What can Canada expect to achieve by promoting religious freedom abroad?

Religion has a track record of providing good things like hope, love, freedom, and morality in many places for many people. It is a very important part of their lives, and not for bad reasons. Many people around the world organize their lives around their religion. It’s their community, their friends, and their networking. And we don’t want to tamper with that unless it’s absolutely necessary. It’s a wonderful thing for these people.

However, religions should not be allowed to have practices, no matter how traditional they are, that violate fundamental laws. For instance, there should be no human sacrifice, and there should be no polygamy. Those are simply not to be tolerated, and you couldn’t have religious freedom [with them in place]. It’s the practices that are on the boundaries of what is acceptable to people that raise interesting problems.

Would atheists be protected by an Office of Religious Freedom?

That depends on what’s being protected according to these principles. Will the office protect the right of free assembly and the right not to be interfered with?

Atheists ought to be protected. If the freedom to have no religion at all isn’t included in the freedom of religion, then that is a bad policy. That said, there is only a miniscule portion of atheists in any population that I think would need any protection, as only a small fraction of them belong to actual atheist groups.

Is there a difference between a government promoting religious freedom within its borders and abroad?

So long as a government is promoting religious freedom within its own borders [as well], there does not have to be. Promoting religious freedom abroad is no different than promoting free elections, justice, equality for women, and fair labour practices for children around the world. These are all worthy national and international goals, as is religious freedom. Of course, religious freedom is a more hard-edged issue in some ways, in that some countries clearly have a long tradition of religious intolerance and this policy cuts against that.

In establishing an Office of Religious Freedom, will the Canadian government implicitly place religious freedom above other human rights?

The government implicitly elevates religious freedom: If you have a special office for one [human-rights issue] and not for the others, that does raise a question. Why not for all? Why not have an office that promotes human rights in general? Why should you single out religion if you are not already willing to defend the rights of, say, women, or gays and lesbians, and so forth?

There are certain human rights that conflict with religious freedom. The most pervasive and serious is a child’s right to access information about the world. I think that many religions attempt to shelter children from knowledge of other religions, or even the history of their own religion. They want to closely control the information that children growing up in that religion have. That’s a very serious issue. The state should not permit a religious group to say, “We forbid our children to learn how to read,” for instance. That would clearly be outside acceptability. But some might say it is a matter of religious freedom. I don’t think that case has ever come up, but if it did, you could say that it is a form of child abuse to deny your children the ability to read. In [situations like that], the promotion of the right to read for children everywhere should take precedence over protection of religious freedom.

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The question can best be answered by posing it in another way: What can Canada contribute by promoting religious freedom abroad? Before Canada created its office, the United States operated the only diplomatic program explicitly charged with promoting global religious freedom, and its activities inevitably became bound up with its status as a superpower. Thus, critics see ulterior motives or find cases of inconsistency or hypocrisy where U.S. strategic interests clash with its human-rights policies. Because Canada’s foreign policies are not tainted in this way, it is in a position to uphold international law on religious freedom with great clarity. By making this contribution, Canada will gain the admiration and respect of a growing global network of human-rights groups, religious-freedom advocates, scholars, religious dissidents, and heroes of conscience.

There is also a powerful national-security rationale for supporting international religious freedom. We know from the latest research that militant religious movements and transnational terror networks spring from societies that deny religious rights or persecute religious minorities. In a world of fervent religion, the only antidote to violent fanaticism is expanding regimes of tolerance where religious energies are channelled into civil-society engagement and healthy competition, where religious communities, in the words of the Quran, can “vie one with another in virtue.”

Would atheists be protected by Canada’s office?

Yes. The reigning document for international law on religious freedom, which Canada’s office will uphold, is Article 18 of the Universal Declaration of Human Rights, which states:

Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance.

As is clear in this declaration, robust religious freedom recognizes the rights of persons to explore, question, or change their religion or beliefs. Not only does this declaration implicitly protect the rights of doubters or non-believers, but empirical evidence on the ground also suggests that religious skeptics are most safe where religious freedom is robustly protected. Atheists or questioners are most vulnerable in theocratic states like Saudi Arabia and Iran, or in autocratic regimes that curry favour with dominant religious communities to stay in power.

Is there a difference between a government promoting religious freedom within its own borders and abroad?

Yes. There is a difference between a government protecting religious freedom within its borders – through constitutional or legal provisions – and advancing it abroad through diplomacy. The difference lies in the fact that a government is able to enforce domestic laws that protect the freedom of conscience, belief, and religious exercise, and by that means educate citizens about the value of toleration and pluralism. A nation does not have that enforcement power abroad, so it must rely on the diplomacy of moral suasion and appeals to the self-interest of other sovereign states. But a key lever is international law, which clearly establishes religious freedom as a universal right that all members of the United Nations are obligated to uphold.

In establishing an Office of Religious Freedom, will the Canadian government implicitly place religious freedom above other human rights?

No, because human rights reinforce each other. Governments and international organizations launch all sorts of special human-rights campaigns and programs – for women’s rights, worker’s rights, gay rights, children’s rights, refugee rights – so there is precedent for special emphasis. Moreover, the promotion of human rights internationally is always vulnerable to strategic calculations of nations, so to the extent that religious-freedom advocacy brings new energy to rights campaigns, it will enhance the broader human-rights cause. Critics of the U.S. International Religious Freedom Act, which established the State Department Office, commonly expressed the concern that it would elevate religious freedom above other human rights. But eventually, secular human-rights groups, such as Human Rights Watch, came to welcome the American initiative because it brought new religious allies to the human-rights cause.

Religious freedom is a potent human right because it encompasses so many other rights – the freedom of speech and assembly, of belief and conscience, the right to own property and form civil-society organizations, and the right of democratic participation. Moreover, we know from research by Brian Grim and Roger Finke that religious freedom vitally contributes to civil liberties, democratization, women’s status, economic development, inter-religious amity, civil peace, and regional stability. It is also a critical check on the abuse of state power, which was why James Madison and other formative thinkers viewed religious liberty as the “first freedom” worthy of its pride of place in the Bill of Rights.   

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Is the trend toward “state capitalism” tightly linked to the rise of emerging economies?

Once they get big enough to compete internationally, firms from G20 emerging markets face an intensely competitive international trading and investment environment dominated by global giants. States do seek to give leading domestic companies a boost during this globalization process. This is generally true whether or not the firms are state-owned. Two thirds of the Fortune 500 companies from emerging economies have some level of state ownership. In my comments, I am going to address Chinese state-owned enterprises (SOEs).

In the Jan. 21 issue of The Economist, Adrian Wooldridge refers to “state capitalism” as economies in which corporations are partly owned, and fully controlled, by the state. These state-owned enterprises are alleged to be captured by the elites and serve the purposes of the elite or the party, depending on the country. Due to the pervasive influence of politicians, these firms are characterized by micro-management, cronyism, loss-making, low productivity, corruption, and an inability to innovate.

To begin with, we need to recognize that the economic diversity and scale of institutions and companies in China is difficult to grasp. At any given moment across a range of situations, statements can be both true and not true. These sweeping generalizations are not completely inaccurate, but they are missing the detail and context necessary to make sense of what is going on. While it is certainly possible to find instances of the above features of “state capitalism,” in my view, the converse is closer to reality. If micromanagement, cronyism, etc. were the defining features of Chinese SOEs, it would be difficult to account for their success.

The 121 nationally supervised SOEs are profit-driven to their core, and widely understood in China to be the most competitive and best-managed of China’s companies. If the state has a goal, it is for SOEs (and entrepreneurial firms) to globalize rapidly and compete head-to-head with global competitors in international markets. SASAC evaluation criteria are overwhelmingly financial, and financial performance drives executive compensation. The executive suite is made up of a party-appointed chairman and other executives drawn from within the SOE. These party-appointed leaders move from one SOE to another, with the majority of them carrying the rank of minister. Their career mobility lies in the corporate vision and leadership qualities they bring to bear at a succession of SOEs.

Allowing the market to decide [has been] the fundamental principle driving growth in China over the past three decades. The power of the market to decide winners is so internalized that Chinese executives express a certain bafflement that the government or party would have the time or inclination to direct SOE decision-making and strategy. SOEs are pushed to compete [against each other, domestically, and] internationally against the major rivals in their field. Neither the bureaucracy nor the party seeks to micromanage how that is done in detail.

Deng Xiaoping’s advice at the beginning of reform was, “study what the West has to teach us.”  For the past 40 years, Chinese students, government officials, and business people have consciously set out to learn from the West – in many sectors, there is now a sense that China has achieved international standards and may be improving on that. The pattern has been to study many sources, synthesize them, and adapt [the ideas] to their own system. Innovation is now identified as a key requirement for a sustainable society. We will see whether a generation of learning, synthesizing, and adapting is an effective foundation for innovation. Chinese strengths include a long decision horizon, planning, and effective co-ordination of resources. China educates more engineers each year than we have in total. Although the emphasis on innovation is recent and there is thus little to go on, it would be overconfident, to say the least, to assume that SOEs won’t be contributors to innovation. Entrepreneurial firms will no doubt be innovative as well.  

SOEs are starting to invest globally – including in Canada. Should Canada treat these companies differently than it does typical foreign investors? What threat do they pose to Canada?

Like many other countries, Canada has laws governing major foreign investment by foreign companies. The Investment Canada Act focuses on acquisitions for control of an existing Canadian company in its effort to ensure that foreign investment brings net benefit to Canada.  The SOE Guidelines include more detailed provisions to deal with applications by companies owned by foreign states. As I note in my paper, the publicly listed arms of these SOEs are subject to the rigorous financial reporting, transparency, and governance requirements of the New York, London, and Hong Kong stock exchanges. As I understand it, proposed investments in Canada by these listed arms are not generally subject to additional governance requirements. When the non-listed arms seek to invest, I think undertakings on these points are apt to ensure an appropriate level of transparency and Canadian governance is maintained.

There is an ongoing undercurrent in the debate on Chinese investment suggesting that China is a potential rival to the supremacy of the United States and the West in general, and that its SOEs may therefore behave in hostile ways. Let us take the concern that in a period of global scarcity of a commodity, the Chinese state might order SOEs to ship produce from Canada to China at prices below the prevailing price in Canada. Canadian transfer pricing rules and administration are designed specifically to prevent exports at below-market prices. Another fear expressed is that the Chinese state might push an SOE to somehow disadvantage a Canadian market or a Canadian company for whatever reason. Again, Canadian competition and other laws are in place to discipline any such move. In short, Canada has the necessary laws and enforcement capability to protect our interests.

It is worth noting that such behaviour would be contrary to the SOE corporate interest. It would put at risk corporate and financial integrity by undermining the good name and relationships that take decades to establish. These companies are contending for global position and leadership. Such a move would directly damage the entire web of commercial relationships, to say nothing of lawsuits, security investigations, etc.
There are parallels between the suspicion and resistance that Chinese firms sometimes meet in OECD countries and the reaction to overseas investment by Japanese manufacturers in the 1980s.  The Japanese focused on establishing strong relationships with local communities, spreading the economic benefits of their businesses. This is the best means to dispel cultural misunderstandings.

Collaborating with Chinese firms, accessing their supply chains, and connecting with their management networks are all sources of potential advantage to Canadian firms in dealing with Chinese SOEs and other investors in Canada. Canada is short on capital to develop not just its natural resources, but also its technologies and human resources. Our great strength is the diversified nature of investment from overseas.  
China may well be moving from high growth (GDP growth of 10 per cent over 30 years) to something somewhat slower. Society and government are in rapid transition. The Investment Canada Bureau within Industry Canada (which implements the Investment Canada Act) has the tools to achieve net benefit for Canada. In recent years, the Investment Canada Bureau has demonstrated its intention to challenge foreign companies that do not fulfill agreed undertakings.

The economic rise of East Asia carries both threats and opportunities for Canada. The economic shift has already occurred – the issue is how we adapt to it. Trade and investment with China is just one element. The principal insight of liberal capitalism is that markets will allocate resources more efficiently than governments. China’s admittedly unique development model doesn’t challenge that core thesis. Theirs is an intensely competitive economy and society. 

There can be little doubt about the rise in Asian energy consumption with its attendant purchasing and investment power. The International Energy Agency, which has been closely following Chinese energy SOEs for over a decade, notes that they were both substantially independent of the state and driven by the imperative to compete successfully with their global rivals.

How do you evaluate Prime Minister Stephen Harper’s trip to China, and the deals he signed there?

Prime Minister Harper did sign many deals – the uranium [deal], FIPA, the renewal of the energy framework, various agricultural commodity agreements – all very helpful both to Canada and the Canadian business community. Harper also witnessed the signing of many private-sector deals. These occasions assist companies to bring negotiations to a conclusion and get needed coverage in China and Canada for their deals. There was considerable press coverage in China. Strong relationships at the top leadership and ministerial level are important to all bilateral relationships, but especially in China. To make the most of the business, social, and cultural relationships, these have to be cultivated and developed over time. To gain credibility in China, Canadian government and business both need to work on concrete initiatives that carry through with the intent of [establishing] broad government-to-government agreements.

Does the rise of state capitalism necessarily mean the decline of countries that relied on liberal capitalism to triumph? 

My research suggests that behaviours described as typical of “state capitalism” are far from characteristic of Chinese SOEs. If Chinese SOEs did suffer from rampant micro-management by the state (or party), non-commercial orientation, loss-making, poor productivity, and corruption, then western companies wouldn’t have much to worry about. Unfortunately, that is not the case.

We are in the midst of a change in global economic power with the states of East Asia (not just China) and other G20 emerging markets taking a greater role. Changes in relative power are unsettling, but it is hard to see what is gained by mischaracterization of the competitors. A response based on clear-sighted understanding rather than half-truths will take us further in the long run.

China spent the last 30 years learning and adapting to western technology and management.  Other emerging-market economies have done the same with varying forms of support from the state. They all have legitimate global economic interests to pursue. The “state capitalism” mindset seems to assume that the status quo prior to their rise is somehow superior to what might evolve as the interests of a wider range of countries are brought to bear. Multilateral institutions are likely to be the best defence of the international trading and investment system created by liberal capitalism. China is generally regarded as an active and compliant participant. 

With respect to energy and the global shift in supply and demand, Canada needs to consider a global energy strategy – not a continental one. We need to recognize the rise of Asian energy consumption (China, Japan, South Korea, etc.) and diversify our customer base. Prime Minister Harper’s recent trip to China, and the parallel initiatives of Natural Resources Minister Joe Oliver, suggests a growing grasp of the momentous global changes of which Canada and China are a part.

The development of Canada’s natural resources represents the lion’s share of our recurring exports and hence an important source, not the scourge, of our standard of living in an intensely competitive world.

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First, is there a strategy in place for dealing with conflicts between religious freedom and the protection of other human rights? In Canada, we are quite clear: The oppression of women or vulnerable minorities will not be tolerated in the name of religious freedom. But how will the new Office of Religious Freedom respond when the issue is interference with the right claimed by religious groups in other countries, for example, to marry young girls off long before adulthood, or to impose rules that blatantly discriminate against women in religious courts, or to ban gays from places of worship? 

There must be protocols in place for handling the inevitable conflicts between the exercise of religious freedom and other human rights. And these protocols must be consistent with Canadian values, which include, but are not limited to, religious freedom. 

Secondly, are we confident that the office will promote freedom of religion, not religion itself?  The advocacy of human rights is a legitimate activity for government, but the direct promotion of religion is not. Indeed, the promotion of religion by government would be unconstitutional: It is crystal clear in Canadian law, as articulated by the Supreme Court of Canada, that freedom of religion includes the right not to follow any religion at all. The right to reject religion is every bit as solidly protected in Canadian law as the right to follow the faith of one’s choosing is. Is the Office of Religious Freedom going to advance both with equal gusto, or is its real reason for existence to promote religion? 

Finally, why are we focusing on freedom of religion instead of freedom of conscience and religion? The Canadian Charter of Rights and Freedoms guarantees both “freedom of conscience and religion” (emphasis added). One of the rights people hold most dear is the freedom to live according to the values they believe are paramount – that is, to live as their conscience indicates they should. For some people, those paramount values relate to ideas about the creation of the world, the supernatural, or the divine. The values felt most binding by others relate to environmental protection, paying homage to animals their culture depends upon (such as the buffalo or bear), or the ethical imperatives of social justice, such as the need to eliminate poverty. All such frameworks of belief – both the religious and non-religious – are matters of conscience, and all need to be supported by an office devoted to freedom of conscience and religion.

Unfortunately, one has reason to doubt that the government is undertaking the careful thinking necessary to run a sophisticated Office of Religious Freedom. It is worrying that organizations such as Amnesty International Canada, which have significant expertise on clashes between human rights and religious freedom globally, were not invited to a recent consultation on the creation of the office. 

Canadians need to know that the Office of Religious Freedom is going to be informed by really good thinking. Freedom, rights, conscience, and religion are all much too important to be treated in a cavalier fashion.

Photo courtesy Reuters. 

To defend religious freedom no more implies its superiority to other human rights than to defend any such right implies its superiority to others. Properly understood (and there’s no reason to conclude that the present government understands it improperly) freedom of religion implies the other basic human rights. All are aspects of the autonomy of the individual, so to defend any is to defend that autonomy, and therefore (in principle) all the others. To establish an Office of Religious Freedom is therefore wholly without prejudice to any other human freedom.

Here the crucial point to grasp is that religious freedom has never meant freedom to practice illiberal religion (i.e. any religion that seeks to employ coercion, whether of its own adherents or others). You can’t persecute under the mantle of freedom from persecution, and it’s precisely freedom from religious persecution for which “religious freedom” is shorthand. In a clash of dogmatic and intolerant sects (of which there are still many in the world today), neither party can invoke the protection of the principle of religious freedom.

 Neither, however, can any sect claim protection that violates any human right in its efforts to propagate or maintain itself, for any such violation amounts to illegitimate coercion on behalf of religion. The best way to understand religious freedom is precisely as freedom from such coercion. 

From this, it follows that religious freedom equally protects the religious and the non-religious.  The believer can no more coerce the atheist than the atheist can coerce the believer. I don’t fault the Harper government for not billing its new entity as the office for the Equal Protection of Believers and Non-Believers. However, to defend religious freedom is, in fact, to vindicate such equal protection. Who benefits from the purging of all coercion from the realm of religion? Obviously not the religious only. 

There is, of course, one sense in which the establishment of an Office of Religious Freedom does “place religious freedom above other human rights,” but that sense is neither improper nor sinister. All governments choose their fights, and then their fights within their fights. For the Harper government to create such an office is not to turn its back on other human rights. It’s merely to indicate that it will focus a portion of its limited resources for international human-rights promotion on issues of religious freedom. 

Consider this decision as analogous to one to create an Office of Freedom of the Press or of Freedom of Assembly. Would either such decision have aroused such animus? Neither of these freedoms is less fundamental than freedom of religion, but neither is either of them more so. All belong in the bundle, as necessary aspects of the human autonomy that we mentioned at the beginning. All three freedoms, moreover, are subject to massive violation in many parts of the world today. All are in sore need of white knights to ride to their defence. All, indeed, are in need of far larger squadrons of these than Canadian diplomacy (and the new office with its limited budget) have to deploy. Is the Harper government then to be faulted for choosing to employ its few drops of influence in one bucket rather than many? Or for choosing the issue that is most likely to command the enthusiasm of a large fraction of its supporters? Not by me it isn’t.

Photo courtesy Reuters.

UBC Professor of Law Pitman Potter evaluates Prime Minister Harper’s trip to China and advises on how Canada can pursue its national interest when faced with the challenge of state capitalism:

 (Video: Watch this video on the post page)

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Is the trend toward state capitalism tightly linked to the rise of emerging economies?

Yes, because we’re talking about countries that are growing from a low base and want to play rapid catch-up, and because political leaders need relatively pliable governing institutions to permit the state to play such a large economic role. China is by far the most important player here. Russia and the Gulf Arab monarchies have a long history of resource nationalism, and a democracy like Brazil can dabble in some aspects of state capitalism in the energy and mining sectors. But if a country of China’s means and potential weren’t driving this trend, I doubt we’d be talking about it.

There is also a question of definition here. Eurasia Group defines state capitalism as a system in which governments dominate crucial economic sectors to bolster their domestic political positions. Norway has both a national oil company and a sovereign wealth fund, but its government does not meet this definition of state capitalism, because it is not directly involved in using these relatively transparent institutions as political instruments. It’s not the tools but how they are used that makes the system.

The recent Economist special issue on state capitalism noted that the global measure of economic freedom has been in decline for the last three years. Is the rise of state capitalism, and the concomitant decrease in global economic freedom, simply a reaction to the economic crisis of 2008?

Yes, but the economic crisis isn’t finished yet. Most markets have stabilized, and our sense of vertigo has eased, but both the crisis of confidence in the eurozone and the sluggishness of the U.S. economy are residual effects of the 2008/2009 market meltdown. For that reason, it’s too early to argue that state capitalism has enjoyed lasting gains. We should also look closely at this idea of economic freedom. Not every regulation should be treated as a form of protectionism. Intelligent (and therefore limited) regulation of key sectors is crucial to their stability. Without well-designed and properly enforced rules of the road, liberal capitalism is destined to make state capitalism look ever more appealing to those willing and able to invest in it.

State-owned enterprises (SOEs) are starting to invest globally, including in Canada. Should Canada treat these companies differently than it treats typical foreign investors? What threat do they pose to Canada?

Yes, these companies should be treated differently, because many of them are different. That’s not to say that they should be barred from Canadian markets. I wouldn’t presume to tell Canadians how they should define their country’s security. But some state-owned companies are less transparent than privately owned firms operating in the same sector. Those that fit this description merit a closer look.

That said, barring SOEs or sovereign wealth funds from investing in local markets can come with an opportunity cost. There are good reasons to welcome many of these proposals. Beyond the commercial advantages some of them can provide, partnerships can be formed that serve the long-term interests of Canadian companies operating abroad. New relationships with Asian SOEs can help Canada balance its trade portfolio away from excessive reliance on the U.S. economy and toward new opportunities across the Pacific. That diversification will serve Canada’s long-term economic interests.

These companies don’t deserve scorn; they deserve scrutiny.

Among the 10 countries with the largest oil reserves in the world, Canada is the only one without a state-owned oil company. Would Canada be shrewd to become a player in the SOE game?

Look at the rest of the world’s national oil companies. China will continue to rely on CNPC, Sinopec and CNOOC to provide the oil needed to keep China’s economic engine humming, but can they adapt quickly enough to meet the needs of a shifting 21st-century energy environment? Saudi Aramco is a formidable institution, but its success and political influence make it a formidable obstacle to greater diversification of the Saudi economy. Petrobras is a leader in deep-sea drilling, but the Brazilian government has given it a degree of responsibility in developing that country’s offshore oil reserves that might make Petrobras a much larger and less efficient company, preventing Brazil from profiting from its oil wealth as fully and quickly as possible. Is Mexico well served by the legal and political protections provided to Pemex? And how long can Venezuela’s PDVSA continue to produce enough oil to keep the Chavista movement in power?

Partnering with someone else’s national oil companies can be profitable. Creating one of your own can create problems that become progressively harder to solve.

Does the rise of state capitalism necessarily mean the decline of countries that relied on liberal capitalism to triumph?

No, because liberal capitalism in its various forms has been lurching from boom to bust and back again for centuries, and state capitalism has yet to prove its staying power.

There are many ways to approach this question, but there is one crucial attribute that provides liberal capitalism with a thousand lives while threatening the foundation of state capitalism: creative destruction.

Survival depends on ability and willingness to change. As we know, change often comes at considerable human cost. Industries die, workers are displaced, and lives are transformed. This formula gives liberal capitalism its dynamism. Authoritarian governments, however vital they are today, are inherently brittle. As state-owned companies grow larger, they develop the ability to defend their interests at the highest levels of government and within bureaucracies. In some cases, those within the political elite develop considerable personal stakes in their success. They do not adapt when they can – and then cannot when they must.

China’s government can still call on considerable cash reserves. The Kremlin can still afford to create its own opposition parties. The Saudi royals still have plenty of oil to sell. But when these governments and their state-owned companies are forced by circumstance to adapt, there is good reason to doubt that reliance on state capitalism will have served them well.

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How does the Fraser Institute’s Economic Freedom Index work?

Basically, what it tries to do is measure the extent to which individuals and families are free to make their own decisions. We have 42 separate variables to capture that, and they are fro

m third-party sources, which is important: We don’t create the data that goes into this report, and that means it’s objective, that we can’t influence the outcome. Anyone with an internet connection can collect the same data and come to the same results that we do.

We look at five areas:

1. Size of government. This is an important factor,  as government reduces the room for free economic exchange.
2. Freedom to trade. You should be able to buy and sell from anybody in your own country (and anybody in any other country, for that matter).
3. Sound money. Your property can be expropriated every bit as much due to inflation as through taxation.
4. Rule of law. This is absolutely essential. A market economy and economic freedom cannot take place where there is not an impartial and strong rule of law. Otherwise, the rich and the powerful will squeeze the economic freedom out of the poor and the weak.
5. Regulations in three areas: 1) Credit markets. You should be able to borrow from, and lend to, whomever you wish. 2) Labour markets. You should be able to work for, or hire, whomever you wish. 3) Business. You should be able to start, and close, a business whenever you wish.

The index shows a decline in global economic freedom over the last couple of years. Is this a result of the rise of state capitalism?

Well, the rise of state capitalism is just one factor of 42. So it’s not a powerful influencer in terms of the Freedom Index, at least at this point. I think it’s quite an unfortunate trend. All the research on state enterprises – and there’s been a ton of it – shows that they are less productive than private-sector enterprises and, even worse, that they get used for political reasons, which means they benefit the powerful in the political system and actually penalize the less powerful. The last thing you want is a politicized global economy, or even a global economy that’s more politicized than it is now.

The states with powerful governments and less powerful populases are often the least responsible of the global powers, China being an example of that right now. There’s also a false analysis behind the success of these things. There’s been considerable talk of the Chinese model, which involves a lot of state ownership and state strategy. And it is true that China’s been growing rapidly. But what the economic research tells us is that changes in economic policy – in other words, the rate of change of economic policy – is primarily responsible for the rate of change of economic growth. Coming from a dismal economic structure, China’s rate of change to better structures has been quite strong, so its economic growth has been quite strong. But that’s been experienced by many other countries that ultimately had to further liberalize their economies or hit the ceiling. So I don’t think there is any Chinese miracle and I don’t think there’s a Chinese model.

If economic change starts happening at a slower rate in China, do you think the growth in China will decrease from its really miraculous levels?

Sure. As I said, that’s what happened to all developing countries as they went forward. Taiwan, South Korea, Hong Kong, and Singapore all went through huge growth phases and then, as they became developed and were no longer able to copy existing economic strategies, they had to find their own way. Japan is another example. The growth slowed down. There’s no reason at all to believe that China will be any different and, right now, China is facing a significant number of internal problems, as we all know.

In that case, how do you think Canada should approach Chinese investment in Canada, particularly in the form of state-owned enterprises?

I think Canada and other nations need to be very wary. I think there are a number of people on my side of the street who believe in free markets who are open to investment from state-owned enterprises. But frankly, I don’t think they’ve thought it through. If free marketers in Canada object to Canadian government ownership of Canadian enterprises, which we do, why wouldn’t we object to Chinese government ownership of Canadian enterprises?

Canada hasn’t seriously entered the state-owned enterprise game. Should it?

Of course we shouldn’t have state-owned enterprises. When have they succeeded in Canada in the past? Petro Canada … it was good to sell that. Did the various state-owned airplane makers work out? No. But Bombardier’s working out. It makes no sense at all – all it will do is politicize our economy and weaken our export growth.

How is the trend in global freedom showing in Canada? It seems that in the last few years we’ve become less free. Is this just a series of minor fluctuations, or is this a more significant trend?

Minor fluctuations. I always caution people that data are not a sharp dot but rather a fuzzy smudge. So even if nothing has changed, you’ll almost have quantum fluctuations in the data, jumping up and down. We’ve probably become a little bit less free. Government spending has taken off under the Harper government, but I wouldn’t say we’ve seen anything truly significant. Our rate of loss of economic freedom, which is very small, is less than that of a lot of other nations in this financial crisis.

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For one thing, like many Latinate terms, it tends to distance the observer from the emotional impact of what’s going on. “Collateral damage” is a neat term that doesn’t involve a discussion of what’s actually happening, which is that innocent people are being killed or murdered, and that’s what I think, in some ways, this should be called.

The term also denies intentionality – it refers to the unintentional side of warfare – when a great deal of this mortality is intentional. I’m not saying the U.S. military goes out to kill civilians, but there are many cases in which the military knows that civilians are at risk and are likely to be hurt or killed, and they go ahead with their missions anyway.

For example, consider any bombing that takes place: Long-range artillery can be at up to three miles – they don’t know what’s at the other end of a three-mile trajectory, but they go ahead and do it anyway. The U.S. military tries to avoid this sort of thing, but it does happen, and it happens often enough that it is a moral outrage.

In short, I don’t like to use the term collateral damage because it doesn’t convey what’s actually going on.

In 2007, General David Petraeus’s tactical changes acknowledged the strategic problem of civilian casualties and sought to reduce them. Did these tactics succeed?

The problem is not just attitudes toward civilians – though that’s a serious problem that continued after Petraeus took command in Iraq. He had just published a new field manual for U.S. operations in the army, which acknowledged that many of the military’s actions were alienating Iraqi civilians because they were not treating them well.

It comes down to an old military debate about counterinsurgency, which goes something like this: In order to fight the insurgency, one has to get close to the population. This reflects the modern nature of warfare, in which you’re not fighting armies that are uniformed and identifiable – you’re fighting insurgent groups that often hide among civilian populations, so you have to get close to the people, earn their trust, help them with development projects, speak their language, honour their cultural preferences, and so on.

But the fact is (and any senior officer would acknowledge this), in the first years of the war in Iraq, the U.S. military was not sensitive to local cultural norms, and was roughing up a lot of Iraqis (often unnecessarily) – detaining them, arresting them, putting them in horrible prisons, shooting them, forcing them to migrate, etc. And this indeed fuelled the insurgency.

If you had a cousin who was killed in your town, allegedly by a U.S. soldier, your reaction, especially if you were a young man, would be to take arms against the occupier to defend your community. We know this from interviews with people who have been detained – they become fighters because they think they are defending their communities. And we may objectively disagree with that, but that’s what they think they’re doing, and it’s important insight. I think Petraeus, along with other members of the senior military officer corps, recognized that.

Petraeus tried to change it, which is very hard to do in the middle of a war. By that stage, we didn’t have enough troops to undertake counterinsurgency operations. They did make an attempt to change local perceptions of the U.S. military and how they were operating in these Sunni Arab districts. But by 2007, it was already civil war: Most of the violence was Iraqi violence, which was very hard to stop.

In Afghanistan, I think they did a better job from the beginning, knowing the history of resistance to occupiers. But Afghanistan is a difficult terrain, and U.S. soldiers don’t speak the local language. There were so many barriers that it was not likely to be a successful mission.

Would it make a difference to American attitudes toward Iraq if journalists spoke openly about the hundreds of thousands, rather than tens of thousands, of Iraqi deaths since 2003?

I’ve puzzled over this quite a bit, and I continue to puzzle over it, because every week, it seems, I see some mention of the death toll in Iraq being in the tens of thousands – sometimes predicated with the term “at least.” I think it makes a difference what you say about the level of mortality, even though people can become inured to these numbers very quickly.

The goal is to have a real discussion about the lessons and consequences of the war in Iraq, and the major consequence is what happened to the Iraqis. Some, making pro-war arguments, will say, “Tens of thousands of people died – that’s too bad. But we got rid of Saddam Hussein – that is good. We got rid of a monster. People in Iraq are liberated; they can make their own future. Tens of thousands – that was probably worth it.”

If the number of people who died in Iraq were a million or a million and a half, it would be much harder to make that claim. 1.5 million casualties would be three times the number Hussein himself killed in Iraq – he is often said to have killed about 400,000, many of them Kurds. The moral standing of American victory would be very hard to sustain.

So the next time this situation arises (which it will), in which large numbers of U.S. troops are being contemplated for deployment, we might think twice about what we’re doing if we can talk about the enormous human consequences of this war – not just death, but also tremendous disruptions in health care, education, and so on.

We’ll never know the exact number of people who have died, and that number may not resonate with the American public no matter what it is. I still prefer to have a discussion that has some sense of the reality of what happened. The scale of destruction was enormous, and we need to come to terms with what happened as a result of the invasion.

Do you think the new media make it more, or less, difficult to have an honest national discussion about America’s wars?

There’s been a lot of speculation about the new media. Twitter and Facebook were not prominent during the main phase of the Iraq War.

In any case, the media that are driven by individuals rather than news organizations, for the most part, were adding a lot of opinion – some of it good, analytical, and worth reading. Juan Cole, for example, a professor at the University of Michigan who is an Arabic speaker, added quite a bit. But most of what was expressed on the internet – particularly on blogs – was just opinion. It was using reports from The New York Times, The Guardian, and other news sources, and making a comment about them.

There was very little worthwhile information that came via the blogs – and virtually none came from the Iraqi side, except for blogs that were written by Iraqis, which was a change from the wars in Vietnam and Korea, of course. There are very few personal narratives, even today, in English about the Korean or Vietnamese experiences of these wars that occurred on their own soil. I think that’s a great pity and a great gap in our understanding of what happened, and it’s one reason we don’t fully consider the human consequences of war.

The Iraqi blogs (at least the ones in English) represented a particular slice of Iraqi society: young, educated, western-oriented Iraqis. Nevertheless, they were informative and provided a great many day-to-day accounts of what was going on. But those were not widely read by Americans.

Apart from those blogs, I don’t think the internet offered much that newspapers didn’t.

How was the Libyan war similar to these other wars?

What’s most interesting about Libya is not necessarily similarities to previous wars but the irony that the U.S. laid its entire justification for military action on the protection of civilians, which was not true of Iraq, Afghanistan, or Vietnam (Iraq was about weapons of mass destruction; Afghanistan, the pursuit of Osama bin Laden; and Vietnam, preventing the Communist takeover).

Humanitarian rationales are always martialed in these cases, but they’re not usually the primary reason put forth. Libya is the first time I can remember that civilian protection has been the No. 1 reason for intervention.

It’s ironic because we don’t have our own house in order about civilian protection, and yet here we are going into a place that was fraught, and remains fraught, with a lot of difficulties. It’s not over in Libya. The civil war against Gadhafi is over, but the outcome in Libya remains uncertain for humanitarian or western liberal principles.

From my standpoint, it’s an inconsistent policy – we commit to going to war in one place to protect civilians but, almost simultaneously, we have been relatively callous about the cost to civilians in Iraq and Afghanistan.

Is human security, as opposed to the security of states, receiving more attention in politics and universities?

There’s an interesting line of reasoning that Obama is committing military resources – in a restrained way – to protect civilians. The Responsibility to Protect discourse in the UN and elsewhere is part of this; “human security” is another way of framing it.

You could say that Bill Clinton as president was doing so in Kosovo, and to some extent in Bosnia itself, and that the elder president Bush’s landing in Somalia gave precedent. But the mission in Libya and the deployment of troops to Uganda seem to indicate a more serious, sustained embrace of this outlook. Some attribute it to Samantha Power, Susan Rice, and Anne-Marie Slaughter, all of whom have been close to Obama.

The question is not just about one’s desire to protect human security, but also how you go about doing it. Is it all about military interventions? I don’t think it is. I think a lot of human security is guaranteed not by military intervention, but by political, diplomatic, and economic policies of various kinds.

It would take considerable study to see whether Obama has been following through with this in his development policies. You certainly couldn’t say he has with respect to the Palestinians. But at least human security is in play. It’s interesting to see that people in power are now at least administering these concepts, which were marginalized and sidelined for so long. I think that’s a good thing.

What responsibilities does the U.S. now have to Afghanistan and Iraq? How can the American public, with its war exhaustion, be convinced of these responsibilities?

I think our responsibility to Iraq and Afghanistan is enormous. The amount of destruction in Iraq is colossal.

While we cannot make right what went wrong, we are obligated to stay in Iraq – not with the military, but in order to be as helpful as the Iraqis want us to be in terms of expertise, networking with the rest of the world, trade, and so on. We should be able to help them with reconstructing infrastructure, restoring health care, and so on, to the relatively high levels that existed under Saddam Hussein.
We don’t have the money to do a lot of it, but we need to be there in some helpful way that is not just about security, training people to reconnaissance, and so on, which is more likely what we’re going to be doing there.

Afghanistan is very much in need of enlightened development policies that funnel funds by way of loans directly to people who are starting, or trying to sustain, businesses in agriculture, irrigation, electrification – things that people want and can manage themselves once they have the resources.

A lot of the aid that’s gone to Afghanistan has been military related (for example, when we build a highway that Afghans don’t necessarily need, but that we need in order to move our divisions around). What Afghans really need is help with irrigation, moving perishable goods from one market to another, and so on. That we haven’t done so well at, partly because the marriage of development and security has always been problematic for Americans – and others – who intervene in other countries. Security concerns always seem to win out.

People who are doing better economically than they used to be are not necessarily going to be loyal to the United States or disloyal to the Taliban, but poverty, corruption, and economic chaos don’t generally lead to good outcomes for political control.

You want prosperous people who can take care of their own future in order to increase the likelihood of a political settlement that’s more to our liking (that’s one way of putting it) – an outcome that will be sustainable in all respects.

The measures announced in the action plan are totally appropriate and unexceptional. They might help reverse the trend toward thickening the border that began following 9/11. But these measures have been on the table for years, and could (and should) have been put in place long ago. Similarly, the RCC mandate is familiar to anyone who has followed suggestions for regulatory harmonization made since NAFTA was first signed.

The action plan generated a burst of interest north of the border and some predictable complaints that Canada’s sovereignty was being eroded.

What happened in the U.S.? 

Basically nothing. Barely a word. One article, written by a well-known Canada watcher, appeared in Cleveland Plain Dealer. There was nothing in the Times, the Journal, the Post, or USA Today.   

Is this good news? Bad news?

On the positive side, Beyond the Border has not become an issue in the Republican candidate road show. One can easily imagine that it could have become one, with border-rabid moat diggers calling out President Obama on opening our longest border up to who knows what kind of threats and dangers.  

The Canadian side stickhandled the Beyond the Border process carefully, avoiding the more contentious ideas that were initially discussed (the original North American security perimeter, for example) and focusing on well-established links among government agencies.

But there are negatives, as well.

Low-balling these matters and redefining goals as a series of fairly modest discrete steps meant that a whole raft of key issues were side-stepped, such as changes in cabotage rules and national preference policies (“Buy American”). These are potential game-changers, and would have a deep impact on continental economic collaboration. Enhancing the resilience of our infrastructure is an admirable goal, but, beyond this, we need to be thinking about building a new infrastructure of highways, rails, pipelines, and electric systems adequate for the global competition of the 21^st century. There is no broad vision in the Beyond the Border program beyond incremental improvements in cross-border co-operation.      

Moreover, in taking this approach, the action plan process fails to educate wider publics about the essential nature of the bilateral relationship – that we do not sell things to each other, but, rather, make them together. We are not just talking about borders between sovereign nations. We are talking about deeply integrated production and distribution systems and high levels of interdependence. So far, however, we have failed to create informed constituencies and build support for cross-border collaboration. Instead, there has been little information – and often widespread misinformation – about developments in North America.   

To compete in the emerging global economy, we need to think in terms of big ideas – about free trade in freight transportation, a North American energy strategy, and a North American infrastructure strategy. 

Have steps been taken to create the political will to do this? Is there a political strategy here?

Keeping heads down, under the legislative radar, is an attractive but dangerous approach. On one side, it fails to mobilize key constituencies and build alliances in state and metropolitan governments, among economic stakeholders and opinion leaders. On the other, stealth is a serious problem. If we act like conspirators, we will surely be suspected of conspiracy.

Where do things go now? The action plan has been introduced at a terrible moment in the U.S., given the hyper-extended election cycle and the politicization of everything government touches (we are dealing with senior legislators who are quarreling about using “greener” plastic cutlery in the Congressional cafeteria – the great “fork fracas”). If Ottawa had pushed this early in the Obama administration, it would probably have been well-received in Washington, and could have led to a major step forward in making North America work better. 

Facing major funding cuts, creating new medium-level administrative entities will not be high on U.S. agency agendas. So anything that involves expenditure or more than modest changes in procedure that might attract Congressional attention will go by the board. It is hard to imagine President Obama, or any senior administration official, standing up for the Beyond the Border project for the next year. And you can bet that the first time this becomes a visible political issue, U.S. support will vanish like smoke.

Forecast: At best, useful but modest incremental changes in border management.  

This article is part of the CIC’s ongoing series, “Did KeystoneXL Kill the North American Idea?”

Photo courtesy Reuters.