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OTTAWA’S DEAL TO ALLOW REPAIR OF RUSSIAN-OWNED TURBINES COVERS LONGER PERIOD THAN PREVIOUSLY DISCLOSED

ROBERT FIFE and STEVEN CHASE

July 11, 2022

The Globe and Mail

 

The Canadian government’s deal to allow the repair of Russian-owned turbines covers a period of up to two years from now and would allow the import and re-export of up to six units – a far more extensive arrangement than had previously been disclosed.

Two government officials told The Globe and Mail on Tuesday that Global Affairs Canada granted the German industrial giant Siemens Energy an exemption under Canada’s Russia sanctions for two years. This allows the company to send turbines from Nord Stream 1, a pipeline majority-owned by Russian state controlled Gazprom, to Siemens Canada’s facilities in Montreal for regular repair and maintenance.

One of the officials stressed that the arrangement with Siemens allows the Canadian government to revoke the sanctions-relief permits at any time. The Globe is not identifying the officials, who were not authorized to discuss the matter publicly.

Russia last month cited the delayed return of the turbine equipment, which Siemens Energy had been servicing in Canada, as the reason it decided to reduce the flow of natural gas through Nord Stream 1. The pipeline, which runs from Russia to Germany, was operating at 40-per-cent capacity.

Separately on Tuesday, the Ukrainian World Congress, an advocacy group for the Ukrainian community whose head office is in Toronto, filed a legal challenge of the government’s decision in Federal Court. The application for a judicial review of the permit to circumvent sanctions is asking the court to suspend and ultimately quash it. The permit is “unreasonable, unjustifiable, and contrary to the stated purpose of Canada’s sanction regime,” the legal application said.

Ukraine’s ambassador to Canada, Yulia Kovaliv, expressed disappointment about the two-year deal. ”The revenues from gas and oil are directly supporting the Russian military. To waver even for two years, and showing Gazprom can get what it wants, is a dangerous precedent,” she said in an interview on Tuesday. “They are stamping the status quo on weaponizing energy.”

Prime Minister Justin Trudeau’s government and Germany had initially said only one turbine was at issue. On Sunday, Keean Nembhard, press secretary to Natural Resources Minister Jonathan Wilkinson, revealed that six are involved.

One of the turbines, stranded in Montreal due to sanctions on Gazprom, is being shipped back to Europe, while the other five will be sent to Siemens Canada over the next two years for regular maintenance, the sources said. Siemens Canada will send the turbine equipment to Germany, whose government will then turn it over to Russia. The indirect return route could allow Canada to say it has not reneged on its sanctions.

Siemens Energy spokesperson Ann Adair said the company had no comment on the two-year deal. Adrien Blanchard, press secretary to Foreign Affairs Minister Mélanie Joly, would not

confirm or deny the two-year time frame, but said “these turbines follow a regular maintenance schedule which was paused due to sanctions.” “The maintenance schedule now restarts for a limited period of time. However, the minister can revoke the permit at any time,” Mr. Blanchard said in a statement.

The Ukrainian government said Russia’s demand for the return of the turbine equipment to resume a higher volume of gas deliveries to Europe amounted to blackmail and unconventional warfare. Returning the gear, President Volodymyr Zelensky said on Monday, was an “absolutely unacceptable exception to the sanctions regime against Russia.”

Mr. Zelensky said the move could undermine Western efforts to isolate Moscow, and open the door for other Western allies to ease sanctions against the Kremlin for economic gain.

The Ukrainian Canadian Congress (UCC), an advocacy group for Canadians of Ukrainian origin, said the arrangement runs counter to the idea that Europe is trying to reduce its reliance on Russian natural gas. UCC national president Alexandra Chyczij said it suggests Moscow will be able to reap years more profit from gas sales to Europe, money that helps fund its war machine in Ukraine. “This is a deadly and far-reaching precedent. We urge Prime Minister Trudeau to immediately cancel this permit and to stop Russia’s genocide of the Ukrainian people,” Ms. Chyczij said.  “The special permit issued by the government of Canada to exempt Gazprom and Nord Stream 1 turbines from Canadian sanctions is far more extensive than necessary to allow Germany to top up its energy reserves for the winter. This permit in effect facilitates the continued operation of Nord Stream 1 for a two-year period and does not accord with the stated intention of Germany to wean itself from Russian energy supply.”

Clifford Sosnow, co-chair of law firm Fasken’s international trade and investment group, said the deal is a tactical victory for Russian President Vladimir Putin. But, he said, Mr. Putin was denied a strategic victory because Canada’s decision to repair and return the turbines – as Germany requested – has prevented a rift between NATO allies. He said the extraordinary decision by the Biden administration to publicly support Canada’s decision underlines how important it was to maintain NATO solidarity.

Conservative foreign affairs critic Michael Chong called the lengthy sanctions permit for importing and re-exporting the turbines a “significant circumvention of the global sanctions package meant to punish and isolate the Putin regime, and a decision that undermines Canada’s standing in the world.” He said Canada’s lack of effort to deliver liquefied natural gas to Europe is part of what has left Europeans scrambling for energy. “The Liberal government never should have put Canada in a situation where the export of these turbines was an option in the first place. The fact is, the Liberal’s anti-energy policies have cancelled and discouraged projects that would have allowed Canada to export liquefied natural gas to our European allies, including Germany,” Mr. Chong said.

He added that the most important thing the Liberal government could do now is expedite the construction of new energy infrastructure that would allow the export of Canadian liquefied natural gas to Europe.

Mr. Trudeau was under intense pressure from German Chancellor Olaf Scholz, who raised the issue with him at the G7 summit in late June. Mr. Scholz is planning a trade visit to Canada on Aug. 22 and 23 to push for the construction of liquefied natural gas export facilities on the East Coast.