Evidence of meeting #25 for Foreign Affairs and International Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was energy.
A recording is available from Parliament.
2:10 p.m.
Conservative
Garnett Genuis Conservative Sherwood Park—Fort Saskatchewan, AB
Further, following up on Mr. Zuberi's comments, one of the principal arguments for—
2:10 p.m.
Liberal
The Chair Liberal Ali Ehsassi
I'm afraid you're out of time, Mr. Genuis. We now go to Ms. Bendayan for four minutes.
2:10 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Thank you, Mr. Chair.
Before I ask my questions, I'd like to briefly come back to what my colleague Mr. Bergeron touched on, which is the statement or rather the blackmail by Mr. Peskov with respect to the Nord Stream 1 pipeline. As I understand it, this pipeline that runs through Ukraine and enters the European Union through Slovakia is indeed in service, and volumes are stable. Again, as I understand it, this pipeline and the TurkStream pipeline are the only two remaining land routes for importing Russian gas into Europe.
Of course, I have questions for both witnesses.
In the discussion we are having with you today, you mentioned in your opening statement that you encouraged our committee to travel to Ukraine. As you know, we had travel plans that were vetoed in the House of Commons by the Conservative Party.
Are you aware, gentlemen, of why that travel was vetoed?
2:10 p.m.
Executive Director and Chief Executive Officer, Ukrainian Canadian Congress
We're not privy to the discussions of the committee in terms of travel, but we certainly encouraged our parliamentarians and government officials to travel to Ukraine at the safest and earliest opportunity.
2:10 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Thank you.
I also note that in your introduction you encouraged Canada to continue supporting Ukraine militarily. My understanding is that one of the things Ukraine needs most right now is armoured vehicles. We know how crucial armoured vehicles are to the operation that is ongoing at the moment in the hope that Ukraine will be able to retake some of its territory.
Canada has already sent some armoured vehicles to Ukraine. I note that one country that has large stocks of these vehicles but seems to be unwilling to send them to Ukraine is Germany. Do you have any information about Germany's refusal to provide these vehicles? How can we make sure to get more armoured vehicles to Ukraine quickly?
2:10 p.m.
Senior Policy Advisor, Ukrainian Canadian Congress
Germany is providing weapons to Ukraine. It is providing them at a pace that is not the pace we would like to see. Any of your engagements with your German counterparts in the Bundestag that would get them to put pressure on the German government to speed up these deliveries would be most welcomed by us.
2:10 p.m.
Liberal
Rachel Bendayan Liberal Outremont, QC
Very good.
We are about to enter winter and we're hearing a lot about the challenging winter ahead for Europe, but I believe the winter will also be challenging for Ukraine, given how snow and cold might affect your military operations.
How do you see the coming months on the ground in Ukraine, and how can we make sure you have the best possible tools over the course of the coming months?
2:15 p.m.
Executive Director and Chief Executive Officer, Ukrainian Canadian Congress
From an immediate civilian survival perspective, we have, through our humanitarian appeal, begun to talk about winterization. We know that there are substantial funds that the Government of Canada has yet to spend. I believe there is about $75 million that could be spent on winterization, which means everything from providing heating to basic repairs for people in all of these devastated villages that we've seen on our screens, where roofs, doors and windows are gone and people are left cooking over, basically, campfire stoves. Civilian winterization is essential to enable people to survive.
As we said, the next steps on military and security support mean identifying, together with our allies, whether Canada has more light armoured vehicles or missiles or communications systems that would be effective for the Ukrainian army so that it can continue its offensive and be victorious in this war in the shortest time.
2:15 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you.
On that note, allow me to thank Mr. Michalchyshyn and Mr. Zakydalsky for once again having made themselves available to all of the members. I know I speak on behalf of all of us when I thank you for your tremendous advocacy and for always being the fount of knowledge on all issues related to Ukraine. Thank you for your time.
Members, we'll suspend the meeting briefly to allow our witnesses to leave. We will of course continue for the second hour with three new witnesses.
Thank you.
2:20 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Colleagues, allow me to now commence the second hour of our committee hearing on the issue of turbines to be exported to Europe.
We are very privileged to have three distinguished witnesses with us for this hour. We have Dr. Devlen, who is with the Macdonald-Laurier Institute; Dr. Kolga, who is also with the Macdonald-Laurier Institute; and Dr. Schmitt, who is a research associate with the Harvard and Smithsonian Center for Astrophysics and the Harvard Ukrainian Research Institute at Harvard.
Let me say that we are very sorry and we thank you for being patient. Our first panel ran about 15 minutes over, so we are very grateful that you have made yourselves available.
Each of you will have five minutes for your opening remarks. We will begin with Dr. Devlen. The floor is yours for five minutes.
September 7th, 2022 / 2:20 p.m.
Balkan Devlen Senior Fellow, Macdonald-Laurier Institute, As an Individual
Thank you very much for this opportunity to contribute to the committee's deliberations.
My comments are aimed at shedding light on what I see as the central question in the debate about the gas turbines today: Should Canada revoke the permit allowing the maintenance of the now-infamous gas turbines? The answer to this question is a resounding yes.
Doing otherwise—continuing with the sanctions exemption—does not advance Canada’s interests, does not help our European allies with their energy problems, and continues to provide the Russian dictator Vladimir Putin with opportunities for blackmail and leverage against the west.
Let me briefly elaborate in the five minutes that I have.
It is clear to all that the technical issues have nothing to do with Russia’s decision to first reduce and then completely shut down gas flows to Europe via Nord Stream 1. Russia’s actions over the years, and particularly in the last few months, made this very clear. There is no need to again go over the familiar terrain that has been covered in the deliberations of this committee. It's a political decision aimed at blackmailing and forcing Europe to ease or break the sanctions imposed on Russia as a result of its brutal and unprovoked invasion of Ukraine.
Kremlin spokesperson Peskov said as much with great clarity on Monday, and Putin repeated the same thing today in his remarks. This fact is clearly recognized by the German and European public, as polling consistently indicates. It would be giving too little credit to the European public’s political sophistication to argue that they will buy into Russian excuses and blame Canada for the difficulties.
Therefore, it is clear that Canada’s decision to continue to provide an exemption for the gas turbines will have no role in determining whether Russia will resume gas flows to Europe or not, nor will revoking the permit lead to a backlash against Canada from the Europeans.
What it does, however, is provide an ongoing point of leverage for the Kremlin to create friction and discord between allies and enable the Kremlin to develop a narrative of western weakness and disunity by pointing out the carve-outs within the sanctions regime.
In other words, the Kremlin turns to other countries and says, “Look: Canada, Germany and other western powers immediately violate their own sanctions regime and carve out exemptions when their domestic interests are threatened. Why would you go along with this and pay the price when they are not interested in doing the same?” Putin is basically repeating the same line today in his talk.
Continuing with the exemption also does not help our European allies with their energy needs. What would help is to get Canadian LNG to them, as they have been asking for publicly and very clearly. Not only has Chancellor Scholz voiced his desire for more Canadian LNG, but other allies, such as Poland and Latvia, have been calling for more Canadian gas to Europe for a while. Clearing the obstacles in front of this real and tangible support for Canada’s allies is urgently needed. That is what a good ally would do.
Lastly, it is important to keep in mind the broader geopolitical context in which this issue needs to be considered. The strategic goal for Canada must be Ukrainian victory in this war. Supporting Ukraine is not charity but enlightened self-interest. What is at stake for Canada is not only the security and prosperity of our European allies but also the future of the rules-based international order that has benefited Canada and Canadians immensely. The country—Russia—that launched this brutal attack on that international order is not far to the east of us; it is an immediate neighbour to the north in the Arctic. Policies that provide leverage and opportunity for Russia are not in the interests of Canada.
To recapitulate, whatever the initial merits of the decision to provide an exemption, there are no strategic, political or economic reasons now to continue to provide Russia with potential leverage for the next two years. It neither advances Canada's interests nor alleviates our allies' suffering. The permit should be revoked and Canada should look for ways to get its LNG to European markets as fast as it can.
Thank you very much for this opportunity to talk to you today.
2:25 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you very much, Dr. Devlen. We will next go to Dr. Kolga.
Welcome. You have five minutes for your opening remarks.
2:25 p.m.
Marcus Kolga Senior Fellow, Macdonald-Laurier Institute, As an Individual
Thank you, Mr. Chair.
I am simply Mr. Marcus Kolga, not Dr. Marcus Kolga.
Thanks to you and the members of the committee for this opportunity to appear before you today.
Over the past months, Russia has threatened to starve vulnerable nations around the world by blockading millions of tonnes of Ukrainian grain while shelling and bombing critical Ukrainian agricultural infrastructure to induce a global grain shortage. At the same time, Russia has falsely blamed western and Canadian sanctions for causing this food crisis, despite the fact that our sanctions do not affect any Ukrainian agricultural infrastructure or the transport of grain and food to those nations that rely on it.
Russia's weaponization of hunger is matched in cruelty by its use of energy to freeze Russia's neighbours. Many Europeans experienced this first-hand when Russia cut all gas supplies transiting Ukraine in January of 2009. Canadians only recently became aware of Putin's energy warfare after Global Affairs granted Gazprom a sanctions exemption to permit the repair in Canada of turbines that compress gas exported from Russia through the Nord Stream pipeline to Europe.
However, the Kremlin's use of energy as a point of geopolitical leverage did not emerge out of a vacuum. The former vice-president of Gazprombank, Igor Volobuev, told a Polish newspaper in May how he was instructed by Gazprom executives to develop anti-Ukrainian narratives in 2005 when Ukraine's political trajectory shifted toward Europe. He also created anti-Georgian narratives in 2008 when Russia invaded South Ossetia and Abkhazia. According to Volobuev, all decisions within Gazprom are made inside the Russian presidential administration.
If Canada's decision to grant Gazprom a sanctions waiver was intended to call Putin's bluff, that mission has been accomplished. It is now clear that our sanctions did not impair Gazprom's ability to pump gas through the Nord Stream pipeline. As we've heard from previous witnesses today, they never did.
Underscoring the false nature of Russia's accusations, a recent report published by the BBC exposed massive gas flares at Gazprom's Portovaya compression station near the Russian starting point of the Nord Stream pipeline. Flaring is a process by which gas producers burn off large quantities of gas for sustained periods of time. According to that report, $10 million worth of gas is being burned off by Gazprom each day. That is gas that would otherwise be pumped through Nord Stream to Germany and Europe or through existing pipelines that transit Ukraine and Poland.
Indeed, as other witnesses have pointed out, the Kremlin has now explicitly stated that gas will only start flowing through Nord Stream once Canadian and western sanctions have been lifted. This is blackmail.
Vladimir Putin's intent is to weaponize gas in order to erode western support for Ukraine and undermine Canadian and allied democracies by blaming us for rising inflation and energy costs through disinformation. This is happening right now. This morning, in fact, in Vladivostok, Vladimir Putin doubled down on his accusations about western sanctions and even claimed, “we did not start anything in terms of military actions; we are trying to end it.” At the same time, Putin made it very clear that the polarization of the democratic world that his regime is actively contributing to will greatly benefit Russia.
We're currently witnessing Russian state media and proauthoritarian groups promoting these exact narratives. Protests that were organized by Kremlin-aligned Communists and populist neo-fascists in Europe this past weekend will be exploited by Russian propagandists to build on them and destabilize western democracies. We cannot rule out that these false narratives will not inspire similar protests among Canadian far-right and far-left extremist groups.
In Putin's own words, the sole beneficiary of this polarization is his regime. Now that Putin's bluff has been called, the sanctions waiver issued by Global Affairs should be revoked and the integrity of Canada's sanctions regime should be restored. Sanctions work when they are applied, sustained and enforced.
Finally, Canada should prioritize the development of infrastructure to export Canadian gas to Europe, as many of our allies have asked us to do. Canadian small nuclear reactor technology can also help our allies take control of their own supply of electricity. In fact, Estonia recently signed an agreement to do just that. Canada can provide a mutually beneficial contribution to European energy security that will lead to greater overall European stability if we only commit to it.
Thank you, Mr. Chair. I look forward to your questions.
2:30 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you, Mr. Kolga.
We'll next go to Dr. Schmitt.
Dr. Schmitt, you have the floor for five minutes.
2:30 p.m.
Benjamin Schmitt Research Associate, Harvard-Smithsonian Center for Astrophysics and Ukrainian Research Institute, Harvard University, As an Individual
Hello and bonjour, Chair Ehsassi, Vice-Chair Bergeron and distinguished members of the Canadian Parliament. Thank you and merci for the opportunity to speak today about supporting Europe’s energy security.
My name is Benjamin L. Schmitt. I'm an astrophysics researcher at Harvard.
I'm a former European energy security adviser from the U.S. Department of State. Currently, I’m a research associate at the Harvard-Smithsonian Center for Astrophysics and Harvard Ukrainian Research Institute, a senior fellow at the Center for European Policy Analysis, and a Rethinking Diplomacy fellow at Duke University.
We meet today nearly seven months after Moscow unleashed its horrific campaign of chaos in Ukraine, but let’s be clear: Just as Putin’s military aggression against Ukraine didn’t start with its February large-scale invasion, the Kremlin’s wider hybrid aggression against global democracies, including weaponized energy, is nothing new either.
With this in mind, we can look back on three critical lessons.
First, energy and critical infrastructure proposals advanced by Putin’s authoritarian regime are not just commercial deals.
Nord Stream is more than just a commercial deal.
Second, sanctions have been an effective tool to slow and stop Kremlin malign energy activities over the years.
Third, technology export controls remain vital to throttle the Kremlin’s ability to acquire systems and components needed to both wage and fund its horrific war.
Given the total state control of authoritarian nations like Russia, nearly every sector of society can be weaponized to advance geopolitical aims, from cyberspace to supply chains to space assets and, of course, energy for political blackmail. Knowing this, undermining sanctions unity on the Nord Stream 1 turbines simply to “call Putin’s bluff” is only justifiable in a world where Russia hasn’t been weaponizing energy for years—but it has. For context, we can look at Putin’s Nord Stream 2 pipeline.
Nord Stream 2 was a long-running geostrategic anchor that Germany openly clung to as Russia created a gas crisis last year. In 2021 the Kremlin intentionally limited natural gas volumes destined for European storages, most of which were owned by Gazprom. Despite this reality, Berlin convinced the United States government to waive its own mandatory bipartisan sanctions aimed at stopping Nord Stream 2, with Berlin agreeing to seek EU sanctions in the case that Russia took further steps to weaponize its energy resources. Even though Putin did just that, Berlin failed to seek those sanctions, emboldening Putin’s confidence that energy pressure could limit the latitude of foreign policy responses to Russia's horrific war against Ukraine.
Thankfully, Washington finally sanctioned Nord Stream 2 AG and its corporate officers just hours before Putin's large-scale invasion began, ending the project for good, hopefully. But distressingly, even with this fresh lesson in mind, history seems to be repeating itself here in Canada.
For months, Gazprom has cut flows to at least a dozen EU member states, including via its Nord Stream 1 pipeline, and since mid-June has cut by 60%, 80% and now 100%. Multiple technical assessments from German ministries and officials stated that Russia’s explanation for these cuts—supposed technical issues that could only be solved by receiving stranded Siemens turbines near Montreal—were nothing more than pretext for another political energy cut.
That’s why it’s so baffling that Berlin simultaneously pressured Ottawa to undermine its own technology sanctions against Russia. Even if Gazprom’s dubious technical justifications had merit—and they do not have merit—the Kremlin could easily restore gas deliveries to Europe right now via other routes where it's limiting flows. That it refuses to do so speaks volumes about Putin's malign intent.
Berlin pressuring Ottawa to undermine sanctions unity through the turbine waiver sets a worrying precedent from which the Kremlin will learn a troubling lesson—that weaponizing energy dependence can be effective at breaking western consensus on the very technology export controls that are curbing Russia’s military potential and economic engine.
Russia’s refusal this summer to take custody of the first of the turbines transferred to Germany raises questions about Ottawa’s subsequent decision to stand by its waiver after the visit of German Chancellor Scholz in late August, when news reports say that it authorized the transfer of five additional Siemens turbines.
To cap off the saga, this week Kremlin spokesperson Peskov stated out loud what the world knew for months, that the turbine story was a cover for energy weaponization, declaring that the cuts will continue until sanctions are dropped, and that “Other reasons that would cause problems with the pumping [simply] don’t exist.”
In closing, I will leave you with three very brief recommendations.
One, Canada should reverse the turbine sanctions waiver as soon as possible, backed by political endorsements from Germany and the United States.
Two, Canada should expand sanctions on the Putin regime and increase LNG export capacity, incentivizing exports to European partners and allies.
Three, Canada should pass legislation to curb Kremlin strategic corruption in western democracies, just like what I proposed to U.S. Congress, called the “stop helping America’s malign enemies, SHAME, act”.
In our dire struggle against Russia's criminal onslaught against Ukraine, Putin and his authoritarian cronies need to see a wall of strength from democracies unwilling to waiver in their resolve to hold the Kremlin to account. Then there will be only one nation forced to change its foreign policy in order to avoid “Ukraine fatigue”, and that would be Putin's Russia.
Thank you for your attention.
I look forward to your questions today.
2:35 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Thank you, Mr. Schmitt.
We now go to questions by the members.
The first member is Mr. Chong.
Mr. Chong, you have the floor for six minutes.
2:35 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Thank you, Mr. Chair.
Before I direct my questions to the witnesses, I'm wondering if you invited the foreign affairs minister of Ukraine to appear in front of this committee, and, if so, what was the response?
2:35 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Mr. Chong, I can assure you that I've been advised by the clerk that the foreign minister of Ukraine was invited, an invitation was extended, but regrettably, he was not available.
2:35 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Thank you, Mr. Chair.
I'd like to direct my question to Dr. Schmitt.
According to the Finnish Centre for Research on Energy and Clean Air, Russia has raked in €158 billion since the war began in Ukraine from the sale of oil and gas exports, more than half of which have been to the European Union. In fact, this Finnish research centre has indicated in its report that €43 billion has been added to the Russian budget from the sale of these exports to the European Union.
Canada could displace Russian gas in western Europe. We are the fifth-largest natural gas producer in the world and we have the longest coastline in the world. According to my back-of-the-napkin calculation, a simple 15% increase in Canadian natural gas production could displace more than a third of all Russian gas in western Europe.
Recently, Chancellor Scholz was here in Canada, and he said:
As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice.
He further added comments:
For now this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this.
The Canadian Prime Minister rejected the German request to work with Germany to export more Canadian LNG to Europe.
I'd like your comments on that.
2:40 p.m.
Research Associate, Harvard-Smithsonian Center for Astrophysics and Ukrainian Research Institute, Harvard University, As an Individual
I think Canada can play a major role here. Obviously increasing the amount of export infrastructure on Canada's Atlantic coast is incredibly important as well as using the St. Lawrence Seaway to the greatest extent possible potentially to bring LNG through the Great Lakes. Again, I defer to Canadian experts on the various routes, but it can be done.
With that in mind, we also have to look at the extent to which Canada and other western allies can help the EU take a war-time level of effort to build out the energy import infrastructure as quickly as possible to increase the bandwidth of LNG that can be brought in to displace Russian natural gas.
Of course, we want to move to renewables as quickly as possible and of course we need to address the climate crisis but in a war-time contingency we need a one-for-one swap with these volumes.
2:40 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
On that last point, Dr. Schmitt, the current government has indicated it takes five to 10 years to build an LNG facility here in Canada, but Germany is about to construct two new LNG terminals in the Baltic Sea within about 12 months. Germany is not a major energy producer, yet it is able to construct these two new terminals in the Baltic Sea in just over 12 months. That's what the German economic minister has recently said. They announced the construction of these two new terminals just shortly after the war began on February 24, and yet we as an energy producer—the fifth-largest natural gas producer in the world with an immense capability to engineer, design and build energy infrastructure—has a government that says it's going to take five to 10 years to construct. I want to finish on this point and allow you to comment on it.
The Prime Minister said during Chancellor Scholz's visit that there has “never been a strong business case“ for LNG facilities on the east coast and yet Timothy Egan who is president of the Canadian Gas Association essentially said the Prime Minister was wrong. He said that “the biggest obstacle” is not that there isn't a business case, but “regulatory uncertainty” from the federal government. He said that there's “an incredible business case if the regulatory framework is clear. Are the environmental approval processes going to be fast enough and clear enough? How is it that this can happen so quickly in the United States and it can't happen as quickly in Canada?”
I would like your comment on our inability to be a willing partner in the NATO alliance, to step up to the plate to export natural gas to Europe to displace Russian gas, which is funding Putin's war regime.
2:40 p.m.
Research Associate, Harvard-Smithsonian Center for Astrophysics and Ukrainian Research Institute, Harvard University, As an Individual
Like a lot of the G7 members that are producers, including the United States and others, Canada needs to make sure that global democracies are making our energy resources available to Europe as quickly as possible.
I do want to point out on the German side that they're doing a number of things. Two floating storage and regasification units in Brunsbuettel and Wilhelmshaven, Germany are being built, but there also is a need to build out floating storage and regasification units, or floating LNG import terminals, at locations that are strategic and have existing infrastructure. There's been some talk in the media about potential companies that are thinking about this at Lubmin, Germany, but Lubmin is the point of contact where Nord Stream 2 comes onshore. In June the economic ministry in Berlin came out and said that they were considering a plan to expropriate the Nord Stream 2 pipelines in German waters, physically cut and sever them away from the Nord Stream 2 pipeline, which is currently unused due to U.S. sanctions, and attach them to floating storage and regasification units to bring non-Russian LNG through those systems and through the Lubmin gas hub and the EUGAL pipeline onshore.
This would basically be a war-time level of effort and speed to leverage existing infrastructure. That still hasn't happened yet. We need more signals from Berlin that that's going to happen. That's got to happen infrastructure-wise on both sides of the Atlantic, and we need to do it awfully quickly.