Foreign Affairs Committee on Aug. 4th, 2022

[The Vice-Chair, Conservative, Marty Morantz]

Welcome to meeting number 24 of the Standing Committee on Foreign Affairs and International Development. Pursuant to the motion adopted on July 15, the committee is meeting to study 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're not speaking, your mike should on mute.

I remind you that all comments by members and witnesses should be addressed through the chair. I'm Marty Morantz, vice-chair of the committee. I will also be asking questions and when I do I will be passing the chair to my colleague, Mr. Bergeron, the second vice-chair. That's how we will proceed.

I'd now like to welcome our witnesses. Our witnesses today are Melita Gabrič, ambassador of the European Union to Canada and head of the delegation; from the Embassy of the Federal Republic of Germany, Ms. Sabine Sparwasser, ambassador of the Federal Republic of Germany to Canada; and the ambassador of Ukraine to Canada, Yuliia Kovaliv.

Welcome, all of you. Thank you for being here. I'd like to ask each of you to make your opening statements. You each have five minutes. We'll start with the European Union ambassador.

Ms. Gabrič, please proceed. You have the floor.

[Her Excellency Melita Gabrič, Ambassador and Head of the Delegation of the European Union to Canada]

Good afternoon, honourable chair of the Standing Committee on Foreign Affairs and International Development, honourable committee members and excellencies Sparwasser and Kovaliv. It is my pleasure to be with you today to provide perspective on the matter at hand on behalf of the European Union.

Since the very first day of the unprovoked, illegal and egregiously unjustified military invasion of Ukraine by the Russian Federation, Europe has been helping Ukraine economically; financially; with humanitarian assistance; diplomatically; politically; and with the provision of weapons through the European peace facility. We will continue to do so.

In order to restrict the Kremlin's means to finance this disastrous war, the EU and its member states have also adopted the largest sanctions package in European Union history. We are closely co-operating with our transatlantic and international allies, with Canada being one of our closest partners. We appreciate the timely and efficient exchange of information as well as the support that Canada has been providing to Ukraine. We appreciate Canada’s investment in European security and its commitment to a rules-based international order.

To cut revenue sources for Russia from its energy exports, the EU is determined to wean itself off Russian energy altogether. To this end, a decision was made to ban 90% of oil imports from Russia by the end of this year. We have also adopted a ban on all imports of coal from Russia, the export of specific refining technologies, and new investments in the Russian energy sector. The EU sanctions regime, however, does not affect goods or technology linked to the industrial transport of natural gas into the European Union, and nor is Nord Stream 1 subject to any EU sanctions. In other words, nothing under the EU sanctions regime would have prevented the repatriation of the Nord Stream 1 turbine.

The European Commission welcomed the decision by Canada to return a natural gas pipeline turbine to Germany after its repair for use in the Nord Stream 1 pipeline, which has been transporting gas to a number of European countries. With the return of this part, one of the excuses being used by Russia for reduced gas flows was removed. Such flows in the short term help EU countries stock up on supplies for the winter, and are part of a strategy of phasing out our reliance on Russian energy.

Russia is continuously using energy supplies as a weapon against the EU and its member states. We have adopted a number of measures to prepare for possible further disruptions of gas supplies from Russia, ranging from diversifying supply sources, speeding up the development of renewables, becoming more energy efficient and reducing natural gas demand this winter. The EU and Canada have been working together to identify concrete and viable areas for co-operation on the key energy-related commodities for which the EU has a particular need—liquefied natural gas and hydrogen, but also uranium, critical raw materials, potash and biomass.

We are grateful to Canada for its support and commitment to helping with European energy security while deepening co-operation on our mutual net-zero energy transition.

Mr. Chair, thank you.

[The Vice-Chair, Conservative, Marty Morantz]

Thank you, Ambassador.

Next we have the Ambassador of Germany to Canada.

Ms. Sparwasser, you have the floor for your opening statement. Please proceed.

[Her Excellency Sabine Sparwasser, Ambassador of the Federal Republic of Germany to Canada]

Thank you, Mr. Chair.

Thank you very much for this opportunity to appear at this hearing.

The decision of the Canadian government to grant an exemption for the export of the Siemens gas turbine at the request of my country has given rise to much controversy and criticism. I want to give you the German perspective here.

Before I go into the arguments, allow me to place this question in a larger context. What we're having today is a very important debate, but it is a debate among very close partners and friends. We are all united and allied in our strategic goal. Russia must not win this war of aggression against Ukraine. It must not succeed in its attempt to redraw the map by force and it must not be allowed to destroy the post-war security order of Europe.

All governments called upon to witness today here in this room—Canadian, European and German—are actively and unambiguously supporting Ukraine against the Russian aggression. We do it politically, financially and militarily, including with heavy weapons.

Together with our partners in the G7, we have decided on unprecedented packages of far-reaching sanctions. I want to stress that we are in this for the long haul. As Chancellor Scholz just said, “We will support Ukraine for as long as it takes.” We want Ukraine to be free and sovereign and able to become part of the European Union.

Our message today should be clear to anybody and it should certainly be clear to Russia. We are Ukraine's friends and firm allies. We will stay the course.

When we now debate the export of these turbines, we're debating a very important issue, but it's not a strategic one; it's a tactical one. Both sides in this debate have valid and weighty arguments. No decision is perfect and none was easy. It was only after a lot of soul-searching that Germany asked Canada to allow a waiver of its national sanctions regime, and the Canadian government did grant it after difficult deliberations. We're very grateful for the decision.

The reasoning behind our request is simple. Our sanctions should impose an economic cost on Russia, but they must not harm us more than they harm Russian interests. As you well know, many countries in the EU, including Germany, are decreasingly dependent—but still dependent—on Russian gas for their energy supply. That's the reason why European sanctions—and U.S. sanctions, by the way—did not include sanctioning goods and services related to the delivery of Russian gas.

Canada has been a leader within the G7 on sanctions against Russia. Canadian legislation has imposed a broader sanctions regime nationally. It is geared to hurt Russia. It was certainly not designed to make it harder for the Europeans to fill their gas tanks, while quickly replacing Russian gas.

Mr. Chair, let me say that sanctions are a very blunt instrument. When states impose economic costs on another country, they often inflict unintended consequences on third parties. Waivers allow flexibility and they allow us to sharpen sanctions. All of our countries use them. The U.S. uses them. The EU just waived some sanctions on Russia to help open up Ukrainian food exports and to take away Russia's pretext that western sanctions are to blame for the global food crisis.

For a very similar reason, Germany asked Canada in June and July to allow the delivery of the turbines. We did not want to fall into Putin's trap. He pretended that the lacking turbine was the reason why Gazprom had to cut the delivery of gas to Germany and Europe. We did not believe him then and we do not believe him now. We're now seeing that Russia is finding more and more pretexts not to take the turbines back. That is really a case in point. We have called his bluff.

With the delivery of the turbine, the pretext is gone. Now it's clear for all to see that Russia is using energy to exert pressure on Europe. It's trying to pit one ally against the other, and it wants to divide us. We need to resist this.

We also need to get out of our dependency on Russian fossil fuels very fast. Germany has already taken a lot of bold steps, and the EU has too, as Melita explained. We have achieved good progress on coal; we're out of it. We're going to be out of oil very soon. On gas, well, on February 24, our dependency in Germany on Russian gas imports stood at 55%. In the last few weeks, it was down to 30%. I checked today; we're down to 26%. That's huge progress. Our goal is to completely phase out Russian energy as fast as we can.

Today, Germany as well as a considerable number of other European countries still need it in order to fill up for the coming winter, though. We're trying to fill up our gas storage as fast as we can to 80% to 90% as the backbone for the winter. It's very important for heating in Europe.

We're also preparing for the possibility that Russia will decide to cut off Europe completely or nearly completely. Nationally and on the EU level, we're coordinating a whole bundle of emergency measures. I will very quickly name just four.

We will bring back what we wanted to phase out, namely coal, and that is very painful in the face of our climate targets. We're in the process also of reassessing our nuclear phase-out. We may prolong the life cycle of our remaining nuclear reactors.

The second point is that we share and we save. The EU has just released its gas saving plan. Melita referred to it. Hopefully, all of the European countries will save energy at a rate of 15%, and Germany even more.

The third point is that we diversify. Our partners in Norway, Netherlands and the U.S. have increased their production in order to make up for at least some of the shortfalls in Russian gas. To receive liquefied gas, Germany will now be installing two LNG ports by the end of this year and probably two to four more by the end of next year.

Fourth—

[The Vice-Chair, Conservative, Marty Morantz]

Ambassador, I'm sorry to interrupt.

[Sabine Sparwasser]

Did I go too long?

[The Vice-Chair, Conservative, Marty Morantz]

Perhaps we could get you to wrap up. It's just that there are so many MPs who have questions.

[Sabine Sparwasser]

Yes, I'm so sorry.

[The Vice-Chair, Conservative, Marty Morantz]

Oh no, there's no need to apologize. It's my job to be the heavy. Please complete your remarks.

[Sabine Sparwasser]

I just want to say that we're speeding up our energy transition, and we've changed our legislation for that. It's just to say that we're preparing for very tough times, and we're trying to do it in a way that keeps Germany and Europe strong economically and keeps the consensus in our societies together. We need to do everything in order to keep us from being weakened. If the economy in Europe and Germany stutters, that would also entail very heavy repercussions for our joint ability to continue our support of Ukraine.

My last sentence returns to where I started: We're in this for the long haul. We need to be united. We need to be strong. We need to be there for the support of Ukraine and the rebuilding of Ukraine as a free and sovereign nation in Europe.

[The Vice-Chair, Conservative, Marty Morantz]

Thank you very much, Ambassador.

Next we have Ambassador Kovaliv, Ukrainian ambassador to Canada.

You have the floor for your opening remarks.

[Her Excellency Yuliia Kovaliv, Ambassador of Ukraine to Canada]

Dear Mr. Chair and dear members of the committee, thank you for this opportunity to address you.

Since February 24, as Russia started its unjustified war against Ukraine, it has used a wide range of weapons: missiles, tanks, sexual violence, food and energy.

We value Canada's leadership and swift parliamentary reactions as one of the first countries to recognize Russian aggression and war crimes as the genocide of Ukrainian people. You stated the obvious and helped us build alliances around the whole world to recognize that Russia's goal is to destroy Ukraine as a sovereign country and Ukrainians as a nation.

We are also grateful to Canada for the steadfast support by providing unprecedented financial support, military and humanitarian aid, hosting Ukrainians who are fleeing the war, imposing sanctions and being the first to introduce a tool to seize Russian assets. Ukraine is grateful for these important actions of direct support.

Russia's ability to fuel the war is built mainly on its oil and gas revenues, which have already exceeded $100 billion for the period of the war. The reason why Canada and other allies have imposed sanctions is to deprive Russia of the revenues that are funding the war.

We are united with our EU partners on the importance of reducing the dependency on Russian energy. This dependency has been built for decades, unfortunately with an ignorance of its true danger. People who stood at the origin of this irresponsible policy now visit Moscow for vacations.

The urgent steps to decrease consumption have been taken by the EU. We as a country had to take the serious steps in 2014 when Ukraine totally cut off Russian gas supply to Ukraine. Today, I'm addressing you not only from the position of the country that has been fighting for over five months for our sovereignty, but also from the country that has for a decade been resisting Russia's energy pressure.

Our position from the very beginning was that the decision to provide the permit for Siemens turbines was a dangerous precedent that violates international solidarity and goes against the principle of the rule of law. In fact, the waiver has already strengthened Moscow's sense of impunity.

We repeat what was stated before: It's clear that Russia's demand for turbines has no technical basis and was aimed only at putting on even more pressure. The more you concede, the more emboldened the Kremlin feels in pushing for further exemptions. Simply put, it's a slippery slope.

I would like to remind you of the key facts. First, Russia is able to continue full gas supply to Germany without the turbine that was shipped to Canada. This turbine is still in Germany and Gazprom announced just yesterday that it will not accept it.

Secondly, it's not true that Ukraine cannot deliver and substitute gas delivery to Germany. The Ukrainian gas transmission system is 40% larger in capacity than Nord Stream 1. Even today, the volume of gas that Ukraine delivers to Europe is bigger than Nord Stream 1 delivers. Ukraine has traditionally delivered gas to Germany, Italy, Austria and other countries of the region. This is the only pipeline where the Russian monopoly Gazprom has no stake. It delivers gas to Europe even during the war.

Delivery through the Ukrainian route would also provide additional security for 11 million Ukrainian households who are getting the gas from the same pipeline.

Dear members of the committee, this waiver is not a one-time decision. The maintenance of all six turbines in Canada will cement Russia's ability for years to come to weaponize energy and to derail the efforts to address climate change, and it will be done with Canada's blessing.

The waiver was issued with the claim for better energy security, but the latest weeks have evidenced that it only gave Russia grounds for further blackmailing.

Hostile Russian moves followed. They further cut gas flow, announced another turbine to be out of order, and fully stopped gas supply to Latvia, where Canadian forces are deployed.

Today, 12 European countries have been cut from Russian gas supply on political grounds. Russia is responsible for orchestrating the gas crisis in Europe. It's now obvious.

The reason for the waiver was not to allow Russia to blame sanctions for the disruption of gas supply and now it's more than clear that an additional five turbines that were allowed to be further maintained in Canada will be turned by Russia into tools of humiliation.

We urge you, do not take the bait. There was no need to waive the sanctions to call Putin's regime bluff and simply lie. You can just google the history. This logic of appeasement already failed to prevent the war in Ukraine.

Ukraine is eager to work with EU countries on the measures to decrease gas dependency. We are committed to help by providing a Ukrainian gas route and offering Ukrainian gas storage, and by supplying the EU with additional electricity that could substitute up to five billion cubic metres of gas. We are already on that way with the EU. We are also looking forward to co-operating with Canada on energy security for renewables, hydrogen and the supply of LNG.

Let's not forget that since the permit was issued, Russia committed a series of war crimes—at a shopping mall in Kremenchuk and Odessa seaport; over 50 prisoners of war of Azovstal were killed; and over 160 civilians were killed in only three weeks.

Ukraine needs further military support to resist the aggressor on the battlefield. We need sanctions to deprive Russia of the economic ability to continue the war. As stated, the permit was issued with high hopes for the Government of Canada to help strategic partners in Europe. Since this step has obviously failed to bring expected results, we ask you to revise this decision. The permit was stated to be revokable, and nobody wants five other turbines to repeat the sad story of the current one.

Dear Mr. Chair and members of the committee, the west has demonstrated unity and commitment to stand with Ukraine until Ukraine wins this war. Let's be tough. Let's be as brave as the Ukrainians who are protecting the rest of Europe from Russian barbarism. I have no doubt in your support for Ukraine and that your support to Ukraine will continue. On behalf of all Ukrainians, for that I want to thank you.

[The Vice-Chair, Conservative, Marty Morantz]

Thank you very much, Ambassador.

We will go to our first round of questions. First up is Mr. Genuis for six minutes.

Mr. Genuis, you have the floor.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

My initial comments will be to the German ambassador.

Your Excellency, as a bit of a personal introduction, I'm very proud of my own German heritage. My grandmother's family were German Jews, and although they lived through very dark times, my grandmother survived the war because of the courage of many ordinary Germans who were willing to shelter her at great risk to themselves.

She lived in the Münster area of Germany, where Clemens von Galen spoke out boldly against injustice and inspired everyday German farmers to shelter my grandmother and to sacrifice in the pursuit of justice.

I have been carefully reviewing the arguments of your government on this issue of the turbines, and there seem to be lot of commonalities in talking points with the Canadian government, with the same words, the same turns of phrase, etc. I note that while you continually profess friendship with Ukraine and talk about unity, you seem to presume to know better than the Ukrainians what is in their interest.

It seems to me that saying you care but failing to listen is not how true friendship works.

As it pertains to the issue of energy, your government is first of all acknowledging the reality that the turbines are not needed and that, as far as this summer goes, the maintenance is routine. Your chancellor said explicitly of the turbines that “It would be good if they would be there, even though they are not necessary.”

The Russians did not need to cut production as a result of the absence of a turbine. The facts make this plain, and you have now acknowledged as much. Instead, as the Ukrainian Canadian Congress identified, the Russians were running a test. They were testing our resolve and, in particular, your government's resolve, to see whether we and you were ready to sustain support for Ukraine through arbitrary production cuts.

According to multiple media reports, your foreign minister, without claiming that the turbines were in any way necessary, told Canada that if the missing turbine led to a stoppage of natural gas from Russia, it would spark popular uprisings and force Berlin to halt support for Ukraine. In other words, your government's argument is not that turbines are needed, but rather that you do not believe that the German people can stomach the sacrifice that will be required if Russia continues to arbitrarily drive down its gas supply. Sadly, the implication of that argument is that you would do almost anything to get them to increase that supply.

Of course, now that Russia has seen your response and has heard your government say these things, they will push further and continue to use the threat of arbitrary energy withdrawal to get additional exemptions to sanctions and other concessions. Now that Russia has seen and been told that you do not believe the German people can sustain serious sanctions and that the withdrawal of energy will lead to popular uprisings, they will continue to exert further pressure, of course.

What really strikes me and bothers me about your government's argument isn't just that it regurgitates the failed talking points of appeasement, but that it seems to demonstrate a low opinion of the courage and propensity for sacrifice of your own people. We all know that sanctions involve sacrifice. Stopping mutually beneficial exchanges between people in different countries is going to have negative consequences for people on both sides. That is inevitable, but while Ukrainians are fighting and dying, not just for their freedom but for ours as well, I think the least that we can all do is be prepared to bear the sacrifice that sanctions require of us. We must be prepared to give until it hurts if we want to prevail, but your government seems to believe that your own people would give in to the Russian pressure and that Germans would take to the streets if the turbines were not returned.

Now, personally, I have a much higher opinion of the German people. I believe that Germans have the potential for heroic sacrifice and, unlike these talking points about popular uprisings, I think my view has public opinion data behind it. It was reported by the European Council on Foreign Relations that more than half of Germans already want to maintain support to Ukraine in spite of high energy prices, even absent any leadership from the government on that point.

When it comes to a willingness to sustain the sacrifices that are required to prevail against Russia, the problem is not with the German people. The problem seems to be with the policy of the German government and now the Canadian government.

Now, of course, the challenges Germany faces are the result of a situation that came about because your country continued to take Russian gas between 2014 and 2021, even though Ukraine was already under Russian occupation. Your government, I think, should acknowledge the reality that Russia will constrain or cut off supply in a time and a way of their own choosing, and the only real alternative for Germany is to either completely acquiesce or to stand firm and prepare for all possibilities, policies that become more and not less likely with every concession.

Ambassador, those are my comments. I will say that I think you have maybe a minute and a half left, and I'll give you the balance of my time to respond to those comments as you wish.

[Sabine Sparwasser]

Mr. Chair, am I allowed to—

[The Vice-Chair, Conservative, Marty Morantz]

Yes, Ambassador, you have the floor.

[Sabine Sparwasser]

Thank you, Mr. Genuis. There were so many points in there.

My first point, which I made at the beginning of my intervention, is that I can see both sides of the argument. It is a tactical decision. There is a tactical argument to be made. What is the stronger measure?

We—my government, and the Canadian government has also been convinced of that—believe that we have called Putin's bluff by honouring the part of the turbine delivery. We called his bluff, because it is now very clear to see that Russia has not been asking for the turbines in good faith and in order to reset the provision of gas. It has done it in order to blame us and our own sanctions for the fact that Europe will not receive any gas.

The second point is that, like you, I believe that the German population is very ready for sacrifice and is very ready to stand behind Ukraine. This is absolutely true. You may have seen in Berlin the welcome that Ukrainian families received when they came. We have about 900,000 Ukrainian refugees. People are very happy to welcome more of them.

You made a very good point when you said that we made a huge strategic mistake by creating such a dependency on Russia. It was a grievous mistake. It happened over many decades. It was also part of a policy to try to tie Russia into the European security system. It followed the fall of the wall, when we saw Russia as a member of the European security system—

[The Vice-Chair, Conservative, Marty Morantz]

I'm sorry, Ambassador. I'm in the unenviable position of having to cut off an ambassador. I don't cherish it.

Mr. Zuberi's up next for six minutes. Perhaps he'll let you complete your thoughts. I'll leave that to him.

Mr. Zuberi, you have the floor.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you, Mr. Morantz.

I'd like to thank all of the ambassadors for being here. I recognize that we, each and every one of us, are all standing in solidarity with Ukraine, from Canada to Europe.

I would also like to thank the panel for acknowledging that Canadian sanctions against Russia, in its pursuit of this illegal war, are very robust.

I'd like to thank our German allies and all European allies in their steadfastness in confronting Russia and supporting the Ukrainian people.

This being said, I'd like to start off with the EU ambassador. Earlier, in the previous panel, our foreign affairs minister said that sanctions should aim, whenever possible, to pressure Russia firmly and clearly, but also to avoid unintended consequences upon our allies. Does the EU share this view?

[Melita Gabrič]

Thank you for this question, honourable MP Zuberi.

The short answer to your question is that the European Union is determined to minimize unintended consequences of our very serious sanctions for third countries, as well as for the European economy.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you for that.

I know that we all say this together, while being very steadfast against what Russia is doing and supporting the Ukrainian people.

To both the EU ambassador and the German ambassador, Minister Wilkinson said that there were no other alternatives to his decision when it came to providing the turbine. Can you speak about the importance of this decision to Germany? In your view, were there alternative decisions that could have been made by Canada?

That's to both Ambassador Gabrič and Ambassador Sparwasser.

[The Vice-Chair, Conservative, Marty Morantz]

During the question period, you can assume you have the floor in response to a question, Ambassadors.

[Sabine Sparwasser]

Melita.

[Melita Gabrič]

Yes, thank you, Sabine.

I want to reiterate what I already said in my opening statement, which is that we do welcome Canada's decision to repatriate this turbine, both because it took away the pretext that Russia has been using for reducing the flow of gas, and also because, as you are all aware, Europe has found itself in this situation with energy security because of Russia's aggression against Ukraine and because the European Union and its member states decided to support Ukraine very firmly with different means, as I already explained, ranging from financial, military and political support to support for refugees and so forth.

We are determined to wean ourselves off Russian energy. In order to do so, we need to do that gradually. We already decided to ban 90% of imports of Russian crude oil. We already banned import of Russian coal, and we are determined to phase out our dependence on Russian gas. In the meantime, in the short term, we need to prepare for the winter, and whatever flow of gas can come to Europe is of course helping with filling up our storages. As Sabine already referred to, we decided to fill our storages up to 80% to 90% by the end of the year or by the beginning of November. Here I also want to emphasize that we already increased imports of natural gas from non-Russian sources by 75% compared with last year.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you for that.

Ambassador Sparwasser, do you have anything to add to that?