Thank you very much, Mr. Chairman.
I'm very happy to be here to meet all of you and to have this chance to share my thoughts and analysis with you today. As you've heard, I'm a professor of political science at the University of Ottawa. I'm also a member of the McLeod Group, which is an Ottawa-based group of people interested in promoting a more proactive role for Canada in international affairs. So it's particularly fitting that I come and talk to you today.
I've been doing a lot of research over my academic career on foreign aid, especially Canadian foreign aid. I've just finished editing a book on CIDA and Canadian foreign aid, which will be coming out in September.
What I want to talk about today involves CIDA and the private sector, and the private sector's role in development. My take on this issue is very much coloured by my primary interest, which is foreign aid, so I'm interested in looking at the use of public funds for development and how that intersects with working with the private sector.
The private sector has for a very long time played an active role in foreign aid, especially as contractors. They're essential partners for CIDA. Currently, for example, a Montreal engineering firm is rebuilding the Dahla Dam in Afghanistan, and that's the kind of thing you would want the private sector to do, and not an NGO. So I just want to start by saying that I do see an important role for the private sector in development.
However, as I mentioned, I want to talk about CIDA's partnerships with mining companies, and that's something that I can't be so positive about. As all of you know, I'm sure, the international cooperation minister announced last year four projects that have to do with partnerships with NGOs and mining companies, and they totalled $27 million. The three specific projects are going to be working with CARE, World Vision, and WUSC, partnering with Canadian multinational extractive industries IAMGOLD, Barrick Gold, and Rio Tinto Alcan.
Why is CIDA entering into these partnerships with the private sector? When the minister presented it—if you look at the CIDA website—it was framed as corporate social responsibility, CSR. But much of these funds are going to obtaining and keeping the goodwill of mining-affected communities—in other words, allowing the companies to come in and stay while operating their mines.
To me, this is part of the bottom line of mining companies. If they're going to build a school or a clinic or something like that to win over and keep the support of a community, this is part of the calculation companies make when they invest. This is not something that should be covered by public funds.
The mining industry officials have defended these partnerships as being essential for Canadian competitiveness, which to me flags the fact that it's a form of indirect subsidy to Canadian mining companies if they are saying they can't compete without this kind of support.
Minister Oda, however, has responded by saying, “In no way are public funds being used to increase the profitability (of these companies).” This was in an interview with the Ottawa Citizen in January.
Thinking about the appropriateness of these partnerships, I'm not speaking out blankly against them. The mining companies admit that they lack expertise, and they claim they need CIDA to facilitate the partnerships with NGOs. But mining companies can partner with NGOs if they like; they do not need CIDA's support to do that. They're perfectly free to engage in any kind of relationship with a non-governmental organization, or in fact a private one.
What private companies do when they don't have expertise is they hire it. They can hire consultants, they can hire a smaller company, they can subcontract, they can recruit personnel. They don't need CIDA to do that work for them.
In response to these critiques, the Mining Association of Canada and the Devonshire Initiative came up with new arguments on why CIDA involvement was necessary for the CSR activities. One argument they came up with was that they needed CIDA's involvement to ensure accountability. I found this an unconvincing argument as well, because this is the same industry that opposed, en masse, Bill C-300, the corporate accountability of mining, oil and gas corporations in developing countries act. So to me this argument that companies need CIDA to keep them honest is not a convincing one.
In an interview last month, Minister Oda stated, “There's nothing wrong with the private sector, and particularly our Canadian private sector. They're responsible. They're good.” This was in response to some of the critiques of the CIDA partnerships with NGOs and Canadian mining companies.
Many mining companies may be outstanding corporate citizens, but such blanket statements are not difficult to contradict. In fact, those comments were made simultaneously when the scandal regarding SNC-Lavalin was unfolding. In fact, it still is. The CEO and other executives have resigned over corruption accusations. The RCMP is investigating and raiding the company's headquarters.
I don't want to say that all companies are evil, because I certainly don't believe that, but at the same time, I don't think it's helpful to say they are all good or they are all responsible.
In fact, a recent report from the organization, RepRisk, entitled, “Most Controversial Mining Companies of 2011”, listed 10 companies worldwide that had the most controversial reputations and recommended that organizations engage with them only with high levels of caution, given the reputational risk to working with then. Among those top ten companies were two of the three companies that CIDA has chosen to work with: Barrick Gold and Rio Tinto.
One question that is very important to ask is whether these are the right partners for CIDA. CIDA claims these partnerships will improve the effectiveness of aid, but I have not seen any convincing arguments yet. The projects themselves were not approved through the regular competitive process that other NGO-backed projects have to go through, and very little information has been released on what the contents of these agreements are. Perhaps as MPs you are able to access this information much more easily than I am, but so far, including through an access to information request, I have been unable to get copies of exactly what is contained in these agreements.
One argument that has also been made by CIDA is that it's about leveraging additional funds. This is a good use of CIDA money. The question I would raise is why only seek it from Canadian companies. If it's only about leveraging more money, and it's not about helping these companies be more competitive, why not also get money from, say, Chinese companies, or give money to Chinese companies that partner with NGOs, according to that logic.
What are these companies bringing to the table other than some funds? In some cases, the funds they bring are only a very small proportion of the total funds. For instance, with respect to the project in Burkina Faso, IAMGOLD is contributing $1 million, and CIDA is contributing $5.7 million. The lion's share is still being contributed by CIDA.
To me, this signals that corporations are setting the agenda. This is only a small proportion of CIDA's total spending, and I will be the first to admit that. However, if this is being touted as the kind of partnership of the future, to me, having those kinds of fast-tracks for approving projects just because corporations are putting in some money is a perversion of the idea of aid effectiveness and the government being in charge of its own aid agenda.
It also risks contradicting the very definition of official development assistance, which, according to the OECD definition to which Canada subscribes and which is part of the legislation, the Official Development Assistance Accountability Act, aid must be primarily for supporting economic and social development in developing countries. That would exclude support to Canadian private companies. It also risks contravening the provisions of the Official Development Assistance Accountability Act. If Canadian mining companies working with CIDA are responsible for human rights violations, as they have often been accused of, this would be in direct contravention of the Official Development Assistance Accountability Act.
To conclude, Canada should be very cautious when partnering with the extractive industry for development activities. There are a number of ethical issues at stake, as well as Canada's international reputation. Minister Oda admits that she makes no distinction between Canadian commercial and development objectives, and I think this is a major problem for a minister who is in charge of an international development agency. Foreign aid should focus primarily on fighting poverty and inequality abroad, regardless of Canadian commercial or corporate interests. That is the law.
If the Canadian government wants to support Canadian companies abroad, it has many other instruments it can use to do so. For instance, there is Export Development Canada. We do not need to use foreign aid to do so.
Thank you very much.