Foreign Affairs Committee on June 6th, 2023

[The Chair, Liberal, Ali Ehsassi]

Thank you very much.

We now turn to Ms. McPherson.

You have four minutes.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much, Mr. Chair, and thanks to all of our witnesses for being here.

Ms. Moret, I'm going to continue on with the questions my colleague was just asking you.

We've added a number of names to our sanctions list. As you mentioned in your testimony, the increase in the use of the sanctions mechanisms has skyrocketed around the world. Obviously, what's happening in Ukraine is the reason for that. Adding the names is not the same as enforcing the sanctions, and it's not as useful if we don't have those enforcement mechanisms.

In Canada, the RCMP has reported that approximately $136 million in assets have been frozen and $292 million in financial transactions have been blocked.

I'd like your perspective. How would you evaluate how we are doing with regard to enforcement? What are the exact key things we need to do to make sure that the enforcement of the sanctions is equal to adding names to lists of the sanctions?

[Dr. Erica Moret]

I think it's a huge challenge elsewhere, not just in Canada.

First of all, Canada doesn't have the investigative or enforcement capabilities that the Office of Foreign Assets Control in the U.S. Treasury has. There, the staffing is in the hundreds of people, and the sophistication of the techniques they use has also been honed over many years.

I think that is the first point. Having the proper ability to conduct investigations and to engage in enforcement is critical. At the moment, I believe all of this—decisions on new sanctions and outreach to private sector investigations—is done by a small group within Global Affairs Canada. They simply can't do everything. I would say that really warrants some closer capacity if that is to change.

Another lesson is that working with partners is really key. It's not for no reason that we see the special envoys of the U.S. and the EU, Jim O’Brien and David O’Sullivan, working together to encourage third countries to clamp down on circumvention, or to not, at least, support evasion and so on. It is also key, working with international partners.

A final point I would make is that capacity in third countries is absolutely critical. Many of the countries you'd hope are helping not to fill gaps, or at least to help enforce sanctions, may be really lacking in capacity. That's not just in the government department, but also customs, the intelligence services, policing and so on.

There really need to be some very serious capacity-building efforts overseas that could be done collectively with other partners.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

It sounds like what you're telling us is that there is some capacity building that needs to be done in Canada too, when you talk about hundreds of people working on this work, whereas I think we heard we had seven or 12, or some very small number working in Canada. I think resources are a key priority.

I'd like to ask a question of our witness from Myanmar, Burma, if I could.

You spoke a bit about the arms and the Myanmar military. Could you talk a bit about how Canada could better ensure that all arms, including Canadian parts and dual-use systems, don't make it into the hands of people or governments under sanctions?

[Zaw Kyaw]

Thank you.

It's very unfortunate that parts and supplies are still going to the Myanmar military, including from the west. I'm not sure about the Canadian arms out there, but from Europe and the U.S., companies are directly or indirectly providing them.

That's why we need to target the parts brokers. They are using different channels. It's the arms brokers, not only the arms suppliers. This way, Canada needs to coordinate with allies on targeted sanctions against arms brokers. This would ensure that the junta does not receive the parts or arms to kill people, and that it does not re-export them to Russia to kill the Ukrainian people, as well as the Russian people.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you very much.

I believe that's all my time.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We'll move to the next round. This will be a three-minute round.

Mr. Genuis, you have three minutes.

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

Thank you, Chair.

Mr. Kyaw, I want to follow up on your comments about arms brokers. Would you be able to provide the committee with a follow-up in writing of some names and details about who the particular arms brokers are and how they can be sanctioned?

[Zaw Kyaw]

Yes. I can provide it after. Some of the brokers are already sanctioned in Canada and the U.S., but many more are still out there. As I mentioned, some of them evade the existing sanctions as well.

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

Thank you.

Could you take a minute or so to elaborate on oil and gas sanctions specifically? How should we do those? How can they be targeted, and what's effective?

[Zaw Kyaw]

Oil and gas sanctions are a source of vulnerability to the Myanmar military. Yes, we have done a lot of sanctions from Canada, many of them symbolic, but Myanma Oil and Gas Enterprise alone has a revenue of $1.5 billion. It is the single source of income, of foreign exchange income, for the Myanmar military. The EU already sanctions Myanma Oil and Gas Enterprise, but as my fellow witnesses say, it has to be coordinated. They're using different loopholes. Canada, the U.S. and the EU should have sanctions against Myanma Oil and Gas.

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

In terms of your discussion about loopholes, is the problem that sanctions are supposed to be applied but are not being effectively enforced, or is the problem that we're sanctioning some entities but we're not sanctioning others, and effectively the entities are able to use legal means to bypass the sanctions by engaging with unsanctioned entities?

[Zaw Kyaw]

It's the other way around. For example, Asia Sun Group, another arms supplier, is already sanctioned by Canada and the west, but our information says that they have another front company, called Shoon Energy. Shoon is the one that's importing arms.

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

I guess my question is around whether the use of these front companies is formally illegal. Is the circumvention being done through legal means or illegal means?

[Zaw Kyaw]

We don't know. It could be illegal, because of the sanctions. They're bypassing the sanctions. Is it illegal—

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

Thank you.

Just quickly, Ms. Kadian, with the time I have left, I want to get your thoughts on Turkish government officials who may be involved in violations of human rights in the conflict between Armenia and Azerbaijan. Are there officials affiliated with the Turkish regime that you'd recommend for sanctions as well? Do you have thoughts on that, just briefly? If you want to follow up in writing, that would be great too.

[The Chair, Liberal, Ali Ehsassi]

Please be very brief. You have under 15 seconds.

[Anaïs Kadian]

There are obvious links and supports that are happening from Turkey to Azerbaijan in creating this human rights crisis. We can provide other names as well afterwards.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

Dr. Fry, you have three minutes.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you, Chair, and I want to thank the witnesses for being here.

I am particularly concerned about what Ms. Moret has pointed out, even though it would seem to be difficult. If sanctions are going to work, have we...? We can't evaluate what the impact of it has been. It looks like in Myanmar we haven't changed anything. Really, things are worse.

Do we have indicators that we can use, for instance, to measure and look at how we're getting to where we want to go? What happens if you sanction the country and that country continues to escalate its behaviour against human rights, etc.? How do we know if that happens? How can we, for instance, look at loopholes? If we don't have indicators and we can't measure, we can spend tons and tons of money trying to do something that in fact has no impact.

Do you know any country that has developed at least a set of indicators or some form of benchmark measurements that we can use to at least, even if crudely, evaluate what's going on?

[Dr. Erica Moret]

That's a great question.

I would say that all governments are most likely using a set of internal benchmarks of a kind. Whether or not it's a very comprehensive or established methodology is another question. I would say that there are certainly ways we can start to think about different types of impacts. For me, that's the key question. It's not just one type of impact. It is the signalling and the political function of showing that something decisive is being done, of course, but there's also constraining access to key resources.

I think we can see that very clearly in Russia at the moment. The fact that Russia is having to purchase ammunition shells or rockets from the DPRK, or drones from Iran, suggests that they're really having to go to great lengths now to access some of the dual-use goods that are otherwise hard to reach.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you, Ms. Moret.

I don't have a lot of time, and I would like to ask a further question.

First and foremost, are there other countries that have established certain indicators and an ability to measure? That's the first part.

The second part I want to get to is this: Should we expand sanctions to countries that...? We are already sanctioning Myanmar, but should we expand sanctions to countries that are being used as funnels by other countries that are already sanctioned? How do we do that? How do we know that is going on?

[Dr. Erica Moret]

When it comes to your question on other countries, the key here is this: There are various initiatives under way in the U.S. and the EU, as far as I understand it. I know Canada is closely involved in some of those discussions, as well. I think that's a very positive thing.

With regard to your question on sanctions on countries serving as funnels, this is definitely being discussed elsewhere at the moment. That's the purpose of U.S. extraterritorial sanctions, of course, in many cases. It would probably be a big step forward for Canada to start entering into that terrain, given our long-standing opposition, alongside the EU, to those kinds of measures. At the same time, there are other ways, in my view, to work together with other countries to ensure circumvention and evasion are clamped down on.

Ultimately, with the idea of changing a behaviour.... That's something less likely to come about with sanctions. Constraining access to vital resources such as weapons, financing and so on is a much bigger success story for sanctions in many cases.

[The Chair, Liberal, Ali Ehsassi]

Thank you for that.

We now move to Mr. Garon for a minute and a half.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you very much, Mr. Chair.

Ms. Moret, in a recent article published in La Presse, you talk about the American regime and its Office of Foreign Assets Control, which has a lot of staff and has several divisions to conduct investigations and follow up on the application of sanctions.

What is the difference between that office and the way we operate in Canada? If it's different, what would be the benefit to Canada of having an office like that?