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Proceedings of the Standing Senate Committee on
Foreign Affairs

Issue 14 - Evidence


OTTAWA, Tuesday, October 2, 2001

The Standing Senate Committee on Foreign Affairs met this day at 7:05 p.m. to examine and report on emerging political, social, economic and security developments in Russia and Ukraine; Canada's policy and interests in the region; and other related matters.

Senator Peter A. Stollery (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, I call the meeting to order. First, I should like to introduce our witnesses who are from the Canadian International Development Agency, CIDA. The witnesses are specialists in the field of Russia and Ukraine and their expertise is consistent with our study of those two countries.

We have with us this evening Mr. Peter Daniel, Vice President of Central and Eastern Europe Branch, as well as Mr. Rick Ward, Director General, Russia, Ukraine and Nuclear Programmes Division, Central and Eastern Europe Branch.

I would ask Mr. Daniel to give us a reasonably brief presentation, followed by Mr. Ward. We will have questions following their presentations.

Senator Carney: Mr. Chairman, to save ourselves writer's cramp, will copies of these presentations be made available to us now?

The Chairman: I have not seen any copies.

Senator Carney: None were circulated, Mr. Chairman, which is why I am asking the question.

The Chairman: I have not received copies of the presentation. We have not recently operated with copies of the presentations.

Senator Corbin: Mr. Chairman, I would like to add my opinion. The people responsible for planning these meetings, and I am not talking about the witnesses, but our staff, should see that senators are provided with pertinent text. At times, it is difficult to understand what witnesses say. The translations can also make this difficult. If you have the text in front of you then, if you miss part of the testimony, you can always go back to your text and check out the precision of the statements. That is why they are so useful. I do not think providing us with the text imposes a great responsibility on anyone. I think if you ask for it, you will get it, but someone has to ask for it. I think Senator Carney is right.

The Chairman: I completely agree with you. I guess we have not asked for it. Thus, we do not have it. We will not make that mistake again. Our last meeting was a sort of colloquy, with a lot of toing and froing. We had better have copies of presentations for the next meeting.

Mr. Daniel, please proceed.

Mr. Peter Daniel, Vice President, Central and Eastern Europe Branch, Canadian International Development Agency: On the matter of copies of our presentations, I am speaking from what I call a panaché text that goes back and forth between French and English. We can make available to the committee as soon as tomorrow copies of our presentations in both official languages.

Senator Corbin: That will be useless because by then we will have our own record, in both languages.

Mr. Daniel: Mr. Chairman, it is my privilege to address the committee on behalf of Minister Minna. The minister has asked me to convey her regret that she is unable to be here in person to meet with you on this matter. She knows, of course, that you have been conducting hearings on Russia and Ukraine for several months. She is looking forward to your final report and your recommendations.

Before I go further, I know you have introduced Mr. Ward, but there are several other people from my branch who have specific responsibilities in the areas of Russia, Ukraine and the nuclear program. Behind me are Linda Ervin, the country program manager for Russia; Nicole Rivard-Royer, the country program manager for Ukraine, and Doris Jalbert, who is the senior program manager on our nuclear program. During the question period, if there are very specific questions requiring high precision and detail, I may call on some of my colleagues to answer those questions.

The committee has asked for an overview of CIDA's programs in Russia and Ukraine. In particular, you have asked us to focus on what we do and to include in our presentations our experiences and lessons that we have learned in over 10 years of programming in the region.

Before I begin, let me say a few words to set the context. As you know, from the Department of Foreign Affairs and International Trade, Canada in the World, the government's foreign policy statement, guides Canada's activities beyond our own borders. It clearly states that the Department of Foreign Affairs and International Trade has overall responsibility for foreign policy.

Working within the framework of this policy, CIDA is responsible for Canada's official development assistance. CIDA's mandate is to support sustainable development in developing countries in order to reduce poverty and to contribute to a more secure, equitable and prosperous world.

With this distinction made, let me quickly situate my branch within CIDA. Although poverty reduction is the overall focus of CIDA, the raison d'être for the Central and Eastern European program has been to promote global security and stability. In this fiscal year, we have allocated $47 million to support those goals through the Russia, Ukraine and nuclear safety programs.

Compared to other donors, Canada's budget is pretty modest. According to figures received from the OECD in 1999, which is the latest full year that we have numbers for, foreign assistance received by Russia and Ukraine totalled some $16 billion. Canada's annual contribution of approximately $50 million represents approximately one third of 1 per cent of this number.

Despite our relatively modest budgets, however, our partners have told us that our programming has been well received and that it is of high quality. However, we recognize that we cannot sustain our program with projects in many diverse sectors. We cannot be all things to all people. That is why we have started the process of concentrating our efforts in fewer sectors. We also need to increase coordination of our work more closely with other international donors concerning the rest of that $15 billion dollars that goes into those countries.

For all their differences, Russia and Ukraine share similar challenges. Before I talk about our current strategies for each country, I would like to review very briefly the evolution of our work in Russia and Ukraine.

Ten years ago, Canada set up a task force within DFAIT to support technical cooperation programs with Russian and Ukraine. These programs were transferred to CIDA during the year 1995. To date, in Russia, Canada has committed over $130 million to more than 250 technical cooperation projects. For the current fiscal year, our bilateral budget is $22 million, which supports about 50 active projects.

We also provide assistance through several regional programs. These are programs that cover a number of countries in the Central and Eastern European branch, not just Russia and Ukraine.

In Ukraine, CIDA has committed $151 million to 189 projects. Ukraine's bilateral budget for the current year is $19 million, and it is funding 40 ongoing projects.

In both countries, we examine the proposal through the filters of reform and the future. The process of reform is understood to mean for us the transition from a command economy to a market economy; the development of democratic political institutions; and the development of a strong civil society. Our programs in Russia and Ukraine are a reminder that sustainable development is a long-term process full of unexpected twists and turns.

In the first years of the two programs, the main goal was to show concrete support for the reform process and to ensure a quick transition period. The government also wanted to open doors for Canadian firms to the new market economy. To that end, we generally responded to proposals from Canadian organizations that had already established relationships with their counterparts. We also sought to leverage Canada's modest budgets for Russia and Ukraine at three levels: with local in-country partners, with our Canadian partners, and with the host governments. More than just making our money go further, this helps to build partnerships between our implementing and recipient organizations and ensures commitment over the long term.

Our programs largely contribute to programs designed and implemented by Canadian NGOs, institutions and other government departments or the private sector. We require all partners, both the Canadian and the recipient partners, including host governments, to make significant financial contributions to these projects; in other words, leverage.

Like other donors and the countries themselves, we discovered by the mid-1990s that the reform process was going to be anything but quick. We also found that many partnerships lacked substance, commitment and local ownership, and without CIDA's ongoing support some were simply not sustainable and they consequently died.

In both Russia and Ukraine the 1997 strategies, which tried to cover all areas of activity leading to progress and reform, gave rise to projects operating in nearly a dozen different areas. In retrospect, we now recognize that we were stretched too thin. Our response has been to see to the development of a more focused strategy for both Russia and Ukraine.

[Translation]

I would like now to talk about the future of our programming in Russia. Of all the partner countries of CIDA, Russia is the only one which can have a real impact on global security and stability. In spite of the fact that the Cold War is over, Russia still has a tremendous military capability, including the nuclear arsenal of a superpower. It is obvious that a stable and peaceful Russia is a must to achieve global security.

As a member of the world community, it is clear that the main interest of Canada in Russia is to keep that country in the camp of democracy. Furthermore, since we are the neighbors of Russia, since our territory is also very big and since our economy is also based on the development of natural resources, Canada is in an ideal position to help Russia.

Last year, CIDA examined the status of reforms in Russia, and particularly over the period following the financial crisis of 1998. We have examined our achievements to date and had consultations with the stakeholders who have an interest in our work. More than 100 of our Russian partners took part in the consultations we held in Moscow.

The new strategic framework which will come out of these consultations will propose to put the emphasis on the strengthening of two essential elements: governance and civil society. Moreover, three other cross-linked themes will be covered by the program: the environment, gender equality and Northern Russia.

We are already supporting several projects which are reflective of this new direction. I would like to give you a few examples. Let me begin with governance.

One of the objectives of CIDA, shared also by the other donors in Russia, is to help put in place the conditions under which a market economy could develop to create this enabling environment and reflect our visions in areas such as federalism, corporate governance, the restructuring of the public sector and Russia integration in the world economic system.

The Russian federation is made of 89 entities grouped in seven federal districts. The development of federalism, particularly of some mechanisms to make the federation work, is one of the priorities of President Putin. Federalism is one area where Canadian expertise is very appreciated by the Russians.

Through a project of Consortium for Economic Policy and Research Advice, known under the acronym CEPRA and administered by the AUCC, Canada is able to provide a high quality expertise of federalism to senior policy makers in the Russian government.

As far as law reform is concerned, through CIDA's funding, the Law Faculty of McGill University, in cooperation with the Russian Centre of Research on Private Law, is helping reform the Civil Code in Russia. The project benefits from the unique advantage of our tradition of civil law and common law.

The second major theme of CIDA's new strategic framework is the promotion of civil society. In this case, our involvement is also very diversified. The project entitled Women and Labor Market Reform is a good example. It will assist senior Russian policy makers in developing and implementing effective policies to increase the efficiency of the labor market at the national and regional levels.

The objective of this project is also to enhance women's competitiveness within this market. Through this project, a section on gender equality in the labor market has been included in the social development strategy of the Russian government.

Carleton University and Human Resources Development Canada work in partnership on this project with the Russian Academy of Science, the Russian Ministry of Labor and the Committee for Social Protection of the federal Duma.

Another example of initiative is based on the theme of the development of the civil society. It is a good thing to mention our work within the aboriginal peoples of Russia. They are in a particularly vulnerable position. In many regards, these peoples in their remote Northern communities have essentially been abandoned by the State. Thanks to CIDA's support, the Association of Indigenous Peoples is working with the Inuit Circumpolar Conference of Canada to build bridges between the government and these indigenous peoples.

More specifically, the objective of the project is to establish an Aboriginal Training Centre that provides a full range of services which will give the aboriginal peoples the necessary tools to ensure their economic development and the development of a shared regional management in these areas.

[English]

Let me now turn to Ukraine. Canada views a politically economic and stable Ukraine tied into the euro-Atlantic structure as key to a secure Europe.

There are other reasons to explain Canada's longstanding interest in Ukraine. More than 100 years of immigration to Canada have provided us with strong cultural, academic and institutional capacities for understanding developments in Ukraine. We have drawn on this special relationship as well as on input from our Ukrainian partners to update our country program strategy. As was the case for Russia, CIDA's strategy in Ukraine will be more focused on governance and civil society.

Let me give you two examples of ongoing work that will capture the spirit of the new strategy. I will start with the support for governance.

The development of effective governance in Ukraine touches on all aspects of both public and private sector activity. It includes such issues as combating corruption, public administration and judiciary reform, and creating a enabling environment for the emergence of a market economy. We already have focused much of our attention on these issues.

With support from CIDA, the University of Alberta, together with the governments of Alberta, Saskatchewan, Manitoba and Ontario, and the speaker's office of the House of Commons, is strengthening legislative and intergovernmental cooperation in the priority areas of democratic and economic reform. To date, the project has completed draft legislation in areas such as taxation, culture and media, and credit.

Another successful initiative in Ukraine is the policy advice for reform program administered by the Canadian Bureau for International Education. This is a fast acting flexible mechanism that allows us to respond very quickly to Ukrainian requests for assistance in clearing key policy bottlenecks at all levels of government. We have had nearly 80 separate initiatives funded through this program including the ongoing placement of a Canadian as a senior advisor to Ukraine's Prime Minister.

A further example of the widespread impact of Canada's program in Ukraine can be seen in the science and technology centre in Ukraine. Canada, together with the United States and the European Union, were founding members of the centre whose mission is to support research and development activities for peaceful application by Ukrainian scientists and engineers that were formally involved with the development of weapons of mass destruction.

To date nearly 8,000 scientists have received assistance from the centre. The centre's executive director is a Canadian from the University of Manitoba.

Our second major area of focus is civil society. Citizen participation in Ukraine is very fragile. Tens of thousands of non-governmental organizations exist, but only on paper. In practice, few of them are really well organized. Many have trouble raising funds because of restrictive legislation, cumbersome registration requirements and high taxes. Through our programs, CIDA will focus on areas that increase the capacity of NGOs to undertake advocacy, increase government accountability, and encourage individuals to become full and active members of society. To that end, we will pay special attention to Ukrainian youth. They are among the most powerful voices for reform.

We have also found that a very effective way to respond to needs in civil society is via local initiatives funds. Each of the Ukraine and Russia programs have two funds, one focussing on gender equality and one focussing on civil society development more generally. We have learned that in certain circumstances, small contributions ranging from less than $1,000 to a maximum of maybe $50,000, and that is in very few cases, can deliver results that are much more profound, widespread, and touch many more lives than would have been expected from such modest contributions.

[Translation]

I would like now to give you a brief overview of our nuclear safety program which has also been transferred from the Department of External Affairs to CIDA in 1995.

Following the falling-apart of the Soviet regime, the G-7 countries committed themselves to cooperate with the countries of the area which had soviet-designed nuclear power plants.

The main objectives of this program were to enhance the security of the old nuclear power plants until they are closed down, and to assist the atomic energy control agencies so as to enable them to inspect and to issue operation permits according to international nuclear security standards.

Since 1992, Canada has committed $117 million to this program. About 40 per cent of the projects were undertaken by Canadian experts working for The Atomic Energy of Canada Ltd., Canatom or the Canadian Nuclear Safety Commission. The last project was completed last week. It was a training program for nuclear energy control officers in Russia, in Ukraine and in Lithuania.

The rest of the program is channelled through the European Bank for Reconstruction and Development to multilateral projects we fund with other donors. Ukraine is by far the country which benefits the most of our program because of the particular support that G-7 countries and the European Community committed themselves to give them to help them close down Chernobyl. The most impressive project were are contributing to is the one concerning the stabilization of the shelter containing reactor number 4 since the 1986 incident. Canada promised to give $50 million for this project, which should be completed by 2008.

The support of the international community to a number of projects, particularly the shelter project, evaluated at $1 billion, has been strategic to convince Ukraine to close down definitely Chernobyl last December. This kind of cooperation is more difficult in Russia. Although the security of the nuclear power plants of the first generation has been improved, there is still much to be done to help establish in that country a security mentality as far as the operations and control of the nuclear industry are concerned.

It is clear that our resources are not unlimited. Our annual budget of $6 million is almost fully committed up to the year 2006 for the shelter project which I mentioned. The available balance will be used to support projects aimed at enhancing the security of nuclear power plants and strengthening the security authorities in the area, more particularly in Russia and in Ukraine.

In conclusion, let me sum up the lessons we have learned in Russia and in Ukraine over the last ten years of our programming.

First of all, to have a sustainable impact, we should focus more our programming. We will have to work in a limited number of areas and orchestrate our activities with those of other donors.

Secondly, the best way to stimulate investment from the Canadian private sector, is to help create an environment enabling a market economy to take root. Concretely, this means implementing projects reinforcing the financial, legal and judicial systems. If such changes are not made, if no commitment or progress is made on the political, legislative or normative levels in a specific area, agriculture for example, it would make no sense to put in place any model farm project. It would not be sustainable.

Thirdly, we should balance our program between the proactive and directed projects and those which meet the needs expressed by our Russian and Ukrainian partners. In any event, the same projects should actively support the reform process and create a synergy both in our programming and in the programming of other donors.

Fourthly, the Canadians of Ukrainian origin are a valuable resource for CIDA. Their linguistic capabilities, their relationships and their availability are a real asset for us. Over the next few months and years, we will continue to benefit from their expertise and their vision.

Finally, the transition process will take more time than expected. Unlike countries such as Poland or Hungary which are familiar with a market economy and a democratic system, Russia and Ukraine are starting almost from scratch.

We have seen real progress. Given our limited resources, implementing a project here and there will not make a big difference. We should first focus our efforts on the implementation of an enabling environment for reform. This kind of approach requires some patience and a long-term commitment to generate a sustainable reform in the way the government operates and in the development of a market economy and of an active civil society which is a full participant in the democratic process.

[English]

That concludes my presentation. My team and I will be pleased to answer questions from the honourable senators.

Senator Graham: Mr. Daniel, you said, if I heard you correctly, that Russia has the nuclear arsenal of a superpower. How many armed warheads do they have? We have heard speculation there may be 3,000 nuclear warheads in that arsenal. Is there any evidence that Russia is selling to so-called rogue states?

We hear speculation sometimes that the biggest danger of a nuclear attack is not from Russia but perhaps from North Korea. Some say that North Korea may have six or ten warheads that could reach North America. Would you care to comment on those observations?

Mr. Daniel: Senator, I do not want to skate here, but arms control is the competence of the Department of Foreign Affairs and International Trade. I can tell you that the Russian nuclear arsenal is above 3,500 warheads. I have this information from my former incarnation, which was in my work a year ago at NATO headquarters in Brussels. There are different kinds of warheads. I do not know if you want to get into a technical discussion, but, nevertheless, each one can cause a lot of damage.

On the matter of selling to rogue states, which is an arms-control issue, I must defer to my colleagues at the Department of Foreign Affairs and International Trade. That is a policy issue that is totally in their sphere of competence.

Senator Graham: Fair enough. I will skip to a couple of other subjects, if I may. You talked about supporting democratic political institutions. Can you give an illustration of how you do that?

Mr. Daniel: I mentioned the federalism project in my presentation. That is a major undertaking being followed very closely right now by the President of Russia and the presidential administration.

We are being continuously asked to provide this assistance. It goes to the very heart of the functioning of the state. The 89 Russian sub-national entities that are grouped in seven federal districts are not all as homogenous as our provinces. They do not all have the same status. There are autonomous republics, regions, all sorts of different statuses in those 89 entities, and they have different legislative and taxing authorities, some of them that were never mandated by any constitution. There was merely a vacuum that was legislated and regulated in certain areas. Now there is an attempt to ensure that legislation, in the sub-national units, conforms to the Russian national constitution. They are also attempting to ensure that there is no inconsistency or sub-national legislation that opposes federal legislation. There is an attempt to straighten out the network of crosscutting jurisdictions that exist in a huge country spanning 11 time zones. It is a country with people in Asiatic Russia going to bed when the people in Moscow are getting up. The attempt right now is to try to bring some order to all that disorder so that people who are looking at investing or operating in Russia have some idea what the rules are. Investors need to be able to define the system and the relationship between the various levels of government.

The municipal level is another area we will probably have to look at in the future. This area has been ignored until now, except for Moscow, St. Petersburg, the more popular, well-known centres. In those municipalities there has been an attempt to establish a proper civic administration and a public service that provides services in the city. In the future, once the federation work is well underway, we will have to look at the next level of government because there are some serious problems. These problems include municipalities not operating in a proper way and inconsistencies between the municipal, sub-national and the federal levels. We will have to look at all three levels. Right now we have been asked and are actively working. I would say it is a flagship effort on the part of Canada, which gives us high visibility, and is important in trying to define, the way that Russia will have its federation function. For example, the mechanisms to transfer funds between the federal and the sub-national levels, the different taxing powers, and so on are the kind of work that we are doing. When Minister Dion was in Moscow this summer we were asked to add a component to our federalism project. They were interested in learning how to operate an expenditure management system on the Canadian model.

It is an institutional approach trying to get the institutions to work better so that the enabling environment for investment and a market economy for a pluralistic democracy will improve.

Senator Graham: How open are they to democratic education? Some witnesses have told us that the Mafia has infiltrated just about every level of government in Russia.

Mr. Daniel: I would be less than candid if I were not to tell you that corruption is a serious problem in Russia. Transparency International, which is unofficially recognized as the tracker of levels of corruption, rates Russia quite high. However, the situation is improving. As we and other donors encourage the Russians to make legislative, judicial and systemic changes, and as the government becomes more open in its adoption of information and communications technology, these things will tend to provide greater transparency in the operations of government. As civil society strengthens, people will be out there to start holding the government to account. It will be a long process, but looking back at Russia in 1997, 1999, and comparing it to 2001, we see that there has been progress. It is improving. Progress is measured in small steps, but there is progress and Russia is heading in the direction of greater transparency and trying to bring some of this activity under control.

Senator Corbin: What are the mechanisms, and who uses them, to determine which programs are being put in place? Are these ministerial directives? Are they simply based on the requests from the host country? How do you come to a final determination of what is best for them?

Mr. Daniel: The minister approves the program strategy and country program framework.

Senator Corbin: Who develops the strategy?

Mr. Daniel: We do, in the branch, and we consult in developing that strategy. We are currently having consultations on the Russia program. We consulted in Moscow and in various other parts of Russia. There were over 100 different Russian groups that came to those consultations to comment on a draft of what we were intending to do. You have to put something down so that people can react to it. They were reacting to a statement that we were putting as a point of departure for discussion. We are also having consultations in various part of Canada. We have consultations within the Government of Canada and with other government departments that have an interest in Russia. We have consultations with non-governmental organizations, institutions, and the private sector in Canada on that strategy before it is finalized and sent forward to the minister for approval.

The second part of the question was how does an individual project get picked. There are two different kinds of projects. The first kind of project is a major project. This type of project would have to fit under the country program framework. In many instances, the Russians themselves have requested our assistance in beginning this type of a project. There is a demand for federalism. We did not just volunteer. We were not only asked, but were pressed to give this assistance and develop the project on that basis.

In other cases, a Canadian entity, NGO, university, or private sector entity, might have good contacts and relations with an NGO, government ministry, an institute or an academy of science in Russia, and the two of them develop a project and then come to us soliciting CIDA's intervention.

In cases where we make a contribution, the partners are also making a contribution. We are not operating a 100 per cent financing window. There is a contribution on the part of partners that come to us with their projects seeking a contribution from CIDA. I mentioned the word leverage. We lever our program money from the Canadian partners, the host government, or the NGOs in the host country. The question you are asking is specific to Russia, and this does occur in our program.

The second category of program is what I mentioned in the presentation, the local initiatives, and the different kinds of funds. There is a Canada Fund, which is usually operated by the embassy and responds to demands from local institutions and organizations. These funds are distributed after a judgment is made on the spot. These are very small amounts. It could be even a few hundred dollars in some cases. Those are done at the local level, with decisions made in Moscow, or Kiev in the case of Ukraine, and are operated by the embassy. Then there are the other funds.

Again, these are rather modest amounts of money, usually responding to a request either from an institution or organization in country, or a partnership that exists between a Canadian institution and one in country. These funds are distributed where some small initiative is suggested and a judgment is made that by doing so would serve a useful purpose and be a positive contribution. Not in all cases would these funds need to fit under the country program framework.

We must have some degree of flexibility to respond in some areas. One cannot predict everything and put a strategy together when one starts out. If one is doctrinaire about the matter, that can result in an inability to respond to opportunities that do arise or changes that occur in the path of reform in a given area. Where there may not be an opportunity today, there may be one in a month or six weeks or a year from now. Where there is a closed door now, it may open in the future. Therefore, we must be able to respond in some way to these situations if there are partnerships that come forward with suggestions for these projects.

Senator Corbin: I have been listening to you attentively and, as one who is familiar with good public relations presentations, I thought you painted quite an impressive picture of how things should ideally work. Tell us a bit about the failures. Surely these programs are not all working on ball bearings.

Mr. Daniel: I would be less than candid if I tried to refute that.

Senator Corbin: The committee would like to know that.

Mr. Daniel: That is correct. There are failures and there are failures. Some I would categorize more as disappointments or, perhaps poor judgment, although a good project in and of itself. I mentioned in the presentation that if you have a project that is a sort of orphan child, a model farm or a demonstration project, quite often when our funding ends the thing starts to disappear because it cannot be sustained locally. We have had a number of these.

I have been with the program for 14 months and I have not had to shut any projects down in the time that I have been with CIDA. However, my colleagues who have more institutional memory than I have can give you a few examples. However, sustainability is usually what gets us. We have made some judgments that perhaps in retrospect should not have been made, and we ended up with things that were not sustainable.

Mr. Rick Ward, Director General, Russia, Ukraine and Nuclear Programmes Division, Central and Eastern Europe Branch, Canadian International Development Agency: I will mention one. That area is in the energy sector where early in the program there were many proposals from the Canadian private sector wanting to become involved in this region. There was tremendous opportunity. Unfortunately, our experience has been that not many of them led to downstream investments or projects. That is why Mr. Daniel pointed out that it is better for us to invest in the enabling environment if you improve the legal, legislative framework, and which companies can then have recourse should they have a problem. The adage is that if you build it, they will come.

Those early interventions, however, where we directly supported or subsidized Canadian business interests, were not terribly successful for the reason that Mr. Daniel stated. They are not sustainable. In many cases they found out it was a difficult investment environment and is still a difficult investment environment. You will have read the papers and seen examples where Canadian companies are still getting burned.

Senator Andreychuk: One of the things I am concerned with is the fact that you have been mapping out what your division will do. Is this in line with the minister's new reassessment of CIDA that I understand is ongoing? Has that been completed and, therefore, are these the results for Russia and Ukraine?

Mr. Daniel: First, I should be clear. We have not yet finalized the country program framework for Ukraine or Russia. We are further advanced on Ukraine than we are on Russia. On Ukraine we have had much consultation with the Ukrainian community in Canada, in Ukraine, with the embassy and various Ukrainian authorities, and we are fairly well advanced on the Ukrainian strategy.

On Russia, we are probably a month or so behind the Ukrainian strategy. As I mentioned at the beginning, the prism we look through is a bit different from that of the rest of CIDA. The poverty reduction prism is not applicable in Central and Eastern Europe. It is not the way the program was set up, at the outset, when it began in the Department of Foreign Affairs and International Trade. If you look at the CIDA documents, at our objectives, they are not quite the same as those of the Africa branch, the Americas branch, the Asia branch and so on.

Global security and stability, pluralistic democracy, the market economy, the social infrastructure and nuclear safety are the objectives that are ascribed to Central and Eastern Europe, and we operate through that prism. You refer to the effectiveness document that the minister has put out for consultations. Those consultations are not yet complete.

As you know, they had a series across the country and they are now looking at the reaction from the partners out there and are doing some redrafting of the document. However, there are sections that apply to Central and Eastern Europe, and you will see add-ons in sentences in order to include the difference of Central and Eastern Europe with respect to the rest of CIDA. There are a number of sentences scattered throughout the various sections of that document that make the distinction and cover the objectives, the mandate, and the prism through which we operate in Central and Eastern Europe branch. It is not quite the same as the other branches in CIDA.

The other example is we are CIDA in one branch. We have a multilateral program. We have what they call CIDA Inc. in the rest of CIDA. We have Renaissance Eastern Europe, which is our program to encourage investment and partnerships in the commercial area between our region and the Canadian private sector. We have a partnership program. Therefore, we have all the elements that are separated out in the rest of CIDA within one branch. That is the way the package was delivered from the Department of Foreign Affairs and International Trade when we inherited it at CIDA in 1995. It was more or less left in the same form as the transfer with the budget. There have been, as I say, the adjustments to program framework, and there have been some adjustments to the operating procedures of CIDA and so on, but with respect to the overall umbrella under which we work, it is slightly different from the other branches in CIDA.

Senator Andreychuk: We should probably have that effectiveness document.

The Chairman: Which document is that?

Senator Andreychuk: The effectiveness document on which the minister is working. I understood that it was to be another look at the effectiveness of the programming, where the adjustments should be, and that is the document that has the most value and quality to it for this division, as well as for others.

When the programs for Central and Eastern Europe were set up, we wanted to test and try a completely different philosophy because of the complete uniqueness of Central and Eastern Europe. It was not part of the developing world. They had an education base, and they had certain experiences. It was therefore not a development strategy but a reformation strategy. We could not use the words development or aid; we had to say reform and words similar to that. In 1995, it was moved over to CIDA.

What are you doing in that area? Are you into a development mode? You are moving closer and closer to CIDA's concepts because the problems are so massive. We understated them in Russia and Ukraine. Have you moved towards the development philosophy, and if so, is that desirable? If not, have you been able to maintain sufficient identity to do the things that this particular region needs?

Mr. Daniel: Three countries have been graduated out of our program. They are Poland, Hungary and the Czech Republic, and we have a few others that are slated to graduate out in 2005. They are Estonia, Latvia, Lithuania and Slovakia. That is the plan at the moment. There is no date set for the others, I might add. I did mention that this is a long-term proposition and we must make a commitment for the long term. The program does not begin to make any sense unless we are thinking about the long term.

We never say development. Our countries would be insulted if we did. We talk about technical assistance and cooperation. Those are the words that we use. Nevertheless, what we do is perfectly consistent with what CIDA does in some of the other regions of the world. The only problem that they have is that the base from which they are working is not as developed as in the region that we deal with. The education system in Africa, for instance, cannot be compared to the education system in Romania or Ukraine or even Georgia. There are these differences. The argument can be made that we are indeed You could argue that we are doing development, only our countries would never allow us to use that word. They would be insulted. We are doing development of the enabling environment. That is what we are trying to concentrate on. We have learned that if you cannot have the right enabling environment, there is no sense working downstream if the upstream environment is not going in the right direction. Sooner or later, your project downstream, your model farm or your health project, for instance, will not succeed. Consequently, when it comes to an end, it will end. That is one of the big lessons we have learned out of the 10 years of activity that we have had in this region.

That statement probably applies the further east you go. It is more and more difficult. The enabling environment, in central Asia, makes it extremely difficult to do the kinds of things that we want to do. It is a difficult environment to try to operate in changing the country toward the rule of law. We could not attempt some of the judicial projects we have done in Ukraine in Uzbekistan or Kazakhstan and some of these countries. The environment is not ready for that yet. We are trying to push it in that direction, but it is not there yet, and the government would not let us. They are not asking us, they do not want us to, and they would aggressively discourage us from that kind of activity on their territory.

To get back to the core point, there is nothing that we are doing in the development of the country program frameworks for Russia and Ukraine that is not perfectly consistent with the effectiveness document. What is outlined there and what we are doing is covered in the effectiveness document. Actually, it is underlined, because they have to write some additional words in the sentence to take account of the differences between CEE, Central Eastern Europe, and the other bilateral and multilateral branches in CIDA.

You may be also referring to the minister's social development priorities. Those apply to ODA. Many of our countries are not "ODAable." Russia and Ukraine are not "ODAable." If you look in the document at the targets set by the minister, you will note that Central and Eastern Europe do not count in those targets. It does not count from the baseline, and it does not count in the targets over the five years of the social development agenda. However, that does not mean that we can ignore that. Another lesson that we have learned in the 10 years that we have been working in the region is that it is fine to try to develop a democratic, pluralistic system, and to encourage movement toward a market economy, but if you are not trying to encourage improvement in the social infrastructure at the same time, you run into trouble.

That was one of the main failures of the early part of the 1990s. Everyone thought it was going to be a quick fix, and everyone tried to get investment pumped in there and thought that that would do everything. At the same time as that was happening or being encouraged, the pension system was falling apart, unemployment insurance as we know it was non-existent, and the other social infrastructure, such as the health system, was falling apart.

The Chairman: Mr. Daniel, would you like to tell us what the ODA is, for the record?

Mr. Daniel: Official Development Assistance as defined by the OECD.

Senator Andreychuk: I am concerned about tracking some of the figures. I would certainly like to know how much money has been put into Central and Eastern Europe over the last five years. I would like these figures broken down by the countries, and then broken down by how much has actually gone into governance and civil society. I would like these figures as opposed to the energy and the nuclear portions. You have given us figures. I think you said $151 million into Russia and $19 million into Ukraine. I have nothing to compare those figures with, and I do not see any tracking. Is there some way we can see how the money breaks down in major categories and how it breaks down in each of the countries in your division? I know you cannot get that all tonight, but if you could put it together, I would appreciate it.

Senator Carney: Mr. Daniel, I am constrained by the fact that we just got this list of material so we really have not had a chance to examine these projects. Also, I have no personal knowledge of the area that you are talking about. However, I do have a good knowledge of CIDA's mandate, and I will follow up on Senator Andreychuk's discussion of focus, and the fact that the focus of CIDA is different with these countries than with the ODA in other countries.

I am assuming that the mandate of CIDA remains the same. I understand that the mandate must be responsive to the client country's needs, and that it does not impose itself by saying, for instance, that it has a university program that it will impose on the client. Further, I understand the underlying mandate to be that the client country identifies the need and Canada strives to meet it. I am assuming that is the case.

Why would the client countries, particularly Russia, ask for help in a manner that I find on the surface to be very interventionist, almost very imperialistic? Why would a country ask for advocacy training, which would be called rabble-rousing in some parts of society? Why would this advanced and sophisticated civilization want to adopt our view of aboriginal people? These are just examples. I do not expect you to specifically deal with them.

We seem to assume in these cases that they had no civil society, that they had no justice system, that they had no laws and that they always had corruption. The simple question is, why is the client country asking for the imposition of what is a foreign culture in these areas? I understand the investors' need for them, but why would they ask for really a foreign infrastructure of civil society and processes?

Concurrent with that question, do you ever run into any resentment, opposition or "takeoff" attitudes? You have identified that you have gone beyond technical assistance. You have the beef and forage development project, the land privatization and the farm organization, which are technical support systems. However, you have gone into a different area here. Simply, why would they ask for it, and do they resent it?

Mr. Daniel: On the governance side, we respond to the requests of the government. One of the reasons that we have been successful and why we are asked quite often is that Canadians have become known for not imposing their views and their ways of doing things.

Senator Carney: Historically, yes.

Mr. Daniel: We have operated that way and have been quite successful because of that. We are asked, because of those reasons. We have an approach where our people go in and say: This is the way we do it in Canada. You do not necessarily have to do it this way. There are many other ways. We have examined other ways. Here are the mistakes we made. Here are the things we considered. It is a more neutral and objective approach to technical assistance, particularly policy-making and legislation where it is quite sensitive when you are talking about another sovereign state.

They appreciate that Canadians have this approach and our experience over quite a number of years now has been that our approach is indeed well received. Often, they find us less threatening and so our technical assistance advice is well taken because of that reputation that we have earned through the many people who have gone there and done the projects.

You asked the question about civil society: Why would the Russians want us to go in there and train the rabble-rousers, as you put it. President Putin, in a recent meeting with the leaders of a number of groups from civil society and NGOs from various areas suggested that the government begin a dialogue with the citizens. Perhaps at this point it is institutionalized in the way that he is going about it, but I think President Putin recognizes that collecting citizen input and opinions of people out there in an organized and civilized way is the way that many countries around the world have been operating for many years. He sees that those countries are thriving and operating well.

I think Russia has a deep desire, as does Ukraine, to join the Euro-Atlantic family of countries. These are the countries of the democratic and developed world. This is part of the way that the Russians and Ukrainians feel that their systems should develop. They are at an early stage in their development. Although I do not think they are contemplating that we will be training rabble-rousers, they recognize that civil society has a role to play. They are not yet sure how to define that role, but they are moving gingerly forward in recognizing that dialogue must develop and that those groups must be organized, educated and acquire a sense of responsibility in carrying out the dialogue.

Senator Carney: We could maybe learn from them, too, I suppose, once you evaluate our progress.

In view of the limited budget that Canada spends in this area, and in terms of the goal of stability and security, why would we not be better off in spending all the money on things such as nuclear safety and Chernobyl, rather than spreading it into some these more culturally-driven areas? In terms of our security and stability, I would rather spend our money on nuclear safety in Russia than on gender funds for Ukraine.

Mr. Daniel: I cannot make that choice, because the two are pretty far removed.

Senator Carney: CIDA has always operated in Canada's self-interest. I am being pragmatic.

I have nothing against gender funding. I am simply saying that, in our self-interest, and given the fact that the goals of security and stability, including ours, and given the limited budget, why are we not spending in areas like Chernobyl or nuclear safety, where maybe the amount of money we have available could make a difference?

Mr. Daniel: First of all, Russia would be a much more stable and secure country if it were a pluralistic democracy with a full market economy and transparent legal system. If Russia were operating under the rules that we know and operating under, and being a full partner in all the western institutions, that would make them a much more responsible world citizen. That they have these weapons, although the possession of these things is always a constant danger, the level of angst would probably be considerably reduced. Were they to have that image of being another big European country operating more or less the way we do under the types of rules that we operate under there would be less concern about their weapons.

Even if we put all our money into nuclear safety, we would still only be 5 per cent of the total amount that is being spent at the moment. That is just the ongoing budget. This is a G-7 effort. These are not decisions that we make within CIDA. These decisions are made in the G-7, G-8 fora. We are assessed a share. The share is somewhere in the vicinity of 2 per cent, 3 per cent, or 4 per cent, depending on what it is, it varies, and we pay that share. These programs are decided in a multilateral forum and the evolution of the program is actually being discussed over the next few years. There will be other efforts made in the future, that we will be assessed contributions, and we will have to make our cheques out in order to pay those bills.

Senator Carney: I am not in a position to challenge your assumptions, but it is a very helpful discussion.

[Translation]

Senator Setlakwe: You talked about an enabling environment for reform and the reform of the legal system is of particular interest to me.

You mentioned McGill University's contribution. I know that the Commissioner for Judicial Affairs made several trips in Eastern countries. Has it been done independently or in cooperation with CIDA? Is it funded separately?

[English]

Mr. Ward: That is right. We have a number other legal and judicial type legislative projects both in Russia and Ukraine, so this has been an area of heavy involvement. I do not know whether we supported that specific initiative.

Mr. Daniel: We did not finance the travelling of the judges. We do not finance the judges. As you know, that does not happen. They have a system.

Senator Setlakwe: Do you have any appreciation of the success, or lack thereof, that we have had in training judges in the Ukraine or Russia, or helping them out?

Mr. Ward: I think we have had quite good success. There is a long way to go in many of these projects. I was told during my last visit that, as with many projects, one has to make a distinction between the younger and older generations. The older generation is quite set in its ways, so you have to go right into the education system and get new people who are being trained in the judicial system. As they come out of the system they will be able to function in the new environment.

However, I have been told that the assistance we have been giving is very well received and much appreciated. One of my colleagues has just mentioned that we have a project in Russia with the civil code reform, with McGill, which we have been supporting.

Senator Setlakwe: If you are going have a civil society that functions properly, you need a sound judicial system.

[Translation]

Mr. Daniel: There is also a project in Ukraine where, in cooperation with the Chambre des notaires du Québec, we provided some technical assistance and assisted in the training of a chamber of notaries. The people who were in training organized the Chamber of notaries and developed the profession.

Senator Setlakwe: Did the profession of notary already exist?

Mr. Daniel: Yes, it already existed but the Civil code has changed. it has been updated according to the standards we already know here and most importantly, there are some new areas which did not exist before. For example, there were no private properties before. Now there is a real estate market and an increase in the demand for notaries services.

[English]

The Chairman: I would remind honourable senators that Professor Solomon testified extensively on the judicial project last spring. I thought I would put on the record that we did look into this.

Senator Carney: For clarification, when you talk about the civil code, which civil code are you talking about? In Canada we have the Quebec system, the Napoleonic Code, and the British system.

Mr. Daniel: Quebec, senator.

The Chairman: Louisiana has a code.

Mr. Daniel: I refer to the Quebec Civil Code.

Senator Setlakwe: I would remind the Chair that I was not here last spring.

The Chairman: I understand. I just thought it should go on the record that we are doing our homework.

Mr. Daniel: They have a division of legal practice similar to what exists in Quebec; not quite the same but similar.

The Chairman: I have one very small question. You said at the beginning that we are a very small contributor to this aid project in Russia and Ukraine. I thought you said the amount was something less than 1 per cent.

Mr. Daniel: One third of 1 per cent of the total aid flow into Russia and Ukraine.

The Chairman: Could you tell us who the larger donors are, and who is the largest donor?

Mr. Daniel: The largest single donors are the international financial institutions and the European Community, and then the US, the Japanese, and the United Kingdom.

Are you talking about biggest donors overall or donors in Ukraine or Russia?

The Chairman: I would like the figure corresponding to the one third of 1 per cent statistic for Canada.

Mr. Daniel: The largest aid flows are from the World Bank, the European Bank for Reconstruction and Development, the EBRD, from USAID and from the European Union. The European Union is the largest single donor.

The Chairman: The Germans would be part of the European Union?

Mr. Daniel: That is right, but they also have bilateral aid programs. Each of the European Union countries also has bilateral aid programs. In addition to the contribution that they make to the pot, so to speak, of the European Union, they also do bilateral programming.

The Chairman: So the Germans would be a very large contributor?

Mr. Daniel: Yes. Their equivalent of CIDA is the GTZ.

Senator Bolduc: How is it coordinated between you, the World Bank and all the others? I was looking at the table you gave us about Ukraine. I notice that the same sectors of intervention come back from one to the other. That puzzles me a lot. For example, if the European Union is looking for transition to democracy and at the same time the United States talks about democracy and governance, and the United Kingdom says good governance, there must finally be a lot of overlapping. This is troubling me.

I worked for the World Bank in Africa. I have been there 12 times to study public finance. During my visits that extended from Cameroon to Senegal to Egypt, I saw many things that changed my mind about foreign aid programs. For instance, I saw broken down harvesters sitting idle in the field while in a nearby field I saw tractor parts that would repair the broken ones.

Of course, if you have an intellectual project that is training people, that is another matter. I can understand if you have a group and you train them on common or civil law, political regimes, et cetera.

When it comes to other more concrete projects I must tell you, that in my experience, I have not been impressed. It is not because of the well-intentioned people at CIDA or even at the USAID or anyone else. It is the fact that the programs did not seem to work very well.

Mr. Daniel: Perhaps I should preface my answer by saying we do not do any capital projects of any kind. It is purely technical assistance. Precisely the problem you mention is one of the core areas we are looking at as we develop the country program frameworks for Russia and Ukraine. In the country program framework, there is a whole section analyzing what the other donors are doing.

The first question you asked, and perhaps I should go directly to it, is in regard to donor coordination. Donor coordination runs hot and cold depending upon the country and the time.

It has been very poor in the past. It is improving in Russia and Ukraine. We have a better fix on what other people are doing now than we might have had a few years ago. We are usually aware of the international financial institutions because we are represented there. Thus, we can obtain that information.

There are the big donors. The European Union is the most difficult one in terms of sharing information but there are ways of finding it out. In some countries, they have what they call "donors forums" where they meet once a month or every six weeks to exchange information.

To answer your question differently, and more pertinently, with respect to what we are talking about tonight, in looking at the country program frameworks going forward, we very much take into account what the other donors are doing.

You mentioned governance, which is a wide field. Governance can be in the agriculture area, energy area, et cetera. We are looking at trying to ensure that the areas we go into are, first, areas where other people are not running all over the landscape. The area is not over-engaged, if you will. These are areas that the host countries are also anxious and ready to move forward on. As well, we have particular Canadian expertise to offer, and federalism is a prime example of that. There are not many other people working in this area in Russia. I would not say we have this field all to ourselves, but we are a major player in it. We are not working at cross-purposes with anyone else.

In looking at and choosing where we will make our interventions, we very much look at where the other people are occupying the terrain. There is no sense for us to work there. We should move on to where things are moving forward, where they want help and where not too many people are engaged. capability with the country.

Senator Bolduc: I have here a list of projets terminés in Russia. I see there are 204 of them. There are fairly small amounts of money associated with each. Do you think it is a good way of spreading the money, or should we specialize more in one aspect? Perhaps it is good to do that. I am not criticizing that. Perhaps it is a case of sampling things all over the place.

There are many things about management in that also, such as training and management, et cetera.

Perhaps it is fine, but what is your view about it?

Mr. Daniel: I can give you a more dramatic example from another region. In the aftermath of Kosovo, we have a big program in the Balkans. We had about 100 projects running last year in those countries in the southern Balkans. We have now reduced that to 50. It will be further reduced to somewhere in the low 20s by sometime next year. We will focus on some very well-defined areas that we will end up having some impact on if we stick with it.

Senator Bolduc: There are also the dynamics of people offering their professional services to CIDA. I suspect, that some have developed what I would call a more intimate relationship with your office.

Mr. Daniel: When I mentioned that we had 40 or 50 projects in 11 different areas, or which could be grouped under 11 different thematic areas, we are definitely going to be reducing those 11 to four or five. The number 40 will probably be reduced as well.

There is another aspect to this. Russia and Ukraine are the two major countries in our program, but we have other countries in our program. We are looking at some programming that would be across the region. Thus, we would build in efficiencies for administration, monitoring and evaluation. There are some similarities that we can spread the costs across more countries. We are increasingly looking at that in some areas. For instance, we have a WTO project where we are helping Russia accede to the WTO. We have one in Georgia, the Ukraine and Armenia as well. There is a message here. We are getting those messages and trying not to do that in the future. We will look at this as a thematic area that we could work in across the region.

Senator Bolduc: I suspect at the same time you do that, the Chinese do the same because have succeeded in convincing the Americans to get into the World Trade Organization after 15 years of negotiation. I suspect they are also closer.

Mr. Daniel: They can relate their recent experience, I guess.

Senator De Bané: I would like a clarification on one point. In the document entitled CIDA's Programming Strategy for Ukraine, you have annex A and B. Annex A lists the projects you will not fund in the Ukraine and annex B is the projects that you will fund.

On page 15, you say that you would not fund "twinning" projects. In annex B, you say that the Renaissance Eastern Europe program is one that supports the development of joint ventures. Forty-three Canadian firms have received support, et cetera.

What is the difference between twinning projects that you will not fund and joint ventures that you would fund?

Mr. Ward: With respect to twinning projects, many years ago CIDA supported projects that would twin, for example, the City of Hamilton with Moscow or various cities, and the administrations in these cities would have exchanges and talk about how to run the water supply system or the taxation structure.

The Chairman: They would not want to know how we run our water supply system.

Mr. Ward: Not in certain parts of the country, that is for sure.

That is what I think they refer to as twinning; where an institution in Russia-Ukraine is matched up with an institution in Canada. As Mr. Daniel has pointed out, many of our past projects have been based upon proposals that we receive from Canadian institutions or NGOs. They have identified the needs in discussion with their partners. In fact, they then come to us and say what their partners want. We are not actually financing a twinning arrangement. What we are supporting is a project that the partners have identified jointly to which will they contribute financing, and then we make a decision as to whether or not we will contribute to their proposal.

Senator Graham: You responded to Senator Corbin's question about the roller-bearing successes. Perhaps you could illustrate some of the failures. If I remember correctly, you mentioned model farms. I do not know if you were referring to the model farms as a failure or not.

On the list of current projects related to agriculture, you talked about livestock, the Russian rural information network, training, grain quality, standards in farm management and distance education training.

One of our interesting witnesses has been one of our colleagues, Senator Tunney, who is a dairy farmer from Ontario. You perhaps know that he goes to Russia once a year and brings with him some antibiotics and so on.

Mr. Ward: He goes to the Ukraine.

The Chairman: I think he told us he goes to both places.

Senator Graham: At any rate, one of his illustrations, I thought, was rather dramatic. He said the average dairy cow in Russia/Ukraine produces three to five pounds of milk per day. The cows on his farm produce 75 to 80 pounds of milk a day. That is the most dramatic testimony that I have heard here. Can you tell us if you have tried model farms? It seems to me that this is one of the fastest ways we can provide meaningful aid to Russia and Ukraine.

Mr. Daniel: I have nothing against model farms. One problem is that if you could make the cows produce 75 to 80 pounds of milk, there would be no trucks to haul that milk away. There is no distribution system. There is no marketing policy to sell the milk. They need the whole chain.

The Chairman: I think that is what Senator Tunney said.

Mr. Daniel: That is the problem. The basic agricultural policies are not in place. Privatization and registration of land and the ability of farmers to borrow against the land to get credit or to raise capital to improve their farms and their herds is not in place. There is no point in having one model farm if all of the other pieces are not in place.

A model farm is an example of a downstream project. We and other donors have come to conclude that the enabling environment needs at least some basic elements for growth, or that unique project will eventually not be sustainable. We had a successful model farm in Poland because, as you probably know, the enabling environment there is quite different. The market advanced at a rather rapid clip compared to countries further east. Farmers came from all over Poland and the agricultural policy was changed in order to reflect the model.

The Ukraine is just beginning a process of agricultural reform. We believe that they are serious about doing it. Ukrainians at the highest levels have often asked us for help with putting the policy infrastructure in place to allow for agricultural reform. Once that process is developed, I will be happy to look at a model farm and other projects similar to it. As long as the current environment exists, though, it would be a waste of money.

Senator Graham: It seems to me you are admitting defeat because of the other elements. You say that if a cow produces 80 pounds of milk a day, that milk could not get to market because of poor transportation facilities. That bears directly on Senator Bolduc's comments about overlapping. Is there cooperation, for instance, between CIDA and its counterpart USAID? Can the assisting countries cooperate on the different elements? I am sure you do cooperate in some areas.

As someone said earlier, there are so many worthwhile projects, but perhaps there should be some concentration with other countries and other agencies in specific sectors. The statistics related to us by Senator Tunney were so dramatic. I would not want to be stopped by the lack of transportation facilities for getting the milk to market. There must be ways of doing that.

Mr. Ward: When I was in Russia and Ukraine about a year ago, we visited a model farm. They had an amazing amount of infrastructure in terms of barns and locally-made equipment. As Senator Bolduc pointed out, much of it was broken down. The dairy operation was working fairly well with a small herd. They were basically meeting their own needs. However, they had previously produced over 30,000 pigs per year and now they were not producing any.

When asked about this, they said it was an uneconomic operation because of the high cost and the unavailability of the inputs. Pork was being imported from Canada and other countries while their own production was shut down. There are such inconsistencies within the market. In Russia such problems are being worked out as people become more familiar with the market economy and how to work within the system.

Things are happening, but we as an organization must choose how best to impact the system at any given time.

We have accepted the fact that we must concentrate more. Our resources are spread over too many projects. As Mr. Daniel said, we will reduce our spread in the next strategy.

We have here up-to-date projects lists for both Russia and Ukraine. The new Ukraine strategy is on our Web site. The new Russia strategy will out in a few months.

Senator Corbin: I wanted to address the question of rusting nuclear subs and other floating devices that are sinking in port, of all places, in a number of areas.

I expressed my concerns to a spokesperson from Foreign Affairs at the very outset of this round of studies. We were told that Chernobyl is now the focus and that the submarines can wait, regardless of whether they leak radiation or other substances. However, the subs are in common Arctic waters.

Has that dossier changed? Has Canada been approached to assist and, if so, do we have any expertise in that field? Will we wake up some morning with radiation flowing into our own Canadian Arctic waters? You smile. I do not know if you take the question seriously or not. What is the score? Perhaps you could describe it and say that is not your concern. What is the situation?

Mr. Daniel: It is very much a concern. That issue is on the agenda of the G-7-G-8. It is being dealt with now. They were heading toward some decisions. I made a reference to the ongoing work in nuclear safety that is a multilateral issue. We contribute our share when a program is decided upon. These decisions are made between the countries. There is an amount budgeted for the clean-up and we have to provide our share. We sometimes also provide our expertise.

There is more than just the submarines. There are military bases and a number of other things. All these things are being grouped in the discussions that are ongoing now in the G-7-G-8. Over the next year or two, they will be turning their attention to that with a view to putting forward a program that will deal with it.

Senator Corbin: Why is CIDA acting as banker for the G-7 in these issues? Why is some other government agency not handling this? All you do is write the cheque. The decision is made elsewhere. Why are you involved in that at all?

Mr. Daniel: The program was transferred from the Department of Foreign Affairs and International Trade and this came along with it. Also, this is judged by the government to be part of the international assistance envelope and our contribution comes from that envelope. We are committed until 2006. That is the $6 million of which I spoke in my presentation. There could be further decisions made in the multilateral fora, particularly G-7-G-8, that would result in us having to contribute another amount for a given period of time in order to deal with other clean-ups.

I might also point out that we are talking about is civilian nuclear power plants, and regulatory and safety regimes for civilian nuclear facilities. We have not yet dealt with the clean-up of bases, submarines and the kind of things that you mentioned.

The Chairman: On the agricultural issue, having just looked at Polish farming, I remind you that Polish agriculture was only nationalized in the large Prussian estates. When you cross Poland, you come across large formerly Prussian estates with very big old Russian combines working on them. Of course, the situation in Poland is totally different from that in Ukraine and Russia.

Thank you very much to our witnesses. This has been a very interesting presentation.

The committee adjourned.