Canadians Run Amok In Azerbaijan

by Kristian Gravenor

The Dominion, Canada

Aug 2 2007

Mining, oil undermines central Asian diplomacy and trade

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 a flight to Ashgabat,
Turkmenistan, a former Soviet Republic populated by nomadic desert

It’s also home to sensitive post-Soviet territorial disputes, the
most delicate of which is Turkmenistan’s 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 and
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’ve broken a rule or
regulation somewhere.

But there are no Canadian rules when it comes to our companies
extracting abroad. None. Really. 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 dirty 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 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

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 miners 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 positive 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."

Because if Canada’s resource extractors are kept in check, countries
like Azerbaijan can become gold mines, figuratively speaking, for
legitimate, mutually beneficial trade.