FAIT Committee Report

            In recent years increasing attention has been paid to the newly independent and geopolitically and economically important states of the South Caucasus and Central Asia, areas of the world with which Canada has traditionally had little engagement.

            In April and May 2000 the Committee held a series of some six public hearings with the small number of Canadian experts, non-governmental organizations (NGOs) and business persons interested in and knowledgeable about these regions, although members regret that they were unable to speak with representatives of all of the various ethnic groups who live there. It also sent small delegations of Members of Parliament to visit key states there, as well as the important neighbouring state of Turkey. They met with political and parliamentary leaders, local NGOs and significant donors and multilateral agencies active in the regions.

            As representatives of the Department of Foreign Affairs and International Trade later told the Committee:

The visits by members of your Committee last year represented the first serious high level political attention to the region from Canada. Your interest was noticed and warmly welcomed, and has opened doors for other Canadians. The reception from the host governments was unprecedented ? and is a clear indication of the degree to which these countries wish to engage with Canada. It also is clear that your study, and last year’s visits, have raised expectations which we must be careful to manage within our existing resources.

            The November 2000 federal election delayed the completion of the Committee’s work. With the resumption of a new Parliament in 2001, however, the Committee decided to complete its work with a final public meeting with government officials in April 2001. While the bulk of this report was therefore completed months ago, the Committee believes its conclusions are still valid and will be useful in the development of Canadian foreign policy.

            The following report, which contains recommendations for a strengthened Canadian policy on this important part of the world, is divided into three parts. The first provides an overview of the issues raised during the Committee’s study, as well as recommendations for a Canadian approach to the common problems of these two distinct regions. The second and third parts review challenges specific to the South Caucasus and Central Asia, including some unavoidable duplication, and make additional recommendations.

Introduction and Overview

            On the collapse of the Soviet Union nearly a decade ago, 15 newly-independent states faced an immediate need to ensure their security and stability, pursue democracy and good governance after decades of Communism, and revitalize command economies that had been designed as elements of a larger, inefficient whole — all in a context of serious environmental and other problems.

            International attention over the past decade has focused mainly on the Russian Federation, but has more recently also turned to the eight newly-independent states of the former Soviet South — Azerbaijan, Georgia and Armenia in the South Caucasus, and Kazakhstan, the Kyrgyz Republic, Turkmenistan, Tajikistan and Uzbekistan in Central Asia — largely because of the significant hydrocarbon and other resources in the regions. Some, indeed, see the Caspian Basin region, which lies between the South Caucasus and Central Asia and includes Russia and Iran, as the scene of a new "Great Game" for influence and control being played between these and other powers, including the United States and Turkey.

            After holding public hearings in Ottawa and sending small delegations of Members to key countries in the regions in April and May 2000, with a final hearing in April 2001, the Committee has concluded that the area is important to Canada in a number of ways and warrants significantly increased attention in Canadian foreign policy. This must be based on an up-to-date understanding of these complex regions. The Committee has tried not to perpetuate alarmist views — such as those in a recent article in the journal Foreign Affairs that warned that, "if left to fester, the Caspian could make the Balkans look like a pregame warmup." These regions should not be seen solely as an energy province of global significance, the scene of a new geopolitical "Great Game" or even a modern "Silk Road" connecting Europe and Asia — the logic underpinning the European Union’s Transport Corridor Europe-Caucasus-Asia (TRACECA) program. Nevertheless, the day-to-day problems faced by the 70 million people who live there are real, as is the potential for both huge profits and geopolitical and other conflict, particularly between the United States and Russia. In fact, as Canadian expert Professor Neil MacFarlane of the University of Oxford argued before the Committee:

…there is reason to consider these issues to be urgent. Although the region appears to be reasonably stable now by recent standards, it's unlikely to last. A number of the region's states face extremely problematic political successions in the next several years. There's increasing evidence of a growing threat from Islamic radicalism in the northern Caucasus and in the Farghona (sic) Valley…there is a clear and widening gap between the positions of an elite — which has benefited from reform and privatization by stealing the resources of their countries, to put it crudely — and a mass of the population that has essentially been left out. This too creates fertile ground for political radicalization.

Finally the recent victory of Vladimir Putin in elections in Russia and the reactivation of Russian diplomacy in both the Caucasus and Central Asia, which is evident as we speak, raise a number of potentially disturbing questions about the future direction of the only great power, that is to say Russia, in a position to dominate the Caspian Basin and what this might mean for the broader agenda of the West in the Caucasus and Central Asia.

            As a key regional power, Russia has an important role to play in the South Caucasus and Central Asia. It is important to note, however, that the Committee’s study of the Caucasus focuses on the three independent states — Azerbaijan, Georgia and Armenia — south of the Great Caucasus mountains, and not on Chechnya or other Russian territories to the north.

            The Committee is under no illusions that Canada can have a dominant impact in the South Caucasus and Central Asia. After hearing from the increasing number of dedicated Canadians active in the region — for example in the Centre for Trade Policy and Law, the Canadian Society for International Health and the Canadian Human Rights Foundation — the Committee does believe that it can make a positive contribution. This would demand a significant increase in Canadian attention to these regions, however. As James Wright of the Department of Foreign Affairs and International Trade noted before the Committee, given distance and a lack of resources "this is not a part of the world in which Canada has been extensively engaged."

            The following chapters review the current situations in the South Caucasus and Central Asia. Canada’s foreign policy objectives in these regions since 1991 have been those pursued on a global basis: economic development and prosperity, stability and security, and the promotion of values such as democracy, good governance and human rights. While these broad objectives remain valid, as we shall see there has been mixed success in implementing them over the past decade, and the Committee therefore makes recommendations to enhance their effectiveness. Given the success of recent deficit fighting efforts, the Committee believes more resources can now be provided to advance important foreign policy objectives. It agrees with Professor MacFarlane, who noted in a written submission that, "…Canada is in a rather privileged situation, which is in part a result of earlier neglect. Our country has few clearly articulated lines of policy in the region. And the countries of the region have little experience of us. Since we have an insubstantial profile, we have greater flexibility."

            The Committee is convinced that this report can have value beyond the development of Canadian policy in these important strategic regions. By reviewing broader issues, such as the need to ensure the provision and efficient use of adequate resources to support foreign policy objectives, the difficulties of supporting countries in transition, the need to strengthen key multilateral organizations such as the Organisation for Security and Co-operation in Europe (OSCE) and developing and pursuing peacebuilding and other creative strategies, this report will make a contribution to the development of Canadian foreign policy as a whole.

I. UNDERSTANDING THE REGIONS

            Mr. Suleymen Demirel, President of Turkey at the time, told members of the Committee in Ankara that the new geopolitical geography following the collapse of the Soviet Union is not yet consolidated. Because of their geographical isolation and the complex historical and current situation, the eight states of the South Caucasus and Central Asia are still very poorly understood in the West. As one critic noted pointedly, "Until the demise of the Soviet Union, not even Antarctica was more remote from the American mind than were the lands around the Caspian Sea, and this for good reasons." In spite of the significant differences between these two distinct regions, their states have many common problems, such as the political and economic challenges of transition to market economies, democratic governance and the rule of law after decades of Communism; the need to ensure stability, security and friendly relations with neighbours in regions containing multiple flashpoints, and a Soviet legacy of arbitrary borders and often exclusivist nationalism.

            Generally speaking, the states of these regions have been most successful in implementing the Western economic agenda — macroeconomic stabilization, privatization, marketization and integration of the economies of the region into the broader global economy through trade and foreign direct investment. They have been less successful, however, in implementing Western norms of democratic governance, civil rights and the rule of law. Another important issue is corruption, which is not only an issue of governance, but is also linked in large part to poverty and the lack of a social safety net. Transition is a dynamic process, with countries continually shifting forward and even backward. At the risk of oversimplification, we can think of the eight states of these regions in three categories, in terms of their success in the political and economic transition to date: Georgia, the Kyrgyz Republic and Armenia have seen the most progress; Kazakhstan and Azerbaijan have seen some progress; and Uzbekistan, Tajikistan and Turkmenistan have seen the least progress.

            All of the states of these regions face significant challenges in completing the transition to market economies, democratic development and good governance; however, the three South Caucasus states of Azerbaijan, Georgia and Armenia also remain preoccupied with more traditional security challenges stemming from conflicts in the immediate post-independence period. While cease-fires have been in place for several years now, no lasting political solutions have been found. Central Asia (apart from Tajikistan) has not seen comparable conflict, but has in recent years seen an increase in small scale fighting blamed on a combination of Jihadist "terrorism" and drug trafficking.

Energy and Resource Management Issues

            As noted, much of the renewed attention to these regions is due to their reserves of oil, gas and other resources, which will undoubtedly provide the single most important economic means whereby these states can increase the prosperity of their citizens. These resources must be developed in a sustainable, cooperative and equitable manner, however, if they are to benefit the regions as a whole and contribute to peace and stability rather than detract from them. As one expert has noted, "it could easily go the other way, if differential benefits from this development destabilize sub-regional balances of power, or if particular countries (e.g. Armenia) are excluded from the process and have incentives to act as spoilers." Realistically, Canadian resource firms will not play a major role in the development of the oil resources of the Caspian region, yet, as we will see below, it is important that they contribute to the extent possible to ensuring that the resources are sustainably managed and their benefits widely shared within the regions.

            Estimates in the early 1990s that placed the energy resources of the Caspian region as equivalent to those of Saudi Arabia are now accepted to have been exaggerations; however, the oil resources of the region are significant — widely assumed to be comparable to those of the UK’s North Sea resource at about 150 billion barrels of oil compared to about 676 billion barrels in the Middle East —and will play a key role in both the economic development of Azerbaijan, Kazakhstan and Turkmenistan themselves and, it is hoped, the regions as well. The United States meets some 50% of its energy needs with imports, and U.S. policy towards the region has stressed the role of Caspian oil resources in ensuring the security and diversity of future energy supply. As American expert Dr. Rob Sobhani argued before the Committee, this logic can be applied equally to Canada as well.

            Oil and gas reserves are valuable only if they can be delivered to paying customers. Much diplomatic and other energy over the past several years has gone into "pipeline politics" designed to ensure that new pipelines — particularly the Baku-Tbilisi-Ceyhan Main Export Pipeline — will meet both practical and geopolitical needs. While geopolitical considerations are real, the Canadian government believes that the marketplace will ultimately decide the routing of what will probably be multiple pipelines in the regions. Arguments about energy security have some merit, yet the Committee believes that the specific Canadian interest in the energy resources of the Caspian is the real but second order potential for Canadian firms to contribute to what, over the long term, will be a large amount of services and infrastructure construction. More generally, Canada must do its best to ensure that the benefits of these resources are broadly shared both within and among the countries of the regions.

The Challenge of Transition

            The international community has now had a decade of experience supporting transition in Central and Eastern Europe, both through bilateral and existing multilateral mechanisms, such as the European Union, the World Bank, the Council of Europe and the Organization for Security and Cooperation in Europe (OSCE), as well as institutions such as the European Bank for Reconstruction and Development (EBRD). Created in 1991 specifically to support transition towards democracy and market-oriented economies, the EBRD now operates in some 26 countries and has become the largest source of foreign investment in the former Soviet Union; the Committee has made use of the annual economic overviews prepared by the EBRD, and members who visited the regions benefited from meetings with EBRD representatives in both the South Caucasus and Central Asia.

            Political and economic transition has everywhere proved more difficult and protracted than expected, and the countries of the former Soviet Union have been significantly less successful than states in Central and Eastern Europe. A key conclusion of this decade of experience, summarized in EBRD's Transition Report 1999: Ten Years of Transition, is that not only strong economic reforms, but also effective public institutions, good governance and strong social infrastructures are very important. Canada can now benefit from this experience as it updates its policies — particularly what government officials described as CIDA’s "nascent, modest but growing" programs ? both in these regions and elsewhere.

            Patrice Muller, Canada’s Director on the EBRD pointed out in a recent article that Canada's trade and investment volumes with the former Soviet Union as a whole remain relatively minor. Yet Canada has gained considerable experience in supporting transition over the past decade, including through the creation of such programs as Renaissance Eastern Europe. In a significant move, responsibility for supporting transition was in mid-1990s transferred from the Department of Foreign Affairs and International Trade to CIDA. This examination of Canada’s policies on the South Caucasus and Central Asia has also allowed the Committee to consider in depth for the first time the implications of this transfer of authority. As Stephen Wallace of CIDA reminded the Committee in an April 2000 presentation on its policies in these regions, "The first thing to say about our program is that poverty is not our main focus as it is elsewhere in the world. In Central and Eastern Europe and the former Soviet Union, transition is our key mandate, specifically transition to the market economy and transition to democratic pluralism. As you will see throughout your studies and hopefully your visits to the region, many challenges remain on both these fronts."

He continued:

In the Caucasus and Central Asia, our role is to provide direct support during the democratic transition to a market economy. Aside from providing humanitarian aid to the most disadvantaged and vulnerable people in the region, for example, refugee populations, we are mainly involved in promoting change and new opportunities under… difficult circumstances…We have been working in the region for five years on all levels, that is in terms of policies, laws, institutions and regulations.

We have developed what we think are very valuable partnerships which have resulted in direct changes in the region. However, this is a long, drawn-out process. As I said, we have made some progress in recent years, but the going is fairly slow. In my view, we need to continue focussing our attention on reforms if we truly want to see some concrete results in the medium and long term.

            In 1998-99, Canada’s assistance to these states amounted to less than one tenth of one per cent of total international assistance of over US$5 billion. By 2001, CIDA was spending some $4 million annually in these eight countries: about $1 million in the South Caucasus to support transition and reform in the health, trade and investment, small enterprise development and good governance sectors; and $3 million in Central Asia mainly on projects in the natural resources sector, including oil and gas, water resources and agriculture. CIDA has lately begun to be somewhat more proactive in these regions, and has strengthened its field presence through the posting of an officer to Almaty, Kazakhstan, and the engagement of two locally engaged professionals, in Almaty and Ankara, Turkey.

            Officials of the Department of Foreign Affairs and International Trade told the Committee that as Central European countries are successful in their transition, more of the funds currently devoted to supporting transition will be available for the South Caucasus and Central Asia and elsewhere in the former Soviet Union. In addition to quantitative increases in support, the Committee hopes CIDA and other departments will continue to review and enhance their programs in light of this study and its recommendations.

Transition in the South Caucasus and Central Asia

            As Professor Neil MacFarlane pointed out in a 1999 study entitled Western Engagement in the Caucasus and Central Asia, through a combination of multilateral and bilateral programs Canada and other Western states have supported a broad reform agenda in the South Caucasus and Central Asia since they achieved independence in 1991. The results of a decade of engagement, however, have been mixed at best. Greater progress has been made in implementing the Western economic agenda than in transplanting norms of governance and rights, and there has been "little effect" with respect to conflict management and resolution. As he put it to the Committee in May 2000:

To make a long story very short, what we've wanted in the region resembles my kids’ Christmas list, if you will. Both bilaterally and multilaterally, we have sought peace and stability, democracy, human rights, economic liberalization, the rule of law, the enhancement of the political sovereignty of these new states, and their integration into global markets. This is an ambitious and still largely unfulfilled agenda…

I think it’s fair to say that as a community of states with liberal democratic values, we have not clearly established our priorities amidst this set of objectives. However, the locals, I think, have concluded that we care more about stability and economic opening than about rights and democracy. They’ve defined their own approaches to reform accordingly and essentially, in my view, negatively…

            There are a number of reasons for the limited success in implementing the reform agenda in the South Caucasus and Central Asia, not the least of which is the potential contradiction between the desire to ensure political stability by supporting ruling elites and the need to encourage political development. Yet, given the history of Western engagement and the current situation in the South Caucasus and Central Asia, a number of avenues seem particularly promising.

Economic Development and the Rule of Law

            Canadian trade with and direct investment in the countries of the South Caucasus and Central Asia is very modest, with the exception of that in the Kyrgyz Republic. The states in the regions have both significant natural resources and an educated workforce, and have generally been successful in constructing the framework of economic transition. A predictable business climate which would encourage Canadians and others to invest in these regions has not yet been established, however. Mr. Paul Carroll of Toronto-based Worldwide Minerals, for example, told the Committee about his company’s unhappy experiences in Kazakhstan, while Stephen Wallace of CIDA made the point more generally. As he noted: "I think what you will find is a fairly familiar set of laws, of regulations and policies and ways of operating. What you won’t find is implementation in a way that is transparent, consistent, and timely. I think that’s the major challenge facing that area of the world." Members of Committee who travelled to the South Caucasus and Central Asia in May 2000 agree with this assessment — particularly those who discussed the business climate there with an experienced Turkish businessman in Ankara. When asked why his overview of the requirements for successful investment in the region did not address corruption, he pointed out that it had — under the need to maintain "good contacts" with local authorities.

            As James Wright of the Department of Foreign Affairs and International Trade told the Committee, "Crime and corruption are the consequences of [a command] economic system that did not work." While the states of the South Caucasus and Central Asia are generally recognized as being among the most corrupt in the former Soviet Union, such problems are hardly unique to these regions, and Canada’s limited programs there attempt to address them. As Stephen Wallace of CIDA noted:

A key lesson from our economic cooperation experience is that we can often make the most difference when our actions strengthen the general business environment as opposed to the directed business interests of individual companies.

CIDA, therefore, has a particular role to play to ensure that policies, laws, and regulations make sense and are applied fairly and transparently, that basic economic institutions work, and that workers are equipped to meet the demands of the global economy. These…are the building blocks of sustainable trade and investment and they are the basis for addressing key aspects of governance and corruption.

            Members agree with this focus, but feel more must be done to achieve the economic development so evidently needed in these states, and to encourage Canadian firms — particularly small and medium-sized ones — to invest there.

            While Canada’s interests in these regions is evolving to cover the range of foreign policy concerns, its initial interests were economic — particularly those of mining and other resource firms. In view of the need to improve the living standards of their citizens, all those whom Committee members met in the regions encouraged further Canadian investment. As became clear in their hearings in Ottawa, however, care must be taken that Canadian companies do not impose environmental or other costs on their host states, and that they should contribute to the societies themselves. Members welcomed the example of such Canadian firms as Hurricane Hydrocarbons, which operates a community centre and several other activities in Kazakhstan; however, they noted the concerns of a number of NGO groups over such major Canadian investments as Cameco Corporation’s high profile joint venture in the Kumtor mine in the Kyrgyz Republic (discussed below). While he was speaking specifically about the links between commercial activity and human rights concerns in the South Caucasus and Central Asia, the comments of Alex Neve of Amnesty International apply more broadly as well. In his words:

I think the crucial piece from our perspective is that it proceeds, in a way that is true to human rights principles. Canadian businesses that operate in the region, whether or not they’re legislated by national laws to do so, should refrain from doing anything that will contribute to human rights abuses in a region. And secondly, they should do everything at their disposal to be good human rights actors in the region, to be agents for change on the human rights front to the degree possible. There’s more and more awareness in the corporate sector of how important that is. Some companies feel a little bit more up to the challenge than others. If it’s an issue that’s being considered, certainly it should be encouraged to be the mentality that guides investment in the region.

            As Janet Hatcher Roberts of the Canadian Society for International Health told the Committee in Ottawa:

If we simply promote trade and industrial development without also promoting effective social policies and concern for environmental sustainability, we run the risk of harming the people rather than helping them. It’s important that we ensure human development is deliberately promoted through capacity building, policy development, public participation, and concern for equity.

Supporting Democratic Institution-Building and Strengthening Civil Society

            Throughout the hearings and in their travel, Committee members were made aware that the many and complicated problems of these regions will not be changed overnight; prudent and useful Canadian policies must take a long term perspective, and focus on education, the media and other civil society support that is critical to the development of stable and prosperous societies. As Professor MacFarlane argued:

I think we’ve gone just about as far as we can go in encouraging governments themselves to reform in this region. There’s only so far you can go in attempting to convince Geidar Aliev or Islam Karimov to turn into a John A. MacDonald or a George-Étienne Cartier.

What does this mean? I think it means that the focus in assistance programming should be on civil society. In the first place, this means educational opportunity in order to build a more broadly based understanding of what liberal democracy is and what it implies, with regard to the behaviour of both governments and peoples.

Second, effective engagement and effective use of the taxpayers’ money, if you will, means investing in democracy, rights and the rule of law from the bottom up, not the top down. I think this means support of the NGO community and independent media.

The agenda of liberalization and democratization is a long-term one probably everywhere, but I think particularly in this rather curious region. It’s best served by efforts to inform and engage the citizenry of the Caucasus and Central Asia in the building of their own political and economic futures. To fail to do so is to leave the region’s destiny in the hands of superannuated, unrepresentative and generally corrupt elites, who cannot produce stability in the longer term and may indeed be fostering the very instability they claim to be controlling.

            He also warned, however, that while they can play an important role in strengthening civil society, care must be taken to avoid "flavour-of-the-month" NGO activity.

            The Committee agrees that civil society must be supported from below, particularly through the day-to-day work of such NGOs as women’s groups, and that there should be a long-term focus on education. As Ms. Ria Holcak, Director of the Central and Eastern Europe Program at the Canadian Human Rights Foundation told the Committee, such an emphasis would also help address the serious human rights concerns in the regions. Her argument is worth quoting at length:

…there is no quick fix to the problems in the region. In our view, building a human rights culture in countries where there was no history of democracy and protection of human rights and where human rights is a new term in their vocabulary takes time. It's a long-term process. Trying to do so during a period of tremendous economic and social upheaval is even more difficult. Canada has an important role to play, but we can only be effective if we are willing to increase our investment and involvement and commit to a long-term engagement.

Over the long run, the hope lies in building up democratic institutions and promoting a culture of human rights. Support is needed for strengthening the democratic functioning of parliaments, reinforcing the independence of the judiciary, and establishing independent and effective human rights institutions. Given Canada’s particular experience in this field, it makes sense for Canada to support the creation of independent ombudsman offices in the region.

However, strengthening institutions is not enough. No matter how much effort is put into parliaments, the judiciary, or human rights institutions, these energies will be wasted unless a similar effort is put into the emergence of a vibrant civil society capable of mobilizing the public to protect their own interests.

She added:

One of the most effective ways for Canada to contribute to the democratization process is to support the human rights education initiatives that target schools and state officials. It is particularly important for the long term to target the younger generation by incorporating effective human rights education programs in the schools.

            A number of Canadian universities, such as St. Mary’s, have already been active in these regions, as has the Canadian Bureau of International Education, while CIDA offers a limited number of scholarships. As Dr. Patrick Armstrong of the Department of National Defence argued in an individual presentation:

My personal recommendation is that we should do much more of it. Invest in the future, and in most of these countries, the future is young people. Bring them out here, get them to like Canada, teach them something useful and so forth. We have to do it in a humble way though, not in an arrogant way, which there has been far too much of.

Promoting Multilateral Cooperation

            Canada’s experience with multilateralism has long been a key element in Canadian foreign policy, and can be put to good use in these regions, both in reinforcing existing cooperation mechanisms, and in encouraging evolving ones. As Dr. Robert Cutler argued before the Committee:

This region is extremely important as regards the future evolution of the international system in the 21st century. Therefore, Canada has the opportunity to make special contributions, building upon its established credibility in matters of multilateral cooperation. It is a fortunate situation that this possibility coincides with the pursuit of Canada’s particular economic interests, as well as its general interests in human security.

            In terms of existing mechanisms, to increase Canadian engagement with the South Caucasus and Central Asia — and leverage what will remain a modest contribution — it is vital to complement the work of multilateral organizations and key donor countries to complement rather than duplicate effort.

Regional Security, Stability and Peacebuilding Mechanisms

            The transition to economic prosperity and good governance can be achieved only in the context of regional stability and security. The South Caucasus and Central Asia are now more peaceful than they were in the early 1990s, but they are not necessarily more stable or secure. These states share such global concerns as the non-proliferation of nuclear weapons and material; however, their immediate security concerns are much more regional in nature.

The Organisation for Security and Co-operation in Europe (OSCE)

            The specific security challenges of each region, from territorial integrity in the South Caucasus to terrorism and drug smuggling in Central Asia, will be considered in the following chapters. Yet the overall need is to adopt a comprehensive and co-operative approach to security in these regions which will both prevent the outbreak of further conflict and allow the longer term pursuit of peacebuilding strategies to overcome the legacy of the past. For these reasons, while a number of key multilateral organizations, including the United Nations High Commissioner for Refugees (UNHCR), the World Bank, the Council of Europe and the EBRD, play an important role in humanitarian assistance and supporting transition, the Committee believes the key vehicle for ensuring security, stability and peacebuilding in these regions to be the OSCE. According to James Wright of the Department of Foreign Affairs and International Trade:

We have also provided strong support for the activities of the Organization for Security and Cooperation in Europe. This is a key institution that has been very effective in building acceptance of democratic values and institutions throughout Europe. By posting Canadian officers at key missions from time to time, participating in election observer missions such as in Georgia, Kazakhstan, the Kyrgyz Republic, and Armenia and in other activities to support and encourage the development of democracy and stability in the region, Canada has been able to encourage the work of the OSCE and to advance the transformation of the region…

            For a number of reasons, the OSCE has never lived up to the expectations of the early 1990s, when many believed it could become the predominant security institution in post-Cold War Europe. Yet its comprehensive and co-operative approach to security, including the codification of interrelated security and democratic principles — and its inclusion, since 1992, of a parliamentary dimension in the form of the OSCE Parliamentary Assembly — makes it key to the security of its members in Europe and North America. This is particularly true in the complex regions of the South Caucasus and Central Asia, whose multiple problems are not amenable to military solutions. As Alex Neve of Amnesty International argued before the Committee:

The OSCE, despite some weaknesses and imperfections and inconsistency from time to time, is obviously one of the most important international bodies that’s active in the region …I would encourage Canada, as a member of the OSCE, to encourage the OSCE to do more and to do better in addressing the kinds of issues you’ve heard from us this morning, but other that you’ll hear as well.

            In addition to its large size and procedures for making decisions by consensus, the OSCE has been constrained by the unwillingness of member states to advance its greater resources and responsibility. As Professor Neil MacFarlane noted before the Committee, "…among international organizations, obviously the OSCE is the most underresourced." He added that "…I think that as a community the community of western states hasn’t actually decided on just what the role of the OSCE should be and how it’s to be useful and whether we should invest in it. I think we should invest in it, but who am I?" With its multiple roles of early warning, conflict prevention, crisis management and post-conflict rehabilitation, the OSCE has played an important role in the South Caucasus in particular, and can be encouraged to increase its activity in Central Asia. Though the Committee believes that Canada must increase its practical support for the OSCE, resources alone are not enough. More fundamentally, there should be a policy of strengthening Canada’s focus on the OSCE as a key element in post-Cold War international relations.

Parliamentary Diplomacy

            The peaceful development of the South Caucasus and Central Asia will demand regional cooperation on many levels. Dr. Robert Cutler argued before the Committee that one potential field for such cooperation lay in parliamentary diplomacy. Noting the increasing importance of interparliamentary bodies in increasing dialogue and cooperation among legislators and in representing civil society to executives, Dr. Cutler recommended that the Government of Canada support the development of parliamentary diplomacy in the South Caucasus and elsewhere through the existing mechanism of the Parliamentary Centre in Ottawa, a non-profit institution which provides training and capacity building for parliamentary bodies around the world. As he put it:

As you know, the Parliamentary Centre holds regular training and development sessions for parliamentarians around the world. The Parliamentary Centre, I submit, should be given the means to undertake a comprehensive program of both training and research on international parliamentary institutions — or IPIs for short — because there is little, if any, systematic knowledge about these brand-new institutions, as a whole. The program may be given on a continuing basis, for these IPIs are becoming a fixture in world society. They will influence, indeed they have already influenced, the evolution of trade, development, and the norms and structures of the international system…IPIs are developing into an important societal oversight mechanism on traditional executive-based diplomacy. They also establish ongoing transnational relationships that restrain old power politics, where civil society and NGOs are underdeveloped and politically constrained. In such a manner, they prepare a middle ground for interstate cooperation.

            In the specific case of the South Caucasus, the Presidents of the parliaments of Azerbaijan, Georgia and Armenia agreed in June 2000 that parliamentary cooperation between their countries which had begun the year before had "contributed greatly to building confidence and good relations in the region," and agreed to establish a single and permanent tri-parliamentary working group to deal with issues of mutual concern. In testimony before the Committee, Dr. Robert Cutler also outlined one NGO proposal, which will be discussed further below, for the creation of a "South Caucasus community" which would include a regional parliament to increase dialogue and cooperation among legislators.

            The members of the Committee are under no illusion that supporting and encouraging further parliamentary cooperation in the South Caucasus and Central Asia will alone solve the myriad problems facing these regions. At the same time, given the increased importance of interparliamentary bodies in the exchanges of views and for the development of greater understanding, the Committee agrees on the potential usefulness of encouraging further parliamentary cooperation among the states of the regions, and more broadly as well.

Democratic Debate

            An ongoing challenge in the South Caucasus is the legacy of violent conflict in the early 1990s, perhaps best exemplified by the case of the Nagorno-Karabakh enclave in Azerbaijan. As James Wright noted before the Committee:

…Nagorno Karabakh is one of the more difficult challenges. Here ethnic tension gave rise to violence and armed rebellion. Efforts to ease this tension, however, ran up against the twin principles of territorial integrity and the right of self-determination, the key principles behind the OSCE. From this distance we can see how Azerbaijan's reliance on territorial integrity to guide its actions and claims runs afoul of the right of self-determination by the Karabakh Armenians. Equally, we can see how Karabakh Armenians claiming self-determination undermines the territorial integrity of Azerbaijan. This does not lend itself to an easy fix.

            Historical explanations for the conflict in Nagorno-Karabakh vary widely, and Committee members who travelled in the region have heard them all. Yet they have also seen the more practical consequences of this and other conflicts in the camps full of thousands of refugees and Internally Displaced Persons (IDP) they visited in Azerbaijan.

            While it is not possible to compare the situation in Canada directly with those in the South Caucasus and Central Asia, Mr. Nazeer Ladhani of the Aga Khan Foundation of Canada spoke before the Committee of the importance of Canada’s "multicultural democracy." In his words:

What differentiates Canada’s ethnic diversity from that in the central Asian states? It is our successful development of what His Highness the Aga Khan has referred to as a multicultural democracy. What does multicultural democracy mean? It means governing responsibly, through openness and tolerance. It means affording opportunities to all citizens, while maintaining their identities, irrespective of their religious or ethnic affiliations, to participate in the social, economic and political development of the country.

Of all the countries of the industrialized world, the accomplishments of Canada’s multicultural democracy are arguably the most envied internationally. Canada is recognized as a learning model for countries undergoing the often turbulent transition to democracy. This is Canada’s most important value added, one that it can leverage, and be admired in so doing, to advance its interests in the region.

            Dr. Patrick Armstrong has pointed out the need to avoid arrogance in giving advice to the states of these regions; however, the Committee can only note that democratic and non-violent debate over these and other questions is infinitely preferable to the alternatives.

Non-Governmental Organizations (NGOs) and Early Warning Mechanisms

            The Caucasus and Central Asia are tremendously complex; as Patrick Armstrong noted before the Committee, while common, single explanations are often misleading. A useful tool for understanding and placing the complex regions of the South Caucasus and Central Asia in perspective was the project for Country Indicators for Foreign Policy (CIFP) at Carleton University in Ottawa. As Professor David Carment explained to the Committee, the CIFP project maintains a database of up-to-date information on all of the countries with which Canada has foreign relations showing some 80 political, economic and other indicators, which can be displayed in a number of ways to help understand countries and regions. In addition to planned improvements to the database, by pursuing links with international knowledge networks such as the London-based Forum for Early Warning and Early Response (FEWER) — which also trains local analysts in the Caucasus and Central Asia to understand the kinds of indicators that are responsible for conflict — this project may prove even more useful as an early warning and therefore conflict prevention tool. As Professor Carment pointed out in his testimony before the Committee:

…one of the reasons we collect data is not just simply to decide for ourselves…what Canadian foreign policy should be, but also to inform Canadians why they should care….Also I think that the collection of data and the broadcasting of that information in a public forum provides a key monitoring activity…which would allow us to better understand whether or not these societies are sincere about embracing change.

            The Country Indicators for Foreign Policy project is not perfect, as some members pointed out during the Committee's meeting with Professor Carment in May 2000; it needs to be complemented by other sources of information. Yet given the importance of ensuring the availability of public and up-to-date information to assist legislators and others in evaluating developments and trends that inform Canadian foreign policy, as well as to provide early warning to help prevent conflict, members believe this project merits further support.

Cooperation with Regional Actors

            The states of the South Caucasus and Central Asia have struggled to ensure that they are no longer defined by their relations with former imperial powers such as Russia, Turkey, Iran or others; however, these neighbouring powers will play an important role in the development of the regions. The states of the South Caucasus and Central Asia therefore need to understand the policies of those countries, and work as far as possible to ensure peaceful and mutually beneficial cooperation with them and other important actors such as the United States, the European Union, China and South Asia.

Russia

            Russia has obviously experienced tremendous foreign policy and other changes over the past decade. Russia has always regarded the South Caucasus and Central Asia at least partly as important security buffers along its borders. As James Wright of the Department of Foreign Affairs and International Trade argued in April 2000:

The loss of empire has been difficult for the Russian people, and they continue to struggle with it. The Russian notion of the "Near Abroad" says it best — it represents an important psychological distinction for Russians between the lost republics and the longer established independent states…the key is that Russia continues to try to carve out an active role for itself throughout the region, even as economic relationships often evolve in the opposite direction.

            While many take a consistently negative view of Russia’s role in the development of the states of the South Caucasus and Central Asia, the Committee does not believe this is justified, although its military forces still stationed in the region can be said to have had both positive and negative effects. Given a long history of often troubled relations, capped by seven decades as part of the Soviet Union, it seems likely that their relationships with Russia will remain both the most complicated and, perhaps, the most critical for the states of the South Caucasus and Central Asia. There could be no more powerful incentive for cooperation.

            In fact, as Ron Halpin of the Department of Foreign Affairs and International Trade told the Committee in April 2001:

Over the first fifteen months of President Putin’s administration we have seen a considerable evolution in Russian foreign policy, particularly with regard to the countries of the "Commonwealth of Independent States."…President Putin now seems to be paying more attention to the promotion of Russian economic interests. Furthermore, he is pursuing these interests bilaterally, rather than using the more traditional but unwieldy multilateral mechanisms. This is evident in the role Russia is playing in the resolution of the Nagorno-Karabakh dispute, and has led to a more constructive relationship between Russia and Azerbaijan. President Putin has travelled frequently in the region throughout the last year, in stark contrast to his predecessor.

Iran

            In the early 1990s many argued that Iran represented a threat to the sovereignty and stability of the states of the South Caucasus and Central Asia. Its attempts to increase its relations with these states in the years following their independence, however, met with limited success. While the current struggle between reformers and hard-liners in Iran is primarily domestic, it also has important implications for Iranian foreign policy. As Dr. Rob Sobhani, who focuses on U.S. policy on Iran, the Middle East and the Caucasus at Georgetown University, argued before the Committee:

In the early 1990s, Iran’s role was very negative. They were trying to undermine some of these regimes, some of the weaker ones like Azerbaijan. With the election of President Khatami, ideology has been taken out of Iranian foreign policy and pragmatism has been injected…

What you see today is a more pragmatic approach to the whole region. Iran is interested in stability because war will create refugees, which means they’re going to come into Iran, for example…With the exception of the Arab-Israeli conflict, you will see a pragmatism, which includes the Caspian, and cooperation with the other Persian Gulf countries such as Saudi Arabia.

            In fact, he added, Canada could use increased relations with the Caspian region as a "springboard" for entrée into Iran and the Persian Gulf region.

Turkey

            James Wright of the Department of Foreign Affairs and International Trade noted before the Committee in 2000:

We would be remiss if we did not mention Turkey, a country that wields important influence as a newly opened gateway to the Caucasus and Central Asia. On the western edge of the region, Turkey with its historical and linguistic links plays a key role as a model of secular development in an Islamic region, and as a market especially for Caspian oil and gas, and supplier of modern goods and services. Turkey also has a stabilizing influence on the regional security stage as a military power and NATO and OSCE member. However, the ever present risk of further destabilizing ethnic conflict [sic] within the Caucasus is another potential dark cloud affecting Turkish interests. Moreover, friction with Armenia over Nagorno Karabakh and interpretation of the tragic events during the collapse of the Ottoman empire continues.

            Members of the Committee, particularly the four who visited Turkey during the trip to the South Caucasus, believe that the potential exists for significantly expanding bilateral relations between Canada and Turkey. At the same time, issues such as minority rights and freedom of expression will continue to be contentious, and members regret that they did not have the opportunity to meet with Kurdish representatives while in Turkey.

            From the perspective of the present study, however, while Turkey will play a special role in the development of these regions, the key fact is that after many years of dialogue and political and economic reform, it is itself still being integrated into Europe, and its human rights and other policies are continually monitored by European institutions to which it belongs, such as the the Council of Europe.

            Turkey is a complex country, and the collapse of the Ottoman empire had a strong influence on modern Turkey’s approach to territorial integrity and minority rights. For years the actions and policies of Turkey on its Kurdish minority have been the subject of international criticism, not least in international bodies such as the Council of Europe. As one interlocutor noted in Istanbul, however, in a practical sense this criticism arises because Turkey is judged in comparison to Western states rather than its neighbours in the Middle East. Turkish Foreign Minister Ismail Cem defended that country’s approach to minority rights and other related issues when Committee members raised them in Ankara. He also admitted, however, that the development of rights and freedoms in Turkey was delayed first by the Cold War and later by a serious internal terrorist threat.

            The past year has seen severe economic problems in Turkey, yet this should not obscure other progress. As Committee members were told repeatedly in Turkey in 2000, the year 1999 represented a significant milestone in modern Turkish politics: There was a seeming resolution of the worst of its internal terrorist problem following the capture of Abdullah Occalan and the unilateral declaration of a cease-fire by his Kurdistan Workers’ Party (PKK), important political reforms, a significant rapprochement with neighbouring Greece, and Turkey's belated acceptance as a candidate member of the European Union. While welcoming these developments, Canada and other states will continue to press Turkey over minority rights and other issues in appropriate forums.

            The states of the South Caucasus and Central Asia do not want a Turkish "Big Brother" to replace their previous Russian one. As we shall see below, however, Turkey has played a very positive role in advocating a Caucasus Stability Pact modelled on that of the Balkans. Like Canada and other states, the newly independent states of the South Caucasus and Central Asia can see from the experience of Turkey that integration into Europe through key multilateral organizations such as the Council of Europe carries significant responsibilities as well as rights; true integration depends on values at least as much as geography.

II. IMPLEMENTING CANADIAN POLICY

            As noted above, faced with no pressing need to build and maintain a Canadian presence and a lack of resources, Canada’s presence in and policy toward the South Caucasus and Central Asia has been undeveloped. An important result of this is a lack of adequate Canadian diplomatic representation in these regions: Canada has only one embassy in Central Asia, in Almaty, Kazakhstan, which handles relations with Kazakhstan, the Kyrgyz Republic and Tajikistan. Canada has no embassy in the South Caucasus; relations with the three states of the South Caucasus and Turkmenistan and Uzbekistan in Central Asia are handled from Ankara — Azerbaijan, Georgia and Turkmenistan — and Moscow — Armenia and Uzbekistan. Both the fact that Canada has the lowest profile in the region of any G-8 state and the lack of experienced Canadian diplomatic and other personnel on the ground there are significant impediments to achieving the Canadian foreign policy objectives noted above. Increasing Canada’s profile simply for its own sake would be a waste of money; on the other hand there must be a public demonstration of Canadian interest if Canada’s foreign policy objectives in the regions are to be achieved. If nothing else, as American expert Dr. Rob Sobhani pointed out to the Committee, the lack of Canadian presence hurts Canada’s chances of increasing economic ties with Azerbaijan and other countries in the regions:

The way it works, the Maple Leaf needs to be there. If they don’t see the Maple Leaf, it’s difficult, because when they’re negotiating with the president, the prime minister or the oil minister, his first question is to ask where the ambassador is. The response is "Sorry, Canada doesn’t have an ambassador." That immediately takes away from the bargaining position.

            Economic considerations cannot be the sole driver of Canadian policy in these regions, of course. As Sobhani pointed out to the Committee, however, high-profile contacts with foreign governments are particularly important for new states asserting their independence. In his words, "…the relationships with Canada and America and France form the bedrock of the independence of these countries. They see their assets as the only way to guarantee their independence."

            Such high-profile expressions of interests are useless without increased presence on the ground. For example, in a written summary of its conclusions after some 25 years of operation in Central Asia, SNC Lavalin suggested increasing Canadian government activity in Central Asia, including visits by officials and representatives of the Export Development Corporation (EDC), and increased work by CIDA. In the following two chapters the Committee will make specific recommendations for increasing Canadian representation and profile in these regions.

            There must also be enhanced coordination among departments. An example of the current lack of such coordination was given to the Committee by Mr. Denis Leclaire, Director of International Activities at St. Mary’s University in Halifax, one of a number of Canadian universities that have been active in capacity building in the South Caucasus and Central Asia. While Mr. Leclaire spoke positively of the potential for St. Mary’s and other Canadian universities to assist in the transformation process, he agreed with the need to increase Canadian presence in these regions and stressed the importance for universities of streamlining the issuing of visas. As he noted:

Visas to Canada, either to visit or for student authorization, are much more difficult to obtain than to the U.S. or to Europe. Even with projects funded by CIDA or other donor agencies, Canadian immigration officials mostly — and I must say in this case in Moscow — have put up some barriers, time barriers, administrative barriers…

It is interesting that at a time when we are encouraged to do work in the region by one government agency, CIDA, and are encouraged to recruit international students to Canada by DFAIT and by Industry Canada, we often end up with larger difficulties with visas when trying to encourage students to come to Canada. This is especially the case in the former CIS countries.

            The issue of student visas is an important one for the country, and in this context is also linked to the role of Honorary Consuls.

Overall, the Committee believes that there should be a new Canadian foreign policy focus on these regions with both a significant increase in resources and specific emphases as noted above and in the following two chapters.

Recommendation 1

In view of the importance to Canadian Foreign Policy of the South Caucasus and Central Asia, the Committee recommends that the Government of Canada develop, prepare, and publish a policy statement outlining a significant increase in Canadian engagement with the Countries of these regions. As noted above, such a policy must adopt a long-term perspective, and include:

an immediate significant increase in Canadian diplomatic and other personnel stationed in these regions, as well as an increase in Ottawa-based support;

a focus on educational support, including human rights education and increased Canadian scholarships for students from these regions;

a recognition of the importance of the rule of law, and specific initiatives to combat corruption;

a significant emphasis on the Organization for Security and Cooperation in Europe (OSCE) as a key means of advancing security and democratic development goals in these and other regions.

streamlined procedures for expedititing visas for students from these regions;

an increase in Canadian aid to these regions, as set out subsequently in this report;

a working visit to the regions by the Minister of Foreign Affairs, both to demonstrate increased Canadian interest in the regions and to contribute to the development of an enhanced Canadian policy.

Recommendation 2

While applicable beyond the South Caucasus and Central Asia, the Committee recommends that the Government of Canada invite a proposal from the Parliamentary Centre for the establishment of a program of training and research on the increasingly important area of "parliamentary diplomacy" and interparliamentary institutions, focussing particularly on their potential in the South Caucasus and Central Asia. The Committee also recommends that the Government of Canada support the further development of the Country Indicators for Foreign Policy (CIFP) project at Carleton University.