August 2, 2007

Canadians Run Amok in Azerbaijan

Mining, oil undermines central Asian diplomacy and trade

by Kristian Gravenor

The Dominion - http://www.dominionpaper.ca

When Jean Chretien retired as prime minister after a decade running Canada, he did not go to Disneyland. Instead, he visited a place seldom visited by American tourists. He hopped on a flight to Ashgabat, Turkmenistan, a former Soviet Republic populated by nomadic desert tribes.

Turkmenistan is also home to sensitive post-Soviet territorial disputes, the most delicate of which is its claims to oil under the Caspian Sea. For years, the country has been slowly working towards an agreement with its Caspian-side neighbours –- mainly Azerbaijan -- over where to draw territorial boundaries and how to divide those resources.

In the midst of this delicate situation, the seasoned Canadian statesman jetted in as a lobbyist for Roger Haines's Buried Hill Energy, an Alberta-based company that was hoping to help Turkmenistan extract oil beneath the Caspian Sea.

While the high-profile lobbying barely made the back pages in Canada, the image of a longtime G-8 leader meddling in the fragile negotiations laid a wallop to the process. Chretien departed Turkmenistan after a few handshakes, but he left behind a regional diplomatic chill. Only now, two years later, has the process of determining the regional boundaries started inching forward again.

One might imagine that the Alberta oil company storming in to sensitive, decade-spanning negotiations might have broken a rule or regulation somewhere. But there are no Canadian rules when it comes to our companies extracting abroad. As industry watchdog Karen Keenan of The Halifax Initiative explains, "The Canadian government doesn't have any policy statement or regulatory oversight of how it expects Canadian mining companies to operate overseas. It's a total policy vacuum."

When it comes to mining and oil exploration abroad, Canada not only turns a blind eye to the corporate weekend in Vegas, but it often also supplies the poker chips.

"The Canadian government provides a myriad of forms of support for these companies," says Keenan, "but we and many others are saying that the Canadian government shouldn't be promoting these companies; instead they should look at them and make sure they're following standards."

The misadventure in Turkmenistan might also have cost Canadians jobs.

Azerbaijan -- which, thanks to rising oil prices, has suddenly emerged as one of the world's hottest economies --was unhappy when Canada's former leader doubted its territorial sovereignty.

Recently, according to one highly-placed source, Canada went to bat for a Canadian jet manufacturer bidding on a fat contract to supply the Azerbaijan government with jet aircraft. The would-be Azeri buyers politely reminded the Canadians of the Turkmenistan affair.

The Azerbaijanis weren't buying from Canada.

It wasn't the first time that Canada's laissez-faire approach to mining and exploration needlessly irritated the fast-modernizing former Soviet republic, which has often cited Canada as a model for its post-Soviet democracy.

The Azerbaijanis also claim that controversial Canadian miner Robert "Toxic Bob" Friedland has been mining on parts of Azerbaijan now controlled by the Armenian army. An international gold-mining tycoon, Friedland got his nickname after he tried to sell LSD to an undercover agent in Maine in 1969. He retained the moniker after a string of his South American mining operations left a wake of environmental disasters and mass protests, including a spill of three billion litres of cyanide-contaminated wastewater in Guyana in 1995.

Azerbaijani officials referred to satellite evidence that Friedland, whose mine-now-think-later policies have caused a stir in many countries, set up the Zod gold mine in the western regions of Azerbaijan.

The area is within a conflict zone where one million Azerbaijanis were expelled in 1992.

The Armenian army currently controls the area and many Azeris see the presence of Canadian miners on the spot where Azeri residents were ethnically cleansed as immensely hurtful and insensitive.

Legally, Canada can do nothing to discipline such mining and oil companies. There is, however, hope that Canuck miners might soon lose their international license to misbehave.

Last year in Canada, the Government Roundtable on Extractive Industries resulted in an unprecedented agreement between a wide-range of socially conscious do-gooders and the oil and mining industries.

In March, an impressive coalition of industry and citizen groups signed the document that would set standards on how Canadian mining corporations should operate abroad.

Although the system is toothless -- the mining companies balked at fining rule breakers -- civil groups hope that the agreement will be enshrined in law this fall and that fines for corporate mining misbehaviour will eventually follow.

Keenan is optimistic that the federal government will soon make the deal law.

"We've got mining, oil and gas companies behind this agreement, Canadian civil society, faith-based organizations, labour unions, environmental NGOs, human rights groups; they're all backing it. We've never had this kind of consensus before."

And there's hope that other Canadians can pick up the slack and help foster the sort of positive trade in Azerbaijan that Canadians can be proud of.

Ottawa entrepreneur Grant Thomas, who has visited the Caucasus half a dozen times, sees Azerbaijan's rocketing economy as having potential for more than morally dubious mining by opportunistic Canadian entrepreneurs.

"If we can mobilize the time and the attention, there are some niche areas in which Canadian companies in Canada could become a leader in Azerbaijan," he says.

Thomas's baby is called a Regional Innovation Zone, a conception that would accelerate the possibility of Canadian technology reaching Azerbaijan. He sees Canada working with Azerbaijan on such things as satellite seismic mapping and environmental clean-up technologies.

Other Canadian initiatives fostering a different kind of relationship with Azerbaijan includes the Digital Opportunity Trust, an Ottawa NGO that aims to bring computers to countries where they're scarce. Alberta businessman Donn Lovett tells the Dominion that he was enthusiastically received in a trade mission to the country.

Meanwhile, Karen Keenan hopes that one day soon, Maple Leaf miners will no longer be able to undermine Canada's reputation and interests abroad. "The Canadian government is finally saying that maybe we should revisit our rules to see if our standards are high enough to bring us real benefits."

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