Foreign Affairs Committee on Aug. 4th, 2022

[The Vice-Chair, Conservative, Marty Morantz]

I call the meeting to order.

I'm Marty Morantz. I am the vice-chair of the committee and I'm chairing the meeting today, along with my colleague Mr. Bergeron, who is the vice-chair. We will be passing the chair to each other over the course of the meeting, so that we can each take our individual rounds.

Welcome to meeting number 23 of the Standing Committee on Foreign Affairs and International Development. Pursuant to the motion adopted on July 15, the committee is meeting for its study of the export of Russian Gazprom turbines.

As always, interpretation is available through the globe icon at the bottom of your screen.

I would like to take this opportunity to remind all participants in this meeting that screenshots or taking photos of your screen is not permitted.

Before speaking, please wait until I recognize you by name. When speaking, please speak slowly and clearly. When you are not speaking, your mike should be on mute. I will remind you that all comments by members and witnesses should be addressed through the chair.

I would now like to welcome our first panel of witnesses before the committee and thank them for agreeing to take the time to share their views with us. We have two ministers with us, the Honourable Mélanie Joly, Minister of Foreign Affairs, and the Honourable Jonathan Wilkinson, Minister of Natural Resources.

Minister Joly, please make your opening statement. You have five minutes.

[Mélanie Joly, Liberal, Minister of Foreign Affairs]

Thank you, Marty.

It's good to see all of you. I hope you're having a good summer.

Colleagues, of course I'm pleased to be with you today with my colleague and friend Minister Wilkinson. We're here to discuss the great consequences of Putin's war of choice in Ukraine, the roles Canada can play to secure Europe's energy security and, of course, how we can support our allies in implementing a green transition.

Yesterday, I hosted my German counterpart, Minister Baerbock, and we discussed these important issues.

Five months ago, the Russian president ordered his troops to invade Ukraine, a sovereign country.

His is an attack on freedom, on democracy and on the rights of Ukrainians to determine their own future. It is a flagrant disregard for international law and the UN charter, and an attack against the foundations of the rules-based international order.

We have worked with our allies and partners to impose severe costs on President Putin and his regime. This has included 1,600 sanctions on individuals and entities who support, fund and enable President Putin's war regime. These include President Putin himself, his daughters, members of his cabinet and his oligarchs, and key Russian industries, including high tech, chemicals, luxury goods and manufacturing. As a result, Canada has the strongest sanctions regime in the G7 when it comes to Ukraine.

Evidence is showing that international sanctions are having a significant impact on the Russian state. A recent study from Yale University painted a picture of a deeply crippled economy. Russian imports have largely collapsed. Russia faces challenges securing crucial inputs, leading to widespread supply shortages. Russian domestic production has come to a complete standstill, with no capacity to replace lost businesses, products and talent. As a result of the business retreat, Russia has lost companies representing nearly 40% of its GDP.

Of course, Canada's support for Ukraine's sovereignty and territorial integrity is unequivocal, and Canada has provided significant assistance to Ukrainians to help them defend themselves against Russia's invasion.

This morning, our government announced the resumption of Operation Unifier. We also announced $620 million in military assistance, nearly half a billion dollars in humanitarian support and over $1.5 billion in loans to help Ukraine's economy.

We've also announced $50 million for demining initiatives and over $9 million for initiatives to counter sexual violence.

The way that allies stood united in their support for Ukraine came as a great surprise to President Putin. Allies have isolated Russia politically, economically and diplomatically. Whether through the United Nations or the G20, we are hindering Russia's ability to spread disinformation freely.

We saw through Russia's lies and false pretenses for their invasion, and we still do today. President Putin is working to shift blame as he's weaponizing food. Now he's doing the same with energy.

We know that President Putin seeks to further destabilize Europe and sow division among the alliance. To this end, Russia has weaponized energy by cutting the flows of gas to Europe. Putin hoped to leverage Canada's role in the maintenance of Nord Stream 1 turbines to do just that.

We know that Europe is facing an energy crisis. Europeans—Germans—are facing shortages impacting households and industries. Our allies are worried about the situation as they stock up for the winter. Knowing that turbines were being repaired in Canada, the German Chancellor reached out to us, directly pleading for us to call Putin's bluff.

This was a very difficult decision for everyone in this government. It is one that was not taken lightly or without trying to find an alternative. Minister Wilkinson and I engaged directly with the Ukrainians and Germans, and encouraged discussion between them.

The decision was taken to grant a permit that allowed for the maintenance of Nord Stream 1 turbines and their return to Germany. With this permit, Siemens Canada may lead this work as scheduled on six specific turbines. It is time-limited to a maximum of two years.

With the issue of turbine maintenance taken off the table, Putin has nothing left to hide behind. As the flow of gas slows down, the world now knows with certainty that it was Putin's decision, and his alone.

Russia has shown the world that it cannot be relied upon as an economic partner. The Europeans no longer want to be dependent on Russia. They also understand the importance of fast-tracking the green transition, and as a solid ally, Canada needs to answer the call.

We are working closely with Germany and partners in Europe to find solutions to the energy crisis Europe is currently facing. That said, we need to stick to our targets for reducing greenhouse gas emissions. My colleague Jonathan Wilkinson, the Minister of Natural Resources, will have a lot more to say on that.

In closing, I want to reiterate Canada's unwavering support for Ukraine. We will continue to provide the Ukrainians with the help they need to defend themselves against Russia's invasion.

Now, I will turn the floor over to my friend and fellow minister, Jonathan Wilkinson.

Thank you.

[The Vice-Chair, Conservative, Marty Morantz]

Minister Wilkinson, you have the floor for five minutes.

[Jonathan Wilkinson, Liberal, Minister of Natural Resources]

Thank you very much, Chair.

I welcome this opportunity to discuss Putin's failed attempt to use turbine engines to divide the alliance opposing his unjustifiable invasion of Ukraine. The turbine matter, as Minister Joly pointed out, was a difficult and a complex decision.

The facts are well established. In June, Siemens Canada applied to Global Affairs Canada with an urgent request to continue scheduled services and maintenance of Russian A65 turbine engines at its facility in Montreal, the only facility in the world capable of providing these services.

Germany and the European Union expressed, in the strongest possible terms, their desire to see Canada return the turbines.

They saw that Putin could use the turbines as an excuse for shutting down gas flows to Europe and that the blame for this would be placed on Canada and on western Europe. European countries were very clear that should the turbine not be returned, it would become significantly more challenging to maintain domestic support for Ukraine, threatening a split in the alliance. Ukraine, on the other hand, urged Canada not to return the turbines, concerned that it would signal to Putin and the world a weakening in western resolve to maintain economic sanctions against Russia.

The trap that Putin was trying to set by weaponizing the Nord Stream pipeline was obvious. Don't return the turbine, such that Canada and the west are likely to be blamed for reducing the gas flow to Europe and risk dividing the alliance, or return the turbine and risk a perceived weakening in the alliance's resolve regarding sanctions.

Let me say this very plainly to this committee today: Canada will never aid Putin in dividing the alliance that supports Ukraine. We and our allies remain united in steadfast support of the people of Ukraine, and we will not weaken our resolve in imposing punishing sanctions on the Russian regime.

During consideration of these issues, I spoke multiple times with my counterparts in Ukraine, Germany and the EU. Our conversations included consideration of potential alternatives for supplying Europe with gas.

Ultimately, our government made the decision to allow the return of the turbine to Germany. Let me underline why.

First, returning the turbine eliminated Putin's excuse for holding Europe hostage to gas supplies. The German Chancellor just a few days ago stated that, thanks to Canada “we were able to call Putin’s bluff....With the turbine ready to be delivered, it is up to Russia to resume their contractual obligations.” He went on to say that the decision to deliver the turbine was “a strong sign of support for Germany and for Europe and of maintaining solidarity amongst close allies in order to sustain long-term support for Ukraine.”

Second, the intention of our sanctions is and has been to punish Putin. It is not to jeopardize Europe's economic stability and potentially weaken the alliance. The intent of these sanctions was never to punish our allies in Europe.

Finally, concurrent with the turbine decision, to eliminate any question of Canada's resolve, Canada upped the ante and imposed additional sanctions on Russia. Canada's course of action has been publicly supported by the U.S., Germany and the European Union.

As we all know, the Ukrainian government did not agree with our decision. I certainly discussed these issues directly with Minister Galushenko prior to a decision being made.

However, at the end of the day, our decision avoided Putin's trap: we have strengthened the alliance, supporting Ukraine rather than weakening it, and we have sent a clear signal to the world that we are strengthening our resolve regarding sanctions against the Putin regime.

It is also important to note that Putin's weaponization of energy supply is precisely why the European Union is focused on displacing Russian gas through securing other sources, through conservation, and through accelerating the energy transition towards renewables and hydrogen. The era of Europe depending on cheap Russian oil and gas is over, and countries of the European Union will be looking to Canada and other friendly countries to assist with the supply of energy. In this regard, Canada has indicated that it will boost its exports of oil and gas by 300,000 barrels and barrel equivalents by the end of this year.

Canada is also actively engaged with both the EU and Germany on the potential for exports of hydrogen, liquefied natural gas, or LNG, and critical minerals.

The decision taken by Canada on the turbine reflects that we remain committed to actively supporting Ukraine, working to maintain and strengthen the unity of the alliance against Russia, and working to assist our allies with energy requirements over the short and medium term.

I thank you for inviting me to be with you today, and I certainly look forward to the discussion to come.

[The Vice-Chair, Conservative, Marty Morantz]

Thank you, Minister.

As I have the first round, I'm now going to pass the chair to our second vice-chair.

Mr. Bergeron, do you accept the chair?

[The Vice-Chair, Bloc, Stéphane Bergeron]

Yes, Mr. Chair.

I am now pleased to turn the floor over to Mr. Morantz, to begin the first round.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you, Mr. Chair.

Minister Joly, I think one of the difficulties we have here is that the European Union, along with the NATO alliance, is providing billions of dollars in cash, weapons and munitions to Ukraine to defend themselves. At the same time, it is paying hundreds of billions of dollars to Russia, which they are using in turn to fund their war effort. Canada, by returning this turbine, becomes complicit in a situation where we're aiding the European Union and essentially funding both sides of this war. Canada should never, ever be in a position like that.

The talking points I've been hearing over the last couple of days from you and Minister Wilkinson are that, well, now we're calling Putin's bluff. But that wasn't what you said in early July when you made the decision. There was no talk about calling a bluff or playing a game with Mr. Putin. No. What you said was that returning the turbine was integral to Germany's economy and its citizens, as the country is currently heavily dependent on Russia energy. That was what you said. You didn't tell the Canadian people that you did it to call anyone's bluff until I think yesterday, when I read your comments in the Globe.

So it's just not fair at all to say that this is about calling Mr. Putin's bluff. In fact, it stretches credulity, in my mind, to say that your conversations with the Germans back in early July or June, whenever you were meeting, were about calling Mr. Putin's bluff. They were about encouraging domestic supply. The Ukrainian Canadian Congress has said that your rationale also makes no sense. We'll hear from them later. It's been known for years that Mr. Putin uses energy as a foreign policy tool to punish enemies. It was entirely predictable that Russia would continue to use energy as a weapon after Canada acquiesced to Russian blackmail, essentially.

The reality is that this was a terrible decision that puts Canada in a terrible spot. It doesn't help Germany, and it makes Canada look weak in the eyes of the Russians. Isn't that right, Minister?

[The Vice-Chair, Bloc, Stéphane Bergeron]

Over to you, Minister Joly.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Thank you, Mr. Bergeron.

Marty, of course I hear your preoccupation, and I hear the preoccupation of the UCC. At the same time, the reality is that for too long Europe has been depending on cheap Russian gas, as mentioned by Minister Wilkinson in his remarks. That was reiterated yesterday when I was with my colleague Annalena Baerbock, the German minister of foreign affairs. For too long, Germany has been relying on that gas. In Europe, not only Germany but many other countries, including the Czech Republic and others, have been relying on that gas. The reality is that they are now moving from relying on cheap Russian gas to also finding new solutions. That's why they've been in active conversations with our government.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

With the greatest of—

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I will just continue to answer your question.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I have limited time, so I would like to move on.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

I know, Marty, but my goal really is to answer your question.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

[Inaudible—Editor]

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Now, at the same time, this was not an easy decision to make. For many weeks, Jonathan and I were actively in conversation with our German counterparts, who had reached out to us from the beginning, and also with Ukrainians to try to facilitate the conversation not only between the three of us but mainly between Germany and Ukraine, because this is also something that is between both countries.

Now, to make sure that we would keep the alliance together, and we all agreed that we need to continue to be strongly united against Putin, we needed to make sure there wouldn't be any form of pretext or any form of alibi. That's why the expression of calling Putin's bluff is the one that we're using, because clearly that is what we're doing.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

With the greatest respect, Minister, why didn't you say you were calling his bluff in early July?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Well, at the time, the decision was still being discussed amongst allies.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

That wasn't the rationale then, was it?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

No, no, no, that was always the rationale, because of course, Marty, what was most important was to make sure—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

If it were the rationale, why didn't you say that in early July?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

—that we would continue to be united.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Why not say so in early July?

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Until that time, we were still in discussion with the Ukrainians. The last conversation I had about the turbine with my Ukrainian colleague was actually when I was at the G20. I think it was in Bali. It was two o'clock in the morning. I had a discussion with Minister Kuleba and the minister of foreign affairs from Germany, Annalena Baerbock—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I do have limited time, and I think you respect the fact that I get to ask more than one question.

[Mélanie Joly, Liberal, Ahuntsic-Cartierville, QC]

Marty, I'm just giving you the facts for you to be able to understand the situation.