Foreign Affairs Committee on Oct. 31st, 2016

[The Chair, Liberal, Bob Nault]

Mr. Lopez, can I interrupt for a minute?

[Prof. George Lopez]

Please do.

[The Chair, Liberal, Bob Nault]

We're having difficulty hearing you at our end. Plus, it's not allowing us to do the translation that's required here in the House. What we're proposing to do is call you back and see if it improves so we'll be able to do the translation.

[Prof. George Lopez]

Yes, that's fine. Our earlier connection was fine, but I'm getting a lot of static as well. I'll wait.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Lopez. We'll give it one more try.

I'm sorry that I had to cut you off. If you would, please back up about five minutes in your submission to the committee. Then we can do the translation. You can start at the beginning.

[Prof. George Lopez]

All right.

[The Chair, Liberal, Bob Nault]

I apologize for this. Go ahead, and thank you for your patience.

[Prof. George Lopez]

Thank you very much.

Do you want me to start at the beginning?

[The Chair, Liberal, Bob Nault]

You can start at the beginning. Thank you.

[Prof. George Lopez]

Thanks again for this opportunity.

The use of multilateral economic sanctions, particularly by the UN Security Council, has been increasingly advocated by transnational human rights NGOs and various governments friendly to human rights promotion and protection, and sanctions imposition and enforcement occupies a significant place in many of our foreign policies in democratic states, as well as in the UN Security Council.

In fact, in terms of human rights protection and advancement, the Security Council currently mandates 15 total sanctions regimes, with 11 of them having some form of human rights or humanitarian law dimension.

On its own, the African Union has imposed sanctions in eight cases where extra-constitutional changes of government have occurred and it has smartly leveraged these targeted measures to protect fragile rights during the first years of democratic governance in post-war nations.

The European Union administers almost 370 sanctions cases, with a high proportion of those having human rights dimensions. My own country, through the Treasury Office of Foreign Assets Control, has proposed 50 total financial sanctions programs against individuals, governments, or organizations for their violation of human rights.

Even with all of this structure and activity, I think the honest approach is to say that these measures have proven only somewhat effective. In fact, worse yet, are the cases where historic inaction by the Security Council has led to dramatic expansions of human rights atrocities. These, of course, occurred in the situation of mass killings in Yugoslavia, genocide in Rwanda, mass killings in Liberia until about 2001, and the continued debacle and killings in Sudan's Darfur region.

At present, the historical evidence about targeted sanctions is cautious at best for its ability to improve human rights performance of a violating government or of marauding militias that continue to kill civilians at will. Sanctions, I think we must say, have by themselves rarely forced rights violators to desist their actions. They've never toppled a government run by a dictator who violates human rights.

But when dictators have changed their behaviour, it's because sanctions have been an important part of the mix of wider foreign policy tools and ones that focus on domestic pressure points within terrible regimes that lead to an improved human rights situation over time. Sanctions have more dramatic success in safeguarding the rights protection culture that's emerging in fragile democracies.

If I were to put it in its best light, I would say the UN Security Council has made progress more in norm articulation and lags behind in effective implementation and enforcement. These new global norms that have emerged tend to fall into three categories.

The first is the protection of civilians during armed conflict.

The second is what some of us fear as an all too short-lived assertion in the international community at the UN about what would be called the R2P principle, the responsibility to protect civilians faced with upcoming mass atrocities. Of course, many of us are deeply indebted to Canada for its leadership in the R2P realm.

The third area is one I mentioned earlier, which is the protection of electoral and democratic transition processes at the UN. That includes the movement from prior sanctions aimed at stopping civil war to now be reformulated as part of peace-building and peacekeeping on the ground.

Much, as you know from the testimony of others, has proceeded to narrow sanctions, to what we call the “smart” or “targeted” kind. The ones that have proven most effective are those that fall into three areas.

The first is freezing financial assets, property, and other funds held outside the country where the atrocities are being held. These might be held by national government entities or officials, by officials privately or in their public realm, or by persons designated as supporters, conduits, or enablers of the regime.

The second is the ability to deny assets movement and access to overseas financial markets, particularly emerging financial institutions, national bank mechanisms, and other government ways of transferring funds, particularly to designated private banks, investors, and money launderers.

The third area is restricting the trade of very specific goods and commodities that provide substantial revenue to these human-rights-violating actors, especially ones that are highly traded and valued by markets in the west.

The structure of imposing targeted sanctions on rights abusers and their effectiveness is something we've learned over time. In practice, when powerful foreign policy countries such as Canada, the U.K., and the United States work with the United Nations or regional actors like the EU or AU to reinforce sanctions that have been passed or, more importantly, to precede the measures that the wider organizations will take, we've found increased chances of success.

The most notable case of this, I think, is what happened in 2011, when western states combined to pass a series of strong impositions and a locking down of assets of half of General Gadhafi's usable monies from Libyan official funds and from private assets available to the regime totalling nearly $36 billion. This occurred 48 hours before the Security Council Resolution 1970, and there was also another tranche examined and frozen before Security Council Resolution 1973. These particular locked-down assets had a significant impact on Gadhafi's ability to import heavy equipment, to hire foot-soldier mercenaries, and to hire in full the elite commando units he was exploring in a variety of countries to come to his aid.

My own work has increasingly pushed me, over the last few months, to look at a human rights abuse situation in which we have to move beyond the most visibly available agents who are authorizing the human rights atrocities, that is, government institutions and leaders, to more identifiable individuals who actually perpetrate the rights violations or mass atrocities themselves. A deeper probing of these abuses indicates to us a dramatic connection to specific products, companies that supply them, assets holding, and financial facilitating organizations—in fact, a wide array of individuals and entities that are usually not visible at early stages of analysis.

In light of this, we are advocating the targeting of sanctions on what we would call this enablers category, which focuses on the means that are used to commit mass atrocities, as well as the way that they're financed. The organizing logic behind this concept, in part derived from the Libyan experience, is that mass atrocities are organized crimes. Crippling the means to organize and sustain them—the money, the communications networks, the resources—can dramatically interrupt their execution.

As my time is coming to a close, I will hold for answering to questions the cases where we've seen this, in Congo, Darfur, and elsewhere. I'd advocate for examination by your good committee the way in which we can dig deeper into the perpetrators of mass atrocities and look at those sustaining enablers of a transnational nature that often have ties to the west, where their assets can be frozen and their networks disrupted.

Thank you very much.

[The Chair, Liberal, Bob Nault]

Thank you very much, Professor Lopez.

We'll hear from Professor Portela, and then we'll go to questions, colleagues.

Good morning, Professor Portela.

[Professor Clara Portela, Singapore Management University, As an Individual]

Hello.

[The Chair, Liberal, Bob Nault]

We have just concluded with opening comments by Professor Lopez. We want to turn the floor over to you for your opening comments, and then we'll go to questions.

If you're ready to follow through on that, I will turn the floor over to you.

[Prof. Clara Portela]

Yes, please.

[The Chair, Liberal, Bob Nault]

The floor is yours. We're looking forward to your presentation.

[Prof. Clara Portela]

Thank you very much.

I thank you for this opportunity to talk to the members. I hope that I can speak clearly and am sufficiently slow for the interpreters to translate to French.

My speaking notes are going to be very brief. Unfortunately, I have to mention that I was not able to listen to the presentation of Dr. Lopez because there were technical difficulties here. I apologize if I end up saying things that have already been mentioned by Dr. Lopez.

As a specialist in European Union sanctions, I would like to start by commenting on the comparability of the Canadian legislation with European Union measures.

The European Union has some possibilities, let's say, for imposing sanctions against countries where corruption is widespread, with the idea of actually punishing the governments that engage in widespread practices of corruption. However, it doesn't have anything along the lines of theFreezing Assets of Corrupt Foreign Officials Act. There is no equivalent legislation now, and no equivalent legislation is under discussion in the context of the EU. Basically, there have been no demands coming from civil society or from any member states to put in place legislation that is similar to the Freezing Assets of Corrupt Foreign Officials Act.

I mentioned that the EU still has the possibility of punishing government authorities, let's say, for corruption. This exists in the framework of development aid co-operation. As you know, the European Union is allowed to interrupt development aid on the basis of widespread corruption practices by government authorities. This takes place under the heading of “good governance”.

The treaty that provides for development aid from the European Union to developing countries includes a clause that explicitly foresees the possibility of interrupting development aid on the grounds of widespread corruption. This exists as an EU practice when the European Union as a whole is a donor, and it also exists in the practice of individual member states that are also important donors to developing countries, but outside this framework there are no measures along the lines of the Magnitsky Act in the U.S.

It is difficult to imagine that the EU will contemplate the adoption of an act of this nature due to the recurrent court challenges that it has been facing with regard to its designations. The EU has been blacklisting people under anti-terrorist legislation and also in the framework of its sanctions regimes against individual countries. However, these listings are subject to the scrutiny and the jurisdiction of the European Court of Justice.

The European Court of Justice has actually ruled in favour of the claimants quite often. According to calculations made by researchers, only 40% of the cases in which designations have been challenged in front of the European Court of Justice have been in favour of the European Union. In the remaining 60%, the claimants have been able to basically win the challenge and to compel the European Union to cancel its designation.

The European Union currently has a very big problem with blacklisting individuals. It is actually quite reluctant to expand legislation along these lines, because it has faced important difficulties in bringing evidence that could be made public to the court in order to support its cases.

Moving back to the Canadian version of the Magnitsky Act, which is basically the Freezing Assets of Corrupt Foreign Officials Act, this document actually puts Canada on a par with the U.S., because it is basically following a U.S. model. This departs from previous practice, in which Canada was actually not necessarily following the U.S. lead in terms of sanctions imposition, but was also coordinating with the European Union. We see that this departs from current practice.

To comment further on this act, what is good about this act is that it is actually a very targeted instrument. It allows for the imposition of very clearly targeted sanctions precisely because it focuses on individual designations. This contrasts with the practice in the case of the European Union, where state authorities are punished as a whole through the interruption of budgets support in terms of charges of corruption. To the extent that targeting is considered to be a positive innovation on the sanctions landscape, this act is actually very good. It's very good in terms of allowing there to be an effect on specific individuals without having any impact on society and on innocent bystanders.

My last point concerns the purpose of the measure. What do we actually want to do by freezing the assets of corrupt foreign officials and what effect is this likely to have?

The idea with this type of legislation is to make Canada a more hostile environment for corrupt officials, because once this type of legislation is in place and corrupt officials are aware that they have been blacklisted, they basically cannot operate in the Canadian markets. They cannot hold assets there. This delivers a very strong signal to them that they are unwelcome. They are personae non gratae in the country. This is definitely useful, because obviously it serves to single out and stigmatize these specific individuals.

We can also expect that this will have a deterrent effect on other officials who are tempted to engage in the same sorts of practices if they have any interest in maintaining assets in Canada or if they have any relationship to the country. At the same time, we should distance ourselves from the idea that by imposing these sort of measures we will be able to compel a behavioural change in any of the affected individuals.

Actually, we have to take into account the fact that even if these individuals resent the fact that they are blacklisted and stigmatized by a respectable member of the international community such as Canada, their priority is to be regarded as members of the group in power, or the elite circles, let's say, in their country of origin. If they find themselves in a situation in which all of their colleagues, associates and bosses, the other members of their circle, are part of a blacklist, it would actually be very suspicious if they did not appear on exactly the same blacklist. Consider the situation of person who has been blacklisted under the act and whose name disappears from the blacklist after some time, perhaps in response to a modification of its practices. This would put the person in a very delicate position in those elite circles if they're integrated in the country of origin. It seems to me that the moment somebody gets blacklisted under the act, we cannot expect any behavioural change at all.

What is important about this circumstance is not that the Freezing Assets of Corrupt Foreign Officials Act should be believed to be an ineffective tool, but it is important to be clear about what the purposes and likely impact of this act will be, and it is important that this be communicated very clearly to the public, particularly to the Canadian public directly. Otherwise, the authorities will face the risk of being accused of putting legislation in place that is ineffective. Actually, this can be very effective. It will be able to fulfill certain important functions in international relations. In terms of criminalization of corruption, that should definitely be pursued, at least in my opinion, but we should make sure that no expectation is created among the public that this will actually change things on the ground.

Thank you very much.

[The Chair, Liberal, Bob Nault]

Thank you very much, Professor Portela and Professor Lopez.

We're going to go straight to questions. We'll try to restrict them to about five minutes each so that we'll get through a number of colleagues as our time wraps up.

I'll start with Mr. Allison.

[Dean Allison, Conservative, Niagara West, ON]

Thank you very much, Mr. Chair.

To both professors, thank you for your testimony.

Dr. Portela, the U.S. has looked at this Magnitsky law as we're looking at it. If some of these western democracies start looking at acts like this, do you see the possibility that this would be something that Europe, the EU, may consider in the future?

[Prof. Clara Portela]

Am I supposed to answer right now or wait for other questions?

[Dean Allison, Conservative, Niagara West, ON]

Go right ahead.

[Prof. Clara Portela]

There is a possibility that the EU might consider it, but I think the problem about all the difficulties standing in the way of a possible adoption of similar legislation by the EU is not so much the lack of commitment of the EU to the fight against corruption in this country, because the EU, being one of the most important donors, is quite interested in making sure that its aid is spent effectively. It definitely has an interest in fighting corruption.

The problem with this specific piece of legislation is that designating specific individuals is a problem for the European Union because, under the institutional system of the EU, the possibility exists for individuals who have been designated to challenge the blacklisting in front of the European Court of Justice. The European Court of Justice will listen to them. It will accept the case and will actually examine the evidence. Often, the European Union has not been very effective in defending itself. It was unable to produce the evidence on which the blacklisting had taken place, particularly in the case of terrorist organizations or terrorist designations, because it were based on intelligence that was confidential and could not be made public. Often this intelligence came from foreign sources such as the U.S., for example, and foreign intelligence services were unwilling to allow the European Union to disclose this evidence. In these cases, the European Union has been forced by the European Court of Justice to delist the individuals, because it was simply unable to produce convincing evidence in front of the court.

This is something that has affected even the listings of the European Union that emanate from the United Nations Security Council, which in theory are obligatory for everybody to impose. Because the EU is facing this big problem and has not found a way of dealing with it, I don't think it is very likely that the EU will contemplate passing legislation along these lines before it has found a way of sorting out the problem that it has with the individual designations that are condemned by the European Court of Justice as not being compatible with due process guarantees under human rights legislation, particularly the very stringent European convention on human rights.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, Dr. Portela.

Because my time is limited, I have a quick question for you, Dr. Lopez. You mentioned three things in terms of targeted sanctions: freezing assets, obviously, denying movement, and restricting trade. Is there anything else that you would add to that in terms of effective targeting of sanctions? I know those are the top three.

[Prof. George Lopez]

I think those are supported by travel bans and the special designation of individuals to make sure that their passports are frozen and those kinds of things.

When we get to the enabler level that I had talked about at the end of my presentation, I think you look at a wider range of goods and services that indirectly facilitate sustained atrocities. That puts us into technology, telecommunications equipment, satellite phones, cellphones, and computer hardware, and that can then give us the financial leverage through the existing targeted financial sanctions to go after those particular commodities, which have really been off base to those who have been trying to help with human rights in the past.

I think the application and targeting of the existing three that I mentioned, supported by smarter identification of what the services and goods are that facilitate the atrocities, is where we want to go.

[Dean Allison, Conservative, Niagara West, ON]

Thank you.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Allison.

We'll go to Mr. Mendicino, please.