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OTTAWA, Wednesday, May 18, 2016

The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study foreign relations and international trade generally (topic: the situation of Crimean Tatars in Ukraine); and to study recent political and economic developments in Argentina in the context of their potential impact on regional and global dynamics, including on Canadian policy and interests, and other related matters.

Senator A. Raynell Andreychuk (Chair) in the chair.

[Editor's Note: Some evidence was presented through a Russian interpreter.]

[English]

The Chair: Honourable senators, the Standing Senate Committee on Foreign Affairs and International Trade is authorized to examine such issues as may arise from time to time relating to foreign relations and international trade generally. Under this mandate, the committee can receive testimony on various matters of interest.

During the first part of our meeting today, the members will have an opportunity to receive an update on the situation of Crimean Tatars in Ukraine. I trust our interpretation is working and that you can hear us simultaneously in French and English and a third language to accommodate our guests.

On behalf of the committee, I would like to welcome Mr. Mustafa Dzhemilev, Member of Parliament, Parliament of Ukraine and Commissioner of the President of Ukraine for the Affairs of the Crimean Tatars; and His Excellency, the Ambassador of Ukraine to Canada, Andrii Shevchenko.

The committee has received biographies in advance, but I thought for the purposes of the record it would be important to at least highlight a few points with respect to our guest who will make a short presentation to start.

Mr. Dzhemilev is one of the most well-known members of the Crimean Tatar National Movement and has served as Chairman of the Mejlis of the Crimean Tatar people, the single supreme representative organ of the Crimean Tatars until 2013.

The Tatars, a Turkic-speaking Muslim minority group with deep roots in Crimea, have a long history of repression. During World War II, hundreds of thousands of ethnic Tatars were deported from Crimea to Central Asia by Soviet authorities, only to return in the 1980s.

Following Russia's illegal annexation of Crimea in March 2014, the Crimean Tatar community has faced increased repression at the hands of Moscow-backed authorities. In April 2014, Mr. Dzhemilev himself was banned by Russia from entering Crimea for five years. The next move of repression came when a Russian court in Crimea branded the Mejlis, the top legislative body of the Crimean Tatars, as an extremist organization and banned their activities on the peninsula in April 2016. Ten thousand Tatars are estimated to have fled Crimea since the Russian occupation two years ago.

There is more to our guest's biography, but I will leave you to read that, as it is extensive, tracing his involvement and his commitment to the Tatar movement and the people with Tatar background.

On behalf of the committee, Mr. Dzhemilev, I welcome you, with His Excellency, and I now turn the floor over to you to make opening statements. Then the senators would like to place questions. We have limited time, but I think we can finish everything appropriately. Welcome to the committee.

[Interpretation]

Mustafa Dzhemilev, Member of Parliament, Parliament of Ukraine and Commissioner of the President of Ukraine for the Affairs of the Crimean Tatars, as an individual: Distinguished chair, dear committee members, I am very grateful for this opportunity to come here and speak to you. Thank you for giving me the opportunity to talk to you about the situation of the Crimean Tatar people in Crimea following the occupation by the Russian Federation.

As you know, I am a representative of the Crimean Tatar people, which are an indigenous people of Crimea. It is the group that has been most repressed in Crimea. For example, our representative body was recently banned by the Russian Federation because it did not accept Russian occupation.

We demand that the Russian troops leave our territory and that the territorial integrity of Ukraine be restored. We demand that Crimea be reintegrated as part of Ukraine. Of course, that is why most repressions are coming against the Crimean Tatars.

I would like to remind you that Crimean Tatars, as you mentioned, were deported in 1944, and for dozens of years we fought, using non-violent methods, to come back to our homeland. Not all of our people came back. We have had many problems with the Ukrainian government as well, but we lived in a democratic society and we defended our democratic rights. Now there's been a huge slideback.

Right now the Russian Federation understands they cannot make a deal with Crimean Tatars, that they cannot make them collaborate with the regime, and that's why they're trying to push Crimean Tatars out of the territory.

Many members of our community have been arrested. Searches are going on daily. There is banned literature and searches are for weapons as well, but what is most awful is that there are abductions, something that didn't even happen during Soviet times. Of course Crimean Tatars were repressed during Soviet times. However, at least they followed some kind of procedure. There was some kind of decorum, some kind of window dressing, but right now none of that is being respected.

The situation is worsening because the Mejlis of the Crimean Tatar people was banned. The Mejlis was declared an extremist organization. This is basically declaring the entire people as extremists because the Mejlis are elected by the Crimean Tatars.

The day before yesterday, four more people were arrested. We'd like the subject of Crimea and the de-occupation of Crimea to be on the agenda of the Parliament of Canada and of the Parliaments of other countries.

There are conversations about making deals with Russia. However, I say that until the occupation is over, until the occupants leave our land, we cannot make any deals. That is why I would like to bring your attention to the following. The main issue is Russian troops leaving our country and ensuring the territorial integrity of our country.

I don't want to take up much of your time. If you have any particular questions, I will take them now. Thank you very much for your attention.

[English]

The Chair: Thank you.

Your Excellency, is there anything you wish to add?

His Excellency Andrii Shevchenko, Ambassador, Embassy of Ukraine: I would just like to thank the committee for addressing this issue. We strongly hope that your colleagues from other committees, both in the Senate and the House of Commons, will address the issue and tackle it.

I would also like to underline that what we hear from the Crimean Tatars and from the legendary leader of the Crimean Tatars, Mr. Dzhemilev, shows us a different perspective of the Crimean occupation. It's not just a security issue, a border issue or an international law issue; it's a human rights issue. In the 21st century we see how a tiny nation is again under the risk of physical extinction, and we strongly encourage all the respected members of the committee and your colleagues from the Senate and from the Canadian establishment to address this issue.

Thank you very much for the ability to speak on this.

The Chair: Thank you.

Senator Johnson: Good afternoon, gentlemen.

Mr. Dzhemilev, I truly admire your courage and your dedication to the Tatar people.

The economic blockade of Crimea by the Ukraine has prevented food and other essential goods from reaching the peninsula. Tatar leader Refat Chubarov has praised the blockade as an effective tool in raising the issue of Crimea in Ukrainian politics.

Doesn't this blockade bring further hardship to those caught in the middle of the conflict, especially the over 250,000 Tatars still living there?

[Interpretation]

Mr. Dzhemilev: Thank you for your question.

As I understand, according to the Geneva Conventions of 1945 regarding the occupied territories, the social and legal situation is the responsibility of the occupying party, not the country that has been under occupation. Right now, about 80 per cent of food, 80 per cent of water and 85 per cent of electricity comes from mainland Ukraine into Crimea.

We say that the occupants should at least behave well and take that into consideration. We say, "We are supplying all of this to you, so stop the repressions against our people.'' However, our appeals had no effect and, indeed, we began the blockade.

With regard to the energy, the electricity that, as you mentioned, touched the residents of Crimea, Crimea on its own produces about 300 megawatts of energy. The requirement for energy is about 1,200 megawatts. The electricity that Crimea produces is enough to provide for civilian needs, schools and hospitals. However, Russians are acting in their typical way. They supply electricity to light up Putin's portraits, to their military sites, and whatever is left goes to the civilians.

Even taking that into consideration, we said, "Well, let's make a new deal, a new agreement, where we provide for electricity that comes from mainland Ukraine into the autonomous republic of Crimea that is temporarily occupied by the Russian Federation. If we write that down in our agreement, we are ready to supply electricity.'' But in response, Putin said, "We will poll the residents of Crimea, and if they agree to this formulation, we will make a new agreement.''

The day after, he said that 93 per cent of Crimea's residents said they do not need an agreement that's formulated this way. They will wait for Russia to bring in their own electricity from mainland Russia to Crimea. That was the result.

With regard to the reaction of Crimea's residents, even those who are very pro-Russian don't blame Ukraine for that. They ask, "Didn't Putin know that 85 per cent of electricity comes from mainland Ukraine? Why hasn't he done something about that?'' The Crimean Tatars welcome this. They said that they make do and live in darkness if this will bring the end of the occupation closer.

Some of our Western allies put pressure on us, and we agreed to turn on one of the electrical conduits at 220 megawatts. We immediately received so many phone calls from our countrymen. They said, "Don't do this. We were just starting to enjoy the confused faces of these bandits, and you're depriving us of the pleasure, so please don't turn it back on.'' Nevertheless, we did turn the electricity on so that civilians don't suffer.

[English]

Senator Johnson: Sir, how would you characterize the contemporary relationships among ethnic Russians, Ukrainians and Tatars in Crimea? Before the conflict erupted in 2014, were the Tatars able to live and work in peace with their neighbours, or did they face discrimination?

[Interpretation]

Mr. Dzhemilev: Well, let me tell you this. About 60 per cent of Crimea is populated by ethnic Russians. About 85 per cent of those are people who were resettled into Crimea. They were brought into Crimea, or their ancestors were brought into Crimea, from the Russian Federation, from the internal oblasts. When they were resettled, they were told that traitors lived on this land, Crimean Tatars, and these people gobbled up the propaganda. They were housed in the homes of Crimean Tatars who were deported, and for many years this systematic propaganda used to justify the deportation of Crimean Tatars.

So, of course, when we started to come back to our historical homeland, we did not see any goodwill towards us.

However, years have passed, and we started to build up those relations. Of course, the pro-Russian organizations were quite active in Crimea. They were trying to sew enmity between the Slavic population and Crimean Tatars.

Right now, this situation has worsened quite a bit because Crimean Tatars have ignored the so-called referendum. Out of 180,000 Crimean Tatars who were able to vote, according to our data, about 0.5 per cent took part in voting.

The Russian propaganda states that 83 per cent of the population of Crimea took part in the referendum, but that is not true. We are confident that 32.4 per cent of the voters of Crimea voted in the referendum.

So it cannot be said that the Russian population was wholeheartedly for the occupation and that only the Crimean Tatars were against. Ukrainians and ethnic Russians were also against, and of course the Crimean Tatars were as well. That goes without saying.

Relations between Russians and Crimean Tatars are good, unless there is propaganda of hatred between our two peoples.

[English]

Senator Johnson: Thank you, sir.

Your Excellency, the West has provided billions in aid to Ukraine to stabilize its economy and build stronger institutions, and rightly so. Despite this rocky political situation and vested interests, what can you tell us about the progress being made in this respect, and when will Ukrainians start reaping the benefits of a stronger economy and freer institutions?

Mr. Shevchenko: We are in the process of modernizing the country, which is not an easy thing to do. There are always fields of progress, which include our energy sector and the creation of the national police of Ukraine. I'm in a position to again thank Canada for helping us in these very important fields.

There are other fields where progress is not as fast as all of us would like to see. When I say "all of us,'' that does not just mean Canada, the West; it also means the Ukrainian citizens, including myself and many other Ukrainian citizens in this room.

But then again, we should understand that it is extremely difficult to go ahead with this complicated process of modernizing the country when you have war on your territory and your economy is devastated by war. We are very grateful to Canada and to the West for understanding the complexity of this situation.

Senator Johnson: Thank you, Your Excellency.

Senator Cordy: Thank you very much to both of you for taking the time to be here today.

Ambassador, when you were speaking, you said that the treatment of the Crimean Tatars and the occupation of Crimea is not just a security issue but that it's also a human rights issue. I wonder if both of you could elaborate on that.

[Interpretation]

Mr. Dzhemilev: The first thing that the occupiers did was to do away with all of the democratic freedoms that existed in an independent Ukraine. All the media was controlled by the occupying party, and even several days before the referendum, the media was spewing out Russian propaganda.

The second thing they did was to order everyone to take Russian citizenship and receive Russian passports. They said that by April 17, 2014 people could decide for themselves which citizenship they want, and they could keep their Ukrainian citizenship if they so wanted.

Four offices were issuing these passports, and people were trying to keep their Ukrainian citizenship. Those who failed to formally declare their willingness to keep the Ukrainian citizenship were automatically made Russian citizens.

Another issue is that if you keep your Ukrainian citizenship, you're considered a foreigner by the occupying party, which means that you lose the right to live in your own home in Crimea. You can only keep your residence there for 90 days. Then you have to leave Crimea, stay outside for some time, and then ask the occupying government for permission to come back to your own house and spend another 90 days there. Of course, this was completely unacceptable for Crimean Tatars, and nobody applied to become a foreigner in their own land.

Should a person not receive a Russian passport, they basically cannot function in the territory of Crimea because they cannot buy a house and cannot receive employment. They cannot go to school, and they have no right to seek medical help because the first thing the hospital asks is, "Where is your Russian passport?''

What is interesting is that according to the occupying government, 30,000 to 40,000 of people have not received their citizenship.

Ukraine, for its part, said that those people who did receive Russian passports can leave Crimea and receive their Ukraine passports again.

The second issue is repression against those who spoke out against the occupation, and here all the norms of the Geneva Conventions on the status of occupied territories are being violated. Basically, Russian citizenship is in effect, even though under the Geneva Conventions, the Ukrainian legislation should be in effect.

People are being persecuted, even for the actions they committed before the occupation. For example, on February 26, 2014, two weeks before the so-called referendum, which Russia recognized as the official annexation of Crimea to Russia, there was a rally near the Parliament of Crimea. The government brought the pro-Russian demonstrators to that place, and they were trying to force the hand of the members of the Parliament to appeal to Putin and annex Crimea to Russia.

When Crimean Tatars learned of this, they also came to the rally, with Ukrainian flags, Ukrainian Tatar flags. As a result, they disrupted this rally, and the members of Crimean Parliament did not make this appeal to Putin.

There was a small altercation between Crimean Tatars and pro-Russian rally participants. The next day, special forces of the Russian Federation, without insignia, took control of the Parliament building.

Right now, there is arbitrary persecution against Crimean Tatars who participated in that rally for participating in an unsanctioned rally. But, on February 26, 2014, we could not request the permission of Moscow to hold a rally on our own land. That is absurd.

Another issue is the arrests of people who have religious literature or banned literature or political literature as well. Ukrainians are not even familiar with the concept of banned literature. It's absurd to ban literature because you can find anything online these days. However, in Russia, there is a huge list of books that are banned that cannot be read or even held at home. It's a crime.

The people who come to Crimean Tatar homes looking for the literature don't even have the list of this literature, so they just confiscate anything that's not in Russian. Even the Quran; they confiscate our Qurans.

As we understand it, the issue is not with finding banned literature. The issue is intimidation. They are trying to intimidate Crimean Tatars. They come into our homes. Even if the door is open, they will break the door down or jump over the fence. Thirty people who are armed and masked come into your house and make everyone lie down on the floor. They try to humiliate us, break things in our homes and basically cause people to be afraid for their own safety.

There have been over 250 such searches; they are a daily matter. People are not even paying attention to that anymore. They're not even abiding by the procedure. Under the Soviet government, for example, without permission from the prosecutor's office, certain activities could not be conducted. But the forces that now come in are not constrained by any permissions. They just break down the door, come into the house and grab what they can. They humiliate people and try to provoke people to have reasons for even wider repressions.

This atmosphere of increasing fear, the abductions, the executions is what makes our people leave their homeland. Can you imagine the tragedy of these people who, for many years, tried to come back to their homeland, and right now they are forced to leave their Crimea once again?

Mr. Shevchenko: I would just add that there is an impressive list of Crimean Tatars who went missing. Some of them were later found tortured and dead. There is an impressive list of political prisoners of Crimean Tatar background. And there was this outrageous decision to ban the Mejlis of the Crimean Tatars, the only representative institution of the Crimean Tatars.

All of that happens in the country, or under the authority of the country, which has no independent judiciary. It means that none of these people have any chance to defend themselves.

This fits into the wider picture of human rights violations in the occupied territories in Crimea and Eastern Ukraine. Russia has turned the occupied territories into tribal land — no rule, no law, no rule of law. It is especially painful for the Crimean Tatars, because these countrymen of the Crimean Tatar region are easier to differentiate from others because of the religion, the language and other things.

One more aspect: We are talking about the indigenous nation, which has no other homeland to go.

I think all that makes the situation of the Crimean Tatars very special. We strongly encourage people in this room and the world community to help us defend the Crimean Tatars.

[English]

The Chair: Thank you very much.

To respect the fact that we are limited in time due to other commitments you have, I'm going to ask Senator Rivard to place his question now.

[Translation]

Senator Rivard: I would like to welcome the ambassador and the member of Parliament. We greatly sympathize and empathize with the Crimean Tatars' situation. You concluded your opening remarks by saying that you would like Russia to leave Crimea so that there can be a return to normal everyday life. Russia invaded Crimea after a bogus referendum was held, and at the time the international community was practically unanimous in condemning Russia for its actions. Time has passed and Putin, who is a sly fox, has decided to support part of the international community in fighting the Islamic State in Syria.

It is my impression that the pressure on Russia eased off almost completely because Russia became an ally through this gesture. I personally hope that Russia will leave Crimea. You will recall however that Canada and other countries took steps against Russia, including freezing assets. Nevertheless, the Russians are still in Crimea.

From what I can see, the Russians will unfortunately not be leaving Crimea anytime soon. Could you tell me then what concrete steps, besides going to war with Russia, could be taken to improve the fate of Crimea and, of course, the Tatars?

[Interpretation]

Mr. Dzhemilev: I'm basing this on defending the rights of the people who are in the occupied territories. It's impossible. Of course, if there is broader pressure from the international community, perhaps the situation could ease.

There is constant monitoring of the human rights situation. If the OSCE, Amnesty International or other international organizations could have their monitoring missions there, if they could be present on the ground, this could perhaps ease the situation.

However, in general, defending or upholding the rights of those people in Crimea, that's impossible.

If I could say a couple of words about abduction and extrajudicial killings, the first abduction took place in March 2014 of Reshat Ametov. The only crime of this man is that he came out wrapped in a Crimean Tatar flag, holding a sign, "No to Russian occupation.'' This man was taken away in a car, and several days later his tortured body was found in a ditch near the city.

Of course, if the authorities wanted to find those who were guilty of this crime, it would be easy to do so. The video of the abduction is on YouTube. But if you do look for these people, you would find the organizers of this abduction. The person who headed the then-defence forces of Crimea is the current Prime Minister of Crimea Sergei Aksyonov, who has a criminal background. He worked on orders from the federal security service of the Russian Federation. That is why the human rights violations could be somewhat limited because they cannot be eliminated until those gangsters, those criminals leave the government.

The situation could be eased, as I mentioned. We had a conversation with the President and Prime Minister of Turkey. We asked Turkey to join the sanctions regime, but Turkey says that by not joining the sanctions, perhaps they would have better avenues of defending the rights of the Crimean Tatar people. However, they did not succeed in this. Erdogan spoke on the phone several times with Putin and asked him to allow me to come back to my homeland, but he did not succeed in these negotiations.

So I really don't see any other way of upholding human rights in the occupied territory. Once again, I will just say that if there was a permanent presence of international monitoring organizations in Crimea, that would be great.

[English]

The Chair: We have two more questioners. I will turn to Senator Dawson to put his question and then Senator Beyak. We will then hear the answers to those questions so that we can complete this part of the meeting in the time allocated.

Senator Dawson: I am in agreement with my friend from Quebec City. Canada's support is obvious. It is bipartisan, in both chambers, but it is not successful. So what kind of help or movement can we encourage at the international level, whether it's NATO, the UN or the parliamentary associations, where we can get the international community to not go back, as Senator Rivard indicated, to saying, "Well, the Russians were nice to us, so let's not be aggressive against them.'' Which organizations should we put pressure on to help you, since just being in support of you has not been successful?

The Chair: Thank you.

Senator Beyak, do you have a question?

Senator Beyak: They have all been answered with the presentation. But I wanted to tell you that my late husband's family is Ukrainian. We are very close, and so my heart is with you. We will do everything we can as a committee.

The Chair: The answer to Senator Dawson's question.

[Interpretation]

Mr. Dzhemilev: What can Canada do? We don't see the solution as a military one because the war to liberate Crimea would mean that the entire Tatar people would disappear and would be killed. Even if we could try to stay, the occupiers know that Crimean Tatars do not support them, and we would fear ethnic cleansing. Even during the first days of the occupation, we knew that they had lists of people who would have to be exterminated if there were any armed conflicts with the occupying Russian party.

We say that the only way to free Crimea is through sanctions. These would have to be very effective sanctions, which would make the occupier leave Crimea.

In 1979, the Soviet Union occupied Afghanistan. Thank goodness Reagan was very decisive. He applied sanctions, and as a result the Soviet government fell apart and the Soviet troops left Afghanistan.

We live in dynamic times. The Russian Federation does not have the same potential as the Soviet Union had, and we think that we could bring about an earlier liberation of Crimea through effective sanctions.

As far as the leadership of Canada goes, I have heard that Canada plans to start a dialogue with the Russian Federation. I can't quite imagine how that would be, starting a conversation with a gangster; but if you do start a dialogue with Putin, we would want Canada to offer some kind of platform to discuss the issue of the de-occupation of Crimea.

The so-called Minsk process and agreements that are in place say that the sanctions can be lifted if Russia complies with the conditions of the agreements. However, the Minsk agreements do not mention the Crimean peninsula. That's why we need to introduce the territorial integrity of Ukraine or the de-occupation of Crimea into these agreements, or create a brand new platform.

We offered such a platform to the signing parties of the Budapest memorandum. France, the United States and the U.K. guaranteed our territorial sovereignty and integrity in exchange for us giving up our nuclear arsenal. We did that, counting on these guarantees. We gave up many nuclear warheads that would have been enough to destroy the entire Russia. I think if we were still in possession of these nuclear weapons, Russia would not dare act as it has. That's why we should introduce a platform to liberate these occupied territories on the basis of these agreements that guaranteed our sovereignty, security and territorial integrity. This could be done with the participation of Canada, because Canada is one of those countries that has, first of all, a very close relationship with Ukraine. From the very first days of Ukraine's independence, this great country of Canada supported us, and a lot depends on Canada's position. I think if Canada came out with such an initiative, this would be of huge assistance.

[English]

Mr. Shevchenko: We have had several very productive meetings in the last couple of days with representatives of all the three parties and distinguished members of the government, including Prime Minister Trudeau, Minster Dion and Minister Freeland. We identified several fields where Canada could help to ease the pain of the Crimean Tatars.

First, IDPs of the Crimean Tatar origin: There are plenty who were forced to move from Crimea and who now live in miserable conditions in the south of Ukraine.

Second are educational programs for youths of the Crimean Tatar region. Many of them lost the opportunity to get a good education in Crimea.

Third is bringing information to Crimean Tatars and other people in the occupied territory of Crimea and the east of the country. We enjoy a lot of support from Canada in that direction, and this could be a powerful addition to the support we receive.

Once again, if you take a bird's-eye view on the issue, there is a strong need for a profound, thoughtful conversation on the occupation of Crimea and the future of Crimea, and we believe that Canada could take a strong lead on this issue.

The Chair: Thank you. We have run out of time.

Mr. Dzhemilev, I thank you for coming to the Senate and personally telling our audience, particularly the senators here, of the plight of the Crimean Tatars.

With regard to your recommendation that the Minsk agreements do not include specific references to Crimea, I think nonetheless the world community should know. Certainly in Canada, the territorial integrity of Ukraine has been stated and restated. I think it is a Canadian preoccupation, not just by governments or parliamentarians, but the people of Canada.

I think your specific recommendations are extremely important, and the Standing Senate Committee on Foreign Affairs and International Trade will give thought and reflection as to how we can assist the Crimean Tatars in the fate they face.

Rest assured that the consistent view towards Ukraine will continue to ensure human rights values, international treaties and other common sense, if I may call them that, and reasonable measures are taken to assist not only Ukraine and its struggle at the moment, but particularly the Tatars.

Thank you for coming before the committee, and rest assured that it is not just one appearance; it is a preoccupation.

Honourable senators, during the second part of this meeting we will hear testimony as part of our study on recent political and economic developments in Argentina. The committee has heard from many witnesses to date, including experts, academics, Canadian government officials, stakeholders and the Argentine Ambassador to Canada.

I'm very pleased to have before us, again, at this table, Mr. Jean Daudelin, Associate Professor and Associate Director at the Norman Paterson School of International Affairs at Carleton University.

You have extensive experience and strong knowledge of Latin America, and we very much appreciate your expertise in coming before us today.

We have circulated your biography. Your background and research is therefore known by the committee members. I'm going to turn the floor over to you to make opening comments before we go to questions.

Welcome to the committee.

[Translation]

Jean Daudelin, Associate Professor and Associate Director, The Norman Paterson School of International Affairs, Carleton University, as an individual: I would like to thank the committee for inviting me. It is always a pleasure to answer questions from people who can have an influence over the foreign policy of the country. I have prepared opening remarks for seven minutes, and they will be brief. Following that, I will be pleased to answer any questions.

The new president of Argentina, Mauricio Macri, was elected at the end of 2015, and he brought in a political program that can be divided into two main components. The first is a restructuring of the economy involving very aggressive liberalization focused on the primary goods export sector, specifically the agricultural sector. This is a liberal economic policy. The second is a realignment of the country's foreign policy and its diplomacy that, over the past few years, was centered on a leftist populist coalition formed around Venezuela, and to a lesser extent Brazil. Macri was very clear in his intention to realign Argentina's foreign policy towards the west, and more specifically, the North Atlantic axis. I will now go into both these components in more detail.

I will begin with economic policy and its challenges and problems. Macri introduced five main measures. The first was the elimination of large government subsidies that had been created by the previous government, mainly for gas, electricity and transportation. This immediately led to increases in the price of gas and electricity in the range of 600 per cent, and it doubled the price of public transit.

Second, immediately following his election he brutally devalued the currency. He let the currency float, which led to a devaluation of approximately 40 per cent.

Third, he very quickly reached an agreement with international creditors who were preventing Argentina from issuing bonds on global markets to attract capital because of the outstanding debts they had inherited from previous governments.

Fourth, and this is probably the most important measure, he eliminated export taxes imposed by the previous government, mainly in the agricultural sector, which had reduced Argentina's export capacity.

Last, both directly and indirectly through government transfers, he very quickly cut public servants' positions. We are talking about at least 40,000 jobs in the public service over the first three months of 2016.

He was a great international success, and immediately following the agreement with their creditors, Argentina issued bonds that brought in billions of dollars, the highest amount for an emerging country over the past several years. That is certainly a success.

It is also clear that eliminating export taxes in the agricultural sector will significantly increase Argentina's exports because the highly productive agri-food industry had been practically paralyzed by the previous government's tariffs. That is the easy part.

That having been said, devaluation and the elimination of subsidies will lead to a significant increase in inflation. Inflation was already a problem under the previous government and it could not be assessed because the government had literally gutted its statistical capabilities. No one really knew how high inflation was. One thing that Macri is doing is rebuilding the government's capacity to produce statistics.

In fact, the Central Bank as well as international experts are of the opinion that inflation will be between 30 per cent and 40 per cent for 2016. It already appears to be 17 per cent for the first three months of the year. It is unlikely that increases in prices will continue at this rate, simply because the increase is due in large part to the elimination of subsidies. This is a rather significant challenge that the government will be faced with very soon.

Furthermore, the rather brutal elimination of subsidies and the loss of 120,000 jobs over the first three months of 2016 have created resentment within the population and the opposition is mobilizing this through, for instance, a bill that would prevent employers from firing individuals for at least two years. This is a bill that is being debated and I believe that the vote in the assembly will take place today. That is just an example, but clearly the opposition wants to take advantage of the resentment that has resulted from the draconian measures that the government has taken.

Furthermore, with an already fragile economy, limited investments and high interest rates, further investment was hampered. On top of that, Brazil, Argentina's main trading partner, is undergoing a deep economic crisis. This includes a 3 per cent to 4 per cent recession both last year and this year, and a political crisis of which you are doubtless aware. Consequently, insofar as Brazil is Argentina's main export destination at 50 per cent, particularly for the manufacturing sector, weak investments and the crisis may lead to a recession.

In the longer term, it seems clear that Macri intends to reinforce an economic restructuring process around the resource sector. Over the last 30 years, manufacturing and industry have declined by about half, with a manufacturing sector that currently represents about 15 per cent of the economy, whereas that number was 30 per cent at the beginning of the 1990s. However, it is fairly clear that the government's liberalization measures will accelerate the process and may essentially destroy what remains of the Argentinian industry, which mainly consists of cars and car parts flowing towards Brazil, as it is not globally competitive.

Argentina is therefore becoming a resource and services-based economy. While it has significant and promising energy and mining sectors, it is mainly as an agricultural power that Argentina is likely to play a role in the coming years.

I would like to briefly discuss foreign policy. During the election campaign, Macri made it clear that he intended to realign the country's foreign policy by directly criticizing Venezuela in particular. Following his election, he clearly indicated his willingness to realign Argentina towards Western Europe and North America. He was quickly rewarded for this realignment, with visits from the leaders of almost all major European countries and President Obama. Furthermore, he received a near-triumphant welcome in Davos.

In this realignment, the rapprochement with the United States is particularly significant, as the United States' traditional ally in South America was Columbia, which is essentially a country in the grip of civil war and drug-related violence. Therefore, it was not a truly useful platform for the region, whereas Argentina, with a fairly substantial economy and a truly southern position, is more likely to be a reliable ally. There is no doubt that the United States already views Argentina as its most important ally in the region.

Relations between Argentina and Brazil, during the few months in which they were possible under Dilma Rousseff's government up to last week, were not particularly good and would not have improved, given the crisis in Brazil, which led to the near paralysis of Brazilian diplomacy. However, there would no doubt have been tensions should the need to take a joint position have arisen. Brazil's new government, under President Temer, seems to be leaning towards an economic policy that resembles Macri's policy of liberalization, an end to subsidies, budgetary cuts to the health care sector and further austerity.

This will probably imply a further weakening of Mercosur, a mechanism devised to protect the Brazilian and Argentinian industry, two industries that are currently in rapid decline and that are both in crisis. That being said, so far, Brazil seems unwilling to make the same bet as Macri on primary goods exports, as its industrial sector remains quite influential.

With respect to Canada, Argentina's mining potential has long drawn the interest of Canadian companies. Some are already present, and in those circles, Macri's openness and liberalization policies are well received. Like Brazil, Argentina has a major infrastructure deficit. Consequently, the world's big engineering firms, including Canada's, are interested by Mr. Macri's plans. Furthermore, Argentina's oil and gas potential is underdeveloped and for many years has attracted little investment. So there is a certain potential there, but as you know, those are not sectors that seem to have a very bright future in the short or medium term.

Finally, Argentina has huge potash reserves which may interest Canadian players, and indeed have already attracted some. However, traditionally, Canadian potash producers are seeking export markets, and in that case, Argentina would be a competitor.

So, generally speaking, Argentina is not a major trading partner for Canada. There are fairly major investments, especially in the mining sector, but Argentina's export matrix makes it more of a competitor than a partner for Canada. That being said, the country's liberalization and the weakening of Mercosur are more likely to be beneficial for Asian countries, which may find a less protected market in Argentina for their manufacturing exports.

In political terms, it is fairly clear that Argentina's foreign policy under Macri will be more in tune with Canada's traditional foreign policy outlook than the Kirschner administrations were previously. Bilateral negotiations should be more fluid than before. However, I find it difficult to identify issues where bilateral cooperation could have significant global or regional impacts.

Thank you.

[English]

The Chair: You pointed out some of the directions that the president will take and some of the difficulties he will face. Canada's role has been somewhat limited. You say we're a competitor, and we've heard that before from other people — Brazil and Argentina, as a matter of fact. What should Canada be doing now with the new government? Most people are looking for an advantage for their own country and to bring Argentina into international structures and modalities. Is there a niche where Canada could do something positive to Argentina but also to Canada?

[Translation]

Mr. Daudelin: I believe the potential for cooperation lies in the diplomatic sphere. For example, it seems fairly clear that the situation in Venezuela will deteriorate quite rapidly and that South American organizations, ONASUR and CELAC, are unable to deal with the problem. Furthermore, the Colombian secretary general of ONASUR has already spent more time criticizing the impeachment process in Brazil than the state of emergency imposed by the Maduro government in Venezuela. As a result, some space could open up for the OAS, the Organization of American States, a forum that has lost some ground over the last few years, but which could regain ground with an increased Argentinian interest in a kind of hemispheric management for problems in the Americas, whereas Latin American countries, over the last 10 or 15 years, tended to stick entirely to South America. Furthermore, the best indication of that approach was the creation of the community made up of the states of South America and the Caribbean, an organization of American states that does not include the United States and Canada. I believe there may be potential to recover the role played by the OAS, a forum in which Canada has traditionally invested a great deal. It should be possible to work on this area with Argentina.

As regards the situation of the international organizations and broader multilateralism, I see fairly limited potential. When it comes to trade negotiations, I think that if liberalization works, Argentina will pursue all-out liberalization, which will not align with our own trade policies for agricultural products, because of supply management issues with which you are familiar.

[English]

Senator Downe: I'm curious as to what other countries are doing. The Germans are heavily invested in Brazil. The Chinese seem to have a relationship with the previous Argentinian government. Is that continuing? What is the investors' confidence of these other countries in the current situation in Argentina?

[Translation]

Mr. Daudelin: Currently, there seems to be great enthusiasm. In my opinion, over the coming months, Macri will have to demonstrate effective control over the economy. After all, this is a country with an inflation rate of 35 per cent in 2016. He does not have a majority in Congress, and most of the liberalization measures have already been taken.

He is now dealing with the negative and social consequences of measures he took immediately, devaluation, cutbacks in subsidies. At this time, there is quite a bit of uncertainty. I highly doubt there will be a flood of investment in the short term. I think everyone will wait and see whether Macri manages to successfully navigate circumstances he himself has created with very radical measures.

I am not sure whether, in the short term, Canada will have much competition in that area.

Senator Rivard: Welcome, Mr. Daudelin. We know Argentina needs investors and foreign currency. How much will investors be frightened off by the indictment of the former president, Ms. Kirschner, for corruption and for manipulating the true value of the country's debt? Might investors find this situation a bit frivolous? It does seem to be a tendency these days. There is a change of government, then the former government is accused of having behaved inappropriately. Do you honestly believe that the indictment of the former president might have a very negative effect on Argentina?

Mr. Daudelin: It clearly was going to happen, because rumors of charges backed with substantial evidence have circulated for some time. When Argentina issued international bonds, which by the way were very successful — although I forgot to jot down the numbers — that was taken into account.

Personally, I was surprised by the enthusiasm generated by the Argentinian bonds, given the high level of uncertainty within that economy, inflation and the unknown technical ability of that government. There are people in place who are officially quite competent, but how will they go about managing the economy? That is a major unknown. Until now, Argentina has had no difficulty raising international capital. The stock market is in very good shape. The level of enthusiasm seems a bit exaggerated to me.

Senator Rivard: I have another question for you. Argentina has nuclear reactors, I believe. Do they have any CANDU reactors?

Mr. Daudelin: There was a CANDU reactor, but Argentina has clean technology. They wanted to export small portable nuclear reactors to Venezuela, but that never took place. I do not believe the current government will invest much in that sector.

Senator Rivard: As a professor, are you aware of many countries which, like Argentina, were taxing exports? I think it was a major impediment to growth, and now, Argentina has eliminated nearly all taxes on agricultural products. Have you seen anything similar elsewhere? Here in Canada, on the contrary, exports receive favourable treatment. Before the GST, there was an excise tax that was not applied to exports.

Mr. Daudelin: During the protectionist era, many countries taxed exports. This is no longer the case since the 1980s. That being said, Argentina has a problem in this area. The manufacturing sector is shrinking rapidly and ownership in the agricultural sector is highly concentrated. As a result, if it does not impose taxes on this sector, unlike mining products, the government is depriving itself of a major source of revenues. For example, Canada taxes oil production. We have mining royalties. But that does not apply to the agricultural sector. Argentina therefore finds itself in a difficult position in attempting to raise funds. The Argentine government has few options at its disposal.

[English]

Senator Johnson: Good afternoon.

We have heard a lot about Venezuela in our study of Argentina, and there was an excellent article in The Economist yesterday. There is a serious political and economic crisis in Venezuela. Do you think the new Macri government, working through multilateral organizations, could call for some peace and order in Venezuela? Could they have any influence there? And can organizations such as the OAS do anything to reduce the risk of violence within Latin American countries?

[Translation]

Mr. Daudelin: With respect to Venezuela, I do not believe Argentina has any influence whatsoever. When it came to regional dynamics, Argentina was very much on the sidelines. In the past few years, it only maintained close relations with Brazil. There were export contracts with Chile, but this is a country that has always had a somewhat isolationist policy in South America.

Argentina's neighbours would not support it as a regional leader or anything like that. Currently, Macri's position is being directly denounced by Maduro. I doubt that the current Venezuelan government will accept Argentina as an interlocutor in negotiations.

Personally — and in fact, I have written about this, and you could find that quite easily — it seems to me that the only two countries that could play an effective conciliatory role in Venezuela would be Cuba and the United States acting jointly, insofar as together, they have credibility and influence on both sides. For the rest, I see no one else. Perhaps the Organization of American States, when it comes to regional repercussions, but the only ones who could truly play such a role are the United States and Cuba.

The problem is essentially one of criminal violence. We are talking about approximately 100,000 homicides per year: 60,000 in Brazil and 45,000 in the rest of the region. This problem is not likely to be managed at the regional level, with the possible exception of some liberalization of drug policies. However, I doubt that public opinion is ready to enter into a discussion about legalizing cocaine-based drugs.

[English]

Senator Johnson: Argentina has been through a number of devastating economic crises. How much of a middle class does the country have? And how do you think younger Argentinians view the state of upward mobility in their society and economy, and their country's role in the world and the global economy?

[Translation]

Mr. Daudelin: Traditionally, people from Argentina have a black sense of humour when it comes to their country, as do Brazilians when it comes to their country, as well. We should note that Argentina has a fairly old population. Argentina, Uruguay and Cuba have fairly old populations. They would all like to see relatively more young people in politics. It is hard not to be cynical. There are movements on the left, some smaller fairly radicalized movements, as well, but there does not seem to be an identifiable youth movement yet, either on the right or the left.

[English]

Senator Johnson: I know this isn't about Argentina, but you know a lot about Brazil: How are the Olympic Games going to go this year?

[Translation]

Mr. Daudelin: I do not see any major problem with the Olympic Games. The facilities are ready and protected against the Zika virus, especially the athletes' village. If that is what people are worried about, I do not think that the Zika virus will prevent the Olympic Games from taking place.

[English]

Senator Johnson: That's great. When we were there a couple of years ago, they were showing us the arrangements. It's very good for Brazil.

[Translation]

Mr. Daudelin: In that context, there would just be a break of a couple of days, because the country is going through such an incredibly serious crisis that it would not help. It would be like going on a very brief holiday.

Senator Housakos: My question is about the economy. Argentina, like many countries around the world, is experiencing an economic crisis, but Argentina is also dealing with a socio-economic crisis, and its government is in a minority position. Bringing in austerity measures and taking decisions when you have got a solid majority is still a challenge, but when you have got a minority government, it is even more difficult to address all kinds of economic issues. In your opinion, will this minority government receive the support of the public? If not, what are its chances of succeeding, or what percentage of the population supports the government?

Mr. Daudelin: According to the most recent polls, about 60 per cent of the population supports the government, despite the fact that it adopted austerity measures. In my opinion, the government would like to quickly assess the risks associated with the lack of a majority in Congress. That is why the more painful measures were adopted right away. The government is at the very start of its mandate, and it has taken advantage of the divided opposition and the support it received from some of the Peronist supporters. So we are talking about the most difficult measures, but they were taken. Now they have to manage the consequences. Their popularity will go down, but the fact that Peronist forces are divided, which will probably prolong the trial against Ms. Kirschner, could give the government a certain degree of latitude. I do not think the government would be able to introduce another set of measures as rigorous as those that were introduced after the election. As you said, it would not get through Congress. In fact, we are seeing this with the debate on the legislation governing lay-offs. The government wants to make it illegal for companies to lay off employees.

Senator Housakos: According to some witnesses who testified before our committee, Canada and Argentina are economic competitors. In your opinion, could Canada and Argentina work together in that regard? If so, what issues would be involved?

Mr. Daudelin: I think that agricultural research and climate change hold a certain potential. These issues could affect both countries, perhaps in a good way for Canada, clearly, and maybe also for Argentina. So, from that point of view, I believe that there are common interests with regard to managing climate change and the development of agricultural technologies, but these common interests are somewhat limited in scope.

Senator Housakos: Is Canada at a disadvantage because not many of its citizens speak Spanish in comparison with our U.S. or Mexican friends? Is that at all an issue? Does the fact that we do not have many Spanish speakers in Canada represent a disadvantage for us in our relationship with Argentina, if we compare ourselves with our southern neighbours?

Mr. Daudelin: That might be the case. A little while ago, I was saying that Spanish is more popular than French in an increasing number of universities. However, I do not believe it is a huge disadvantage. In sectors where Canada is present, it is easy to find people who speak Spanish.

As well, since you mentioned it, Mexico has a ridiculously small presence in South America, much smaller than Canada's. So from that point of view, I believe that we are doing a good job given our fairly limited resources as far as Spanish speakers are concerned. My son just spent a year in Mexico; after only a few months, he was able to get contracts and employment. So it is not a very significant obstacle, as much as it might be with regard to, for instance, Arabic, Chinese or other languages.

[English]

The Chair: I have a question on two areas before we end. One is on services.

We've been told that Brazil has many universities and well-educated people, but they lack PhD quality, that extra bit, in IT services and some other areas and that Canada could combine with universities there on research and technology. We are ahead of them in some areas and collaborative in other areas, and it would be a win-win. Is Argentina in the same position?

[Translation]

Mr. Daudelin: Argentinian universities are not of the same calibre as Brazilian universities. They are lagging far behind. The great research universities in Brazil, such as the University of São Paulo, Campinas, or the great Catholic universities, needn't envy Canada's middle-of-the-road universities. However, Argentina has for decades been underinvesting in its universities, so there are a lot of problems with those institutions. The situation is much worse in Argentina.

[English]

The Chair: I heard also about under-investment in infrastructure.

[Translation]

Mr. Daudelin: Exactly. Brazil compensates for that to a certain extent, but when it comes to Argentina, once again, it is a long-standing problem, as it is for all of Latin America. For instance, there are basic water supply problems. In Mexico and Brazil, there are electricity supply problems. In fact, it is one of the issues which Argentina wants to address, that is, transportation infrastructure for export purposes needs investments, be it in the energy or transportation sectors. So from that point of view, there is a huge investment potential for growth and international cooperation, no doubt about it, because there is a huge deficit.

[English]

The Chair: I think certainly the world has had more exposure on criminal organization in Brazil. That may have been pre-soccer or pre-Olympics, but I heard there is a criminal culture in many places in Brazil that needs to be broken, and that drugs coming in is a recent issue for them but that there was an historic difficulty in organized crime.

What is the situation in Argentina? You said there is some criminalization. Is it historic within and unique to their country, or is it the movement of drugs throughout South America now that has exacerbated the problem?

[Translation]

Mr. Daudelin: In Argentina, people feel incredibly unsafe, but the homicide rate is not particularly high. If you compare Argentina with Brazil, for example, you will see that Argentina is a much less violent country.

With regard to crime as part of the culture in Brazil or in Argentina, I personally do not believe that this view is justified. There are black markets, and there are huge informal markets, and these are due mostly to the weakness of governments. These weaknesses create voids that are filled by illegal organizations.

So you have to look at the inability or the limited capacity of governments to in fact get a handle on illegal and informal markets; this is what leads to crime and violence. It is not a cultural thing; that is not a very credible hypothesis.

[English]

The Chair: I didn't mean "cultural'' in that sense but that it was as a result, as you said, of the vacuums created by governments, where you could move into villages and take over barrios, et cetera. They seem to say, yes, they had a certain amount of crime and perhaps difficulty with courts, et cetera, but it has been the recent phenomena in the last 10 or 20 years of organized crime coming in and out with drugs. As part of a world network, they move from South America, to Africa, to wherever there is space for criminal activity. Is Argentina caught up in that?

[Translation]

Mr. Daudelin: I spent the last 10 months in Brazil studying the drug markets. Organized crime does not lead to violence. In fact, the most powerful organization in Brazil, which is called the First Commando of the Capital, is a huge criminal organization in São Paulo. Most analysts believe that it played a significant role in bringing down the rate of violence in São Paulo. It is when criminals are disorganized that rates of violence skyrocket, as is the case in the northern part of the country.

On the other hand, I do not believe that we can link violence to the presence of organized crime. North American drug markets, for instance, have a higher economic value than those in South America on a per capita basis, regardless of how you do the math. So you cannot draw a direct link between organized crime and violence.

In the case of Latin America, criminals are disorganized, and countries that manage illegal markets are also disorganized. This gives rise to an extremely chaotic situation. So I think you have to look in that direction to find the root causes of violence.

As far as entry is concerned, it is obvious that Latin America is completely integrated with the major international trafficking networks, such as those in North America and Europe. In fact, that is where the paradox lies: In Europe and North America, trafficking is very well organized and not violent, whereas in countries where trafficking is less well organized, and where public policy is more unpredictable, the rates of violence are shocking. That is what is happening in Brazil now. As I was saying earlier, there were 60,000 homicides in Brazil last year. So it is in areas that are disorganized, areas where criminal activity is disorganized, that the rates of violence are highest. It is a paradox.

[English]

Senator Dawson: Yesterday we created the Canada-Argentina Parliamentary Friendship Group, of which Pablo Rodriguez is now the president. He is going to Argentina for personal reasons, but he will be meeting with Argentinian parliamentarians about creating a Canada-Argentina parliamentary group. I think it will be interesting if the steering committee could maybe get in contact, because we will be going there. I am actually going to be vice-president, I think.

[Translation]

Senator Housakos, it is not because I speak Spanish. My wife and two of my children speak Spanish. Unfortunately, my Spanish is limited. However, I have been to Argentina, and I will repeat what Mr. Daudelin said earlier, which is that you feel very safe in that country. Argentina is far from being one of the worse countries in Latin America. I would encourage committee members to feel very comfortable if ever we decided to travel there.

As far as the Olympic Games are concerned, if Greece was a good example —

[English]

— they won't make any money with the Olympic Games, but at least during that time they will have a little vacation.

That was more of a comment than a question.

The Chair: That was quite a fulsome comment. Thank you.

I think that brings our questioning to an end. You have covered many areas and we appreciate your expertise again. No doubt we will be calling in the future as we have concentrated on a number of areas. We have been covering Venezuela and monitoring that situation. We're doing an in-depth study on Argentina, and the OAS keeps coming up as one of the factors we should be looking at. So I think you will find yourself quite occupied with requests from this committee. We appreciate that you respond so kindly to our requests. Thank you for your time and expertise.

(The committee adjourned.)