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Ihor Michalchyshyn
View Ihor Michalchyshyn Profile
Ihor Michalchyshyn
2022-09-07 14:15
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.
View Rachel Bendayan Profile
Lib. (QC)
What I'm hearing from you gentlemen—
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:16
Ms. Bendayan, I'm afraid you're out of time.
View Rachel Bendayan Profile
Lib. (QC)
Thank you, Mr. Chair.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:16
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.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:22
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.
Balkan Devlen
View Balkan Devlen Profile
Balkan Devlen
2022-09-07 14:23
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.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:28
Thank you very much, Dr. Devlen. We will next go to Dr. Kolga.
Welcome. You have five minutes for your opening remarks.
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 14:28
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.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:33
Thank you, Mr. Kolga.
We'll next go to Dr. Schmitt.
Dr. Schmitt, you have the floor for five minutes.
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 14:33
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.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:39
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.
View Michael Chong Profile
CPC (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?
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:39
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.
View Michael Chong Profile
CPC (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.
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 14:41
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.
View Michael Chong Profile
CPC (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.
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 14:44
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.
View Michael Chong Profile
CPC (ON)
I have no further questions, Mr. Chair.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:46
Thank you, Mr. Chong.
Mr. Sidhu, you have the floor for six minutes.
View Maninder Sidhu Profile
Lib. (ON)
Thank you, Mr. Chair.
I would like to thank the witnesses for joining us this afternoon.
My first question is for Mr. Kolga. You have previously spoken to the opportunities for trade and stronger relations between Canada and the Baltic states. I was hoping you could speak to the importance of building these ties in the context of Russia's aggression in the region, and why it's key for Canada to expand its diplomatic and military presence in the region.
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 14:46
There certainly is demand in the Baltic states, and there has been, for quite some time, for the export of Canadian energy. As I mentioned in my opening remarks, Canada and Estonia have just recently signed an agreement to develop a program to build small-scale nuclear reactors in Estonia to wean that country off Russian electrical supplies. Lithuania, about three or four years ago, built an offshore LNG terminal, and officials in all three Baltic states have clearly stated that they would welcome Canadian gas in those countries.
There are opportunities for Canada to begin exporting gas quickly. There was previously a question about the timelines to build some of this infrastructure. In the United States, there is technology available right now to build offshore export LNG terminals off the coast of Canada. These could be built within 12 months, and we could start exporting LNG to the Baltic states and other European countries quite quickly.
There are other trade opportunities, of course, in the IT sector. Estonia is a leader in developing e-government technologies and such. They've recently set up shop here in Canada, and I think that Canada could greatly benefit from working with Estonia to develop our own technologies here.
So there are plenty of opportunities, and the fact that Canada has established and has announced that it will establish full embassies in all three Baltic states is certainly a positive sign.
View Maninder Sidhu Profile
Lib. (ON)
Thank you for those insights, Mr. Kolga.
Dr. Devlen, you have written about the threat posed by President Lukashenko and his grey-zone aggression against NATO and the EU. Are you able to speak to his role in the current conflict and how you see Belarus's role evolving as this conflict continues?
Balkan Devlen
View Balkan Devlen Profile
Balkan Devlen
2022-09-07 14:49
Effectively speaking, Belarus is a de facto colony of Russia right now under Lukashenko's rule. It has been and it continues to be a staging ground for Russian forces. During the first phase of the war, they did invade from Belarus as well. They continue to carry out missile strikes from Belarus. The Russian planes and air force continue to attack Ukraine through Belarus, and Belarusian ammunition-deposed missiles and artillery shells, etc. are being basically transported and used by Russia in this war.
Perhaps the only silver lining is that, partly because of the resistance of the Belarusian people, Lukashenko could not enter the war in full force on the side of Russia knowing that there is huge resistance, a significant resistance, to such a clear, open intervention, but that does not necessarily mean that it will not happen in the future. Particularly if the Ukrainian counteroffensive in the south goes well, Russia might end up using the available strategic resources, particularly long-range missiles and others, in Belarus to threaten and attack Kyiv more, not necessarily with ground troops but with missiles and artillery shells and the air force. That might bring Belarus in to fight more, but we have to treat this and assume that Belarus, under Lukashenko, continues to pose a threat to European peace and stability.
View Maninder Sidhu Profile
Lib. (ON)
Thank you, Dr. Devlen.
I have a minute left. What do you see as the next critical phase of this war? What should we be watching for that would suggest positive or negative momentum for Ukraine?
That's open to all panellists.
Balkan Devlen
View Balkan Devlen Profile
Balkan Devlen
2022-09-07 14:51
I'm happy to jump in.
This will be a long war. I think one of the biggest threats today is to resist the attempts by Russia to freeze the existing status quo when and if the Ukrainian counteroffensive is successful and Russia tries to freeze the current battle lines instead of withdrawing. I see that as one of the biggest threats in the next three to six months.
Benjamin Schmitt
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Benjamin Schmitt
2022-09-07 14:52
I'll say just one line. One of the biggest threats outside of Ukraine and outside of the conflict directly is losing western support, which we absolutely can't do. We have to make sure that western support is maintained so that Ukraine is supported with all of the weapons and all of the sanctions that are needed to make sure that the Putin regime cannot succeed in Ukraine.
As we're going into this energy crisis—it's been a crisis for almost two years now—we absolutely need to make sure that Putin cannot weaponize energy in order to diminish western resolve to defeat the Russian Federation, and we need to make sure that Ukraine is victorious.
View Maninder Sidhu Profile
Lib. (ON)
Thank you, Mr. Chair.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 14:52
Thank you, Mr. Sidhu.
Next, we'll go to Mr. Bergeron. You have six minutes.
View Stéphane Bergeron Profile
BQ (QC)
Thank you, Mr. Chair.
I'd like to thank the witnesses for being with us and enlightening us with their words.
Mr. Schmitt, I found it refreshing, to say the least, to hear a few words in French from a friend who is from south of the border. It was ironic at the very least. Thank you very much for that short interlude in French.
My question is for Mr. Kolga. If the two other witnesses would like to comment, of course, they are welcome to do so.
Two former U.S. generals, David Petraeus and Wesley Clark, praised the Canadian government's decision to return the turbines to Germany so as not to threaten NATO cohesion and unity. Canada's former chief of defence staff Rick Hillier has argued that the decision would be seen as a signal that sanctions on Russia will weaken.
Didn't we get the worst of both worlds, having perhaps undermined cohesion between the allies, while also opening the door to weakening sanctions on Russia?
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 14:54
I completely agree that we have the worst of both worlds. We've arrived at a lose-lose situation.
The fact that we have compromised on these sanctions opens the door to other allies doing the same. They can justify that action by pointing to our decision to provide that exemption to Gazprom. That is problematic.
Publicly, our NATO allies are going to be supportive of any decision that we take. We worked with the Germans on this issue. Privately—certainly among our eastern European NATO allies and in the Baltic states, Poland and beyond—our decision raised eyebrows. This decision also raised eyebrows among Russian opposition leaders. They all understand that what Putin is very much hoping for is a return to business as usual. The erosion of sanctions, as he clearly mentioned today in Vladivostok, is one of his primary goals at the moment.
I think that Canada still has an opportunity to correct that decision by cancelling that permit to Gazprom and rebuilding confidence in our sanctions regime. That's vital today to maintain that cohesion among our allies, but also to maintain trust in our own defence policy, foreign policy and sanctions policy.
View Stéphane Bergeron Profile
BQ (QC)
Thank you very much.
I'd like to ask Mr. Schmitt a question.
Germany has reportedly already achieved 75% of its winter storage objective, and you said on Twitter that Germany's continued momentum could help counter Russia's weaponization of energy.
Do you have any concerns, given the decision announced by Mr. Peskov that they are going to permanently cut off supply until sanctions are lifted?
Do you fear that they can't keep up with storage at the anticipated rate?
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 14:56
That's an incredibly prescient question. It's something we'll have to monitor over the next several weeks and months.
The bottom line is it's one thing to have storage—you absolutely need to have this storage built up as high as possible before the winter—but there also have to be latent LNG imports or natural gas flows backing that up throughout the winter. It's not just “fill it up to 100% and then you're good for the winter”; you really need to have additional flows of that resource going on.
That means if you can't increase the flows very much because Russia is actively cutting off gas flows, you also have to do a lot for energy efficiency. That's exactly what the German government and German people are doing right now. It will have to continue and it will have to continue across Europe. Partners and allies need to supply as many energy resources to Europe as possible, especially in the next few months, to make sure that they get through the winter.
View Stéphane Bergeron Profile
BQ (QC)
Several experts reject the idea that Siemens turbines are absolutely needed to operate Nord Stream 1. Other models could well have done the job. It seems that Russia may have more stockpiled.
In your opinion, are these assessments credible?
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 14:58
No, they're not. The bottom line is we have to have policies that are based on science and technology that undergird our decision-making. Simply to set up this scenario in which we're pushing back on disinformation to call someone's bluff...the fact of the matter is that the German government several times pointed out that this was not backed up by technical reality—the Bundesnetzagentur, the Wirtschaftsministerium, etc. Siemens just this week said about this purported oil leak that “such leaks do not normally affect the operation of a turbine and can be sealed on site. It is a routine procedure within the scope of maintenance work.... In the past...the occurrence of this type of leak has not led to a shutdown of operations.
The bottom line is we need to turn back these waivers to restore sanctions unity because Putin will enact as much as possible energy weaponization to open up where he's really being hurt right now, which is in technology-calibrated sanctions that are undermining his ability to get systems that can drive his economy, energy technologies and things of this nature, and also dual-use weapons technologies—things like semiconductors. There have been any number of reports of Ukrainian military personnel opening up captured Russian military equipment and, lo and behold, inside are commercial semiconductor products that are stripped out of products like washing machines and dishwashers and things like this. That means our technology sanctions are working. That's why we can't allow energy weaponization to push back on this technology-calibrated sanctions approach. That's why, as global democracies, we collectively have to have foreign policy that is driven by technical reality.
View Stéphane Bergeron Profile
BQ (QC)
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 15:00
Thank you for that.
We'll now go from Mr. Bergeron to Madam McPherson.
Ms. McPherson, the floor is yours for six minutes.
View Heather McPherson Profile
NDP (AB)
Thank you, Mr. Chair.
I would like to thank our witnesses today. It's been very enlightening. Before I start I just want to take a moment. One of the biggest issues for me has been the efficacy, the transparency and the ability of Canadians to understand how our sanctions regime is working. I think that probably some of you saw that I brought forward a motion in the previous session, but I think it's important to note.
Mr. Kolga, you were one of the key witnesses for the 2017 study, but we also had another witness who testified for this committee. Vladimir Kara-Murza was one of the witnesses. He was arrested in Russia in April and he's facing 10 years. Today is his birthday. I just want to take a moment to acknowledge that he has testified for this committee and that he is in a very difficult place looking at 10 years in prison for criticizing the war in Ukraine. I am sorry, Mr. Kolga, and those who know Mr. Kara-Murza.
I would like to start with you, Mr. Kolga. You were a key witness in 2017. You have talked about how this particular waiver has harmed our sanctions regime. There were recommendations that came out of the study of the sanctions regime in 2017 that have not been acted upon. Can you talk a little bit about how we could strengthen our sanctions regime and how we should be making it more transparent, more accountable and easier to understand for Canadians?
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 15:02
I think there's a lot that Canada could be doing to make our own sanctions regime more effective.
First and foremost is working with our allies to harmonize our policies and legislation with the United States, the EU and the U.K. We should be stepping up the enforcement of our sanctions policy. To date, since the start of the war, the RCMP has seized $122.3 million worth of Russian assets. We know for a fact that Russian oligarchs have billions of dollars of assets hidden well in plain sight in this country. We need to be doing a heck of a lot more. If we intend to use our sanctions policy as a consequence and a cost for these foreign regimes, we need to make sure we're using that legislation properly.
During the past six months, the Canadian government enacted new legislation and an amendment to the Special Economic Measures Act that would also allow our government to repurpose some of those assets that have been frozen. We need to start using that legislation. We need to start repurposing some of those billions of dollars that are hidden in this country. We could use some of those funds to help support Ukraine in its struggle to push Russia back past the February 24 border, to reclaim Crimea and to rebuild the country.
We could also be introducing a measure of transparency to the entire process of how those sanctions are imposed, who they're being imposed on and what sorts of assets these targeted individuals have. There should be some accountability through regular reporting.
I would also suggest that this committee be given the power to nominate candidates for our sanctions list. You are experts in Parliament. You've heard from experts and you know who these human rights abusers are, those who threaten the stability of western democracies even in their own countries. You know who these people are. Giving this committee more power to designate individuals and entities for our sanctions list is also important.
One of the most important things that you could do is have that review of our sanctions legislation as you've proposed. I and, I think, a lot of other human rights activists in Canada and elsewhere would very much support this as, I'm sure, Vladimir Kara-Murza would.
View Heather McPherson Profile
NDP (AB)
Thank you.
You talk about transparency and accountability. I've asked about it multiple times in the House of Commons and I've put in Order Paper questions through access to information, and I cannot get the answers I need. In fact, I've been told that because they can't give a pure or 100% accurate answer, they won't give me an answer at all.
We asked to have representatives from the CBSA and the RCMP attend this committee so that we could get a better understanding of that. I fully agree with you when you talk about the need for us to do that.
In terms of that review and the Magnitsky sanctions, are there other people who should be added to those lists? Is there more that should be done using that tool? We know that some are being used, but is there more that should be done using the Magnitsky tools?
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 15:05
Certainly. There are several thousand political prisoners in Russia today since the war began. In the first few months of the war, thousands of Russians took to the streets to protest this war. They were all brutally arrested. The entire Russian opposition, the ones who remained in Russia, have been detained. That includes Vladimir Kara-Murza, Ilya Yashin and others. They are likely going to be in prison, as you mentioned, for 10 years or possibly more.
We should be looking at those individuals and those Russian officials who ordered their arrest from the Kremlin, all the way down to those officials who were involved in putting them into jail. We should be looking at all of those individuals and placing sanctions on them.
There's a lot more that we can do with our Magnitsky legislation which, of course, targets specific human rights abusers in regimes like those in Russia.
View Heather McPherson Profile
NDP (AB)
Thank you very much, Mr. Kolga.
Mr. Chair, I believe that's my time.
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 15:06
Thank you, Ms. McPherson.
We will now go to the second round.
Mr. Genuis, you have four minutes.
View Garnett Genuis Profile
CPC (AB)
Thank you, Mr. Chair.
This is really high quality testimony we're receiving from all three of you. Given your thoughtful and biting critique, I now find it no surprise that the Liberal chair made a last-minute change to the agenda that limits the time we have with you, though it is unfortunate.
Mr. Kolga, you mentioned the ability of committees to be able to nominate people for sanctions.
I want to note, for your information and for the record, that Bill C-281, tabled by my colleague, Philip Lawrence, the international human rights act, contains some of those provisions. We will be debating that bill in Parliament this fall. Hopefully it will be coming to us here at this committee soon.
It's been reported recently, as well, by CBC that the value of frozen sanctions in Canada has dropped in recent months to suggest the possibility that some people have been allowed to sell off assets.
Do you have any reflections or information about how it is that the value of frozen assets under sanction would somehow be dropping?
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 15:08
That's a very good question. I saw that same report.
According to that report, by August 9 the RCMP had initially reported that $289-million worth of Russian assets had been frozen. They then revised that number to $122.3 million. I'm not sure what would account for that sort of drop. It could be the shares in stocks. Certainly, there's one rather large steel company that is owned by a prominent Putin-linked oligarch and that has found itself in quite a bit of hot water since the war started. It's entirely possible that the value of that company, because of the sanctions, because of the war, has dropped. It could be that other assets may have fallen in value because of that war as well. It could be because of that.
I'm not sure how to account for that.
View Garnett Genuis Profile
CPC (AB)
Okay. It's something that maybe the committee should seek further information on.
This question is for all of the witnesses. The Canadian Press reported recently that the Government of Canada was considering the domestic economy, jobs and inflation in making their decision on granting the sanctions waiver. The fact that they were considering domestic economic factors was a big surprise, given that it was discordant with the explanations previously given. We know that the government was lobbied recently by Siemens, but we don't know on which subjects. It seems that the minister has waived sanctions on Russia, rejecting concerns raised by Ukraine, in part to protect the interests of a large company that operates fairly close to her riding.
I wonder what kind of precedent is set when the government is saying that they are granting an exemption like this not because of geopolitical factors but because of domestic economic factors.
Balkan Devlen
View Balkan Devlen Profile
Balkan Devlen
2022-09-07 15:10
Philosophers call that a moral hazard. That is, it creates conditions under which your actions with a narrow definition of interest led further down to unintended consequences that actually harm both your own interests and others'. As I said in my opening remarks, once you start carving out exemptions for domestic political reasons, everyone else starts asking the same, and therefore you create a Swiss cheese of sanctions. Everyone starts jumping from one part to another. It thus undermines the sanctions.
Sanctions work in the long term when they are united and they are consistently applied. You're not going to be accused of hypocrisy when you're asking other countries in, say, the global south to sanction or to join the sanctions against Russia at the same time that you're providing carve-outs for your domestic political or economic interests.
So it significantly undermines credibility as well as the sanctions regime.
View Garnett Genuis Profile
CPC (AB)
Thank you.
Are there any other...?
A voice: If I may, I'd like to—
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 15:11
Mr. Genuis, I'm afraid you're way over time. We will have to go to the next member.
Mr. Zuberi, you have four minutes.
View Sameer Zuberi Profile
Lib. (QC)
Thank you to all the witnesses for being here.
I'd like to start off with Dr. Schmitt.
In terms of weaponizing energy, you mentioned that Russia has been doing that for years, well before this current conflict in Ukraine. Could you share what other conflicts Russia has done this in? Was it done during the wars in Chechnya from 1994 to 1996 and 1999 to 2009; in Georgia in 2008; the war in the Donbass in 2017; and in Syria in 2015?
Can you comment on that, please?
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 15:12
Thanks so much. That's an excellent question.
The bottom line is that Russia has been weaponizing energy for many years. This has a wide definition. First of all, there are the overt gas cuts that we can see have happened dozens of times over the years. I can supply the committee with a list of every one that I am aware of, but I know it's long, with at least 20 or 30 of these sorts of instances.
This doesn't necessarily mirror military conflicts that the Russian Federation has been in, because the Russian Federation under Vladimir Putin has been in a hybrid war at the same time during many of the conflicts you mentioned, at least since the mid-2000s through now, with the west, and has been using energy in one way or another to either create market uncertainty and energy insecurity by actual energy cuts or by doing what I'm really concerned about as well, which is using energy as a means of strategic corruption, to enact energy deals and things like this and then allow for elite capture around this.
We saw this in 2005-06 when former German chancellor Gerhard Schroeder stepped out of office. At the end of his tenure in office, he was supporting Nord Stream 1 and was basically pushing that project forward. He stepped down and was chairman of Nord Stream AG. We saw this go on with Nord Stream 2 and things around Nord Stream 2. Former Austrian economy minister Hans Jörg Schelling became Nord Stream AG's senior adviser after stepping out of office. Former Austrian foreign minister Karin Kneissl stepped out of office. Of course, she was famously covered in the press for having Putin at her wedding and dancing with Putin at her wedding. She stepped out of office after supporting Nord Stream 2 and other pro-Russian policies while in office, and was appointed a board member of Russian state-owned oil company Rosneft. Former French prime minister François Fillon was nominated to not one but two Russian state-owned oil and gas trading companies.
So this really is a concern, and this is what I'm constantly calling for in the United States, which is to start this norm-setting process. The United States should pass an act called the “stop helping America's maligned enemies, SHAME, act”. When small-case shame doesn't work, you need large-case shame. It doesn't have to be called that here in Canada, but Canada can join in this effort. There should be a Magnitsky-level anti-elite capture and anti-strategic corruption effort legislatively throughout global democracies to make sure that former officials cannot leave the public trust and then work for authoritarian state-owned enterprises.
It shouldn't be controversial. This is something that this Parliament can do today, if it would like to, or at least put out a statement saying that it's the sense of Parliament that this sort of practice can no longer happen, because it's still legal in too many jurisdictions.
View Sameer Zuberi Profile
Lib. (QC)
Just to conclude, you said that in the conflicts I mentioned, Russia has been using this same sort of approach of weaponizing energy.
Benjamin Schmitt
View Benjamin Schmitt Profile
Benjamin Schmitt
2022-09-07 15:15
View Sameer Zuberi Profile
Lib. (QC)
View Ali Ehsassi Profile
Lib. (ON)
View Ali Ehsassi Profile
2022-09-07 15:15
We now go to Mr. Bergeron.
Mr. Bergeron, you have four minutes.
View Stéphane Bergeron Profile
BQ (QC)
I have four minutes?
View Ali Ehsassi Profile
Lib. (ON)
View Stéphane Bergeron Profile
BQ (QC)
Thank you, Mr. Chair.
First, I'd like to quote the German ambassador. When she appeared before this committee, she said, “I think our point of view was that we would have lost significantly in the disinformation war if that turbine had not been able to be delivered.”
My question is for Mr. Kolga.
In your view, what would we have lost in the disinformation war had it not been possible to deliver the turbine?
Marcus Kolga
View Marcus Kolga Profile
Marcus Kolga
2022-09-07 15:16
That information war would have simply continued. Now that we have returned that turbine, we see it continue. The Russian government has continuously made excuses to reduce the flow of gas through Nord Stream 1. Now that it's stopped that flow completely, it has continuously blamed various different types of paperwork and insufficient repairs. It is continuing to blame Canadian sanctions, not just for.... Again, it's energy warfare right now, but even for the food crisis it is causing, it is continuing to blame us.
So I'm not sure that maintaining those sanctions would have made the information warfare any more intense, or whether it's reduced it. I think Vladimir Putin will continue using disinformation to spread lies and create conspiracies in order to undermine our geopolitical position, and use the same issues that I mentioned in my opening remarks to try to destabilize and polarize Canadian society and societies in other western democracies.
View Stéphane Bergeron Profile
BQ (QC)
We see that the sanctions are having negative effects on the economies of the countries that have imposed them, so much so that a certain fatigue, even hostility, is setting in with regard to the sanctions. Politicians in Europe, particularly in France, are denouncing the sanctions and claiming that they are not effective and Russia has never made so much money from oil and gas sales to support its war effort in Ukraine.
However, doesn't Mr. Peskov stating that they are going to turn off the tap until sanctions are lifted contradict these claims and show that the sanctions are indeed having an impact on the Russian economy?
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