MAY 30, 2005 | WESTERN STANDARD
Puppets of Beijing
Palsy'Walsy w/Huawei [spies]
Weeeeeeee What Fun! Giggles All Round....
An aggressively pro-China
policy can only hurt Canada’s
national interests.
So who’s pulling the
strings in Ottawa’s
scheme to build
up the next
Communist
superpower?
KEVIN STEEL
Norm Altenhof is in love. The 63-
year-old retired 9-1-1 operator
and former air force veteran
from Calgary returned April 20 from a
month-long tour of China bursting with
enthusiasm. “I would go back there in
second,” Altenhof says. “Standing on a
street corner in Beijing is just like being
in Toronto, only it’s cleaner.”
Everywhere he went, there were outward
signs that a country that had been a
hermit nation barely a few decades ago
had blossomed into a first-world
economic miracle. There were boutiques
full of Gucci shoes and businessmen in
flashy BMWs. After touring nine
Chinese cities, and visiting the homes of
Chinese nationals of varying economic
stations, Altenhof is convinced that the
People’s Republic of China is a nation to
watch in the 21st century. “Everybody
was pretty upbeat and looking to the
future. They seemed to really embrace
capitalism,” he says, though he admits he
only got a tourist’s eye view of things.
It’s true that nobody would talk politics
in public places, Altenhof admits.
Especially not about the 1989 massacre
of pro-democracy students in Tiananmen
Square, which is never discussed openly
in Beijing—though, in private, some
citizens told him that the actual number
of murdered students was 3,000, not the
1,000 widely reported in the West. And
there were signs of a growing disparity
between the rich and the poor, says
Altenhof. Despite aggressive economic
reforms over the past decade—including
the partial privatization of state-owned
firms and even the creation of a national
stock exchange—it’s estimated that out
of the 1.3 billion people living in China,
only 250 million—about one in six—have
benefited economically.
Altenhof believes that what’s still missing
are democratic reforms. He says that
he was thrilled, for instance, to see
Conservative MP Jason Kenney, on an
official government visit to Beijing
earlier this year, demonstrate his support
for China’s underground pro-democracy
movement by paying a visit to the family
of Zhao Ziyang. Zhao, a former premier
of China who had implemented many
of the sweeping reforms, had been
excommunicated from the Communist
party after expressing sympathy for the
Tiannanmen protestors. He spent his
final days as a pariah, and, after he died in
January, Kenney personally paid
tribute to Zhao by visiting his home. “If
people like that can keep the pressure on
Beijing, then I think everything will be
OK,” says Altenhof.
But that kind of pressure on Beijing is
exactly what Canada’s government seems
desperate to avoid. Prime Minister Paul
Martin castigated Kenney for his visit,
claiming that he himself had chosen not
to pay tribute to Zhao because the
family had requested privacy—which was
later proven to be false. During the
January visit, Martin himself faced a
barrage of criticism from human rights
groups for refusing to put much pressure
on his hosts over their notorious human
rights abuses. He didn’t even protest
when the Communist party banned
certain Chinese-Canadian journalists
from covering Martin’s visit because they
had been critical of the state in the past.
“Paul Martin’s opposition of a visit to
the family of a deceased leader of a
democratic movement within China is
entirely in keeping with Paul Martin’s
China policy in general,” says Alastair
Gordon, president of the Canadian
Coalition for Democracies based in
Toronto. If anything, says Gordon,Martin
has taken pains to coddle the
Communists.“He is submitting to the will
of Beijing when he denies the right of any
democratically elected Taiwanese to even
set foot in Canada to visit family or in
transit to some other destination,” says
Gordon.“He submits to the will of China
when he refuses to treat the Dalai Lama
as a political leader, only as a religious
leader, and refuses to speak about human
rights with him. He is submitting to
somebody’s will when he approves $50
million in foreign aid to a country that
has a gross domestic product of $7.4
trillion, the world’s largest army, its own
space program, and 700 missiles aimed at
Taiwan.” The fact that Canada is sending
millions in relief to an undemocratic
country with the fastest-growing economy
on the planet—and successfully
launched its first space mission in 2003—
does seem odd when you consider that,
on April 19,Minister of International Cooperation
Aileen Carroll announced that
foreign aid is being given on the basis of
need and good governance.
MAY 30, 2005 | WESTERN STANDARD COVER STORY 30
Population: 1,306,313,812
(20.5% of the world)
Area: 9,596,960 sq. km
(fourth largest)
GDP total: US$7.262 trillion
GDP per capita: US$5,600
Annual military
spending: US$67.5 billion
Military service: Compulsory, age 18,
two years
Life expectancy: 72.27 years
Religion: Official atheism
Internet users: 94 million
Total exports: US$583.1 billion
Total imports: US$552.4 billion
Oil consumption: 4.96 million bbl/day
Oil imports: 2.41 million bbl/day
Percentage of world’s
commodities China consumes:*
Coal: 31%
Oil: 7.7%
Finished steel: 26.9%
Aluminum: 18.6%
Copper: 19.7%
Pork: 50.4%
Fish: 32.3%
Rice: 32.8%
Cigarettes: 34.8%
*2004 ESTIMATES
SOURCES: CIA WORLD FACTBOOK, FORTUNE
SPOTLIGHT ON CHINA
But Martin had more pressing matters
to discuss with China’s Communist rulers
than to nag them about executed
dissidents, persecuted Christians or the
systematic obliteration of Tibetan culture.
There was a little matter of oil. Or
rather, the big matter of oil. Before
leaving Beijing, Martin had inked a
multilateral trade agreement that promised
the Chinese government even more
kindness from Canada, specifically
greater co-operation in several industries,
but with an emphasis on oil and gas.
“Canada and China have decided to
work together to promote cooperation in
the oil and gas sector, including Canada's
oil sands, as well as in the uranium
resources field,” read a press release from
the Prime Minister’s office announcing
the agreement. “Canada and China will
therefore encourage Canadian and
Chinese enterprises to develop mutually
beneficial commercial partnerships in
these sector”With its explosive growth—
by 2020, China’s GDP is expected to
quadruple from its 2000 level—the Red
state is thirstier than ever for resources.
Across the globe, the Communist government
is fanning out and buying up any
available precious metals and crude oil it
can lay its hands on.China now consumes
about 4.956-million barrels of oil a day
(about a quarter of the 19-million barrels
Americans guzzle daily), with about a
quarter of it imported. But economists
estimate that by 2030, oil consumption in
China will quadruple, far outstripping
domestic production. In addition to cutting
deals in oil-rich countries, such as
Venezuela, Sudan and Iran, the Chinese
are aware of the potential of the Alberta
oilsands.
The People’s Republic of China has
already secured a foothold in the northern
Alberta oilfields. There’s Husky
Energy Inc., controlled by Hong Kong
billionaire Li Ka-shing’s Hutchison
Whampoa group, which recently
announced it is going ahead with a $10-
billion oilsands development project
scheduled to be in full production by
2009. Around the same time, a new
pipeline should be complete, to deliver all
that oil through the Rockies to the B.C.
coast, where it can be loaded onto
tankers for export. The project,
announced April 14, is a joint venture
between Canada’s largest pipeline
builder, Enbridge Inc., and one of the
PRC’s major oil producers, Petrochina.
CNOOC Ltd., another massive stateowned
Chinese oil producer, made its
first foray into the oilsands in April,
scooping up a 17 per cent stake in
Calgary-based MEG Energy Corp.
But given that Canada is situated right
next to the largest energy market in the
world—and the Americans are interested
in the oilsands as a secure source for
crude, one that comes with a lot fewer
complications than relying on Mideast
suppliers—some are wondering why
we’re so anxious to let the Chinese lock
up so much of the reserves. The
Communists, after all, are in the midst of
an unprecedented military buildup,
they’re still one of the worst human
rights abusers on the planet and they
seem increasingly willing to draw the U.S.
into a war over Taiwan if that country
ever declares independence (a move that
President George W. Bush has indicated
he will defend).
31
AP/DAN LOH
Most Canadians remember
Peppergate at the November
1997 Asia Pacific Economic
Cooperation summit in Vancouver for its
images of the RCMP’s brutal treatment of
Canadians protesting against the human
rights abuses of then Indonesian president
Suharto. The cops doused the demonstrators
with pepper spray and ripped down
their signs. Canadians probably also
remember then prime minister Jean
Chrétien’s cold attempt at making light of
the undemocratic assault by quipping
about the pepper spray: “For me, pepper, I
put it on my plate.” An inquiry was
subsequently called to investigate whether
the protesters’ rights were violated. The
inquiry concluded that the RCMP ignored
the protestors’ charter freedoms in executing
their violent crackdown.
But how many Canadians know the story
behind the story? Why was the Canadian
political elite so eager to please a detested
dictator who was to be ousted by his own
people a mere six months later, anyway?
During his 32-year reign, the corrupt
General Suharto had amassed a huge
financial empire and is ranked as the sixth
richest man in the world, with an estimated
personal wealth of $16 billion. And one
of the businesses dealing with Suharto’s
family was none other than then finance
minister Paul Martin’s.
Paiton Shipping, a Barbados-based
company 50 per cent owned by Martin,
was awarded a huge contract from the
Paiton Power Plant just one year before
the APEC fiasco. Controlled by Suharto’s
son, the power plant hired Martin’s
shipping firm to transport clean coal from
COVER STORY MAY 30, 2005 | WESTERN STANDARD
Business before displeasure
Why was Ottawa so quick to crush human rights
protests at the 1997 APEC summit?
Mounties take down a demonstrator
protesting the presence of Indonesian
dictator General Suharto at the 1997 APEC
conference in Vancouver. At the time, the
corrupt Suharto regime was in business
with then finance minister Paul Martin
So, what exactly is Canada’s interest in
providing fuel to a country that may soon
represent a bigger threat to world stability
than Iran or North Korea? “We’re left
with a foreign policy toward China that
absolutely defies explanation as to how
it’s in regional interests, trade interests,
political interests, economic interests,
Canadian interests,” says Gordon.
Though he does think there’s one
explanation, unpleasant as it may be: that
the politicians who devise Canadian
foreign policy have their own reasons for
getting close to China. “The kind of connection
between those who make our
China policy show that they have the
potential to benefit by submitting to the
will of Beijing.”
Long before average Canadians like
Altenhof caught on to the potential of
China, Paul Martin was getting in on the
ground floor. Back in the days of
Chairman Mao, when China’s economy
was still heavily agrarian and backwardly
collectivist, the future prime minister was
already planting the seeds of commerce.
“I first came to China in 1972, during the
waning years of the Cultural Revolution.
I was in business then,” Martin said, in a
Jan. 21 speech in Beijing.At the time, the
aspiring businessman was working for
Power Corporation of Canada, a firm
with $16 billion in revenues controlled by
Montreal’s powerful Desmarais family. It
was clearly an eye-opening experience
because he’s been making deals in China
ever since. Canada Steamship Lines, the
gargantuan shipping company Martin
purchased from Power Corp. in the
eighties, that is now run by his children,
has taken advantage of China’s cheap
workers to build ships. Three CSL container
ships were built in the Jiangnan
Shipyard, controlled by the People’s
Liberation Army. A fourth was refurbished
in Shanghai.Martin actually owns
35 per cent of China’s Tangshan Jinshan
Marine Co.
The Chinese interests of the Desmarais
family—who have been strong financial
backers of Martin’s political campaigns
from early in his political career—run
even deeper. Power’s chairman, Paul
Desmarais, is the founding chairman of
the Canada China Business Council,
which promotes trade between the two
nations. The honorary chairman is his
brother, André Desmarais, CEO of
Power. Power Corp. has longstanding ties
with one of the PRC’s leading corporations,
CITIC Group.As André remarked
at a general meeting in May 2000,
“Shareholders are aware through our
annual reports that for over 20 years we
have had a relationship with the stateowned
China International Trust and
Investment Corp. of Beijing.” In 1997, the
relationship culminated in Power paying
$358 million for a four per cent interest in
the Hong Kong firm, whose interests
include coal-fired power-generation
facilities, automobile and food distribution
concerns, hotels, shopping malls,
infrastructure, and communications
firms. Their primary business is in aerospace,
owning a major stake in Cathay
Pacific airlines and manufacturing fighter
jets for the People’s Liberation Army.
With a direct stake in such a broad
swath of China’s economy, the Desmarais
surely stand to benefit from Canada’s
increasingly cozy relationship with the
Communists in Beijing. But it’s not just
Martin they have to thank. It was his
predecessor, Jean Chrétien, under whom
Ottawa took a distinct pro-Beijing turn.
André Desmarais, who sits on the
board of directors of CITIC Pacific Ltd.,
a CITIC subsidiary, is married to
Chrétien’s daughter, France. And it was
in the same year that Chrétien’s son-inlaw
was negotiating the major investment
in CITIC that Canada, for the first time in
six years, withdrew its support for a UN
resolution censuring China over its
abysmal human rights record. Today,
China is still cited by groups such as
Human Rights Watch and Amnesty
International as a major abuser of human
rights, including its jailing of political
opponents, persecution of religious
groups and its population control
measures,which include forced abortions.
But 1997 was a pivotal year for Sino-
Canadian relations in other ways. It was
that year that a group of investigators
with the RCMP and CSIS wrapped up a
probe into the systematic infiltration of
Canadian society by Chinese gangs. It
was dubbed Operation Sidewinder. But
almost immediately after the security
report that followed, titled “Chinese
Intelligence Services and Triads Financial
Links in Canada,” was completed, CSIS
ordered it destroyed. At the time, the
head of CSIS was Ward Elcock. Elcock,
in fact, is the nephew of Michael Pitfield,
a confidant of former prime minister
Pierre Trudeau. Pitfield co-authored the
report in the early eighties that led to the
creation of CSIS.Today, he is a director of
Power Corp.
CSIS officials would later claim the
report was destroyed because it was full
of fantastical conspiracy theories. But
they not only eradicated the report
32
a Suharto-owned business in Borneo (the
plant has since been closed after nearly
US$300 million went missing from its
funding and Suharto’s successors
determined that the generator was never
needed in the first place). The financial
backer for the Suharto family coal
business is Moctar Riady, through his
firm, the Lippo Group. Riady was named
as a key Chinese agent in the Sidewinder
report suppressed by Canadian security
officials, and Lippo identified as a front
company for the People’s Liberation Army.
Riady was also front and centre in the U.S.
Chinagate scandal—his son James pled
guilty to giving illegal contributions to
former president Bill Clinton’s campaign.
But the Canadian connection to one of
Asia’s most despised dictators doesn’t
end there. In March 1997, the Liberal
government gave a $250-million Export
Development Canada loan to one of billionaire
Suharto’s companies, Indofoods,
ostensibly to purchase Canadian wheat
for manufacturing noodles.
Martin’s businesses were supposed to
be operated in a blind trust while he was
in cabinet, so he couldn’t possibly have
known that he was doing business with
Suharto at the time the APEC assault and
the EDC loans were ordered—could he
have? Well, in February 2003, it emerged
that Martin had exercised a so-called
“peek-a-boo clause” in his supervisory
agreement at least a dozen times while a
cabinet minister, meaning he was able to
talk business with the directors and executives
managing his multimillion-dollar
shipping empire. In other words, in 1997,
he could have known that Suharto was a
customer of his. So who cares if a few
dozen human rights activists had to be
violently suppressed to make the general’s
visit a bit more comfy? After all, as any
good businessman knows, the customer
is always right.
— KEVIN STEEL
MAY 30, 2005 | WESTERN STANDARD COVER STORY
itself—CSIS took the unusual step of
ordering all notes pertaining to the report
shredded. In 1999, someone leaked one
of the few surviving copies of Sidewinder
to the press. The revelations were
explosive: the security agents had found
that PRC operatives had managed to
infiltrate key sectors of the Canadian
economy. Through their association and,
in many cases, investments in property,
technology firms and security, the spies
had managed to cultivate influence in
Canadian politics and our economy,while
harvesting valuable information from our
industries and military. One of the companies
prominently identified in
Sidewinder was none other than CITIC,
which had invested hundreds of millions
of dollars in Canadian real estate and
resource companies. Sidewinder also
noted that caches of arms had turned up
on Canadian Indian reserves that had
been manufactured by a CITIC
subsidiary. Meanwhile, China’s stateowned
shipping firm COSCO had made
the port of Vancouver its main shipping
hubs.Reports from U.S. intelligence show
COSCO ships have smuggled arms into
the U.S., North Korea, Pakistan and Iran.
Brian McAdam, a former foreign
service bureaucrat who ran Canada’s
immigration office in Hong Kong from
1968 to 1971, and again from 1989 to
1993, was one of the key figures whose
suspicions about the PRC’s infiltration of
Canada led to the Sidewinder investigations.
He says that in the eighties, as the
Chinese takeover of Hong Kong in 1997
began to draw near, the Communists in
Beijing struck a deal with the powerful
Hong Kong triads—criminal organizations
specializing in the international
smuggling of drugs,weapons and humans.
The government and the gangs would
work together to exploit the West for
mutual advantage. One of the primary
strategies was to curry favour and influence
with political leaders through large
campaign donations.“They are very good
at talent spotting,” McAdam says, noting
that Chinese agents were donating to Bill
Clinton’s campaigns while he was still
governor of Arkansas.
In fact, the same sort of so-called
conspiracy theories that characterized
Sidewinder were unearthed in an
American investigation into Chinese
influence peddling and intelligence gathering
in that country. In 1999, the
Chinagate scandal rocked the Clinton
presidency, when it emerged that the
president had accepted large campaign
contributions throughout the nineties
directly or indirectly from Chinese intelligence
agents. What followed, under
Clinton, was a U.S. foreign policy adjusted
in a way that made it easier for the
Communists to get their hands on leading
military technology. Defence contractors
were permitted to work closely with the
PLA to help advance its missile capabilities.
What the Chinese couldn’t get legally,
they stole through a series of front
companies based in the U.S. and Canada.
Detailed in an investigation headed by
U.S. Representative Christopher Cox, the
1999 scandal was partly overshadowed by
the disclosure of then president Bill
Clinton’s affair with White House intern
Monica Lewinsky, and few took notice,
especially here in Canada. But many of
the same figures that were identified in
the Cox report were the same ones
fingered by Sidewinder. Both look into
the connections of Li Ka-shing, who, in
addition to his Husky holdings, has
invested millions in Canadian properties,
banks and telecom firms. Also making
appearances in both the U.S. and
Canadian reports are Macau gambling
magnate Stanley Ho,COSCO and CITIC,
which was caught making illegal
contributions to Clinton’s campaign.
Al Santoli, director of the Asia
America Initiative and a former national
security advisor in the U.S.Congress, says
the Sidewinder report made a big impact
in the States. “It got people to look at
what was developing here in the U.S.,” he
says. “It was something that was systematic.
It had a pattern to it.And because of
the deft knowledge of the authors—and a
few other reports that were coming out at
that time—it drew an expanded light on
what was going,” Santoli says, adding that
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PHOTOS.COM, CP/ RYAN WHITE
Beijing-controlled corporations have been manoeuvring to buy up large pieces of Canada’s
oilfields and mining interests to fuel the booming Chinese economy. In April, rumours that a
Shanghai company was looking to take over CP Ships sent the Canadian corporation’s stock
soaring
COVER STORY MAY 30, 2005 | WESTERN STANDARD
the Canadian intelligence underlined the
extent to which political systems and electoral
processes were being subverted.
“Sidewinder put it in a contextual pattern
and that was very important.”
Had CSIS had its way, those details
might never have come to light.
The agency’s unorthodox attempts to
suppress the report eventually resulted in
an investigation in 2003 by Canada’s
Security Intelligence Review Committee,
the public body that oversees CSIS.
Shortly afterward, the investigation was
quietly abandoned.
Coincidentally, there were several
members of the SIRC board who
themselves were linked to some of the
names that popped up in the Sidewinder
report. Former Ontario premier Bob Rae
also sat on the SIRC board. Rae’s brother,
John, is an executive and director at
Power Corp. (with its stake in CITIC).
The SIRC board was headed by Paule
Gauthier, who up until her first
appointment to SIRC, in 1995, had spent
25 years as the corporate secretary of
Power Communications, a Power
subsidiary. Power Corp’s links to CITIC
are mentioned in the Sidewinder report,
under “Case Studies.”
Exactly how much influence the
Chinese nationals named in
Sidewinder managed to procure in
Canada remains uncertain; the probe was
originally intended to be a starting point
to stimulate further investigation. What
is known is that Li Ka-shing has been a
supporter of Martin’s, with Husky
donating $10,000 to the prime minister’s
leadership campaign in 2003 and another
$10,000 from Li-controlled firm Concord
Pacific Group Inc. (Li, who is one of the
most powerful men in Asia, has said the
accusations that he is working for the
Communists are nonsense.) According to
documents obtained through the Access
to Information Act, Martin had several
meetings with Li Ka-shing during a 1995
trip to Hong Kong when he was still
finance minister. The substance of those
meetings however, remains a mystery, as
nearly every detail in the minutes of the
meeting relating to Li has been blacked
out by the government, with notes indicating
that the information was highly
sensitive and pertained to national security.
In other words, Li, a foreign national,
was privy to a meeting where things were
discussed that are now considered too
sensitive for Canadian citizens to hear.
Meanwhile Li, whose companies make
up an estimated 15 per cent of the capitalization
of the Hong Kong stock exchange,
is alleged, in intelligence documents, to
work closely with the Chinese government.
According to the Sidewinder
report: “On 23 May, 1982, Li Ka-shing
and [Triad boss] Henry Fok met with
[PRC leaders] Deng Xiaoping and Zhao
Ziyang in Beijing to discuss the future of
the peninsula. Their task would be to
advise and educate the Chinese authorities
on the basic rules of capitalism. In
return,Beijing would give them privileged
access to the Chinese economic basin.”
Martin’s predecessor, Jean Chrétien,
who was prime minister at the time
Sidewinder was ordered suppressed, has
links to Li as well.While on one of his few
hiatuses from politics, between 1986 and
1990, Chrétien sat on the board of
Gordon Capital—a company run by Li
Ka-shing’s son, Richard Li—and
personally brokered deals between
Gordon Capital and Power Corp. The
investment bank became the focus of
mini-scandal in 1995, when Gordon won
the federal contract to take Petro-
Canada public, shocking the Bay Street
business community, which expected the
multimillion-dollar deal would go to a
larger,more experienced Canadian firm.
At the time Martin was with Power
Corp., he got his start working for
Maurice Strong. Strong, the former head
of PetroCanada, who remains a senior
adviser to Martin today and is a member
of the Privy Council, never lost his enthusiasm
for the Chinese commercial market.
A multimillionaire—though he is an
avowed socialist, his personal motto
being, “Think like a socialist, act like a
capitalist”—Strong, an honorary director
of the Canada China Business Council,
has family ties to the Communist state.
According to a story told to Elaine
Dewar in the Strong biography, Cloak of
Green, Strong’s cousin was the famous
American Marxist writer Anna Louise
Strong. After she eventually moved to
China, becoming a member of the
Comintern, Anna was held in such high
esteem by the Maoists that when she
died, in 1970, her funeral was personally
arranged by former Chinese premier and
communist hero Chou En-lai.
Today, Maurice—who some wags have
not coincidentally dubbed “Chairman
Mo”—also spends much of his time in
Beijing, where he keeps an office.That is,
when he’s not working alongside
Secretary General Kofi Annan at the UN,
as his special adviser and personal envoy.
(In April, Strong stepped aside as the UN
special envoy to North Korea after the
investigators into the Iraqi oil-for-food
scandal revealed he had ties to a Korean
accused of bribing UN officials.) He has
also been hired as a business consultant
to the government of the Chinese
province of Anhui. Currently, Strong is
working with Anhui to help develop its
Chery automobile industry, and has also
been hired by former New Brunswick
sports car impresario Malcolm Bricklin,
who plans to export the Chery to North
American markets.
But perhaps Strong’s most lasting legacy
will be the Kyoto Accord, which is
considered to be largely his brainchild,
emerging from recommendation from
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MAY 30, 2005 | WESTERN STANDARD COVER STORY
35
ABACA/OLIVIER DOULIERY
the 1992 Earth Summit in Rio de Janeiro,
which Strong chaired. And the Chinese
should be grateful for it. The accord,
while binding the hands of western
countries like Canada, by forcing them to
lower greenhouse gas emissions, could
turn out to be a windfall for the
Communists. China, one of the world’s
worst polluters, thanks to its massive coal
burning industries, is not only exempt
from achieving any Kyoto targets, it is
permitted to sell so-called offset credits,
that is, gas allowances it doesn’t use, to
regulated nations, such as Canada, for
millions, perhaps billions of dollars.
Canada can also gain greenhouse credits
through a process called “joint implementation,”
whereby Ottawa pays to
construct power plants in countries like
China that are more efficient than existing
infrastructure. In the $10-billion
Kyoto plan unveiled in April, the
Liberals specified that Canada will both
utilize offset credits and joint implementation
strategies to meet its Kyoto targets.
Meanwhile, companies in China
unbound by emissions limits, such as
CITIC’s electrical generation and manufacturing
interests, can only expect to
gain more competitive advantage over
their North American peers.
While western governments such as
Canada’s have been taking pains
to act as multilaterally as they can, by
signing on to agreements such as Kyoto,
political observers point out that China
plays by a different set of rules. Even if
Beijing had sold off all of its carbon emissions
credits, it’s unlikely it would ever
feel obliged to limit its own carbon emissions
and risk stifling its thundering economic
growth.After all, the Communists
routinely flout all sorts of international
agreements, from human rights codes to
trade rules. “China has proven that
despite all the promises it made when it
joined the World Trade Organization and
everything else, it has no intention whatsoever
in being a good international corporate
citizen,” says the American
Foreign Policy Council’s Santioli.
If anything, the country that Ottawa
seems so eager to do business with is
becoming more menacing every year.
William Hawkins, senior fellow in
National Security Studies at
Washington’s U.S. Business and Industry
Council Education Foundation, visited
China last November on a fact-finding
tour. He stayed in a CITIC-owned hotel
in Zhuhai where the company was promoting
a nearby air show, displaying
large models of its fighter jets in the
lobby. Hawkins remembers the chilling
sight of hotel porters dressed like the jet
fighter’s ground
crew and the
women behind the
front desk decked
out like fighter
pilots. “So far,
Chinese reform has
moved from communism
to fascism,”
says
Hawkins. “You still
have the party running
things, but
you’ve just changed
the economic system.
It’s directed
capitalism, national
capitalism.” While
the Cold War was
fought with the understanding that the
Soviet economic system was unworkable,
and would eventually collapse on
itself, “a China with a booming economy
is going to be a much bigger challenge
than Communist Russia was,” says
Hawkins. “China is using its gains from
trade to build and finance the next great
world power whose ambitions and values
are different from ours.”
John Thompson, director of the
Toronto-based MacKenzie Institute, a
security think-tank, says China “scares
the hell” out of him—more so, even, than
Arab terrorists. “After the jihadists they
are the big security threat,” says
Thompson. “The jihadists are noisy and
in our face, but in the long run they are
not our real threat.They can be an inconvenience,
but if they ever really goad us
sufficiently we’ll be sorry about what we
did to them, but they won’t be around.
China is the emerging security threat.
They are going to give us as severe a
challenge as the Nazis and the Fascists in
the 1940s.”
Washington seems to be taking the
signals coming from China—from its
huge military buildup to its rocket
launches—as that the Communists are
jockeying to become the world’s second
superpower, if not the first, and are warning
allies to stop abetting the enemy. In
April, the U.S. Department of Defence
banned Israel from participating in a
massive air force project after Israel
agreed to help the Chinese army
upgrade its unmanned drones. A few
weeks earlier, U.S. Secretary of State
Condoleezza Rice spoke out against a
plan by European countries to lift a 15-
year ban on arms sales to China,warning
that the weapons may one day be used
against America. “It is the United
States—not Europe—that has defended
the Pacific,”Rice told a news conference.
“The European Union should do nothing
to contribute to a circumstance in
which Chinese military modernization
draws on European technology or even
the political decision to suggest that it
could draw on European technology.”
Rice’s comments came just days
before she paid a visit to the Red state.
While there, she made a point of attending
a service at one of the officially
atheist nation’s few legal churches, as a
sign of protest against the Communists’
suppression of religious freedoms. It’s
that kind of public pro-democratic
gesture, the sort that Paul Martin
scrupulously avoided on his Beijing
visit, that optimists like Norm Altenhof
hope will pressure the Chinese to
reform their fascist state. In the meantime,
Martin and those who surround
him seem to prefer that things in China stay just the way they are.
Puppets of Beijing
Palsy'Walsy w/Huawei [spies]
Weeeeeeee What Fun! Giggles All Round....
An aggressively pro-China
policy can only hurt Canada’s
national interests.
So who’s pulling the
strings in Ottawa’s
scheme to build
up the next
Communist
superpower?
KEVIN STEEL
Norm Altenhof is in love. The 63-
year-old retired 9-1-1 operator
and former air force veteran
from Calgary returned April 20 from a
month-long tour of China bursting with
enthusiasm. “I would go back there in
second,” Altenhof says. “Standing on a
street corner in Beijing is just like being
in Toronto, only it’s cleaner.”
Everywhere he went, there were outward
signs that a country that had been a
hermit nation barely a few decades ago
had blossomed into a first-world
economic miracle. There were boutiques
full of Gucci shoes and businessmen in
flashy BMWs. After touring nine
Chinese cities, and visiting the homes of
Chinese nationals of varying economic
stations, Altenhof is convinced that the
People’s Republic of China is a nation to
watch in the 21st century. “Everybody
was pretty upbeat and looking to the
future. They seemed to really embrace
capitalism,” he says, though he admits he
only got a tourist’s eye view of things.
It’s true that nobody would talk politics
in public places, Altenhof admits.
Especially not about the 1989 massacre
of pro-democracy students in Tiananmen
Square, which is never discussed openly
in Beijing—though, in private, some
citizens told him that the actual number
of murdered students was 3,000, not the
1,000 widely reported in the West. And
there were signs of a growing disparity
between the rich and the poor, says
Altenhof. Despite aggressive economic
reforms over the past decade—including
the partial privatization of state-owned
firms and even the creation of a national
stock exchange—it’s estimated that out
of the 1.3 billion people living in China,
only 250 million—about one in six—have
benefited economically.
Altenhof believes that what’s still missing
are democratic reforms. He says that
he was thrilled, for instance, to see
Conservative MP Jason Kenney, on an
official government visit to Beijing
earlier this year, demonstrate his support
for China’s underground pro-democracy
movement by paying a visit to the family
of Zhao Ziyang. Zhao, a former premier
of China who had implemented many
of the sweeping reforms, had been
excommunicated from the Communist
party after expressing sympathy for the
Tiannanmen protestors. He spent his
final days as a pariah, and, after he died in
January, Kenney personally paid
tribute to Zhao by visiting his home. “If
people like that can keep the pressure on
Beijing, then I think everything will be
OK,” says Altenhof.
But that kind of pressure on Beijing is
exactly what Canada’s government seems
desperate to avoid. Prime Minister Paul
Martin castigated Kenney for his visit,
claiming that he himself had chosen not
to pay tribute to Zhao because the
family had requested privacy—which was
later proven to be false. During the
January visit, Martin himself faced a
barrage of criticism from human rights
groups for refusing to put much pressure
on his hosts over their notorious human
rights abuses. He didn’t even protest
when the Communist party banned
certain Chinese-Canadian journalists
from covering Martin’s visit because they
had been critical of the state in the past.
“Paul Martin’s opposition of a visit to
the family of a deceased leader of a
democratic movement within China is
entirely in keeping with Paul Martin’s
China policy in general,” says Alastair
Gordon, president of the Canadian
Coalition for Democracies based in
Toronto. If anything, says Gordon,Martin
has taken pains to coddle the
Communists.“He is submitting to the will
of Beijing when he denies the right of any
democratically elected Taiwanese to even
set foot in Canada to visit family or in
transit to some other destination,” says
Gordon.“He submits to the will of China
when he refuses to treat the Dalai Lama
as a political leader, only as a religious
leader, and refuses to speak about human
rights with him. He is submitting to
somebody’s will when he approves $50
million in foreign aid to a country that
has a gross domestic product of $7.4
trillion, the world’s largest army, its own
space program, and 700 missiles aimed at
Taiwan.” The fact that Canada is sending
millions in relief to an undemocratic
country with the fastest-growing economy
on the planet—and successfully
launched its first space mission in 2003—
does seem odd when you consider that,
on April 19,Minister of International Cooperation
Aileen Carroll announced that
foreign aid is being given on the basis of
need and good governance.
MAY 30, 2005 | WESTERN STANDARD COVER STORY 30
Population: 1,306,313,812
(20.5% of the world)
Area: 9,596,960 sq. km
(fourth largest)
GDP total: US$7.262 trillion
GDP per capita: US$5,600
Annual military
spending: US$67.5 billion
Military service: Compulsory, age 18,
two years
Life expectancy: 72.27 years
Religion: Official atheism
Internet users: 94 million
Total exports: US$583.1 billion
Total imports: US$552.4 billion
Oil consumption: 4.96 million bbl/day
Oil imports: 2.41 million bbl/day
Percentage of world’s
commodities China consumes:*
Coal: 31%
Oil: 7.7%
Finished steel: 26.9%
Aluminum: 18.6%
Copper: 19.7%
Pork: 50.4%
Fish: 32.3%
Rice: 32.8%
Cigarettes: 34.8%
*2004 ESTIMATES
SOURCES: CIA WORLD FACTBOOK, FORTUNE
SPOTLIGHT ON CHINA
But Martin had more pressing matters
to discuss with China’s Communist rulers
than to nag them about executed
dissidents, persecuted Christians or the
systematic obliteration of Tibetan culture.
There was a little matter of oil. Or
rather, the big matter of oil. Before
leaving Beijing, Martin had inked a
multilateral trade agreement that promised
the Chinese government even more
kindness from Canada, specifically
greater co-operation in several industries,
but with an emphasis on oil and gas.
“Canada and China have decided to
work together to promote cooperation in
the oil and gas sector, including Canada's
oil sands, as well as in the uranium
resources field,” read a press release from
the Prime Minister’s office announcing
the agreement. “Canada and China will
therefore encourage Canadian and
Chinese enterprises to develop mutually
beneficial commercial partnerships in
these sector”With its explosive growth—
by 2020, China’s GDP is expected to
quadruple from its 2000 level—the Red
state is thirstier than ever for resources.
Across the globe, the Communist government
is fanning out and buying up any
available precious metals and crude oil it
can lay its hands on.China now consumes
about 4.956-million barrels of oil a day
(about a quarter of the 19-million barrels
Americans guzzle daily), with about a
quarter of it imported. But economists
estimate that by 2030, oil consumption in
China will quadruple, far outstripping
domestic production. In addition to cutting
deals in oil-rich countries, such as
Venezuela, Sudan and Iran, the Chinese
are aware of the potential of the Alberta
oilsands.
The People’s Republic of China has
already secured a foothold in the northern
Alberta oilfields. There’s Husky
Energy Inc., controlled by Hong Kong
billionaire Li Ka-shing’s Hutchison
Whampoa group, which recently
announced it is going ahead with a $10-
billion oilsands development project
scheduled to be in full production by
2009. Around the same time, a new
pipeline should be complete, to deliver all
that oil through the Rockies to the B.C.
coast, where it can be loaded onto
tankers for export. The project,
announced April 14, is a joint venture
between Canada’s largest pipeline
builder, Enbridge Inc., and one of the
PRC’s major oil producers, Petrochina.
CNOOC Ltd., another massive stateowned
Chinese oil producer, made its
first foray into the oilsands in April,
scooping up a 17 per cent stake in
Calgary-based MEG Energy Corp.
But given that Canada is situated right
next to the largest energy market in the
world—and the Americans are interested
in the oilsands as a secure source for
crude, one that comes with a lot fewer
complications than relying on Mideast
suppliers—some are wondering why
we’re so anxious to let the Chinese lock
up so much of the reserves. The
Communists, after all, are in the midst of
an unprecedented military buildup,
they’re still one of the worst human
rights abusers on the planet and they
seem increasingly willing to draw the U.S.
into a war over Taiwan if that country
ever declares independence (a move that
President George W. Bush has indicated
he will defend).
31
AP/DAN LOH
Most Canadians remember
Peppergate at the November
1997 Asia Pacific Economic
Cooperation summit in Vancouver for its
images of the RCMP’s brutal treatment of
Canadians protesting against the human
rights abuses of then Indonesian president
Suharto. The cops doused the demonstrators
with pepper spray and ripped down
their signs. Canadians probably also
remember then prime minister Jean
Chrétien’s cold attempt at making light of
the undemocratic assault by quipping
about the pepper spray: “For me, pepper, I
put it on my plate.” An inquiry was
subsequently called to investigate whether
the protesters’ rights were violated. The
inquiry concluded that the RCMP ignored
the protestors’ charter freedoms in executing
their violent crackdown.
But how many Canadians know the story
behind the story? Why was the Canadian
political elite so eager to please a detested
dictator who was to be ousted by his own
people a mere six months later, anyway?
During his 32-year reign, the corrupt
General Suharto had amassed a huge
financial empire and is ranked as the sixth
richest man in the world, with an estimated
personal wealth of $16 billion. And one
of the businesses dealing with Suharto’s
family was none other than then finance
minister Paul Martin’s.
Paiton Shipping, a Barbados-based
company 50 per cent owned by Martin,
was awarded a huge contract from the
Paiton Power Plant just one year before
the APEC fiasco. Controlled by Suharto’s
son, the power plant hired Martin’s
shipping firm to transport clean coal from
COVER STORY MAY 30, 2005 | WESTERN STANDARD
Business before displeasure
Why was Ottawa so quick to crush human rights
protests at the 1997 APEC summit?
Mounties take down a demonstrator
protesting the presence of Indonesian
dictator General Suharto at the 1997 APEC
conference in Vancouver. At the time, the
corrupt Suharto regime was in business
with then finance minister Paul Martin
So, what exactly is Canada’s interest in
providing fuel to a country that may soon
represent a bigger threat to world stability
than Iran or North Korea? “We’re left
with a foreign policy toward China that
absolutely defies explanation as to how
it’s in regional interests, trade interests,
political interests, economic interests,
Canadian interests,” says Gordon.
Though he does think there’s one
explanation, unpleasant as it may be: that
the politicians who devise Canadian
foreign policy have their own reasons for
getting close to China. “The kind of connection
between those who make our
China policy show that they have the
potential to benefit by submitting to the
will of Beijing.”
Long before average Canadians like
Altenhof caught on to the potential of
China, Paul Martin was getting in on the
ground floor. Back in the days of
Chairman Mao, when China’s economy
was still heavily agrarian and backwardly
collectivist, the future prime minister was
already planting the seeds of commerce.
“I first came to China in 1972, during the
waning years of the Cultural Revolution.
I was in business then,” Martin said, in a
Jan. 21 speech in Beijing.At the time, the
aspiring businessman was working for
Power Corporation of Canada, a firm
with $16 billion in revenues controlled by
Montreal’s powerful Desmarais family. It
was clearly an eye-opening experience
because he’s been making deals in China
ever since. Canada Steamship Lines, the
gargantuan shipping company Martin
purchased from Power Corp. in the
eighties, that is now run by his children,
has taken advantage of China’s cheap
workers to build ships. Three CSL container
ships were built in the Jiangnan
Shipyard, controlled by the People’s
Liberation Army. A fourth was refurbished
in Shanghai.Martin actually owns
35 per cent of China’s Tangshan Jinshan
Marine Co.
The Chinese interests of the Desmarais
family—who have been strong financial
backers of Martin’s political campaigns
from early in his political career—run
even deeper. Power’s chairman, Paul
Desmarais, is the founding chairman of
the Canada China Business Council,
which promotes trade between the two
nations. The honorary chairman is his
brother, André Desmarais, CEO of
Power. Power Corp. has longstanding ties
with one of the PRC’s leading corporations,
CITIC Group.As André remarked
at a general meeting in May 2000,
“Shareholders are aware through our
annual reports that for over 20 years we
have had a relationship with the stateowned
China International Trust and
Investment Corp. of Beijing.” In 1997, the
relationship culminated in Power paying
$358 million for a four per cent interest in
the Hong Kong firm, whose interests
include coal-fired power-generation
facilities, automobile and food distribution
concerns, hotels, shopping malls,
infrastructure, and communications
firms. Their primary business is in aerospace,
owning a major stake in Cathay
Pacific airlines and manufacturing fighter
jets for the People’s Liberation Army.
With a direct stake in such a broad
swath of China’s economy, the Desmarais
surely stand to benefit from Canada’s
increasingly cozy relationship with the
Communists in Beijing. But it’s not just
Martin they have to thank. It was his
predecessor, Jean Chrétien, under whom
Ottawa took a distinct pro-Beijing turn.
André Desmarais, who sits on the
board of directors of CITIC Pacific Ltd.,
a CITIC subsidiary, is married to
Chrétien’s daughter, France. And it was
in the same year that Chrétien’s son-inlaw
was negotiating the major investment
in CITIC that Canada, for the first time in
six years, withdrew its support for a UN
resolution censuring China over its
abysmal human rights record. Today,
China is still cited by groups such as
Human Rights Watch and Amnesty
International as a major abuser of human
rights, including its jailing of political
opponents, persecution of religious
groups and its population control
measures,which include forced abortions.
But 1997 was a pivotal year for Sino-
Canadian relations in other ways. It was
that year that a group of investigators
with the RCMP and CSIS wrapped up a
probe into the systematic infiltration of
Canadian society by Chinese gangs. It
was dubbed Operation Sidewinder. But
almost immediately after the security
report that followed, titled “Chinese
Intelligence Services and Triads Financial
Links in Canada,” was completed, CSIS
ordered it destroyed. At the time, the
head of CSIS was Ward Elcock. Elcock,
in fact, is the nephew of Michael Pitfield,
a confidant of former prime minister
Pierre Trudeau. Pitfield co-authored the
report in the early eighties that led to the
creation of CSIS.Today, he is a director of
Power Corp.
CSIS officials would later claim the
report was destroyed because it was full
of fantastical conspiracy theories. But
they not only eradicated the report
32
a Suharto-owned business in Borneo (the
plant has since been closed after nearly
US$300 million went missing from its
funding and Suharto’s successors
determined that the generator was never
needed in the first place). The financial
backer for the Suharto family coal
business is Moctar Riady, through his
firm, the Lippo Group. Riady was named
as a key Chinese agent in the Sidewinder
report suppressed by Canadian security
officials, and Lippo identified as a front
company for the People’s Liberation Army.
Riady was also front and centre in the U.S.
Chinagate scandal—his son James pled
guilty to giving illegal contributions to
former president Bill Clinton’s campaign.
But the Canadian connection to one of
Asia’s most despised dictators doesn’t
end there. In March 1997, the Liberal
government gave a $250-million Export
Development Canada loan to one of billionaire
Suharto’s companies, Indofoods,
ostensibly to purchase Canadian wheat
for manufacturing noodles.
Martin’s businesses were supposed to
be operated in a blind trust while he was
in cabinet, so he couldn’t possibly have
known that he was doing business with
Suharto at the time the APEC assault and
the EDC loans were ordered—could he
have? Well, in February 2003, it emerged
that Martin had exercised a so-called
“peek-a-boo clause” in his supervisory
agreement at least a dozen times while a
cabinet minister, meaning he was able to
talk business with the directors and executives
managing his multimillion-dollar
shipping empire. In other words, in 1997,
he could have known that Suharto was a
customer of his. So who cares if a few
dozen human rights activists had to be
violently suppressed to make the general’s
visit a bit more comfy? After all, as any
good businessman knows, the customer
is always right.
— KEVIN STEEL
MAY 30, 2005 | WESTERN STANDARD COVER STORY
itself—CSIS took the unusual step of
ordering all notes pertaining to the report
shredded. In 1999, someone leaked one
of the few surviving copies of Sidewinder
to the press. The revelations were
explosive: the security agents had found
that PRC operatives had managed to
infiltrate key sectors of the Canadian
economy. Through their association and,
in many cases, investments in property,
technology firms and security, the spies
had managed to cultivate influence in
Canadian politics and our economy,while
harvesting valuable information from our
industries and military. One of the companies
prominently identified in
Sidewinder was none other than CITIC,
which had invested hundreds of millions
of dollars in Canadian real estate and
resource companies. Sidewinder also
noted that caches of arms had turned up
on Canadian Indian reserves that had
been manufactured by a CITIC
subsidiary. Meanwhile, China’s stateowned
shipping firm COSCO had made
the port of Vancouver its main shipping
hubs.Reports from U.S. intelligence show
COSCO ships have smuggled arms into
the U.S., North Korea, Pakistan and Iran.
Brian McAdam, a former foreign
service bureaucrat who ran Canada’s
immigration office in Hong Kong from
1968 to 1971, and again from 1989 to
1993, was one of the key figures whose
suspicions about the PRC’s infiltration of
Canada led to the Sidewinder investigations.
He says that in the eighties, as the
Chinese takeover of Hong Kong in 1997
began to draw near, the Communists in
Beijing struck a deal with the powerful
Hong Kong triads—criminal organizations
specializing in the international
smuggling of drugs,weapons and humans.
The government and the gangs would
work together to exploit the West for
mutual advantage. One of the primary
strategies was to curry favour and influence
with political leaders through large
campaign donations.“They are very good
at talent spotting,” McAdam says, noting
that Chinese agents were donating to Bill
Clinton’s campaigns while he was still
governor of Arkansas.
In fact, the same sort of so-called
conspiracy theories that characterized
Sidewinder were unearthed in an
American investigation into Chinese
influence peddling and intelligence gathering
in that country. In 1999, the
Chinagate scandal rocked the Clinton
presidency, when it emerged that the
president had accepted large campaign
contributions throughout the nineties
directly or indirectly from Chinese intelligence
agents. What followed, under
Clinton, was a U.S. foreign policy adjusted
in a way that made it easier for the
Communists to get their hands on leading
military technology. Defence contractors
were permitted to work closely with the
PLA to help advance its missile capabilities.
What the Chinese couldn’t get legally,
they stole through a series of front
companies based in the U.S. and Canada.
Detailed in an investigation headed by
U.S. Representative Christopher Cox, the
1999 scandal was partly overshadowed by
the disclosure of then president Bill
Clinton’s affair with White House intern
Monica Lewinsky, and few took notice,
especially here in Canada. But many of
the same figures that were identified in
the Cox report were the same ones
fingered by Sidewinder. Both look into
the connections of Li Ka-shing, who, in
addition to his Husky holdings, has
invested millions in Canadian properties,
banks and telecom firms. Also making
appearances in both the U.S. and
Canadian reports are Macau gambling
magnate Stanley Ho,COSCO and CITIC,
which was caught making illegal
contributions to Clinton’s campaign.
Al Santoli, director of the Asia
America Initiative and a former national
security advisor in the U.S.Congress, says
the Sidewinder report made a big impact
in the States. “It got people to look at
what was developing here in the U.S.,” he
says. “It was something that was systematic.
It had a pattern to it.And because of
the deft knowledge of the authors—and a
few other reports that were coming out at
that time—it drew an expanded light on
what was going,” Santoli says, adding that
33
PHOTOS.COM, CP/ RYAN WHITE
Beijing-controlled corporations have been manoeuvring to buy up large pieces of Canada’s
oilfields and mining interests to fuel the booming Chinese economy. In April, rumours that a
Shanghai company was looking to take over CP Ships sent the Canadian corporation’s stock
soaring
COVER STORY MAY 30, 2005 | WESTERN STANDARD
the Canadian intelligence underlined the
extent to which political systems and electoral
processes were being subverted.
“Sidewinder put it in a contextual pattern
and that was very important.”
Had CSIS had its way, those details
might never have come to light.
The agency’s unorthodox attempts to
suppress the report eventually resulted in
an investigation in 2003 by Canada’s
Security Intelligence Review Committee,
the public body that oversees CSIS.
Shortly afterward, the investigation was
quietly abandoned.
Coincidentally, there were several
members of the SIRC board who
themselves were linked to some of the
names that popped up in the Sidewinder
report. Former Ontario premier Bob Rae
also sat on the SIRC board. Rae’s brother,
John, is an executive and director at
Power Corp. (with its stake in CITIC).
The SIRC board was headed by Paule
Gauthier, who up until her first
appointment to SIRC, in 1995, had spent
25 years as the corporate secretary of
Power Communications, a Power
subsidiary. Power Corp’s links to CITIC
are mentioned in the Sidewinder report,
under “Case Studies.”
Exactly how much influence the
Chinese nationals named in
Sidewinder managed to procure in
Canada remains uncertain; the probe was
originally intended to be a starting point
to stimulate further investigation. What
is known is that Li Ka-shing has been a
supporter of Martin’s, with Husky
donating $10,000 to the prime minister’s
leadership campaign in 2003 and another
$10,000 from Li-controlled firm Concord
Pacific Group Inc. (Li, who is one of the
most powerful men in Asia, has said the
accusations that he is working for the
Communists are nonsense.) According to
documents obtained through the Access
to Information Act, Martin had several
meetings with Li Ka-shing during a 1995
trip to Hong Kong when he was still
finance minister. The substance of those
meetings however, remains a mystery, as
nearly every detail in the minutes of the
meeting relating to Li has been blacked
out by the government, with notes indicating
that the information was highly
sensitive and pertained to national security.
In other words, Li, a foreign national,
was privy to a meeting where things were
discussed that are now considered too
sensitive for Canadian citizens to hear.
Meanwhile Li, whose companies make
up an estimated 15 per cent of the capitalization
of the Hong Kong stock exchange,
is alleged, in intelligence documents, to
work closely with the Chinese government.
According to the Sidewinder
report: “On 23 May, 1982, Li Ka-shing
and [Triad boss] Henry Fok met with
[PRC leaders] Deng Xiaoping and Zhao
Ziyang in Beijing to discuss the future of
the peninsula. Their task would be to
advise and educate the Chinese authorities
on the basic rules of capitalism. In
return,Beijing would give them privileged
access to the Chinese economic basin.”
Martin’s predecessor, Jean Chrétien,
who was prime minister at the time
Sidewinder was ordered suppressed, has
links to Li as well.While on one of his few
hiatuses from politics, between 1986 and
1990, Chrétien sat on the board of
Gordon Capital—a company run by Li
Ka-shing’s son, Richard Li—and
personally brokered deals between
Gordon Capital and Power Corp. The
investment bank became the focus of
mini-scandal in 1995, when Gordon won
the federal contract to take Petro-
Canada public, shocking the Bay Street
business community, which expected the
multimillion-dollar deal would go to a
larger,more experienced Canadian firm.
At the time Martin was with Power
Corp., he got his start working for
Maurice Strong. Strong, the former head
of PetroCanada, who remains a senior
adviser to Martin today and is a member
of the Privy Council, never lost his enthusiasm
for the Chinese commercial market.
A multimillionaire—though he is an
avowed socialist, his personal motto
being, “Think like a socialist, act like a
capitalist”—Strong, an honorary director
of the Canada China Business Council,
has family ties to the Communist state.
According to a story told to Elaine
Dewar in the Strong biography, Cloak of
Green, Strong’s cousin was the famous
American Marxist writer Anna Louise
Strong. After she eventually moved to
China, becoming a member of the
Comintern, Anna was held in such high
esteem by the Maoists that when she
died, in 1970, her funeral was personally
arranged by former Chinese premier and
communist hero Chou En-lai.
Today, Maurice—who some wags have
not coincidentally dubbed “Chairman
Mo”—also spends much of his time in
Beijing, where he keeps an office.That is,
when he’s not working alongside
Secretary General Kofi Annan at the UN,
as his special adviser and personal envoy.
(In April, Strong stepped aside as the UN
special envoy to North Korea after the
investigators into the Iraqi oil-for-food
scandal revealed he had ties to a Korean
accused of bribing UN officials.) He has
also been hired as a business consultant
to the government of the Chinese
province of Anhui. Currently, Strong is
working with Anhui to help develop its
Chery automobile industry, and has also
been hired by former New Brunswick
sports car impresario Malcolm Bricklin,
who plans to export the Chery to North
American markets.
But perhaps Strong’s most lasting legacy
will be the Kyoto Accord, which is
considered to be largely his brainchild,
emerging from recommendation from
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the 1992 Earth Summit in Rio de Janeiro,
which Strong chaired. And the Chinese
should be grateful for it. The accord,
while binding the hands of western
countries like Canada, by forcing them to
lower greenhouse gas emissions, could
turn out to be a windfall for the
Communists. China, one of the world’s
worst polluters, thanks to its massive coal
burning industries, is not only exempt
from achieving any Kyoto targets, it is
permitted to sell so-called offset credits,
that is, gas allowances it doesn’t use, to
regulated nations, such as Canada, for
millions, perhaps billions of dollars.
Canada can also gain greenhouse credits
through a process called “joint implementation,”
whereby Ottawa pays to
construct power plants in countries like
China that are more efficient than existing
infrastructure. In the $10-billion
Kyoto plan unveiled in April, the
Liberals specified that Canada will both
utilize offset credits and joint implementation
strategies to meet its Kyoto targets.
Meanwhile, companies in China
unbound by emissions limits, such as
CITIC’s electrical generation and manufacturing
interests, can only expect to
gain more competitive advantage over
their North American peers.
While western governments such as
Canada’s have been taking pains
to act as multilaterally as they can, by
signing on to agreements such as Kyoto,
political observers point out that China
plays by a different set of rules. Even if
Beijing had sold off all of its carbon emissions
credits, it’s unlikely it would ever
feel obliged to limit its own carbon emissions
and risk stifling its thundering economic
growth.After all, the Communists
routinely flout all sorts of international
agreements, from human rights codes to
trade rules. “China has proven that
despite all the promises it made when it
joined the World Trade Organization and
everything else, it has no intention whatsoever
in being a good international corporate
citizen,” says the American
Foreign Policy Council’s Santioli.
If anything, the country that Ottawa
seems so eager to do business with is
becoming more menacing every year.
William Hawkins, senior fellow in
National Security Studies at
Washington’s U.S. Business and Industry
Council Education Foundation, visited
China last November on a fact-finding
tour. He stayed in a CITIC-owned hotel
in Zhuhai where the company was promoting
a nearby air show, displaying
large models of its fighter jets in the
lobby. Hawkins remembers the chilling
sight of hotel porters dressed like the jet
fighter’s ground
crew and the
women behind the
front desk decked
out like fighter
pilots. “So far,
Chinese reform has
moved from communism
to fascism,”
says
Hawkins. “You still
have the party running
things, but
you’ve just changed
the economic system.
It’s directed
capitalism, national
capitalism.” While
the Cold War was
fought with the understanding that the
Soviet economic system was unworkable,
and would eventually collapse on
itself, “a China with a booming economy
is going to be a much bigger challenge
than Communist Russia was,” says
Hawkins. “China is using its gains from
trade to build and finance the next great
world power whose ambitions and values
are different from ours.”
John Thompson, director of the
Toronto-based MacKenzie Institute, a
security think-tank, says China “scares
the hell” out of him—more so, even, than
Arab terrorists. “After the jihadists they
are the big security threat,” says
Thompson. “The jihadists are noisy and
in our face, but in the long run they are
not our real threat.They can be an inconvenience,
but if they ever really goad us
sufficiently we’ll be sorry about what we
did to them, but they won’t be around.
China is the emerging security threat.
They are going to give us as severe a
challenge as the Nazis and the Fascists in
the 1940s.”
Washington seems to be taking the
signals coming from China—from its
huge military buildup to its rocket
launches—as that the Communists are
jockeying to become the world’s second
superpower, if not the first, and are warning
allies to stop abetting the enemy. In
April, the U.S. Department of Defence
banned Israel from participating in a
massive air force project after Israel
agreed to help the Chinese army
upgrade its unmanned drones. A few
weeks earlier, U.S. Secretary of State
Condoleezza Rice spoke out against a
plan by European countries to lift a 15-
year ban on arms sales to China,warning
that the weapons may one day be used
against America. “It is the United
States—not Europe—that has defended
the Pacific,”Rice told a news conference.
“The European Union should do nothing
to contribute to a circumstance in
which Chinese military modernization
draws on European technology or even
the political decision to suggest that it
could draw on European technology.”
Rice’s comments came just days
before she paid a visit to the Red state.
While there, she made a point of attending
a service at one of the officially
atheist nation’s few legal churches, as a
sign of protest against the Communists’
suppression of religious freedoms. It’s
that kind of public pro-democratic
gesture, the sort that Paul Martin
scrupulously avoided on his Beijing
visit, that optimists like Norm Altenhof
hope will pressure the Chinese to
reform their fascist state. In the meantime,
Martin and those who surround
him seem to prefer that things in China stay just the way they are.
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