationally. Corporate social responsibility is defined as the way companies integrate social, economic, and environmental concerns into their business practices. CSR promotes sustainable results as well as wealth creation for companies and stakeholders, and it is critical to helping companies manage risks abroad, including environmental, human rights, and financial risks. The Government of Canada encourages and expects all Canadian companies to uphold voluntary international standards and principles and to reflect our values and international commitments. Voluntary initiatives can advance public policy objectives in a flexible, expeditious, and less costly way than regulation. Canadian companies are also encouraged to work transparently and in consultation with local communities in which they are active.

In February 2007, Canada announced its support for the Extractive Industries Transparency Initiative, or EITI, which calls for improved governance in resource-rich countries through the verification and full publication of government payments and government revenues from oil and gas mining. This is a significant step toward increased transparency and helps hold governments to account for the payments received from mining operations.

In addition, Export Development Canada announced in October 2007 that it has become a signatory to the Equator Principles. This is an international financial industry benchmark for assessing and managing social and environmental risk in project financing. I believe they were the first export finance institution worldwide to sign on to that.

Canada and the Department of Foreign Affairs and International Trade promote CSR through the National Contact Point. This is an office responsible for promoting the OECD guidelines for multinational enterprises. Its aim is to facilitate a positive and constructive dialogue between multinational enterprises and those affected by their operations.

In addition, our department is actively engaged in various outreach initiatives and continues to undertake CSR training and information sessions for government officials at home and abroad, enhancing our ability to best advise companies and engage foreign governments on CSR-related matters.

I should just mention as an aside here that all our heads of mission and all our senior trade officers receive training in CSR now before they go abroad.

In conclusion, with respect to Sudan, the Government of Canada remains deeply concerned about the human rights and humanitarian situation. In terms of commercial activity, we do not anticipate any significant increase in investment activity in Sudan. Moreover, if motion M-410 were to be passed, it would represent a further disincentive to trade and investment with Sudan.

Finally, Canadian companies with operations and activities in Sudan or anywhere else in the world are expected to follow high standards of behaviour with respect to issues relating to corporate/social responsibility.

Thank you, Mr. Chairman. That's I think where we can take the statement and then be open for any comments or questions you might have.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Sunquist.

We'll proceed to the first round. Just before we go to the first round, I should say that we have both Foreign Affairs and CIDA represented here, and so I think it would be a good time to congratulate Mr. Obhrai, who has been given the new responsibility of parliamentary secretary to CIDA along with his Foreign Affairs responsibilities. We have some of the CIDA group here.

We'll move into the first round.

Mr. Martin, please.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

On behalf of all of us, I'd like to congratulate Mr. Obhrai for bearing this new mantle. I'm sure he'll do it as well as he has borne that in Foreign Affairs. Congratulations.

Thank you very much, everyone, for being here today. I think all of us will perhaps agree that a whole-of-country approach is needed to deal with the complexities in Sudan. When I was in Khartoum, I met with the regime there, a few years ago. This longest-serving genocidal regime in the world I found to be, frankly, to not put too fine a point on it, a group of pathological liars.

I'm concerned, frankly, that the CPA in the south is going to collapse. That would be a harbinger, of course, of an extraordinary amount of violence and a rebirth, unfortunately, of what that part of the country endured not so long ago.

My questions are threefold.

Mr. Edwards, the deputy minister, was in front of the committee, and much to the surprise and shock of all of us, he said that there would be no resources whatsoever for the UNAMID mission. If that is still the case, I'd like to know why. And if it isn't the case, perhaps you could let us know, please, what resources specifically are going to be used to support the hard assets that are needed for the UNAMID mission: the helicopters, the ground transportation, and the fixed-wing air transport that's required.

My second question is to determine—and if you don't know this today, that's perfectly understandable, but you could send your response to the committee—the list of resources that CIDA is giving to the south to support the CPA and to support humanitarian needs in the south. I think to an extent it has been forgotten about, and particularly in view of the insecurity in Kenya, making it very difficult perhaps to get assets there.

Last, I'd like to know whether any efforts have been made to convince the members of GNPOC, the Greater Nile Petroleum Operating Company, to engage in a divestment and in return be able to find other oil assets, perhaps from Angola and Nigeria, whereby they could replace their oil needs and essentially sever their ties with Sudan, in exchange for a quid pro quo coming from perhaps places such as Nigeria or Angola.

Thank you.

[Ken Sunquist]

Thank you, Mr. Martin.

I'll turn to David Angell, the DG for Africa, to comment on the first part, the resources in UNAMID, and then Louise Clément from CIDA can talk about aid in the south.

[David Angell, Director General, Africa Bureau, Department of Foreign Affairs]

Thank you, Mr. Chairman.

The fundamental difference between AMIS and UNAMID is that the first is an African Union peace support operation and the second a United Nations operation combined with an AU peace operation.

What that means in financial terms, sir, is that with AMIS, the African Union operation, funding is voluntary; countries are asked to contribute. Canada is among the principal countries to have done so. With regard to a UN peace support operation, funding is very largely through assessed contributions. As member states of the United Nations, we automatically are taxed, if you will—in the case of Canada, approximately 3% of the cost.

I think, sir, what Mr. Edwards was saying is that Canada has made an exceptional contribution to AMIS. We have contributed, I think, $286 million since 2004, making us the fourth contributor to AMIS, but with the transition to UNAMID, funding would be through assessed contributions, and so that sort of exceptional contribution would not be sought, because there is a standard funding formula that would kick in automatically.

Canada has contributed, I think, $48 million towards the transition specifically from AMIS to UNAMID, and we are in discussion with the United Nations about other areas where Canada might contribute, above and beyond its assessed contribution.

Thank you, sir.

[The Chair, Conservative, Kevin Sorenson]

Mr. Sunquist, did you or Madame Clément want to follow that up?

[Ken Sunquist]

I will ask Louise to comment on the aid issue.

[Madam Louise Clément, Acting Director General, Southern and Eastern Africa Directorate, Africa Branch, Canadian International Development Agency]

Thank you very much, Mr. Chairman.

While I am not in a position to provide you with a full list of the initiatives today, I can provide you with an overview of CIDA's program in Sudan.

We have a program that is very much focused on a whole-of-Sudan approach. It involves two main areas of priority, the first being humanitarian assistance focused mostly on Darfur. The second component or priority is early recovery, which is very much related to the implementation of the Comprehensive Peace Agreement. So the objective of that component is to facilitate the return of refugees to their home communities, to facilitate de-mining of various regions in Sudan, and of course to improve governance and local government capacity to deliver services to communities.

We will provide you with a full list of the initiatives for the south.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

You have another minute.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Angell, the information I've received is from those responsible for the UNAMID mission. They've really been crying and begging for specific resources--not the troops; they have 26,000. But they're really looking for the hard assets to support those troops. It doesn't preclude us, outside of our assessed contributions, from taking a leadership role to provide some very fixed and defined hard assets that will enable the troops to be deployed. Are we going to do that, have we said no, or do we know?

[David Angell]

Canada will continue to make available to UNAMID the more than 100 armoured personnel carriers they made available to AMIS. We'll still have up to 50 Canadian Forces personnel available to both UNAMID and the peace support operation in the south of Sudan.

Canada had provided a number of helicopters to AMIS. We have been told formally by the United Nations that they are no longer required, but they have been made available during the transition from AMIS to UNAMID. We will remain in discussions with the United Nations about further needs that the United Nations might have.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Angell.

We'll go to the next round, but first I would like to mention that we have with us in the audience here today Her Excellency Dr. Faiza Hassan Taha, ambassador of the Republic of Sudan to Canada; and Mr. Adil Bannaga, deputy ambassador.

We welcome both of you.

Madame Barbot, you have seven minutes.

[Vivian Barbot, Bloc, Papineau, QC]

Thank you, Mr. chair.

Good afternoon, ladies and gentlemen. I thank you for being here today.

About this disinvesting in Sudan, which is the topic of today's meeting, Mr. Sunquist, you were saying that the number of Canadian companies in that country is rather small. Therefore, it seems to me that we have to look at this issue differently. I understand that all the efforts of Canada are aimed at peace, and that there is a desire to change that situation in Sudan. However, the issue of foreign disinvestment is still very topical.

Do you believe that such measures can really have an impact on the government given that those people do business with banks which are not in our world. They deal mainly with Islamic banks from the Gulf. Do you believe that disinvestment measures can improve the situation or accelerate the peace process?

[Ken Sunquist]

Thank you.

I think we need to talk about the context of how large Canadian economic presence is in the country, and it's very small. Why is it small? Since 1992 we have not been promoting the economic exchange. So if companies have come to us and talked to missions, to the department, we have taken the perspective of discussing corporate social responsibility, discussing the role of companies in a warfare situation. We've been discussing these kinds of things, and that has in a sense been a disincentive, a disinvestment, right from the word go, because companies have not wished to participate largely. There are some companies that have. I mentioned that 82% of our commercial activity of exports is around foodstuff, which I think most would agree is probably good for the people in a general sense.

On the import side, the one company that is producing most of the gold has actually been taken off the list by the NGOs in the United States for disinvestment because they are--how best to describe it?--a poster child, one of the best examples of sustainable development, of working in the community. This is according to the NGO rather than from our facts and figures. What we see is a company that has employed over 500 people in jobs that are sustainable, and it isn't part of warring factions. They've built the churches, schools, mosques, hospitals. They've done the traditional good corporate social responsibility, and they've gone a bit farther. Now, this is not a company that is a controlling shareholder in the whole activity.

I think your question is really a difficult one, because it gets to the heart of it. How can you proceed with disinvestment if we don't have very much, and yet, at the same time, get the point across that this is an activity by the Government of Canada, by Canadians, that we don't appreciate and that we don't support what's happening in the region.

So I absolutely agree with you that it's continually talking to companies. You've seen the examples of big companies that were there in the past. They were counselled. They were talked to. They participated in discussions. And most of them have withdrawn.

[Vivian Barbot, Bloc, Papineau, QC]

Even if Canada does not have many corporations in Sudan, it does have a voice in international fora. It has a position on investment and disinvestment, which means that it can have an influence in the debate. Taking account of what Mr. Sachs told us, we can see that the root causes are not of a business nature but are mainly related to poverty, misery, etc.

What influence can Canada exert in order to actually resolve those problems at the root level?

[Ken Sunquist]

First of all, anywhere, anytime we can, if it supports that position you just said, yes, we're there. In my opening statement I think that's what we've said, that Canada is quite prepared to participate in different fora, in different organizations, to do exactly that.

[Vivian Barbot, Bloc, Papineau, QC]

Do you have any results to show us?

[Ken Sunquist]

David, do you want to answer that?

[David Angell]

Mr. chair, I would like to add to my colleague's answer.

At the nonbusiness level, Canada does play an important role about the situation in Sudan through international diplomatic channels. With the peace process, for example, Canada has been among the most important contributors. Personnaly, I have been involved in the negotiations in Abuja during two years. Canada had a diplomat on the ground during the relaunching of the negotiations in Sirt, that is to say in October, November and December of last year. The contact group is the main international committee of the countries engaged in Sudan, of which Canada is a member. Whether it be on Darfur issue or in a North-South perspective, Canada plays an important role there. So, we are very present and active in the international process related to the situation in Sudan.

[The Chair, Conservative, Kevin Sorenson]

We'll move to the government side. We'll go to Mr. Goldring and then to Mr. Lebel.

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you, Mr. Chairman.

Thank you for appearing here today, ladies and gentlemen.

My question is on the divestment area as well. If Canada is engaging in this and Canada is a relatively small contributor to it overall, or has a lesser impact because of the amount of business it is doing in the region, I would specifically like to know what other countries are the major players in the region, identified by name. Which ones are participating in this divestiture? As well, which ones that perhaps should be participating are not doing so? They are a part of trying to find the solution; which ones are specifically just not doing so?

[The Chair, Conservative, Kevin Sorenson]

Go ahead, Mr. Sunquist.

[Ken Sunquist]

That is an interesting question. As to which ones should be, we would say most should be, but that's a different issue.

From a quick search of databases, we found that Canada was minuscule. We looked at other countries that had a fairly large presence there and broke it down to just a couple of different ones for presentation purposes.

If you look at the oil and gas sector--without talking about individual companies, because there are multiples in some of them--countries such as China, Malaysia, India, the United States, Germany, the Netherlands, France, and Italy are all in there. As you know, we've retreated from that area for the last little while. In the energy sector, Switzerland, China, France, and India are all there. In telecoms, we have the United Arab Emirates, Lebanon, Kuwait, Germany, and France.

It gets to the heart of your earlier question too, Madame Barbot. There are a lot of countries very active there. Canada made a decision since 1992 that we wouldn't be as active.

I'm not sure if that gets to the heart of your question, but a number of countries and companies are active in Sudan.

[Peter Goldring, Conservative, Edmonton East, AB]

When we speak of the United States having adopted investment legislation, it isn't necessarily implemented yet, and if the European Parliament has adopted the same type of legislation, obviously some European Union players aren't participating in it yet.

My other question is on the caution side of it. I see that Canada is a contributor of food products and that. I think that would be essential, even though it may be an investment of a sort with companies in Sudan. Are there other cautionary types of investments that we should try to separate from the non-essential ones, investments that perhaps we do need and that may not fall under the purview of what we are trying to accomplish with a divestment process?