Good afternoon, and thank you to the committee for inviting my colleagues and me here today to provide further information and to respond to your questions on the Special Economic Measures Act, SEMA, in relation to three specific countries: Iran, the Democratic People's Republic of Korea, and Russia.
My colleagues and I represent a cross-section of expertise within Global Affairs Canada related to Canadians sanctions and the three countries highlighted for further discussion today. As acting assistant deputy minister for the Middle East and Europe, I have been asked to make the opening remarks on behalf of Global Affairs.
Before speaking briefly to each country, I would first like to take the opportunity to acknowledge the letter dated November 15, 2016, from the Honourable Chair, Robert Nault, in which more specific information is being requested on a number of items.
We thank you for providing this request. We will endeavour to provide the committee with a written response to bullets one, two, and eight from the letter, while the remaining requests will be touched on in my opening statement.
My colleagues and I would be pleased to respond to those or any other questions you may have after this statement.
I would like to start with Russia.
Turning to the measures that Canada has enacted against Russia, I will take this opportunity to respond to some of the questions posed by the chair by means of some illustrative examples.
Following the Maidan protests of November 2013, and the subsequent flight of President Yanukovych in February 2014, the Ukrainian province of Crimea was invaded. Within days, Russia reportedly had more than 6,000 troops in Crimea, and Ukraine appealed to the international community for help.
Before turning to Canada's sanctions regime against Russia, let me first highlight the assistance that Canada provided to the Ukrainian government under the Freezing Assets of Corrupt Foreign Officials Act.
Following a request in writing from the Ukrainian government, the Governor in Council determined that Ukraine was in the midst of a complex political transition due to economic weaknesses inherited from the former government and due to unilateral intervention in Ukraine by Russia. The Governor in Council also determined that it was in the interest of Canada's international relations to enact regulations freezing the assets of certain allegedly corrupt individuals associated with the former government of Viktor Yanukovych under FACFOA.
As a result, FACFOA regulations were enacted on March 5, 2014, freezing the assets of 18 individuals. By March 14, 2014, Russia had increased its military presence to an estimated 20,000 troops, and it had taken control of key institutions and facilities, including the legislature. The Governor in Council found that the situation constituted a grave breach of international peace and security that had resulted, or was likely to result, in a serious international crisis. As a result, the special economic measures regulations for Russia, and the special economic measures regulations related to Ukraine were approved on March 17, 2014.
In the weeks and months that followed, Global Affairs amended the Russia regulations 13 times and the Ukraine regulations 11 times to keep pace with the situation on the ground. In all cases across the sanctions regime, amendments are made to the regulations to adjust the measures, to better target the sanctions or to mitigate unintended consequences. This is an ongoing process that continues throughout the life of the regulation.
As you have heard, the SEMA allows for the imposition of particular measures, not only on the foreign state but on any person in that foreign state or its nationals who don't necessarily reside in Canada. Most SEMA regulations, save for the DPRK, include what are typically referred to as the “asset freeze” provisions, which apply to targeted individuals and entities listed in the regulations. All regulations imposing such measures contain descriptions of the types of persons who can be listed. In the case of the Russia regulations, senior government officials, entities controlled by the government of the sanctioned state, or individuals or entities contributing to the violation of the sovereignty or territorial integrity of Ukraine are all eligible to be listed.
To demonstrate that a targeted individual or entity satisfies those descriptions, officials from Global Affairs, both here in Ottawa and at our embassies abroad, monitor events on the ground, draw from academic and media reports, consult with other departments within the Government of Canada and our international partners, and draw from classified information.
Ensuring that we have done our due diligence in establishing the grounds for listing is key to the listing process. In addition, every SEMA regulation imposing measures on a listed person contains a provision allowing them to apply to be delisted. In such an application, the designated person can argue that they do not, or no longer do, fall within the categories of persons that can be designated as set out in the regulations. Alternatively, the designated person can argue that his or her designation does not further the objectives of the regulation.
To date, Canada has listed a total of 289 Russian and Ukrainian individuals and entities.
The Russia sanctions regulations currently comprise four schedules that list targeted individuals and entities, entities targeted under the sector-specific measures, and the products that are subject to restrictive measures. These were developed as Canada, along with its partners, moved beyond the initial targeting of individuals implicated in the illegal annexation of Crimea to economic measures aimed at key sectors of the Russian economy, in particular, the financial, energy, and defence sectors.
Canada's sanctions, along with those of our partners, are having a significant effect on the Russian economy. The combination of low commodity prices and western sanctions has weighed heavily on investor confidence, prompting large capital outflows from Russia. President Putin has publicly indicated that sanctions are “severely harming Russia”, particularly with respect to opportunities on the international financial markets. The Russian central bank has forecast the net capital outflow for 2016 to be $53 billion U.S.
At the G7 summit in Japan in May 2016, leaders reiterated their condemnation of Russia and reaffirmed their policy of non-recognition of the annexation of Crimea, including sanctions against those involved. The duration of our sanctions is clearly linked to Russia's complete implementation of its Minsk agreements and respect for Ukraine's sovereignty. Canada stands ready to take further restrictive measures, in coordination with international partners, should Russia's actions so require.
I will now address North Korea.
North Korea is the only country to have undertaken nuclear tests in the 21st century, having carried out five tests in 2006, 2009, and 2013, and two this year, just eight months apart, on January 6 and September 9. The frequency of North Korea's ballistic missile launches has also risen sharply this year.
So far in 2016, North Korea has conducted more than 20 short, medium, intermediate range and submarine-launched ballistic missile launches. North Korea's ongoing development of nuclear weapons and their delivery systems—which constitutes a breach of its international obligations—as well as the accelerating pace of North Korea's nuclear and ballistic missile tests, is of grave concern.
On October 14, 2006, acting under chapter VII of the Charter of the United Nations, the United Nations Security Council adopted resolution 1718 imposing sanctions against DPRK in response to a nuclear test the DPRK conducted a week earlier on October 9.
Since then, the United Nations Security Council has adopted multiple resolutions modifying and strengthening the initial sanctions, including resolutions 1874 in 2009, 2094 in 2013, and 2270 in 2016, in response to the additional tests carried out by the DPRK.
Canada has enacted sanctions related to the DPRK under the United Nations Act and the Special Economic Measures Act in order to pressure the DPRK to abandon all existing weapons of mass destruction programs and in response to the DPRK's nuclear tests, ballistic missile launches, and other aggressive actions. Canada implemented UN Security Council resolution 1718 by introducing new regulations under the UN Act and implementing subsequent UN Security Council resolutions on the DPRK by introducing amendments to these regulations as required.
Through its implementation of UN sanctions, Canada has imposed an asset freeze and dealings prohibition on designated persons, including both individuals and entities. The regulations implementing the UN resolutions on the DPRK also impose far-reaching prohibitions on exports and imports in a number of areas, targeting financial flows into the DPRK, and seeking to restrict the export to the DPRK of materials or technical assistance that could contribute to the development of the DPRK's weapons programs.
This includes bans on the exports of items such as arms and related material, aviation fuel, and the provision of training to DPRK nationals in sensitive fields, such as advanced physics or aerospace engineering, among others. Canada has also implemented travel restrictions against persons designated by the UN Security Council under the Immigration and Refugee Protection Act and its regulations.
On August 11, 2011, Canada introduced unilateral sanctions against North Korea under SEMA , implemented through the special economic measures DPRK regulations, which complement and expand upon the sanctions imposed under the UN Act and provide for a ban on all exports to the DPRK, all imports to Canada from the DPRK, all new investment in the DPRK, the provision of financial services to the DPRK and to persons in the DPRK, the provision of technical data to DPRK, and the docking and landing in and transiting of Canada by DPRK ships and aircraft.
These regulations were adopted following the sinking of a South Korean naval ship, the Cheonan, on March 26, 2010. On that date, following an explosion in the Yellow Sea, the Cheonan sank, causing the deaths of 46 crew members. On May 20, 2010, South Korea released the results of a multinational investigation in which three Canadian naval experts participated, which concluded that a North Korean torpedo sank the Cheonan, and that overwhelming evidence supported the conclusion that the torpedo was fired by a North Korean submarine.
Following the release of the Cheonan investigation results, the Government of Canada strongly condemned North Korea's violent act of aggression. Canada's sanctions imposed under the Special Economic Measures Act, complement its implementation of UN sanctions and reinforce the message to the DPRK government that its aggressive actions, such as the sinking of the Cheonan, are unacceptable.
Some exceptions are possible under the regulations, notably for exemptions on humanitarian grounds, such as the export of goods like food, medicine, medical supplies, etc., consigned to organizations for the purpose of safeguarding human life or for disaster relief.
In its administration of the permits process, the department undertakes evaluations on a case-by-case basis of the impacts of the imposition or non-imposition, on humanitarian grounds, of the sanctions, in each case where an exemption to the regulations is requested.
Through this process, permits have been granted in 12 instances, for the export to North Korea of humanitarian goods such as food and medicine, baby formula, multivitamins and other items.
On March 2, 2016, the UN Security Council adopted resolution 2270, the latest addition to the UN sanctions regime against North Korea.
Few elements of this resolution go further than Canada's existing autonomous sanctions under SEMA, which already includes a full export ban, with some humanitarian exemptions. We hope that efforts to agree on a new Security Council resolution in response to North Korea's most recent nuclear tests, and its ongoing efforts to advance its ballistic missile program, will be successful.
In the context of assessing the impact of sanctions regimes imposed by the United Nations Security Council, which Canada has implemented, the department conducts internal analyses and participates in consultations with partner countries to assess the means by which the effectiveness of sanctions implementation may be improved.
Canada and its like-minded partners believe that effective and coordinated implementation of relevant sanctions is, and will remain, critical to international efforts to pressure the DPRK to resume dialogue and abandon its nuclear weapons and ballistic missile programs.
With regard to Iran, in September 2005, the board of governors of the International Atomic Energy Agency, IAEA, found Iran to be in non-compliance with its nuclear non-proliferation treaty safeguards agreement. Iran refused to suspend proliferation-sensitive activities, and the IAEA referred the matter to the UN Security Council in February 2006.
The Security Council identified Iran's nuclear program as a threat to international peace and security, and between 2006 and 2010 it adopted a series of successive resolutions against Iran and imposed four rounds of sanctions on Iran. The obligatory elements of these UN Security Council resolutions were implemented by Canada.
In 2010, Canada imposed the first of six tranches of autonomous sanctions against Iran under SEMA, in line with the broader global approach in response to Iran's nuclear proliferation and ballistic missile programs.
In the case of Iran, autonomous sanctions were imposed in response to Iran's continued violations of its international non-proliferation obligations including under relevant United Nations Security Council resolutions—in particular, failing to suspend its enrichment-related and reprocessing activities, which are both ways of producing the fissile materials necessary for nuclear weapons, and its refusal to co-operate fully with the IAEA.
In the intervening years, the UN sanctions regime applied in Canada under the UN Act, and supplemented by the autonomous sanctions applied by the U.S., EU, and a number of like-minded countries, including Canada, played a key role in bringing Iran to the negotiating table.
After lengthy negotiations, on July 14, 2015, the P5+1 concluded the joint comprehensive plan of action, JCPOA, with Iran. Under the deal, Iran agreed to significant constraints rolling back its nuclear program, and subjecting it to extensive and ongoing international verification in exchange for nuclear sanctions relief.
The JCPOA was endorsed by the UN Security Council in resolution 2231. A key milestone was reached on January 16, 2016, known as “Implementation Day”, after confirmation by the IAEA that Iran had implemented a number of upfront commitments dramatically reducing Iran's ability to produce the fissile material necessary for nuclear weapons. The UN, the U.S., and the EU then lifted or suspended their nuclear sanctions against Iran.
The EU and the U.S. have kept a subset of nuclear sanctions in place, which are due to be lifted in 2023, assuming Iran continues to implement the deal. However, the EU and U.S. sanctions related to Iran's support of terrorism and human rights abuses remain in place.
On February 5, 2016, in order to comply with the decisions of the UN Security Council in resolution 2231, Canada amended its UN-mandated sanctions under the Iran UN regulations. That same day, Canada also amended the sanctions against Iran imposed under SEMA, by replacing the broad ban on financial services, imports and exports with a set of controls and prohibitions specifically targeting trade with Iran in sensitive products with security implications.
Under the SEMA regulations for Iran, Canada continues to maintain a revised list of individuals and entities subject to asset freezes, and with whom all transactions involving property are prohibited, as well as prohibitions on the export of sensitive goods listed in the regulation or related technical data. Canada also continues to restrict the export to Iran of a wide range of sensitive products under the export control list, including a wide range of items for which proposed exports require prior approval and permit issuance by the Minister of Foreign Affairs.
According to the quarterly verification reports of the director general of the IAEA, Iran is continuing to implement its JCPOA commitments. That being said, in the IAEA board of governors' November report on verification and monitoring in Iran, it has been noted with some concern by Canada and like-minded countries that Iran's stock of heavy water slightly exceeded the JCPOA limit of 130 metric tonnes. This is the second time that Iran has exceeded the limit it committed to in the JCPOA.
According to these reports, Iran exceeded the limit by one-tenth of one tonne, or less than one-tenth of 1%, of the allowable limit. Global Affairs Canada officials are continuing to closely monitor all developments regarding the Iran nuclear deal. It is important that Iran continue to fully implement all of its JCPOA commitments. Were Iran to stop implementing its commitments, UN Security Council resolution 2231 includes a snap-back mechanism, through which the UN sanctions regime could be reapplied.
Canada continues to have serious concerns regarding Iran's nuclear ambitions, given its history of nuclear proliferation and its ongoing ballistic missile program. It therefore maintains tight restrictions on all exports to Iran of proliferation-sensitive goods, services, and technologies, in particular those which could assist in the development of Iran's nuclear and ballistic missile programs.
With this outline in mind, my colleagues and I look forward to your questions.
Thank you very much.