Foreign Affairs Committee on Feb. 13th, 2012

[Jinny Sims, NDP, Newton—North Delta, BC]

I'd like both of you to make a comment.

[Chris Eaton]

All of the work that we are doing in the context of this initiative in Ghana and elsewhere is to ensure that local people in Bibiani, and Ghana as a whole, benefit to the greatest extent possible in terms of the investments that are being made by binding firms in that country. So our work is to help strengthen the governance around that sector so that Ghana benefits from it, so that people in Ghana benefit from it, so that people in Bibiani District, where there are five mining firms operating, also benefit from those operations taking place there, and not just have royalties go to the national government, for example.

Our initiative is to try to connect those different pieces together so that not only does the national government get its royalties, but people at the local level get their royalties, so that people at the local level are able to work out conflicts, enhance collaboration, and increase local investment in the areas in which they are operating. And I think Ghana itself has indicated that natural resource extraction is going to be an important part of its national development strategies. So I think we need to help them in that respect.

Where does Canadian funding come in and not come in? Well, again, it's not happening in our project, but I think there are lots of things that companies have to do to get their social licence for operating in the areas where they are, investments that they need to make in the sustainability of operations, in terms of social environmental sustainability, and often they will also do some small projects around their mine that are much more concrete, such as a school or a clinic.

I don't think Canadian funding is needed for that. I think those are all things that Canadian companies and mining companies can and should do themselves.

But were there opportunities to both leverage Canadian mining funds or the funds of non-Canadian firms towards greater social goods, I think that's a worthwhile thing to do. In general, I think it's also worthwhile doing that if the investments are investments that, again, enhance the governance of that sector. By enhancing the governance, what we mean is enhancing the benefits that people actually derive from the investments that are being made.

[The Chair, Conservative, Dean Allison]

Thank you.

Mr. Sullivan, I'm sorry, we're out of time, but we'll circle back.

That's the problem. We've got a three-minute question, and we need about ten minutes to respond.

Mr. Dechert, you have the last question for this round.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for being here.

I'd like to start with Mr. Sullivan. You mentioned the need for different kinds of laws—the rule of law. In general, you mentioned bankruptcy and solvency laws, for example. I know that a law firm that I was previously associated with often got mandates from organizations at the World Bank to help countries like Russia, after the fall of the Soviet Union, Vietnam...and to develop bankruptcy and solvency laws into property protection laws.

A lot of countries, as you've pointed out, have the laws on the books, but I think you also mentioned there's a reality gap between what's written in the statute and the enforcement on the ground. I was wondering if you could give us an example of a successful situation that you're aware of where that kind of reality gap was identified and then was remedied through some kind of outside intervention, whether it's a partnership between a government and a private sector organization or entirely a government organization.

[Dr. John Sullivan]

Keeping in mind the time limits, and thanking you for the question, I'll be telegraphic.

In Russia, thanks to support from USAID, we were able to partner with the Russian Chamber of Commerce and the Russian Association called OPORA to establish 16 coalitions at the local level across Russia that brought in 22,000 Russian corporations, and they did a couple of different things. They created self-defence mechanisms to help firms protect themselves against extortion—bribery requests. They went after the local property markets, which were often being misused by the local governments, again extracting extra money in order to get access to the land, and also putting in place laws and regulations. They're trying to remedy laws and regulations that have been created at the national level but weren't being put in place at the local level.

So it comes back to advocacy. It comes back to equipping people with the skills to know how to do this, and collective action, all parts of that Busan agenda.

There are a number of other countries where the same kind of thing happened. In the country of Georgia—classic example—international best practice is actually a myth. There is an international best practice, but you can't download it on a country. So they brought in a whole group of outside experts to write the administrative code of Georgia, which they did, based on international best practice, translated it into Russian and Georgian, passed it through, and forgot to do any of the training programs or community mobilization. We were able to work with a couple of Georgian think tanks and associations to begin putting pressure on local government, saying this is the law, you've got to implement it. And when they didn't, we went to the newspapers and to the national government.

It can be done, but all too often we just don't think about doing it.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

In your view, is that important for sustainable economic development in any country?

[Dr. John Sullivan]

Absolutely.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

These are things we can do to help them sustain their growth for the long term?

[Dr. John Sullivan]

In the Philippines right now, Jesus Estanislao, the former finance minister for Cory Aquino, has built a sustainable organization. It's called the Institute for Solidarity in Asia. He has mobilized people through a model cities program using the Harvard balanced scorecard. They're not funded. Those people are volunteering their time and effort to do it. Once you've put them together, once they've learned how to do this, they're not going to go back and shut up and sit down.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

Thank you.

If I have more time, Mr. Eaton, you mentioned the World University Service has been active in Haiti and Afghanistan.

Could you give us an example of some of those projects?

[Chris Eaton]

Our work in Haiti and Afghanistan is specifically in the technical and vocational education sector. That work is a little more mature in Sri Lanka, where we've been working for the last 15 years with the government and with industry associations around the standards and the focus of technical and vocational education and around systems of accreditation. It's to take an informal kind of industry training and civil society training that occurred in the country and try to organize it and raise the level and project it forward in terms of the growth needs of the country in ways that benefit large numbers of people.

I would point to that example.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

You mentioned the training of local officials in the mining industry, specifically taxation and royalty structures to benefit local government. Are you advising local governments on how to draft those laws or set up that system of royalties so they can benefit from them?

[Chris Eaton]

The laws are drafted at a national level, not the local level. There's a process in place already to take this extractive industry's transparency index at a national level and bring it down to a local level, so that's what we're experimenting with at the moment. We would like to work with the district government and the national government—and we've had some discussions in this respect—to try to make the royalty sharing happen, which isn't happening right now, even though it's on the statutes.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

So you help them negotiate those royalty agreements?

[Chris Eaton]

That's already established, but it's establishing the policies and mechanisms through which district governments will be able to call down the resources that they already have the right to, but are not yet getting.

[Bob Dechert, Conservative, Mississauga—Erindale, ON]

I see.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Dechert.

Ms. Brown, third round, five minutes.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much.

And again, thank you, gentlemen, for being here.

I would like to go back to something my colleague said about the reduction of poverty. Every Canadian wants to see the reduction of poverty around the world; we just approach it from a different philosophical strain.

I read the book by Dambisa Moyo, Dead Aid. You've obviously both seen that. I'll ask you to comment on it, if you would.

We know that since the end of the Second World War—and we'll use Africa as an example because it's a continent that everybody has sympathetic feelings for—$1.23 trillion has gone into Africa, and yet we have not generated the kind of change that we would want to see or alleviated the kind of poverty that we think should have come with that kind of an investment. As Ms. Moyo says, first of all, we should be giving clear-cut deadlines for use of the aid dollars. She puts a five-year timeline on it and says if you can't start building capacity in that time, you're not doing things right.

We don't want to condemn people to becoming welfare states. We need to see them move out of that. I wonder if you could both comment on how your organizations—and I'm particularly interested in what's happening with the chambers of commerce—are providing that mentorship to entrepreneurial people in countries around the world who are getting aid from us to help them build out of capacity.

I heard what you in particular said, Mr. Sullivan: they're not going back to the old ways because they're making demands of their national governments to put the structures in place. The lights have gone on when they've started to build these structures.

Do you have any comments?

[Chris Eaton]

I think Dambisa Moyo makes a very powerful point, which really speaks to the lack of accountability between government leaders and the populations they represent, and how aid can distort that accountability. It can actually undermine the accountability that needs to take place. From my perspective, she may be a little bit overly pessimistic about the opportunities for doing that, but strengthening that voice is critical, as well as funding the institutions that allow all of that to happen.

What I would say is that natural resource extraction done in the wrong context can have the same effects. I think Nigeria is an excellent example of that. Botswana and Ghana are different examples of it because of the accountability and governance structures that have been established. That's an area where we need to consider more investment, to ensure that people actually benefit in the long term from those kinds of investments when they take place.

[Dr. John Sullivan]

I agree. There are actually now about 17 African countries that have had sustained growth and are doing fairly well. They are documented very nicely in a book by Steven Radelet, who is currently the chief economist at USAID. Prior to that, he helped set up the Millennium Challenge Corporation account, which uses the mechanism you are talking about.

I asked Steven what he thought of that argument. He said a couple of interesting things. One, that in some cases it's overstated. In a fair number of cases where aid just pours into a country—and I hate to say this, but I'm afraid Iraq and Afghanistan are going to be examples, particularly Afghanistan—where aid has flowed in at such levels, it has distorted the local price mechanism and acts like the natural resource curse. It acts like oil.

How do we avoid that? Well, in the case of Afghanistan, I'm not sure it could have been avoided, given the conflict situation. You have to build the local capacity. You have to get the business associations together and mobilize membership in order to really begin to see that demand for good governance occur.

Botswana is an excellent example of a country where this has happened. BOCCIM, the Botswana Confederation of Commerce, Industry and Manpower, took a really strong lead role, right from the very start, in demanding good, sound economic policies. It's a great example. It's right there in the centre of Africa—not the centre, but as a leading country.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Sullivan.

We will move back to Ms. Sims.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you very much.

I want to go back to Mr. Sullivan. I know you didn't get a chance to answer my last question. I won't repeat the whole question, but I do have a short one for you this time. Your centre gets a lot of its money from the government. How critical is that source of funding for you? What kind of impact does it have on the way you do your work, in that the vast majority of funding comes from the government?

[Dr. John Sullivan]

It's critical. Otherwise, we wouldn't be doing the work, obviously. Where I would draw the distinction, though, and this is one of the things.... The National Endowment for Democracy was created in 1983 as a result of President Reagan's Westminster speech. It's a unique institution in that the funding comes from Congress to us and to three other organizations—the International Republican Institute, the National Democratic Institute, and the AFL–CIO's Solidarity Center—as well as to a whole host of NGOs and human rights groups funded directly by the endowment. It is money that comes as a congressional appropriation.

The thing that is unique, and it's one of the reasons why CIPE can do what it does...we do not operate at government direction. The policies, procedures, strategies, and projects are all self-generated. The executive branch has an oversight role, and it has an auditing role. We have to coordinate with them, but it isn't the same as if we were being funded by USAID. Having that national endowment—and there are several of them now around the world. The United Kingdom has the Westminster Foundation for Democracy. The European Parliament has for some time been considering it, but I think eventually will create a European head. There are several of these in different countries around the world. The reason that model is so important is that it gives you a certain degree of insularity from the day-to-day policy interests of a particular government, whether that's a government of your flavour or a government of somebody else's flavour. It becomes a much longer-term, strategically driven operation.

[Jinny Sims, NDP, Newton—North Delta, BC]

Thank you.

I'm going to pass it over to Madam Laverdière. I will come back with an advocacy question later.

[Hélène Laverdière, NDP, Laurier—Sainte-Marie, QC]

Thank you. I am going to try to be very brief.

If I understood what my colleague Ms. Brown said, she spoke, among other things, of the role that businesses can play in training, and in the implementation and setting up of structures to guide operations, and so on. She spoke about the role private enterprise can play in that context.

I don't want to put you on the spot by starting a big debate. However, that said, we realize that it would be difficult for private businesses to provide training to civil society on how to defend their interests against private enterprise. That seems somewhat illogical. Moreover it would be difficult for private enterprise to be at the heart of the implementation of the regulatory and legislative structures that would apply to private enterprise.

However, something was mentioned repeatedly in your presentations which I found very interesting. Private enterprise can help bolster the capacities of associations of private enterprises. However, we still have a long way to go with regard to strengthening the capacities of other organizations and associations in civil society. Where do you see the boundary? I think that Mr. Eaton also mentioned that there are a lot of activities that private enterprise can undertake under the banner of social responsibility. That is a part of the corporate image of companies. We don't have to do that for them. However, should we want to go further, how do you think we should balance government involvement and that of private enterprises that are moved by good will and just want to help out? I am sorry about my somewhat muddled question.