“Advantage Canada: Recalibrating our Role in a Transforming World”

D. H. Burney©
Senior Strategic Advisor
Norton Rose Fulbright Canada LLP

Remarks at O. D. Skelton Memorial Lecture

Ottawa
June 2, 2015

Although I did spend 30 years of my life in what was then called External Affairs, I was not actually around in O.D. Skelton’s time.  Memories of his career lingered well into the 1960’s, however, along with that of many others who were regarded as being prominent in the “Golden Age” of Canadian foreign policy.  One of them, Norman Robertson, was  Undersecretary when I joined.

For a young “probationary” Foreign Service officer, it was more than a little intimidating to go anywhere near “Killers Row” – the top echelon, then ensconced in the East Block – and now, less threateningly perhaps, on the eight floor.

One of my first assignments was to manage Canadiana book presentations to worthy foreign institutions.  I was not a great success.  My first shipment, to Uppsala Sweden, sank literally at sea.  I learned then that the Crown did not insure anything, so it was a complete loss.

Shortly thereafter, I was directed to put together a selection of books for the University of Notre Dame.  Being a bit brash back then, I  challenged the choice on the grounds that Notre Dame was a well-endowed  university that needed no free gift of books from Canada. My memo with that opinion earned me a  blunt meeting with the then Deputy Undersecretary, (Ed Ritchie).   I was told firmly that the books had been promised by a certain Canadian Senator because an Honourary Degree was being given by Notre Dame that year to our Prime Minister (Mr. Pearson).

I learned then and never forgot that policy and politics can, on occasion, interact.

Few countries spend as much time as Canada does analyzing and agonizing over foreign policy or about its role in world affairs.   I think this has a lot to do with our geography and our gradual, even cautious, evolution to independence.  We spent more than a century navigating slowly and gingerly to reduce our dependence on Britain while, at the same time, resisting the allure or existential fear of annexation by the U.S.  All the while balancing the  fissiparous tendencies of our two founding nations. 

Skelton was directly involved with part of this evolution.  He was, as Conrad Black has written, “an authentic Canadian nationalist, a respecter of both the British Empire and the U.S., but an advocate and, insofar as he could be – (what you might call the customary, Canadian caveat!) – of an independent course for Canada”.  Black added tellingly that Skelton “suffered the disadvantages of most Canadians.  He had no flamboyance or panache to raise the heavy dough of Canadian excitement, overlaid as it always is by caution or doubt and a generous portion of self-doubt.”

We are rarely accused of being flamboyant in foreign policy but, had Skelton lived beyond 1940, he might have helped instill a voice for Canada in the direction and strategy of the war more in line with our strong contribution. Our Prime Minister at that time was, as Charles Ritchie’s diaries record, more interested in retrieving ruins for Kingsmere from the London bombings than in promoting a clear Canadian position in the conduct of the war. 

Given that history and a predilection for caution ingrained in our DNA, it is not surprising that our role or identity in the world  seemed uncertain or hesitant.  We clung to nebulous “Middle Power” labels and multilateral linkages almost as ends in themselves even when some of these inclinations were devoid of relevance to Canadian interests.

Perched atop North America with a small population closely knit in a ribbon along our southern border, we have spasms of envy and fear over what our southern giant may do with its overwhelming power.  Some Canadians believe that we are more influential in the world than we are – a “Little American” complex.  Others are inclined to a more deferential “Little Canadian” attitude. For them,  if there are problems in the relationship with the U.S., it must be our fault.

Neither is accurate and both are demeaning.  The challenge for me tonight is to reach beyond the nostrums, try to stir that “heavy dough of excitement” about Canada’s foreign policy and inject a bit of spice with views on how I think Canada should exercise its advantage in world affairs.

I will be selective, not comprehensive, and I do not anticipate consensus.  I do hope to stimulate debate, if not action.  After all, it is an election year so you never know who might be listening. 

The primary objective of foreign policy should be to ensure a prosperous and safe, united Canada in a stable, more humane world. 

Capacity and relevance will determine how influential we can be in defending and promoting our interests and, yes, the values of our political way of life provide a rudder of sorts as we navigate in a more turbulent, uncertain world.

The top priority must be focus.  We need to  tailor the significant instruments of our foreign policy – diplomatic, trade, security and development assistance – coherently and systematically to a particular set of priorities or goals and always with some capacity to adapt to events of the moment. There is no foolproof strategy for unforeseen events in world affairs. 

We see the resurgence of an internationally, lawless Russia destabilizing more than 70 years of relative stability in Europe, along with the rise of other, regional, authoritarian powers like China and Iran.  We see the despicable carnage perpetrated by ISIS in the Middle East, now spreading to North and Central Africa and attracting spasmodic support from youngsters in Western countries, including our own.

The Middle East is more combustible than ever. The initial euphoria over the nuclear agreement with Iran may not sustain the complex negotiations still to come and, in any event, raises broader questions for this explosive region whether there is agreement or not.

Power is more diffuse in the world. U.S. leadership and western resolve are much less certain and institutions intended to preserve stability and prosperity are losing their vibrancy of purpose. It is what Ian Bremmer calls a “G Zero” world, one in which self-interest is in the ascendancy and customary notions of alliance solidarity or neighbourly goodwill are fading.

When Ronald Reagan was asked to describe an optimist, he often told the story of a young boy confronting a room full of horse manure.  As the boy started to dig enthusiastically into the pile, onlookers asked what on earth he was doing.  His reply: “I just know that there must be a pony in there somewhere.”

 I happen to believe that some countries are better able to cope with the uncertainties and seize advantages from the changes underway.  Canada is definitely one such country – with the bloodlines of a pony of sorts!

Basically, we should determine prudently how to counter threats to global stability – as we are doing today against ISIS – and how to assert our comparative advantages in global markets offering the most promise. Adopting what you might call the “Wayne Gretzky model”, going where economic growth will be.

Beyond that broad guideline, here are some specific suggestions on what I think Canada should do to be more attentive, more influential and to thrive in this still young century:

We will always need to be vigilant in defending our vital commercial interests in the U.S. but we should never be dependent on a single market for any export, like oil.  

Canadians may well crave a “special relationship” with America, as many others  do, but the U.S. seems neither able nor willing to reciprocate. In fact, America is increasingly using its economic influence these days to advance its own national interests.

The Mulroney era, with which I was proud and privileged to be closely involved, was a high point of mutual trust and mutual benefit but I now realize that it was an exception, not the norm, and unlikely to be replicated any time soon.

The negative impact from the protracted impasse over Keystone and from other protectionist  actions in America today underscores the risk inherent in excessive reliance on the U.S. More to the point, we are losing market share now  in the U.S. and not making much headway elsewhere.  That is the economic challenge we must confront.

We have the capability and the opportunity  to expand the bandwidth of our global agenda on economic, security and other fronts. What we need is a concerted strategy enabling us to reap tangible benefits and exert greater influence.

Just consider the profound transformation of the global economy which, I would argue, is mostly encouraging. Two-thirds of global growth in recent years has been in Emerging Markets, mostly in Asia and especially in China soon to overtake the U.S. as the world’s #1 economy.  By 2020, that share is expected to be 75%. Many of these markets need not just energy, mineral and agriculture commodities but also education and health facilities, banking, insurance, aeronautics, IT and other high quality goods and services - all of which are Canadian strengths

This is potentially good news provided we in Canada can galvanize the national will to harness the economic opportunities that beckon.

The Canada-Korea Free Trade Agreement (CKFTA) and the Comprehensive Economic and Trade Agreement (CETA) with the EU, when it is implemented, are significant steps that will help and the prospect of a trade and investment agreement with India, announced during the recent visit of Prime Minister Modi, is most welcome. But more is needed.

Let me emphasize that this recalibration is intended to complement, not displace, relations with the U.S. I can assure you though that the more balance and depth we inject into our global agenda, the more we become a mature, global player serving our own interests, the better able we will also be at managing our complex relations with the U.S. We should not be a “one trick pony”!

The key foreign policy question facing the world will be how the U.S. and China choose to manage their economically interdependent but potentially fractious geopolitical relationship.    Throughout history, dominant powers have always struggled to cope with rising ones. The U.S. is fixated on the ascendancy of China. Not surprisingly, China is determined to resist containment maneuvers and assert influence more in line with its burgeoning economic power. 

Canada has an interest in ensuring that this relationship evolves in a stable manner. The best way for us to contribute is to engage seriously and sensibly with both major players

Economic growth has slowed to a paltry 7% in China - I’ll just let that sink in – and questions persist about China’s ability to sustain growth. What has happened to date is real enough but the reforms contemplated in President Xi’s November, 2013 “Decisions” plan are ambitious and are intended to convert the Chinese economy more to  market forces. There will be significant upgrades for the manufacturing sector and greater emphasis on the services sector.  It is a delicate balancing act moving towards a more open, market economy while sustaining monolithic, internal, political control.

To paraphrase what Churchill once said about Russia, China may well be “a riddle wrapped in a mystery inside an enigma” but it offers real opportunity for Canada.

Only thirty years ago, 84% of China’s population lived on less than $1.25 per day. That number dropped to 6% in 2011 and today is no longer a statistic at all. That is what market reforms helped generate, proving that moves out of poverty come from less, not more, state control. And that trend is accelerating.

Let me cite one more statistic. Last year, China spent $128 billion upgrading and expanding its railroad infrastructure.  The U.S. spent $1.4 billion. The contrast is a dramatic indication of how things are changing.

The Chinese leaders recognize that they need a new economic model to secure high quality growth for decades to come but, under any scenario, China will require globally sourced, natural resources and advanced services expertise. That is where Canada has distinct, comparative advantages.

The terms of trade will play a key role and, as the currency hub opening in Toronto demonstrates, financial globalization of China’s economy will be the next major development.

But we cannot hope to reap dividends from these dramatic reforms if we rely essentially on spasmodic, high level visits to advance our interests.

China is pursuing major, market reforms for the simple, self-interested reason that it is the smart thing to do.  Self-interest should motivate a similarly serious and strategic response from Canada.

Regrettably, we have been hesitant  in seizing the opportunities.

An economic, complementarity study has been gathering dust for more than three years. 

We took more than two years to ratify a fairly routine Investment Protection Agreement.

Frustrated by the failure of the IMF and the World Bank to adjust their voting rules to reflect China’s growing economic power, Beijing moved earlier this year to create the Asian Infrastructure and Investment Bank (AIIB). The objective is to finance a 21st century Silk Road of facilities to transport goods efficiently in China’s immediate neighbourhood. Some see it as a Chinese version of the Marshall Plan. The Bank’s most compelling attribute is that China has money. Lots of it. Trillions of foreign exchange to deploy.

This new Bank is all about global legitimacy, serving China’s strategic interests and making Beijing a lender of first resort.

Sadly, Canada chose not to be a Founding Partner and, consequently, Canadian construction companies and Pension Funds may not be in the initial queue when the Bank’s first contracts are signed.

China is also stretching its geopolitical wings these days in places like Sudan, Yemen, Nepal and now Afghanistan, addressing both conflicts and natural disasters with tangible commitments that serve its own as well as broader, global interests. It has the capacity and the will that others lack. Other actions, like aggressive, territorial claims in the East China Sea, are of course less welcome.

The polls in Canada suggest a certain wariness or fear about getting too close to China.  It does have a very different system of government and a checkered record on human rights.  But, if those are reasons for caution, I would suggest that engagement and negotiation are the best way to help influence change.

In world affairs, influence flows from relevance and capability, not sentiment. And governments have a responsibility to lead, not follow public opinion.

We need to decide what kind of relationship we want with China and why as a pivotal part of a more concentrated focus on the Asia-Pacific region. 

A top priority should be the launch of a comprehensive, bilateral economic negotiation that would give us more certain market access for our goods and services and provide greater protection for investors and for things like Intellectual Property rights. That is precisely what New Zealand and Australia, among others, have done. That is what Canada should do.

TPP, if it is concluded, will help in some other Asian markets, notably Japan, Vietnam and Malaysia but we need a bolder, braver, full court press by the government and the private sector to reap the rewards in this dynamic region.

The legacy from Afghanistan and Libya, and now sadly from Iraq and Syria, is sobering.  Military and humanitarian impulses may be part of the tool kit for conflict resolution but ultimately political solutions are required. They can only be derived from firm leadership and strenuous negotiation. No matter how noble the intent, limited or tentative injections of external military muscle  will never resolve outbursts of what are essentially civil war conflicts.

The instinct to get involved in the face of gross, global misconduct tries to fill the vacuum left by international institutions, notably the Security Council, that are charged with the responsibility to manage conflict and avert human catastrophe. But hastily cobbled together coalitions under irresolute U.S. leadership are proving to be insufficient.

The inconclusive track record to date can be attributed to many factors: The U.S. penchant to lead is ebbing; timelines and commitments are determined more by domestic U.S. political considerations than by coherent military or diplomatic objectives and the governments being aided are seriously deficient.  Most lacking in each case, however, has been  an achievable, exit strategy.

Doctrines like R2P or the “call of duty” obligation to act because others, notably allies, are acting are better at compelling participation than in designing workable solutions.

Without more concerted U.S. leadership in an increasingly “G-Zero” world, rising fanaticism and narrow self-interest will trump both notions of duty and principles of collective security.

The reasons why Canada is playing a role in Iraq and Syria are straightforward enough. Less clear is whether what is being done will fulfill the intended purpose and whether we, among others, have the stomach to sustain yet another inconclusive engagement. We cannot stand aloof leaving the heavy lifting to others but, once involved, we should prod more geopolitical or strategic commitment to the task. Most importantly, we need to make an objective assessment of both the collective resolve and the ultimate objective. 

I believe that It is time to rethink our basic approach to global security challenges.  For decades, we have focused almost exclusively on Atlantic links.  Just as we need to broaden our economic reach, specifically to the Asia-Pacific region, we should begin to implement a security shift to that region as well.

Beyond the Middle East, the potential flashpoints for insecurity lie predominantly in Asia and many in the region would welcome a more substantive Canadian role. That is a defining difference between being a partner and a visitor.

But we cannot do it on the cheap and with occasional port visits. Our military is undermanned and under-equipped for what it is already doing.   If we expect to play a more assertive role, either confronting the global threat posed by terrorism or addressing potential flashpoints of instability, we will need to upgrade and expand our military capability.

Closer to home, we should move on Ballistic Missile Defence.  We cannot accept the luxury of U.S. security for our continent without shouldering some of the responsibility.  We should also inject real substance into our  surveillance of the Arctic, a region now subject to new threats. That would provide new life and relevance for our shared NORAD command.  

No doubt, why, on one occasion, former U.S. Secretary of State Dean Acheson, himself a half-Canadian, derided Canadian foreign policy officials as “arms-flapping moralists”.

Multilateralism is never an end in itself and nostalgia, however comforting, is not the best lens through which to chart the future.

Many of the institutions formed in the wake of World War II are losing their lustre, their relevance and their influence.  It is time for some honest stock-taking and reform of what works and what does not and, accordingly, for some reallocation of Canadian commitments and contributions. 

Today’s problems – from terrorism to cyber security, nuclear weapons proliferation and natural disasters - require a fresh, forward looking, collaborative approach initiating new strategic engagements free from outdated  power concepts and institutional gridlock.

Since the end of the Cold War, NATO has lost much of its sense of purpose and, more pointedly, the degree of commitment from its member states.  As Russia’s incursion of Ukraine is demonstrating, NATO has become a paper tiger of sorts when it comes to securing territorial integrity in Europe. The U.S. prefers to see the Europeans take the lead but major European powers, like Germany, seem to put economic self-interest ahead of concerns about breaches to international law.

After a brief flurry of activism in the 1990s, the UN Security Council has returned to Cold War style paralysis among its Permanent Members unable or unwilling to act on breaches to international law, savage acts of terrorism and massive migrations by ‘would be refugees’ seeking safe haven.  Many wonder why countries like Germany, Japan, Brazil and India are not part of a more responsible, UN inner circle.

But that is not the only problem. The WHO was abysmally AWOL in the face of the Ebola crisis. Many UN agencies seem over-burdened by bureaucracy, under-funded and ill-equipped to meet new global challenges. With Ebola and  Nepal, inspired ‘ad hocery’ tries desperately to make up for the shortcomings of  institutional responses.

As the 7th largest contributor to the UN budget, Canada definitely should have a say on internal reforms. For leverage, we should consider tailoring our contributions more to agencies that  actually deliver results and ensure that our substantial financial commitments are more aligned with our global interests.

My basic message is that Canada cannot aspire to be “all things to all people”.   We should be more analytical and selective, channeling our economic strengths, our diplomatic skills, our ideas and our security assets pragmatically where we have interests and the best capacity for influence and success.

A senior Asian diplomat candidly told me that he thought Canada was too well-off, too self-satisfied and not striving strongly enough to seize new opportunities, notably in his region.

“You have every resource known to humanity” he said, “from water to agriculture, minerals and energy and, unlike most other countries, you have no existential threat to your existence. And yet you prefer to coast”.

We do seem at times to be like the man born on third base who thinks he hit a triple.  We do tend to coast on the richness of our resource base and the economic oxygen of our southern neighbour.

We are seen as being “fat around the middle”, ambivalent at best, incapable at worst of building the infrastructure and attracting investments necessary for development and export.

If $50 per barrel oil was not bad enough  for our energy sector, we hobble ourselves further with a combination of judicial and provincial ambiguity and irrational demands from special interest advocates. Meanwhile, our LNG projects languish at the back of the global queue. The Energy East pipeline that would both reduce our dependence on foreign imports and expand our markets for exports of oil, adding an estimated $35 billion to our GDP, is hamstrung by opposition of various stripes.

We act as if we have the luxury to procrastinate, consult forever, send conflicting messages about our appetite for investments and infrastructure without risk – as if the world is waiting breathlessly for Canada’s rich resources.  That is a dangerously naïve presumption.  Investors do have choices.  Customers do have other sources of supply.

No single company can surmount these obstacles by itself. Both governments and the private sector need to do a better job at framing and leading a rational debate on projects that will serve the national interest.

Incidentally, we can implement sensible actions to preserve our environment while developing our resource base. We should not succumb to a false choice between one or the other.

We may have an abundance of food and energy resources but, if we cannot move them efficiently to markets, we will be left literally in a snow bank of our own making.

The real lesson from the sand-bagging of Keystone is that we should move expeditiously to export energy beyond North America. 

We need to decide  whether we are capable of taking concrete action to build the infrastructure needed to secure our prosperity. The Government should assert its constitutional powers to act “on works or undertakings for the general  advantage of Canada” on the grounds that a pipeline, or an LNG facility or a hydro-electricity dam is vital to the economic well-being of the country. Otherwise, we can continue to tinker at the margins, dwell on the fad of the moment and conserve political capital  for more limited objectives.

It is not just a challenge for governments. Complacency can be found in the private sector as well where it is, to some extent, chronic if not cultural.  We do have some superb global champions that have been hugely successful in markets like China where there are serious risks as well as obvious rewards. We should not be shy at celebrating and emulating their success.  

The government can set the priorities and the policy framework through negotiations but it is ultimately the private sector that can bolster the public debate and exploit the benefits of more open market access and more secure environments for investment.

Macdonald acted on that kind of vision to forge a nation that many thought was improbable 148 years ago. What better way to celebrate our 150th anniversary than with decisions that will stimulate our prosperity and our economic security for the balance of this century.

We are a country of 35 million in a world of more than 6 billion people. We should muster what we have  – our economic strengths and diplomatic skills – and what we are into avenues where there are interests to defend and opportunities for influence and success.

We do not suffer from acute dysfunction in governance nor is the level of income inequality a matter of serious concern, as it is elsewhere.

We may indeed lack panache. After all “peace, order and good government” is not as stirring a rallying cry as “life, liberty and the pursuit of happiness”.

But our government does work well most of the time. Our democratic values are secure. Despite occasional lumps and bumps along the way, our unity and our tolerance for diversity of cultures, languages and regions is a powerful magnet for many wanting to come to Canada.

Most importantly, freedom of opportunity is the hallmark of our value system. What you can do is determined not by your pedigree but by who you are and what talents you offer.

We have reason to be proud of what we can bring to the world. Conrad Black has written that “Canada should aspire to be the world’s laboratory for sane government and civil society”. Not earth-shattering or flamboyant but stable, reliable and sure-footed. Quintessentially Canadian.

We do live in an age of fast-changing threats and opportunities but Canada does have real advantages provided that we do not let the blessings of nature and past performance lull us into a false cocoon of comfort.

Geography may have given us the luxury to coast for many years but geography  and sentiment should never limit our ambition or our courage to exploit our strengths beyond North America. That is my basic message for you tonight.

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