Foreign Affairs Committee on Sept. 7th, 2022

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

Gentlemen, thank you for being with us today. Your testimony is certainly most relevant to this committee's work.

Great care has also been taken to ensure that the waiver can be revoked. At the meeting where we heard from ministers Wilkinson and Joly, I asked what the grounds would be for revoking the waiver. Unfortunately, due to time constraints, Minister Joly was unable to answer the question.

Therefore, I'd like to look further into this issue with you. In an August 21 interview with Radio-Canada, Minister Wilkinson said that he believes Russia's scheme has been exposed, but he's still hopeful that the turbine will be returned to Gazprom and that it can be put into service.

On August 24, the Minister of Foreign Affairs told CBC News that she did not plan to reverse her decision even though Gazprom is refusing to accept the first turbine.

Now that Russia's blackmail has been exposed, why bother maintaining the waiver?

[Ihor Michalchyshyn]

I have to say I agree with what you said in your question, that it is unclear several weeks or months later why there would be no revocation of this waiver. The Russian weaponization of energy has become emboldened—more dramatic, I would say, day by day—despite the efforts of the Germans to go along with the various conditions and demands and deadlines that were being imposed initially, such as the turbine and other matters.

I agree with you that it is not clear why we would continue to allow this waiver to be extended. It allows two more years of Gazprom making profits, which we know ultimately fuel the Russian ability to fund the war against Ukraine, a war that we all hope will be wrapped up with a Ukrainian victory in the near future as opposed to being financed and fuelled, literally, for years to come.

[Stéphane Bergeron, Bloc, Montarville, QC]

Even before the Canadian government made the decision, there was some doubt as to the point of lifting the sanction on turbines, particularly because some people believe that Russia has a stockpile of turbines. Moreover, even Siemens believes that the pipeline can function regardless of the turbines.

The ministers made those statements on August 21 and 24, before Dmitry Peskov announced on September 5 that supply would only resume if sanctions were lifted. This was quite clearly blatant blackmail by Russia, and it shows that the waiver needs to be cancelled, even more so because the German ambassador mentioned the cancellation scenario when she appeared before this committee. Neither minister has issued any new statements since Mr. Peskov's on September 5, but I can't understand why we're maintaining the waiver when Russia's blackmail has been so obviously exposed.

The last time the Ukrainian Canadian Congress appeared, alternative solutions were on the table, including the pipeline Gazprom is operating in Ukrainian territory. Based on what you said, that pipeline could have completely taken up Nord Stream 1's capacity. That pipeline is currently operating at under 40% of its capacity.

Now that we know that Nord Stream 1 is no longer working, my question is this: Has supply to the pipeline running through Ukraine been interrupted, or is gas still being supplied in Ukraine through that pipeline?

[Orest Zakydalsky]

To clarify, the pipeline that goes through Ukraine is not owned by Gazprom. It's owned by the Ukrainian government and the Ukrainian transit systems. That is one of the advantages of it: The ability to manipulate it the way Gazprom manipulates Nord Stream 1 is not quite as apparent. Now, Russia can, of course, shut gas on and off at the border as it pleases.

[Stéphane Bergeron, Bloc, Montarville, QC]

As we speak, has supply through that pipeline been interrupted, or is it still running?

[Orest Zakydalsky]

My understanding—and I will check on this and get back to you—is that that pipeline is also not delivering gas, as part of Peskov's statement.

I have to check on that. I don't know what the state of it is today. I don't want to say something that's not accurate. I will find that and email your office after this meeting.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

[Stéphane Bergeron, Bloc, Montarville, QC]

Mr. Chair, that information could be sent to the clerk so that the entire committee can benefit from the answer to this question.

Thank you, Mr. Chair.

[The Chair, Liberal, Ali Ehsassi]

Absolutely.

Thank you for that, Mr. Bergeron. We'll definitely do so.

We will now go to Ms. McPherson. You have six minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you, Mr. Chair.

Like all of my colleagues, I would like to thank the members from the UCC for being here today.

I'd also like to take a moment and acknowledge the generosity that they have shown with regard to their time throughout this entire period. I know that many of us request information from them and are informed by them on a very regular basis. Orest and Ihor, thank you very much for that.

I would be remiss as well if I didn't acknowledge the UCC-Alberta Provincial Council and what an amazing job it is doing in my province.

I want to start today with the waiver question; that's ultimately why we are here. Similar to my colleague, Mr. Bergeron, I just don't understand why at this point the government has not been willing to revoke that waiver.

When this first came up and we were first hearing that this was something the government was considering, similar to many of the people in this room, I wondered why on earth we would trust that Putin would do what he said; he's never done what he has said. He's clearly weaponizing energy and food; he's weaponizing all kinds of those things, so why would we put trust in this? He has made it very clear, and his government has made it clear, that they will not be shipping gas to Germany. I cannot get my head around why the government fails to revoke that waiver.

When Ambassador Kovaliv was in front of our committee, she talked about this being a “dangerous precedent”. I'd love to hear from both of you why you think this is a dangerous precedent and what examples you've seen of how this has proven to be a dangerous precedent.

Ihor, I think you mentioned that the Russians have asked for “further concessions”. Any more clarity you can give on that would be very welcome.

[Ihor Michalchyshyn]

Thank you for your warm remarks.

I'll pass along our best to the UCC-Alberta Provincial Council. It is working incredibly hard to support the Ukrainian refugees who have arrived in the province.

As you said, we believe it's a precedent we've seen, particularly on some sectors. For example, in terms of the tariffs on fertilizer there has been a lot of impact on the pricing of fertilizer due to the Canadian tariffs; obviously with an impact on the agricultural producers in Canada. We've seen public pressure on the government to move on these tariffs, to reduce them and to exempt them. That's the most public example we can give you of where we've been urging the government to remain strong and consistent on this issue.

We don't think it's helpful. We actually think it's the goal of the Russian Federation to poke holes in both Canadian sanctions policy and, generally, western sanctions policy. They understand that consistency and coordination are critical.

I don't think they particularly care what they poke holes into. The more they can poke holes in the sanctions regimes, find differences between jurisdictions and build inconsistencies between our governments that are largely on the same page on this issue.... We believe that is their overall goal. It is part of their goal of disinformation to say that the west is inconsistent and incoherent in applying this kind of pressure.

Orest, do you have anything to add to that point?

[Orest Zakydalsky]

No. I think you've covered it.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Knowing that this is an attempt to poke holes in the sanctions regime or the cohesiveness with our allies, which nobody wants to see, do you think that this waiver has impacted, and continues to impact, Canada's credibility around the world? If so, what are the implications of that?

[Ihor Michalchyshyn]

I think it's become the most high-profile international issue that involves NATO allies and Ukrainian allies and has continued to propel itself forward now for several months without resolution. It has caused the kind of discussion in Canadian parliaments, other parliaments and the media that requires tough questions and tough answers.

As has been pointed out, I can't give you clear answers on the Canadian government's position. You've heard from the German government's representative about its position, which we certainly have questions about as well.

This example can be wrapped up, as you said, with a review of this waiver, with a review of the facts and the situation on the ground, and with an undertaking to work with the Government of Ukraine as it had pledged through its ambassador and its government in its previous and initial reaction to the suspension.

We believe there continue to be many better options than the current situation. We are surprised by the entrenchment of the positions and the reluctance to listen to alternatives.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

I was also surprised at Minister Joly's not agreeing to look at that. This committee should be looking at that as we go forward.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Ms. McPherson. That concludes the first round of questioning. We will now move to the second one.

Regrettably, we are going to have to adjust the time a bit. Each member will be provided with four minutes.

We will start with Mr. McLean.

Mr. McLean, welcome. The floor is yours for four minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

I would like to extend a welcome to Mr. Michalchyshyn and Mr. Zakydalsky. Thank you for coming here today.

Allow me to reiterate our support for the people of Ukraine in their valiant fight against an aggressive and hostile invading army.

Canada should be doing all it can to assist the democratic and free Ukrainian people in upholding their sovereignty and their right to live as free people in their own country. In my opinion, this includes maintaining sanctions on all trade with Russia.

As recently as August 22, Canada's Prime Minister stated that Canada “will be there to support Ukraine and Ukrainian people with what they need for as long as it takes.” These are words in the air, without substance, after the government's decision in July to grant a two-year exemption to federal sanctions and allow a Canadian company to return repaired turbines from a Russian-German natural gas pipeline. This was a decision that Ukraine's president, Volodymyr Zelenskyy, called “a manifestation of weakness”, and I agree. No sooner had the Canadian government capitulated than Russia constrained the supply of natural gas to Europe.

The narrative quickly changed to saying that we called Russia's bluff because we didn't want to be blamed for the shutdown of Russian energy delivery to Europe.

Mr. Michalchyshyn, is it your opinion that there was any bluff to call, or is this just another pivoting narrative from a government with diminishing relevance in international affairs?

[Ihor Michalchyshyn]

As our president said several weeks ago and as we're saying today, we don't think that meeting Russian deadlines, which we would call bending to Russian blackmail, to cancel these sanctions and to enact exemptions as per the desire of the Russian Federation would be a wise move. We support Canada working as a strong Ukrainian partner, as is Germany and as are many countries that are meeting to decide their future support, but we can't overlook this. This has become a major international matter. It is part of the Russian disinformation flow, as has been said. They continue to find an oil leak a week to find reasons they are not going to provide more energy to Europe, so we respectfully call on the government to reconsider.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

Let's explore energy security and the notion of weaponizing energy, which one of my colleagues previously referred to.

In 2009, Ukraine underwent its own natural gas supply conflict with Russia. In that sense, Russia showed a clear resolve to weaponize its energy supply to Europe. In spite of this, many European countries ignored the obvious and doubled down on the supply of Russian gas. If Nord Stream 2 had been finalized, fully 80% of Germany's natural gas would have come from Russia.

Can you comment on the naïveté of European countries that are doubling down on energy supply from a hostile provider for the sake of relatively cheap energy, versus the obvious outcome of the energy insecurity that was going to ensue?

[Orest Zakydalsky]

I would say, first of all, that Nord Stream 2 was completed. Many people said at the time that its completion would make a larger Russian invasion of Ukraine far more likely, which is what transpired. Weeks after the completion of Nord Stream 2, the full-out invasion was launched. Thankfully, the German government has, for now, cancelled the certification of the pipeline.

Through the last decade or more, a lot of voices in Europe and in North America were making it quite clear to European partners that the policy they were pursuing was not conducive to European security. Nord Stream 2 was strongly opposed by the American government, but it decided to let Germany pursue this policy despite American misgivings. The result is what we see now.

Thankfully, after the full-out Russian invasion of Ukraine, a lot of European countries are revisiting the wisdom of their policy and are changing. It is no comfort to the Ukrainian people or to us that this happened after a Russian invasion in which tens of thousands of people have already been killed and thousands more will be killed.

[Greg McLean, Conservative, Calgary Centre, AB]

Point taken, Mr. Zakydalsky. Let me intervene. I have only so much time here. That's a point I also raised with the German ambassador a year and a half ago.

[The Chair, Liberal, Ali Ehsassi]

Mr. McLean, I'm afraid you're way over time, so we're going to have to go to the next member, Mr. Sarai.

Mr. Sarai, you have four minutes.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair, and thank you to both witnesses.

We've been hearing a lot about this topic and about the invasion of Ukraine by Russia in general. It's important to everyone's heart here in Canada. I want to let you know that we take this very seriously.

What we've noticed is that unity in the response to Russia's invasion has been key, and Putin's goal clearly remains to try to divide NATO and the European Union countries. One of the successes has been the fact that the response to Russia's invasion of Ukraine has been negated or has been strongly opposed by European countries, specifically NATO, and they've been unified in their response, whether that's giving military aid, whether that's giving aid in general, or whether that's giving support at the United Nations or elsewhere.

How important do you see the maintenance of the European Union support for Ukraine being as this war unfortunately drags on, Mr. Michalchyshyn?

[Ihor Michalchyshyn]

We know that tomorrow about 40 countries that support Ukraine with defensive weapons are meeting to review what they can do to support Ukraine. As I think was mentioned at the previous meeting, it's quite clear that within Europe there are differences of opinion on this issue. The EU members that border Russia—the Baltic states and the central and eastern European states—have views and an understanding, given their history and experience of dependency on Russia, that I think are quite different from those of Germany and some of the other countries that have this reliance on Russian gas. Obviously the unity of Ukrainian allies is important, which is why the Ukrainian government took the unprecedented step of making a statement in this case, speaking to both Germany and Canada as allies of its war effort and in its humanitarian appeals as well. We definitely believe that this unity must continue. That's why we think the path back to this unity of purpose and unity of messaging and actions is to review this decision.

[Randeep Sarai, Liberal, Surrey Centre, BC]

I just want to be clear. Currently there's permission for only these Siemens turbines. There's no other relaxation of sanctions. As we've noticed, they're not being used, but if we impose the sanctions, they still won't be used or they may be used. Regardless, that wouldn't have any significant impact that I can see one way or the other, except that the German people would know that Canada didn't do anything to block their energy needs. I just want to be clear that no other sanctions were lifted based on this exemption for the Siemens turbine to be serviced.