Foreign Affairs Committee on April 6th, 2017

[Raj Saini, Liberal, Kitchener Centre, ON]

It seems to me that they want to elevate the way they do business, because there is a great push right now, even within Kazakhstan, to make sure that they come to a certain level of OECD country. I think that it's more of a pull away from Russia or China because they are looking towards a different sphere and saying, “Look, our economy now is at a standard where western business can come in and the rules of the game are somewhat well known beforehand.” I just think there is a great opportunity there for Canadian commercial interests.

[Leigh Sarty]

Can I just add to that? In terms of Global Affairs Canada's role in our ongoing commercial engagement with Kazakhstan, obviously we do have the trade commissioner service there on the ground in Astana. Again, as you've probably heard, Canada has some niche areas. Cameco's involvement in Kazakhstan is crucially important. Kazakhstan is very big in uranium, and there are other investments in the extractive sectors.

However, I think that one of the challenges, for Canadian trade in general, is that there is only so much.... The trade commissioner service is there to identify opportunities, to communicate these opportunities, and to help facilitate, communicate, and troubleshoot, but it needs to start with the active readiness of Canadian business people to get engaged. This is the story of Canadian trade in general. When we have that great big U.S. market just to the south that seems so easy to deal with, making people aware of and eager to exploit the opportunities in far-off Kazakhstan is a challenge, but we do what we can.

[The Vice-Chair, Conservative, Dean Allison]

Thank you very much, Mr. Saini.

We'll move over to Mr. Sidhu.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

Thank you both for your remarks.

If we look at the most recent horrific event in Syria that involved chemical weapons and resulted in dozens of deaths, the view of the United States with regard to dealing with Syria kind of differs from that of the European powers. Both Ambassador Nikki Haley and Secretary of State Rex Tillerson have suggested that the removal of Assad is no longer needed, but now, since the last incident, and the crossing of what they call “the red line”....

How would Europe move forward on Syria's issue, given that the most significant western player, the United States of course, doesn't share their view on this fundamental point?

[Leigh Sarty]

I don't want to comment on behalf of Global Affairs on the latest developments in Syria, sir. I could give some purely personal thoughts, but I don't even want to go there.

I'm happy to take that question to our people who follow this, who are absolutely up to speed, and who can comment authoritatively when it comes to the very latest developments in Syria.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

You're saying that it's too early in the game to determine where it's going to go?

[Leigh Sarty]

No, it's just that, from my perspective, things are so complex, and moving so quickly, that it really is.... While for the most part I'm more than happy to speak off the cuff and give some impressions on an issue that is so front and centre and so delicate, I think I'd be doing my ministry, and myself personally, discredit to try to even share speculation with you on that specific issue at this specific juncture.

I mean, I'm happy to speak a little bit about Russia's approach to Syria, and the gains that Russia has perceived it has accrued from its approach. It's moving very quickly, but the global evolution in terms of Assad's prospective fortunes is certainly something that I can say with authority the Kremlin would view as a victory, as a vindication of its approach to this tragic situation. Moscow today, particularly since it began its bombing campaign at the very end of September 2015, really is, even as the situation there remains absolutely épouvantable, for better or for worse a critical player to be reckoned with on this global issue, thus realizing, in that regard, President Putin's objective of demonstrating to the world and, equally importantly, to a Russian public....

There are some indications that they're getting a bit restive, that as economic growth declines and concerns about corruption rise, it's bringing people out into the streets in Russia. Nevertheless, the Kremlin has been quite committed to promoting this vision to its people that in Russia, things might be difficult.... They don't acknowledge so explicitly that things are difficult at home, but the implicit message is that, look, you are citizens of a great power that has stood behind Assad from day one, a power whose armed intervention, whose dramatic use of technologically advanced armed forces, was displayed prominently on Russian television. You Russian citizens are citizens of a great power that's respected in the world. That should make you feel good about yourselves, and make you feel good about this regime.

From that vantage, that's the only aspect of this tragic, tragic state of affairs that I'd be comfortable commenting on. Russia seems to be realizing, at least its short-term, interests with respect to the situation there.

[Jati Sidhu, Liberal, Mission—Matsqui—Fraser Canyon, BC]

You did touch in your remarks on economic development. Central Europe potentially shows some interest in Canada's energy sector, but more than a dozen European countries rely on Russian natural gas and other energy. Do you think there lies an opportunity there in the future for Canada's oil exports? Do you see increased Canadian oil exports to the region as a result of the European countries' desire to deal with the western world?

How do you foresee that evolving?

[Leigh Sarty]

Absolutely. Again, we are talking of the medium and longer terms. I'm not up to speed on the very latest concrete developments that might be in train. Certainly, in global terms, the reality is that, as you described it, there is a clear geopolitical desirability for reducing this region's dependence on Russian gas and, arguably, on the central Asian gas that gets piped to Europe through Russia, which might as well be the same thing.

With regard to gas—oil, arguably, as well, although I'm less familiar with that side of the equation—I do know there is very active discussion with respect to LNG, and particularly with respect to.... Is it Lithuania or Latvia that would host an LNG facility? The specifics are not top of mind, so I will just answer your question in global terms: absolutely, the combination of the geopolitical desirability of reducing this region's dependence on Russian energy and Canada's status as an energy superpower makes for promising bedfellows. There are challenges in terms of global pricing and global markets, and there are some technological issues to be addressed, but this is certain to be an increasingly important part of our co-operation in the longer term.

[The Vice-Chair, Conservative, Dean Allison]

Thank you.

Thank you, Mr. Sidhu.

We're going to move to Mr. Kmiec.

Sir.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Thank you, Mr. Chair.

I have three questions. I want to go through them, so give me some time to give a preamble to them.

One thing I wanted to correct, though, is that in the case of Poland, it isn't a young democracy. Poland has been practising elections at least since the 15th century and the Jagiellon dynasty, when 10% of the population used to vote for elected kings. While we are doing this study, I think it's important to remember that for the last 25 years, many of these countries we're talking about have practised democracy. They're not new to it, and the choices they make domestically, we don't always have to be pleased with.

However, it's the Baltic states specifically that I want to talk about. I want to ask you a question about the current diplomatic representation that we have in Estonia, Latvia, Lithuania. Do you see any downside to expanding our diplomatic representation with them right now as a show of support to them, so that each of them would have an ambassador from Canada? That would allow us to better integrate with them and better assist them in deflecting Russian aggression and Russian interests, as well to deal with a lot of other issues we have and could expand on, including the commercial interests Mr. Saini spoke about in central Asia, but maybe more so in the Baltic states.

[Leigh Sarty]

In the way you pose the question, asking if there is any downside, obviously not, sir.

In an ideal world, we could certainly strongly consider upgrading our representation to the point where we would have full-fledged Canadian ambassadors in all three countries. But it is a reality of Global Affairs that we always keep the nature, extent, and location of our representation abroad under review on an ongoing basis. That takes into account many considerations. Whether we like it or not, one of those considerations is the financial health of the department, and in the current state of affairs, obviously, there would be no downside. This a case where more, by definition, is better than less.

Given the reality of our current resources, we have one Canadian ambassador based or resident in Riga. He gets up to Tallinn and down to Vilnius, to our offices there, which are staffed with locally engaged staff as often as possible. We feel that model is serving our interests.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I'm going to interrupt you right there, just so I can continue Mr. Saini's point about central Asia.

I'm going to use a non-western source. Stanislav Pritchin is head of the Expert Center for Eurasian Development and also a research fellow at the institute of oriental studies at the Russian Academy of Science, so he is by no means a western person.

He provided an outlook recently on what he believes are the economic opportunities in central Asia, and he listed most of the states as having a negative outlook, including Kazakhstan, Azerbaijan, Kyrgyzstan, Armenia, Tajikistan, and Turkmenistan. Georgia, he listed as neutral.

The only one with a positive outlook was Uzbekistan, and that's because of the recent change when Karimov passed away. The state refused to reveal that Karimov had passed away, and it was the Turkish government that mistakenly revealed that he had. The new president has kind of embarked on what sound like reforms to the economy, to the labour market, and potentially to its diplomatic relations.

To the point Mr. Saini was making, is there an opportunity for Canada to then insert itself despite this negative outlook? You have older Soviet bureaucracies that still exist there. You have older Soviet leaders. The reason he listed Kazakhstan as a having negative outlook is that President Nursultan Nazarbayev is 76 years old. He's not a young gentleman anymore.

As these Soviet-era bureaucracies and these persons move on, the next generation is taking over and there is this new opportunity. There are continuing Russian interests in the region, but China is now inserting itself. Is there an opportunity for Canada to either expand the economic opportunities for Canadian companies or to insert ourselves into the new mix that's evolving?

[Leigh Sarty]

I would repeat some of the comments I made in response to an earlier question. What Global Affairs can do, and tries to do, we do. Our resources in that region, both on the ground and our capacities here at headquarters, are relatively modest. As you're probably aware, for the five countries we only have one relatively small embassy up in Astana, which is accredited to Kazakhstan, Kyrgyzstan, and Tajikistan. Uzbekistan is covered out of where I used to work, out of our embassy in Moscow, and Turkmenistan is covered out of our embassy in Ankara.

More often than not, more is better than less, but resources are finite. Nevertheless, we have dedicated trade commissioners who are actively working to identify opportunities and engage with Canadian business. At the end of the day, it's difficult for these efforts to be realized. Whatever emerging trends might be coming down the pike, whatever the desirability of being in on the ground floor for promising opportunities a little down the way, if indeed that is the case in Uzbekistan, I would still contend that the default perception, with a few exceptions, of Canadian business people writ large is that this region is far away, complicated, and potentially corrupt. The region is just not front of mind. That does not mean there are not opportunities, that there are not Canadian firms that are trading, though to a much lesser degree, with the likes of Turkmenistan and even Uzbekistan, where the challenges have been huge. Going forward, though, I wouldn't be particularly optimistic.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I would like to move back to central Europe and the “16+1” Chinese initiative in Europe. It is now 25 years after the collapse of the Soviet Union. It used to be that central European states were kind of trapped between Russian interests and western European interests—French, German, English, whatever the case might be. Now you have this new player, China, this “16+1”. The trade in 2009 used to be about $3 billion U.S. Today, it is about $23 billion U.S. On November 5 of last year, there was a “16+1” summit in Riga. Serbia supports China's claim over the South China Sea, which is really interesting because Serbia has a very strong maritime tradition. On top of this, the first China railway express freight service was opened between China's Chengdu province and Warsaw, Poland. A 12-day express freight ride is now available.

Can you talk more about this new opportunity that some of these states have? How are they leveraging the potential for Chinese direct investment versus the political and economic relationships with the Russian Federation and the European states, along with Canada, which shares a strong relationship with many European states? Our interests in the economy and politics usually align quite closely, and that's not always the case with Chinese direct investment, and it's definitely not the case with the Russian Federation. I'd like to hear your viewpoints on this new player in the region. How credible, really, is this “16+1” initiative?

[Leigh Sarty]

I can't really speak specifically to the ways in which individual states might be leveraging the Chinese reality in their relations with Russia or the European Union. That's simply something I haven't been exposed to. In response to your point, I would just acknowledge that as in all spheres of contemporary 21st century life, China's growing economic power, influence, and willingness to invest are factors to be considered and taken into account.

All countries, Canada included, are engaging with China fully cognizant of the challenges that come with the opportunities associated with China's growing economic and even political influence in the world. That would apply as well to the countries that are the subject of the committee's study. Honestly, the question you pose about the leveraging—and quite specifically in terms of their dealings with, on the one hand, Russia and the European Union—is extremely interesting and well taken, and would merit future study.

[The Chair, Liberal, Bob Nault]

Thank you, Mr. Kmiec.

Colleagues, we have one last member.

Mr. McKay, go ahead, please.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you for your testimony.

I have three questions. The first is with respect to this week's terrorist incident in St. Petersburg. It was arguably unique in its brazenness. It was in the president's hometown, when the president was there. It was possibly as big a message as any terrorist incident in the last few years, and it also fell within the context of the protests in Moscow over the last few weeks.

I would be interested in your views and your overall assessment of the restiveness and the impact, if any, on the position of President Putin.

[Leigh Sarty]

That's a very good question.

It's an absolutely terrible, terrifying episode, and I'm speaking as one who has spent quite a bit of time in St. Petersburg. I know the names of the subway stations well. Sadly, it's not the first such awful attack in Russia. The subway in Moscow has had several bombings in the last decade. I think the last one was in 2010. There was an earlier one in 2004. Then, in terms of terrorism in general, there were some explosions just on the eve of the Sochi Olympics when a bus station in Volgograd was blown up.

[John McKay, Liberal, Scarborough—Guildwood, ON]

But is there something unique about this particular one?

[Leigh Sarty]

I assume we're not speaking definitively about the results of the Russian investigation. I guess the initial indication is that this was someone inspired by Daesh, which underscores or affirms part of the Putin narrative about Syria and international politics more broadly.

I'm not saying this means that I approve, condone, or agree with it, but when I was talking earlier about Russia's approach to Syria, I was putting it very much in terms of the domestic and geopolitical benefits of the Russian approach. Part of the Putin argument and the Russian argument more generally has been that their approach to Syria is a way to ultimately bring stability to the region, and thus diminish the prospect of people coming from the region back into central Asia and perpetrating such acts in Russia.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Part of the Russian narrative, particularly President Putin's narrative, is that he's the strong guy, that he will keep them safe, and that as long as he is the strong guy and keeping them safe, they can ignore their dismal economy and some of the other ventures they are engaged in.

[Leigh Sarty]

Yes. Well, I wouldn't see.... Those who genuinely and sincerely support President Putin are still very numerous, if polls are to be believed. Their confidence would not be rattled based on that.

You're absolutely right in pointing out the symbolism of the fact that it was in his hometown and that it was when he was there—whoa. He was there for a meeting with Lukashenko on that day, which we were talking about earlier. The typical Putin supporter—again, of which there are many—would simply view this in terms of the fact that as strong a leader as he is, he's not superhuman, and they would be confident that he and the regime he leads are continuing to do everything that is necessary to prevent such incidents in the future.

[John McKay, Liberal, Scarborough—Guildwood, ON]

But even Putin supporters have to eat—

[Leigh Sarty]

Yes.