Canadian Manufacturing

$53M mining-centric Peru aid announcement clouded by Senate fiasco

The aid will be spread over six years and go towards mining-related initiatives and education—a new and controversial approach for Canada's aid and foreign policy

LIMA, Peru—Prime Minister Stephen Harper took the rare step of announcing a $53-million aid package well before holding any meetings with Peruvians in the hopes of garnering some attention for his policy plan amid a festering scandal fueled by unsavoury expenses claimed by some Harper-appointed Senators.

The aid will be spread over six years and go towards mining-related initiatives and education—a new and controversial approach for Canada’s aid and foreign policy that places natural resource extraction and promotion of Canadian business at the centre.

The joint statement also announced an agreement to expand air transport between Canada and Peru that will mean more flights to more places in each country.

The natural resource focus on Canada’s aid policy has raised plenty of eyebrows in the development agency community.

There is a global push to have mining and energy companies be more transparent in the royalties and payments they make to governments in developing and emerging countries, and Canada’s new policy plays into this dynamic.

But at the same time, aid activists worry that Canadian profits will come before poverty alleviation when it comes to Canada’s foreign policy and aid.

“The Prime Minister’s visit to Peru provides an opportunity for him to speak out on the importance of putting human rights, including the right of indigenous communities to manage their lands, and respect for the environment at the heart of any policy to promote resource extraction as an avenue for economic development,” said Oxfam Canada’s executive director, Robert Fox, in an email interview.

“It also provides a platform for him to announce unequivocal Canadian support for increased transparency by Canadian mining companies abroad.”

Before taking questions from the media in Lima, Harper will be meeting with mining executives.

The new “extractive industries” approach was rolled out last fall, and aims to align Canada’s aid spending more closely with its commercial interests.

At the same time, the policy is meant to encourage ensure Canadian investors uphold high standards when it comes to labour and environment in developing countries.

Peru is one of Canada’s key recipients of foreign aid, and Canadian mining companies have a large presence in parts of the country known for social unrest. So Peru—as well as Tanzania—is a key testing ground for the extractive-industries-orientation of foreign policy.

“It’s still very conceptual,” said Ottawa-based trade analyst Laura Dawson.

Canadian direct investment in Peru was $6.9 billion in 2012, much of it in the natural resources sector.

And while many Canadian aid activists want to see mining companies treat their foreign labour fairly, they are leery about how Harper will use the new approach.

“From my perspective, Harper is pursuing the wrong policy in Latin America,” said Jen Moore of MiningWatch Canada.

The Canadian government is now seen as a representative of Canadian mining companies in the region, she said, “aimed at maximizing profits and investor protections for mining companies at the expense of people and the environment.”

While in Peru, Harper hopes to also discuss whether Canada should be participating in the Pacific Alliance free-trade talks.

Peru has been a strong advocate to get Canada at the table, and Canada now has observer status. But neither the alliance—Mexico, Colombia, Chile and Peru—nor Canada is sure whether Canada should actually take the plunge.

Harper will spend all day Thursday in Colombia at a Pacific Alliance summit, checking out the talks to see what Canada would gain from joining them.

Canada already has free-trade agreements with all four Pacific Alliance countries, but the new pact aims to go beyond trade in goods to include free movement of labour, capital and investment as well.

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