FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, February 17, 1998

• 0930

[English]

The Vice-Chair (Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.)): I call to order the Standing Committee on Foreign Affairs and International Trade.

This morning we are privileged to have a fine representation here from Lithuania. I'm going to introduce the head of the delegation, Mr. Feliksas Palubinskas. Perhaps you would like to introduce your fellow presenters, although I have to tell you I did stay up quite a while last night practising the names so as not to offend anyone. But I think I'll leave that to you anyway.

Mr. Feliksas Palubinskas (Vice-Chairman of the Seimas and Chairman of the Parliamentary Group for Relations with Canada): Of course, practice makes perfect.

My name is Feliksas Palubinskas. I am the vice-chairman of the Lithuanian Seimas. That is the Lithuanian Parliament. I'm also chairing the inter-parliamentary group in Seimas for the relationship with Canada, which we hope is going to be developing in the near future. Also, I'm a member of the Christian Democratic Party.

With me is Mr. Mecys Laurinkus, the chairman of the foreign relations committee in Seimas, and he is a member of the Conservative Party. Also with me is Mr. Audronius Azubalis, who is also a member of the foreign relations committee in Seimas, as well as a member of the North Atlantic Assembly.

The three of us of course are members of the current coalition in the Seimas and government. Nevertheless, we do respect very much and value opposition.

Some hon. members: Hear, hear.

Mr. Feliksas Palubinskas: The other person with me, Rimantas Jonas Dagys, is vice-chairman of the foreign relations committee in Seimas. He's a Social Democrat.

Actually you are probably wondering why we are here and not at home. Of course we should tell you a little bit about ourselves. Probably it wouldn't hurt to tell you of the fact that we are people who like to stay in our own home. In fact, the Lithuanians have lived in the area where Lithuania is located now for around 5,000 years, so we are quite a stable group. Our history is I think very interesting, probably especially to ourselves. The first record of a united state of Lithuania is since 1236. We had good moments in history and some bad ones. One of the worst ones is that for 123 years we were occupied by tsarist Russia. Recently we re-established our independence from the Soviet Union. That was eight years ago.

I think this reminder will be useful to you when we are discussing international relations and possibly to understand our attitude concerning some aspects.

Basically we are here to establish an inter-parliamentary relationship with Canada, with the Canadian Parliament. Canada is really a country that has a lot of meaning to us. First of all, in Canada there's a very substantial Lithuanian community, an active Lithuanian community. It's always nice to interact with countries where we have something in common, and really there's nothing better than people we share.

• 0935

Secondly, Canada was supportive of our efforts when we were re-establishing independence from the Soviet Union, and for this we are of course very appreciative. We are here to personally say thank you for the Canadian support.

The thank you extends also to the fact that Canada actively participated in the democratization process in Lithuania. After all, after 50 years of Soviet occupation, some of the democratic traditions we had previous to that have disappeared.

Canadians also have helped us, and continue to help us, establish a market economy and make some investments that have helped the country reconstruct its economy.

We are especially grateful to Canadians for their efforts to enhance Lithuanian security. There are several Canadian programs currently running. We hope these programs will continue and we will be able to develop our security plant. This will help put our minds more at ease.

This is turning into a monologue. I'm sure you would like to hear something from my colleagues.

The Vice-Chair (Ms. Colleen Beaumier): Perhaps to explain, it would probably be best for you to do the short presentation and then leave it open to questions. Your colleagues can respond to those. We do have only an hour this morning, unfortunately.

Mr. Feliksas Palubinskas: Excellent. That's very acceptable.

Since Canada is part of NATO, and we are aspiring to become members of NATO, we would like to discuss that subject also.

If you have any questions or comments, we would be delighted to continue the conversation.

The Vice-Chair (Ms. Colleen Beaumier): Perfect. We have lots of questions. We'll begin with Mr. Grewal.

Mr. Gurmant Grewal (Surrey Central, Ref.): Good morning. Welcome to Canada, and welcome to this committee. We are pleased to have you here. We value your friendship with our country.

Since your country is comparatively young, we would like to know a little more about your country before we proceed further in the questioning. Can you kindly let us know a few things about the political and judicial systems in your country?

Second, I would be interested to know more about the security and stability in the region. Very briefly, what is the potential for trade between these two countries? I have been looking into the figures. They are impressive. They are showing improvement, but what is the further potential we can explore in the future?

Mr. Feliksas Palubinskas: First, in terms of political organization of the country, we of course have a president. The president is somewhat of a compromise. It's not a presidential government but a parliamentary government. Nevertheless, the president has considerable powers in international relations as well as in the defence areas.

We have a separation of powers between Seimas' executive and the courts. Of course we are still in the process of trying to sort things out to make sure there are no overlaps. As you probably realize, during the Soviet period these governments were not that cleanly separated. This was really very unfortunate. When a judge was called up by somebody from the party or from the executive branch they in effect were told what the legal decision should be.

We are definitely away from that. We are a democratic country, and we want to make sure the appropriate process is followed.

• 0940

As far as security and stability are concerned, first of all, let me say something about stability. You probably have followed our elections on occasion and noticed that after every election a different party or different groups of parties come in. So far we've had very orderly, normal transfers of power. Consequently, we think we are a very stable country.

The military is under civilian control. No matter the outcome of the next election.... I hope we are returned again to power, of course, but if we are turned down by the electorate, we'll submit to their will.

As far as security is concerned, this is something that is quite uppermost in our minds; that's why I went over a little bit of Lithuanian history. We do have and have always had some large neighbours right next to us, neighbours that were very much expansionary, more so than your large neighbours. We were affected by that, with 123 years of occupation and 22 years of independence again, during which period we reached the economic level of Denmark and we were better off than the Finns. But after 50 years of occupation, we are no longer in a position to compare ourselves either with Denmark or with Finland. So we have lost a great deal in all areas, including the economic area.

We would not want to be again in such a position. We have made a decision. We want to be part of the western world, part of Europe, and we would like to join the European Union as well as NATO. We think it is important that NATO expand, because NATO provided western Europe with great stability and security. Western Europe was able to develop economically, and the economic development permitted development in other areas of human life. We would like to be part of it; we would like to see NATO even expanding beyond us.

Mr. Gurmant Grewal: What are your main objectives for joining NATO? Also, regarding the country's policy about the nuclear arsenal, since Lithuania is the largest republic among all the countries made out of united Russia, what is your nuclear policy in dealing with other countries?

Mr. Feliksas Palubinskas: On the nuclear, as far as the military aspect is concerned, that is totally forbidden.

Mr. Mecys Laurinkus (Chairman of the Foreign Relations Committee at the Seimas): The replacement of nuclear weapons is forbidden even in the Constitution.

The Vice-Chair (Ms. Colleen Beaumier): Thank you.

Monsieur Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): First of all, welcome to Canada during this rather cold time of the year, but there is certainly warmth in the diplomatic relations between our two countries.

• 0945

There is no doubt that we have a number of things in common. Your sovereignty or independence is only a few years old. Therefore, I would like you to tell me whether, with respect to the 1980s and 1990s, it is not paradoxical to try to achieve sovereignty during a time of great economic convergence. One has only to think of the European community and NATO, which you would like to join.

Do you think it is useful and important for a people to achieve sovereignty, to affirm its identity and, subsequently, to join major economic entities at the international and multilateral level? Was this your objective when you became a sovereign state?

[English]

Mr. Feliksas Palubinskas: I would like to say that basically, we have been a sovereign people for, really, 5,000 years. We lived in that area. It's just that in 1236 there was a formal establishment of the Lithuanian kingdom, and of course for several centuries that existed. As I said, only later on, in 1795, was Lithuania subjugated by tsarist Russia. Unfortunately, it was a long period of time, 123 years.

Independence was re-established in 1918, and for 22 years we were an independent country, making very big strides in every aspect of life. Then in 1939 the Molotov-Ribbentrop Pact was signed between Nazi Germany and Soviet Union Russia, and of course we were occupied in 1940. So in 1990 we simply re-established the independence that was always in our hearts. Basically, people never submitted themselves to the idea that they were not worthy of an independent existence.

Of course we realize that in the world we have now, no country can live in isolation. Therefore we are desirous of joining the European Union, but it is a union of free states. We know that, for example, Iceland, when it decided to pull out, was able to pull out. In the case of the Soviet Union, that option unfortunately was not available to anybody.

Mr. Sarkis Assadourian (Brampton Centre, Lib.): The Constitution says you have the right.

Some hon. members: Oh, oh!

Mr. Feliksas Palubinskas: So we are very much desirous of joining the European Union, but as equals. And of course the way it is set up, it is a union of equal states.

[Translation]

Mr. Benoît Sauvageau: Thank you very much for your response, but I believe that was a complement.

[English]

Mr. Mecys Laurinkus: Yes, I would like to add some words. I understand this paradox, of course. You mentioned sovereignty and joining larger unions, such as the European Union, but we have chosen a democratic way. That means our basis and our choice is grounded on citizenship, not ethnicity, and on common western values. That is a ground and that is what we explained to our people as to why we are choosing the European Union.

[Translation]

Mr. Benoît Sauvageau: Therefore, in order to make decisions at the international level, you must and we must all be, as you put it, equal states. We must acknowledge ourselves as such in order to be able to make decisions and join large economic and political entities.

• 0950

[English]

Mr. Feliksas Palubinskas: Definitely. On the other hand, as a small country we realize also that in many of these joint ventures there is an advantage for a small country to be in these large institutions, because the small countries have the same say as the large countries, especially if the smaller countries support each other.

Mr. Benoît Sauvageau: Equality.

Mr. Feliksas Palubinskas: Equality, yes.

The Vice-Chair (Ms. Colleen Beaumier): Mr. Bachand.

[Translation]

Mr. André Bachand (Richmond—Arthabaska, PC): It is clear that my colleague, Mr. Sauvageau, was trying to paint out similarities between the Lithuanian situation and that of Quebec within Canada. He's allowed to do that, especially this week.

Mr. Sauvageau mentioned the cold weather. It is also cold in terms of relations between the federal and provincial governments, but that is another subject. That is internal politics.

I would like more information on present economic ties between Canada and Lithuania since its independence. Have some efforts been made? What type of trade do we have at present with Lithuania?

[English]

Mr. Audronius Azubalis (Member of the Foreign Relations Committee and Seimas Delegation to the North Atlantic Assembly): Unfortunately, Lithuania's trade with Canada is not a very big amount. It's just about $10 million per year. If you're talking about Canada's investment in Lithuania, Canada's investment is not very big either. Canada is just 37th as a foreign country with investments in Lithuania.

We are expecting to develop our relations. If I'm not mistaken, our government is going to sign a big agreement regarding Canada's container company producing special storage for nuclear power waste. I think it will substantially increase Canada's investments in Lithuania.

A voice: We have a number of nuclear power stations in Lithuania.

Mr. Audronius Azubalis: I think that's all. Canada's businessmen are not showing a big economic interest in Lithuania right now. I think this visit can also help a little bit because we are going to have a meeting with some of your businessmen and with an international trade relations agency, if I'm not mistaken.

Thank you.

Mr. Feliksas Palubinskas: I would like to add a little to this. My understanding is that Canada is looking beyond western Europe, and has some interests in areas of the former Soviet Union that lay farther east than Lithuania.

Canada should certainly consider the fact that Lithuania is a western country that was occupied by the Soviet Union. In that fifty years, we learned a few things about points east. In some cases, it was not because we really wanted to go there, but because we were given a free ride from which many people never came back. But those who came back and those who kept on interacting know those areas very well, so there might be an opportunity for Canadian companies to go into joint projects with Lithuanian business people.

Lithuania is also good in this respect: the languages. We have well-educated people, so they could act as intermediaries. I would strongly urge you to consider this possibility, especially since Canada has a considerable Lithuanian community. Again, they are quite well educated in various areas of life, so you could use your own people to interact with Lithuania and then points beyond.

• 0955

Mr. Rimantas Jonas Dagys (Deputy Chairman of the Foreign Relations Committee at the Seimas): I would like to add some words.

Geographically, Lithuania is in the centre of Europe, and it is a fact that we try to use our geographical position. Our trade relations are very much equal for both sides, for the west side and the east side. Of course, for us it is very important to balance this situation. So we'll try to act not just from an eastern or western position but also, as I say, in the south and north. This is a very good situation for our country because of our geographical place, and it allows us to strengthen our cooperation in the Baltic area. It's a strategically important area. So it is the main point of our efforts, both now and in the near future.

Mr. Feliksas Palubinskas: Actually, I would add that in the northern Baltic Sea, Klaipeda is the last port that does not freeze in wintertime. In this respect, again we have a certain advantage. If you go north of us, you may be locked out of the ports there.

On the other hand, if you would like easier relationships, let's talk about non-visa travel. On the part of Lithuania, we can say that we are ready to agree on this particular point. It is stuck on the Canadian side. Certainly non-visa travel enhances interrelationships. You can travel with greater ease, and I think that would be very helpful.

[Translation]

Mr. André Bachand: If I understand correctly, you are like a door that opens the Eastern market, a little bit like Quebec and Canada are the door to the North American market. I think that we are quite similar in that way.

You could also give us access to the European Economic Community and the Eastern market and we could give you access to NAFTA. NAFTA has been a very good move for us. I would have a question for you on that point.

We know that a great deal of effort has been made in Russia, among other places, by Canadian investors who, unfortunately, have been faced with certain organized groups, criminal or otherwise, but very well organized. People talk a lot about the mafia in Russia, but, in any case, let us say that there is a lot of organized crime.

In Russia, for example, in terms of quality and honesty in commercial transactions, without wanting to accuse Russia, I can say that there are a lot of Canadian businessmen and businesswomen who have lost a great deal of money and have had a bad experience in Russia. So when we talk about the Eastern market, it is of interest but people are very hesitant. What is the situation in Lithuania? How is business carried out in your country?

[English]

The Vice-Chair (Ms. Colleen Beaumier): Could you make this as short and efficient an answer as possible?

Mr. Rimantas Jonas Dagys: I think it is very difficult to explain our situation in a short time, but of course we are influenced by what has happened to Russia in terms of the same criminal processes, the mafia and other things. They have influenced Lithuania, where we suddenly have a lot of problems. But if you compare us with Russia, we are in quite a good position and not so big. Of course, we are also transforming all of our system. There is some cost to this transformation and our new functioning in a democratic way. Our structures are now trying to get experience, of course. But generally it's much the same—a better situation, at least, than the Latvians'.

• 1000

Mr. Feliksas Palubinskas: Russia is a very large country, and therefore it's very difficult to gain control over these groups. In our case, as a smaller country, we have an advantage, and we have already started the process.

We are trying to gain better control of the various practices of which these groups tried to take advantage. I do believe we are moving in the right direction. We are cooperating with other countries in this respect. Interpol, for example, is very much used.

Mr. Mecys Laurinkus: Two words. We do not hear of the very large criminal groups, organized crime, inside Lithuania. On the other hand, we have lots of support from the European Union on this question. Of course the main question is our borders with Russia, or Belarus, and we would like to have support even from Canada. It strengthens our borders.

The Vice-Chair (Ms. Colleen Beaumier): Mr. Speller.

Mr. Bob Speller (Haldiman—Norfolk—Brant, Lib.): I would like to welcome you here on behalf of our party. It's nice to see your ambassador again.

I was going to follow up on that question, but I have another question, and maybe I won't. I have a piece here from The Economist. I'm sure the ambassador has read it. It's in the January 10 edition. It says:

Unlike Estonia, front-runner to join the European Union, or Latvia, the Baltic's shipping and financial centre, Lithuania has attracted little foreign business interest. Its industry has been slow to change and corruption is rife. The public administration is still plagued by Soviet-era thinking. Sticky-fingered, arrogant officials undermine....

It's just a terrible article. You've tried to answer it there. If you would like to continue on that.... To increase business, which is very low, obviously, because of the numbers shown being only in the millions.... Certainly you will have to address that sort of question.

Maybe I'll do all my questions at once.

Your growth rate looks very good. Your unemployment is lower than what we have here in Canada. But inflation still sticks up at 24.5% or so.

Mr. Audronius Azubalis: No.

Mr. Bob Speller: Is that wrong? Okay. I'm just wondering why that is.

Mr. Feliksas Palubinskas: That article has some old information. There was a parliamentary election in 1996.

Mr. Bob Speller: The article's dated January 1998.

Mr. Feliksas Palubinskas: I know, yes.

A new group of people came in, a new government. There's a changed attitude. You have already mentioned that the economic development process has accelerated, but all the other processes have also accelerated, including streamlining the business processes.

We realize it used to be that if somebody wanted to come into the country and make an investment, it was a tortuous process. We know we can't attract foreign investment if that's the way we are going to run business operations. We are set now on streamlining, and I think we're making pretty good progress.

• 1005

Mr. Audronius Azubalis: May I add something? I think that somehow our main economic indicators are very similar to those of Estonia. Frankly speaking, we are good neighbours, good friends, but we are also competitors. It's my personal opinion that in some ways they are much better than we are at doing international PR. Even some officials from the EU told us a lot of times that we have very good numbers, but we are not presenting things in a very good form.

For example, in 1996 our country's GDP was 4%, last year's was 6%, and now we are expecting about 7%. It's much more than that of Estonia. Let's say we doubled our direct foreign investments last year. Of course, it's not a big sum. Last year we got direct foreign investments of just $400 million. It doesn't look very impressive, but we doubled it. In 1996 it was just $200 million.

Also, I would like to say that our inflation this year and last year was 8.4%. It's lower than that of Estonia. I think it's our doing.

Mr. Feliksas Palubinskas: It's our modesty.

Mr. Audronius Azubalis: Not modesty, but I think maybe some. In this case, we do not feel that our economy is staying in some lower position compared to that of Estonia.

Mr. Bob Speller: I should have said beforehand that we've been in politics long enough to know that you never believe what's in the paper.

Mr. Audronius Azubalis: No, you should believe it.

Mr. Bob Speller: Some of the information is never current or up to date.

I just have one other quick question. I found this interesting, Mr. Laurinkus. You were in the Soviet Parliament also, and now you've been a member of this Parliament. How do you find the differences between the two?

Mr. Mecys Laurinkus: In the Soviet Parliament, in 1989 I was a delegate of an independent movement at that time. At the time, in 1989, we left the Soviet Parliament, and it was a beginning of the declaration of the restoration of independence.

The difference is very large. We choose a peaceful way, a democratic way. We even made an impact on the Russian democrats at that time.

The Vice-Chair (Ms. Colleen Beaumier): Mr. Assadourian.

Mr. Sarkis Assadourian: First, I wish you a happy independence day. On February 16 I was at a function in Toronto. On Sunday I saw some of you there. So welcome again to Canada and Ottawa.

I have some observations to make. I remember that three years ago there was a group called Captive Nations. I was a member of that group on the side of the Armenians. There were Armenians who were in similar situations to the ones you have.

My question is first to the ambassador. There are those from many previously captive nations among the CIS countries who are now in Canada, or their origins were here, like Ukrainians, Armenians, Latvians, Estonians, or what have you, and they have their own business councils. Their idea is to promote trade between Canada and their ancestral homelands. To this effect, I organized a conference in 1994 called Aid Through Trade. I think a Lithuanian delegation was at the conference. Is there such a thing as a Canada-Lithuania business council to promote trade within your ancestral homeland? That's my first question.

The second question is this. Estonia, Latvia, and Lithuania all come far ahead of other CIS countries despite the shortfalls we discussed, such as corruption or what have you. Is there any idea or discussion that the three of you could form one economic bloc to fight this poverty or corruption, whatever it is or however you want to describe it?

• 1010

Also, do you have territorial claims against Belarus, Russia, or Poland?

Those are my three questions.

Mr. Alfonsas Eidintas (Lithuanian Ambassador to Canada): If I may start, Lithuania is the only country to sign border treaties with all its neighbours. The last was Russia. We are a very big exception here, and we are very proud of that. It was a big and difficult negotiation that we had with Russia, but it's signed. It's not ratified by Parliament right now, but it's done. Russia signed its first border treaty with a former so-called Soviet republic with Lithuania, because they have no claims on us.

The national minorities question is solved. We have small minorities—9% Russian, 7% Pole—and there are indeed no problems. So we have no territorial claims. Belarussia is the problem, because there is non-democratic development inside the country.

Mr. Sarkis Assadourian: Did you know that you can't join the EU if you have a territorial claim against another country?

Mr. Alfonsas Eidintas: Yes, that's right, but we don't have one. Trying to live very peacefully with our neighbours is one of the main directions of our foreign policy.

About business, yes, in Toronto there is a Baltic business council or organization, which is supported by CIDA or the Canadian government. They are active in developing—not with big firms and corporations—trade relations with the Baltic states.

Also, we are trying to be active in the provinces of Canada, because they have many rights. In Ontario or other provinces we have straight relations with business people. The Baltic business council is quite a good idea, and it's on development too.

Mr. Sarkis Assadourian: My third question was about unity among the three Baltic states. Is any consideration given to cooperation among those three states?

Mr. Alfonsas Eidintas: Yes, it's also one of the priorities of our foreign policy, and we are cooperating a lot, especially in political questions.

As member of Parliament Azubalis has said, of course we are economic competitors, because we have very similar economies. Our agricultural industries compete. Our textile industries are competing. Our building of business is competing. Our ship companies are competing and now our airlines are competing. Everybody is competing now. But it's also nice. You're making progress to best serve and so on.

Politically, we also created many institutions, like the Baltic Council, and we have regular meetings of our presidents, prime ministers, and parliaments, our groups of parliaments. We have a Baltic Assembly of three parliaments, with groups having joint sessions, and we now have the same style in Lithuanian and Polish relations. Probably Mr. Laurinkus could add more about that.

We are cooperating a lot with Poland, with central European countries and with Scandinavian countries, which is a very important direction for us. Swedes and Danes are very active in the Baltic States, as far as Finland and Estonia. We sometimes joke about why Estonia is first: because Finland privatized Estonia.

Some hon. members: Oh, oh!

Mr. Alfonsas Eidintas: Sorry about that.

Mr. Mecys Laurinkus: With the three Baltic countries we are on a political level. We share common institutions. On a parliamentary level we share a parliamentary assembly of the three Baltic countries. On a governmental level we share a common government council. On an economic level for the three Baltic countries, we are keeping up relations with the north countries and with the Scandinavian countries in the other direction, and with the north countries' council.

The other direction is, as was mentioned, to Poland. That is our other direction, to central Europe. And also, we share our common parliamentary institutions with Poland.

• 1015

With both countries we have general projects, such as the Baltic energy ring project. It is common to all countries and is a project about our energy future.

On the economic level, our ground is the European Union and the requirements of the European Union. That is our ground of cooperation.

Mr. Audronius Azubolis: For example, we have no taxation between free Baltic states in agricultural products. It's free trade.

The Vice-Chair (Ms. Colleen Beaumier): Madam Debien.

[Translation]

Mme Maud Debien (Laval-Est, BQ): Good morning, gentlemen. My first question is somewhat along the lines of the one asked by Mr. Speller, but I want to take a broader approach.

The new political landscape that resulted from the 1996 election in your country was to have brought about a certain number of reforms. I think that you have already undertaken monetary reform, just recently.

The new government intended to bring in reforms in agriculture, public administration and privatization. I would like, in connection with what Mr. Speller said earlier, to first ask you to give me an update on these reforms.

You spoke earlier of the desire for foreign investment and incentives for Canada to invest more in Lithuania. However, certain analyses show that protectionism is still strong in your country. Is that true and, if so, how can you reconcile the desire for foreign investment with a certain form of protectionism?

Are there any women with seats in the Seimas?

[English]

Which one of you gentlemen would like to answer that question?

Mr. Feliksas Palubinskas: We'll start with the question about women.

We have 25 women out of 141 members. We think that's way too few. We would like to see more of them. On the other hand, when we looked a map that showed the number of women in parliaments around the world, we are in the second group from the top. So in a short period of time we are really doing quite well in this area.

As far as protectionism is concerned, in Lithuania we are getting a lot of complaints that we are not protective enough and are allowing foreign goods to flow freely. As you know, on questions like that it's never an easy thing for everybody to agree when it's too much or too little. But basically we realize we need more competition to improve our own institutions.

The reforms are proceeding. We are inviting in foreign investors. For example, we have opened up the banking area, which used to be protected. We would like foreign banks to come in. In fact, we would love to have a Canadian bank in Lithuania. There are Canadian Lithuanians who have financial dealings with Lithuania, so why not do them through a Canadian bank? A Canadian bank would give our own banks a good run and improve them. We would like our own institutions to be improved.

Mr. Rimantas Jonas Dagys: I'll try to add something as opposition, because I'm much more aware....

Mr. Feliksas Palubinskas: According to the opposition, the opposition is better.

• 1020

Mr. Rimantas Jonas Dagys: Yes. Of course in some ways we have different opinions on the speed of our privatization and other questions. But in general, I must say that if you're discussing our matter of protectionism, I think it's not objective data on your side. The main problem is not concrete regulations. The main problem is our public administrative system. They are so slow, so lazy, and so on and so on. Of course it will be improved in the future.

We have of course some regulations in our agricultural sector, again to come to some agreement with the European Union—some quotas and some barriers—but it will last only two or three years. We had a five-year period, and after that we will totally open our market system.

It is a changing situation. I don't know whether there are serious problems to come to our country now. We are changing the banking system, to allow some banks to be here. Of course we have to have a period where we try to build our own banking system, and this is in the first stage. But in the future we will change this, because all our reforms are done by our agreement with the European Union. This allows us to create an open market system.

Mr. Feliksas Palubinskas: Our problem is that we are dealing with a total transformation of the system. This takes a little time. In my view, we should have done it all in five years, but maybe I thought that way because of my age—I didn't want to wait too much longer. But we are making progress, and I expect that the acceleration will increase as the time passes.

The Vice-Chair (Ms. Colleen Beaumier): I think no matter how much progress you make in your banking system, banks are generally a perpetual international thorn in everyone's side—very necessary, but I don't think you're ever going to get a banking system where you're not going to have a lot of people complaining.

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Madam Chair.

I'm curious about the transition you have had to go through. The market economy left Lithuania for over two generations. You are the leaders of this change: you are the people who are effecting the transition. What about the Lithuanian citizens? How are they responding to the move from Soviet domination to the free market system, and all these changes that you've had to go through?

Mr. Rimantas Jonas Dagys: I'll try to answer, and of course my colleagues will add something.

I think the main sign was in the last presidential election—it was the main sign that most of our people want to be related with western standards, western thinking, and so on. This was a very important sign for us.

Of course there are different opinions within our people, because our reforms changed their lives. There is a big difference in living standards and so on. But in general, by opinion polls, there is a positive opinion for our changes. Of course there are a lot of problems, especially in social questions, but I think in general the situation is changing in a good way.

Mr. Feliksas Palubinskas: But people are complaining. Several weeks ago I was walking with one of the voters in my district, and we wanted to cross the street. The flow of traffic was such that we were standing and standing and couldn't get across. He said “Isn't it terrible that with this independence, things have come to such a point that we can't even cross the street any more”.

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Change is a disturbing thing. In the old system people were assured that they would get or not get, but there was an assurance. In the new system people have to take more initiative, and initiative can be a scary thing. Nevertheless, people nowadays are expecting performance. They are demanding performance. In the first election they voted for people and they expected performance but didn't do anything after that. Now, when I go back to Kaunas, to my district, they come over and they have their specific demands as to what we should be doing in the Seimas. I think that's a very desirable change. That's really a good sign. People feel that they are part of society, of the working society.

Mr. Mecys Laurinkus: Sixty-five percent are working in the private sector.

The Vice-Chair (Ms. Colleen Beaumier): Mr. Grose.

Mr. Ivan Grose (Oshawa, Lib.): Thank you, Madam Chair.

Most of my questions have been hijacked and you've answered them very well.

I would like to congratulate you on your facility in the English language. As you know, we have a small language problem here, and when we hear people from Europe who can speak three or four languages we realize that we have a very small problem.

What is your position as far as natural resources are concerned: coal, oil, natural gas, timber, minerals? Because if one does not have these kinds of resources, one is not master of one's own house. What is your position?

Mr. Feliksas Palubinskas: Actually, we have the greatest resource that a country can have and that's people.

Actually, my story is that I came back to Lithuania full-time in 1992. I brought a university management training program. In this program, every month I used to bring a new American professor to lecture. Virtually every one, when they left, expressed their wonderment of how quickly the people pick up the subject matter and how readily they were able to apply it to their own areas.

I think that a country, no matter how rich it can be in natural resources, if it does not have the people it is poor. We can buy the coal and we can get everything else if we have the people.

Mr. Rimantas Jonas Dagys: I'd like to make a brief summation. Of course, we have only some investigation to find our oil resources. There are some possibilities to find them. But the infrastructure of our economy, the energy system, is strongest in this region because we have our nuclear power station and we export our electricity. In Lithuania we have the best road system, much better than in Poland and other districts. That is a very good basis for our economy. It is very important.

Of course we import gas and oil from Russia, but we're now building two terminals in our sea border. We will try to get oil from other sources and we'll be independent here. And now there's a big project to connect our electricity system with the European Union and to export a big part of our electricity to the European Union.

The Vice-Chair (Ms. Colleen Beaumier): Ms. Augustine.

Ms. Jean Augustine: I will be brief.

It's good to see you, Mr. Ambassador. Mr. Vaiciunas, welcome.

I also want to welcome the delegates, but I want to ask one question as a summary to all of the questions that have been asked. What is your present relationship with Moscow, with Russia? You've talked about the border treaties, so you've had some agreement on that. What is your present working socio-political relationship with Russia, with Moscow?

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Mr. Mecys Laurinkus: Our relationship with Russia is clearly much better than it was in 1990. Our trade and economic relationships are also much better.

We have adopted and signed an agreement on double taxation. It is a big achievement between Lithuania and Russia. We are keeping a relationship with the democratic wing in Russia, in the Duma and in government and society. We have a friendship group in Parliament, even, with the Russian Parliament, with the Russian Duma.

We think we have to work with the Russian democratic wing, keep more of a relationship with them. It is our role as the country that is closest to Russia. We do see this as our role in this area.

Finally, we are trying to involve regions, such as the Kaliningrad region, in an economic relationship with Lithuania—not only with Lithuania, but with Poland and Belarussia as well—in regional economic cooperation. We see that as also our role—involving Russia in European structures.

Mr. Feliksas Palubinskas: I would like to add something to this.

Russia is a large country. It feels that it is a great power and that it can throw its weight around. Russia blusters a great deal. At the same time, Russia is one of those countries that will accept a foregone conclusion. When something occurs, normally it will simply accept it, even if previous to that it would have protested very vigorously. I think that would apply even in the case of its position on the Baltic countries joining NATO. Currently it is dead set against it, but every time a step is taken in this direction through our various cooperative projects, they simply soft-pedal that.

We think there should be really no problem in our joining NATO, even if it's step by step.

The Vice-Chair (Ms. Colleen Beaumier): Our time is up. I would like to congratulate you once again on your very successful week here in Ottawa and your celebration of the 80th anniversary of the Lithuanian independence day.

Earlier, Mr. Azubalis, you said you thought you were having a problem with public relations. I can assure you that here in Ottawa you do not have a problem with public relations. You have an extremely active and personable ambassador.

I have a small token for you, a book on Canada, on behalf of the committee. It's been a pleasure having you here today. Thank you very much.

Some hon. members: Hear, hear.

The Vice-Chair (Ms. Colleen Beaumier): The meeting is adjourned.