Speech to the University of Manitoba
The Honourable Gary Filmon
Chair, Security Intelligence Review Committee
National Security and Economic Prosperity”
Associates of the I.H. Asper School of Business
University of Manitoba
April 5, 2006
Thanks very much for the invitation and the opportunity to speak here today.
As I’m sure you are aware, I am not a graduate of the Faculty of Management, but I had a lot to do with the Associates in the early nineties, when our government made a substantial commitment to match money raised by the Associates and re-allocated from within the university’s budget in order to upgrade and restore the School’s reputation for excellence.
It was a difficult swallow, since we were going through the 2nd worst recession that century in Canada, while simultaneously committed to balancing a provincial budget that had been running deficits for about 20 years. But, the results show that the effort was worth taking and the I.H. Asper School and its graduates are once again highly regarded in Corporate Canada.
And, of course, Dean Feltham and his colleagues play a fundamental role in developing the next generation of Canada’s business leaders and I offer them my congratulations.
As you may know, I am a proud graduate of the University of Manitoba – but in the Faculty of Engineering and the time I have spent in government and the corporate world has convinced me we have much in common.
I had some difficulty in choosing a topic for today, firstly because Jim Lawton cautioned me that the Associates did not host partisan political presentations (on the other hand you may ask questions that stimulate a partisan response), but secondly, my position as a Federal Cabinet Appointment puts me in a very non-partisan role these days.
This afternoon, I want to talk to you about Canada’s national security and its relationship to economic prosperity. But I’m going to do so from my unique perspective as Chair of Canada’s Security Intelligence Review Committee … or SIRC as it is known.
While the relationship between national security and economic prosperity is not usually a topic for discussion, I think it’s something business leaders here in Winnipeg and across the country ought to think more about.
I say this because opportunities for prosperity in today’s global economy are accompanied by significant security threats.
Of course, when I’m talking about threats, I’m not referring to the legitimate competition occurring within Canada or abroad. I’m referring to the criminal, terrorist and espionage activities of individuals, organizations and foreign states.
As business people, we know that markets abhor instability of any kind. The types of activities I just mentioned undermine our economy and threaten Canada’s ability to compete on the world stage. So it’s important that we understand these security threats and their potential impact on our economic prosperity.
This afternoon, I’m going to discuss some of these threats. I’ll also talk about the important role that the Canadian Security Intelligence Service or CSIS, plays in responding to them … and the role that SIRC plays in reviewing CSIS’s operations.
Conditions for economic success
Let’s begin by reminding ourselves about the factors that contribute to Canada’s social stability and economic prosperity. These include: effective government and social institutions … an adherence to the rule of law … respect for individual rights … and, of course, a vibrant market economy based on the healthy flow of capital, trade, people and knowledge.
These factors have helped Canada achieve unprecedented wealth over the past few decades. Today, we find ourselves in the enviable position of being the only major industrial nation enjoying consistent surpluses … both in federal budgets and in trade and current accounts. Our economic growth has been the best in the G-7 for over five years. Our dollar is stronger than it has been in twenty years and the unemployment rate, especially in western Canada, is at its lowest level since the 1970s. We’ve posted impressive gains in family incomes, profits and tax revenues.
However, if we are to maintain this prosperity, we must be prepared to confront emerging security threats … and demonstrate our willingness to protect our vital economic interests.
The most ominous threat facing Canada and other democracies today is international terrorism.
Ironically, the very conditions that spurred the growth of the global economy have also enabled terrorism to flourish. Increased communication and mobility … and the openness of our economic and technological systems … have enabled extremists to hide within our societies and carry out terrorist attacks with relative impunity. The human and economic cost has been enormous.
September 11th remains the most striking terrorist action. Those attacks, by a small group of determined Al Qaeda terrorists, resulted in more than 2,600 deaths at the World Trade Centre, 125 at the Pentagon and another 256 who died on four hijacked aircraft.
Among those killed in the towers were 24 innocent Canadian men and women … including Christine Egan, a 55-year old nurse from Winnipeg.
Beyond this horrific human toll, the attack on the World Trade Centre resulted in an estimated $30 billion in property losses and insurance costs to the American economy.
As Thomas Homer-Dixon of the University of Toronto points out: “
Scared, insecure, grief-stricken people aren’t ebullient consumers. They behave cautiously and save more. Consumer demand drops, corporate investment falls, and economic growth slows.”
Homer-Dixon argues that when psychological responses are factored in, the true cost of 9/11 in lost economic growth and decreased equity value, could exceed a trillion dollars.
A more recent example of Al Qaeda terrorism was last July’s bombings of the London transportation system, which killed dozens of people, injured hundreds more and resulted in an estimated 300 million pound loss for Britain’s tourism industry.
This kind of sophisticated and lethal terrorism has two key objectives: to undermine our fundamental right to human security and to inflict maximum economic damage on modern, industrialized nations.
That’s why it is so important for the business community to have a full and complete picture of the current threat environment facing Canada … as well as an appreciation of the work being done by those organizations charged with safeguarding Canada’s national security.
Current Threat Environment
The London bombings … and the deadly Madrid attacks the year before … should be a constant reminder to Canadians of just how much we take our security for granted.
A sense of physical security is fundamental to the exercise of all the other rights we enjoy in a free and democratic society. Security creates the conditions that allow us to invest, to live and work without fear. It is the basis of our economic prosperity and quality of life. That’s why it’s vital that we maintain both the will and the means to protect it.
In a recent report entitled A Blueprint for Canadian Leadership in a Transformed World, the Canadian Council of Chief Executives highlights the need for Canada to improve its competitiveness in a transforming global economy.
Writing from what it calls the “
front lines” of global commerce, the Council warns that Canadians have become “
dangerously complacent” about a wide range of emerging challenges to our country’s ability to sustain the economic well-being of its citizens.
And not surprisingly, at least from my perspective, the Council cites international terrorism as one of the most significant challenges.
I’m not suggesting that Canada is avoiding these challenges. Canada has shown that it will do what’s necessary to combat terrorism and increase international security. The best example is our current troop deployments to Afghanistan. Canadian men and women are on the front lines of the war on terror, and will continue to be there for the foreseeable future.
This commitment to combating terrorism is based on recognition that Canada … and its citizens … are not immune to terrorism.
Following the London bombings, Al-Qaeda re-issued its list of target countries for terrorist action: and for the second time Canada is on the hit list. In fact, of the six countries named by Osama bin Laden, Canada is the only one which has not yet experienced an attack on its own territory.
Speaking of the possibility of terrorist violence in our country, CSIS Director Jim Judd recently confirmed publicly what the Service has acknowledged for some time: that it’s not a matter of “
if” there will be an attack, it is a matter of “
Terrorism in Canada
Madrid and London also highlight some of the difficulties democracies like ours face in preventing attacks on innocent civilians.
Our country’s openness … and its democratic and multicultural nature … make it attractive for terrorists. Indeed, CSIS has observed that with the possible exception of the United States … there are more international terrorist organizations active in Canada than anywhere else in the world.
Terrorists here are linked to religious, ethnic and nationalist conflicts around the globe. They are here because Canada offers a relatively safe haven for recruiting … fund-raising ... lobbying through front organizations … coercing and manipulating immigrant communities … and coordinating the illegal movement of individuals to and from the United States.
The London bombings show that western democracies are particularly vulnerable to threats posed by “
home-grown” converts to Islamic extremism. The terrorists involved in the two London attacks were all British citizens. Three of those involved in the first attack were born in the United Kingdom, while the others had acquired British citizenship after immigrating to that country.
As I said earlier, just because Canada has not experienced an Al Qaeda attack, doesn’t mean that we’re immune. Canadians and people residing in Canada have been involved in terrorist attacks and conspiracies around the world … and these “
home-grown” terrorists could potentially pose a threat to our own country.
Some of you may have read that Al Qaeda recently tried to attack a vital oil installation in Saudi Arabia, which if successful, could have disrupted world oil supplies and struck a major blow to industrialized economies. Just imagine that “
God forbid” type of scenario here.
As a major oil and gas producer … and supplier to the world’s economic superpower next door … Canada’s pipeline infrastructure is highly exposed and very vulnerable, making it an ideal target. Should such an attack occur, the effects would be catastrophic. We’re not talking about a one-day market downturn, but a major economic blow which would have long-lasting repercussions. We must remain vigilant.
CSIS’s Role In Combating International Terrorism
Given the threat posed by international terrorism, it’s not surprising that CSIS’s number-one priority is counter terrorism … with investigators focused on preventing terrorist acts from being planned or carried out in Canada … and from affecting Canadians abroad.
The Service devotes significant resources to investigating targets, be they groups or individuals, who pose a threat to Canada’s security. Some of these investigations have been underway for some time; others are quite recent.
CSIS is also providing advice to the Government on virtually a daily basis, through threat assessments. These are documents which evaluate the scope and immediacy of terrorist threats in Canada or abroad, and are used by intelligence and law enforcement agencies to keep on top of emerging global threats.
The Service also carries out security screening of immigrant and refugee applicants at our borders, in order to identify and prevent terrorists from entering this country. And within Canada, it conducts community interviews to build contacts and establish a presence, in order to build trust and prevent extremism from taking root.
Transnational criminal activity
Another reality of the new global economy is transnational criminal activity.
Technological advances over the past twenty years have made national borders irrelevant to telecommunications and financial transactions, and have enabled terrorist and criminal organizations to expand globally.
United Nations estimates place the cost of transnational criminal activity in developed countries at two per cent of annual gross national product. This means that transnational crime in Canada … with its GNP of about $ 1.3 trillion dollars … is potentially as much as $26 billion a year … or roughly two-thirds of Manitoba’s G.D.P.
CSIS has identified scores of transnational criminal organizations in Canada, including Asian triads, Colombian cartels, Japanese yakuza, Jamaican posses, Mafia groups from the USA, Calabria and Sicily, Russian and Eastern European mafiyas, Nigerian crime groups and virtually all of the major outlaw motorcycle gangs.
These organizations’ criminal activities include large-scale insurance fraud, the depletion of natural resources, environmental crime, migrant smuggling, bank fraud, gasoline tax fraud and corruption. If there is big money at stake, they are involved.
The CSIS Transnational Criminal Activity Unit provides the Government with intelligence on the threat these groups pose to our national security. Specifically, CSIS investigates threats to the integrity of Canadian financial institutions and key sectors of the Canadian economy … looks at public institutions and programs to detect corruption and fraud … and investigates attempts by major transnational criminal groups to establish operational bases in Canada.
In addition, CSIS works closely with FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada… which produces financial intelligence on threats to Canadian security. FINTRAC’s information helps the Service detect, prevent or deter terrorist financing in Canada.
Another serious threat to Canada’s economy is money laundering. An estimated $5 to $17 billion is laundered in Canada each year.
This kind of large-scale money laundering, using legitimate financial institutions, can negatively affect the investment climate and consumer confidence. The large amounts of money, combined with a willingness to use violence, enable criminals and terrorists to bribe, extort or coerce employees of financial institutions and governments.
All of the threats I’ve just mentioned … international terrorism, transnational criminal activity and money laundering … undermine the legitimate functioning of a free-market economy. They threaten law and order … erode people's sense of security and trust in financial institutions … and ultimately pose a significant threat to our economic and social well-being.
A final threat I want to highlight is economic espionage. While less visible, it is equally harmful to our national security interests.
Economic espionage is best described as illegal or coercive activity by foreign governments to gain access to Canadian economic intelligence.
Canada is a world leader in many technology-intensive fields … aerospace, biotechnology, chemicals, communications, information technology, mining and metallurgy … as well as nuclear, oil and gas technologies. The targeting and theft of Canadian economic intelligence results in lost contracts, jobs and markets, and a diminished competitive advantage. In short, it costs us billions of dollars every year.
Foreign espionage activities in Canada include office break-ins … database hacking … the recruitment of employees or consultants who have access to sensitive information … and the illegal exploitation of joint ventures.
To give you some examples, we’ve seen a case in which a foreign scientist working in the biotechnology sector stole laboratory cultures and confidential manuals. The Canadian company lost valuable research and development data … and significant potential earnings.
In another case, a Canadian company … hoping to secure a lucrative contract from a foreign government … allowed a national of that country to work on a sensitive, leading-edge technology project. The foreign government simply duplicated the technology, based on the information gathered by its inside source.
CSIS works to counter this type of espionage by monitoring the activities of known or suspected foreign intelligence officers … and by preventing foreign visitors, students or delegates suspected of clandestine intelligence activities from entering the country.
Foreign espionage is not limited to Canadian territory. Canadian business people traveling abroad may also be vulnerable. A foreign government can operate more easily within its own borders, making hotel rooms, restaurants, offices and telecommunications systems vulnerable to economic espionage.
A key component of the Service’s efforts to combat economic espionage is its Liaison and Awareness Program for Canadian companies. By participating in this voluntary program, Canadian businesses can gain a better understanding of the threat posed by espionage and take appropriate steps to protect themselves.
Another subject which has been in the news recently is the foreign acquisition of Canadian companies and sensitive Canadian technologies … acquisitions that allow other countries to gain a strategic stake in our economy.
I’m very concerned about this. Why? Because some of the state-owned companies seeking a foothold in Canada are run by the same governments who are directly involved in economic espionage against us.
As business people, we all know that an open marketplace with fair competition and limited government intervention … is in everyone’s best interests. But when it’s not a fair fight and when the competition is another country … using every dirty trick in the book to undermine our national security, then our Government has a responsibility to step in.
That is what happened last June, when the former Federal Government introduced amendments to the Investment Canada Act that would allow it to review … and potentially block foreign investments on the grounds that they pose a threat to Canada’s national security.
The amendments … which were intended to bring our legislation in line with other G-8 countries … died on the order paper when the federal election was called. I hope that the new Government will reintroduce them. Personally, I think these amendments are long overdue, because they would help ensure that sensitive sectors of our economy remain in Canadian hands.
As you can see, Canada’s intelligence service faces many challenges in countering threats to Canada’s physical and economic security. The complexity and sheer volume of these threats means that CSIS must be very sophisticated and much more proactive in its intelligence gathering … which could lead to overstepping the bounds of what is acceptable in this country.
And that’s where SIRC comes in. Our Committee makes sure that that CSIS’s operations and activities are carried out in a manner consistent with its role and mandate, as outlined in the CSIS Act.
SIRC’s Relationship to CSIS
To fully understand the Committee’s role, I want to take a few moments to talk about the creation of both CSIS and SIRC.
Prior to 1984, security intelligence in Canada was handled by the RCMP’s Security Service, which, as a police force, operated at arm's length from government in order to avoid political interference in its day-to-day operations.
All this changed in the late 1970s, due to a series of scandals … the most infamous of which was the burning of a barn used as a meeting place by left-wing Quebec intellectuals. These scandals led to the creation of the McDonald Commission of Inquiry Concerning Certain Activities of the RCMP, which reported in 1981 … and whose recommendations resulted in the disbandment of the RCMP's Security Service.
Mr. Justice McDonald's report also led to the passage of the Canadian Security Intelligence Service Act on July 16, 1984, making Canada one of the first democratic governments anywhere in the world to establish a legal framework for its security service.
For the first time, Canada had legislation that clearly defined the mandate and limits of state power to conduct security intelligence. And equally significant, the CSIS Act created a framework to keep those powers in check — a framework which, by and large, has stood the test of time.
While the CSIS Act gives the Service considerable power to investigate threats to national security, it also provides several accountability measures to ensure that these powers are not misused. The Act describes in detail how the Service’s work is to be monitored through a rigorous system of political and judicial controls … including an Inspector General who reports directly to the Minister of Public Safety … and our own independent, external review body, the Security Intelligence Review Committee.
Basically, SIRC has two functions: to conduct reviews of CSIS’s activities and investigate complaints made against the Service. We have the absolute authority to examine all of CSIS's activities, no matter how sensitive and how classified that information may be. The sole exception is Cabinet confidences, which means discussions among Ministers.
SIRC reviews are done by assessing CSIS’s activities against four instruments, which together form the legislative and policy framework of the Service. These are: 1) the CSIS Act; 2) Ministerial direction; 3) National requirements for security intelligence; and 4) CSIS operational policy.
In each of its reviews, the Committee tries to answer several essential questions:
- Did CSIS have reasonable grounds to suspect a threat to the security of Canada?
- Was the level of investigation proportionate to the seriousness of the threat?
- Did exchanges of information between CSIS and domestic and foreign agencies comply with the law and the agreements and caveats which govern information-sharing?
- And last but not least, did CSIS's investigation respect the rights and freedoms of individuals who were involved in lawful activities in protest or in defense of a cause?
SIRC's second responsibility is to investigate complaints against CSIS that may come from individuals or groups. These can be complaints about:
any act or thing done by the Service” (section 41);
- denials of security clearances to federal government employees and contractors (section 42);
- referrals from the Canadian Human Rights Commission in cases where the complaint relates to the security of Canada; and
- very infrequently, Minister's reports in respect of the Citizenship Act.
When SIRC is dealing with a complaint, we have all of the powers of a superior court. If we accept jurisdiction, the complaint is investigated through a quasi-judicial hearing presided over by one or more Committee Members, assisted by our Legal staff.
Complaint cases can be very complex, involving many documents, transcripts and other evidence. After the hearings are completed, the Presiding Member issues a report including findings and recommendations, to both the Minister and the Director of CSIS. And once any information with national security implications is removed, the complainant is also advised in writing of SIRC's findings.
If the Committee finds that CSIS has acted appropriately, we convey that conclusion to the complainant. If the Committee identifies issues of concern, these are included in our report to the Director of CSIS and the Minister and, to the extent possible, in an edited summary to the complainant.
I also wanted to mention that SIRC produces an Annual Report, which is publicly tabled in Parliament. Every review undertaken and every complaint investigated is reflected in its pages. Because of legal obligations to protect national security and personal privacy, SIRC's Annual Report can only summarize our classified, internal reports. However, all 21 of our Annual Reports dating back to SIRC's creation are available on the SIRC website at www.sirc-csars.gc.ca.
After more than two decades of experience with the Canadian system, I think that most observers acknowledge that Canada “
got it right”. They would say that Canada's review bodies have helped to make CSIS a more professional and a more efficient intelligence service.
Yes, we want Canada to have a strong capacity to deal with terrorism and other threats to our national security. But at the same time, SIRC exists to make sure that CSIS maintains an absolute respect for the rule of law.
Twenty-one years after it was created, SIRC has never been more relevant, especially given the complex and volatile security environment we now live in.
By maintaining the traditional Canadian balance between public safety and individual rights, SIRC plays a vital role in preserving the values which make this country such a wonderful place to live and do business.
And that, my friends, is why national security is so important to our economic well-being. I’m proud to be SIRC’s Chair, because the Committee is helping to safeguard a free and democratic society … and in the process … allowing Canadians to continue to build a dynamic and prosperous economy.
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