Canada considered jobs, inflation in decision to return Russian turbine: documents

Global Affairs Canada considered the impact on Canadian jobs and global inflation when making a decision to return a turbine being repaired in Montreal to a Russian energy giant, a newly released document shows.

The “memorandum for action” prepared by Global Affairs recommended Foreign Affairs Minister Mélanie Joly grant a permit exempting Siemens Canada from sanctions against Russia and allow it to return the equipment for use in a pipeline carrying gas to Germany.

The government submitted the memo and the permit itself in Federal Court in response to a legal challenge of the turbine decision filed by the Ukrainian World Congress.

Joly checked a box concurring with the recommendation and signed her name. She declined a request for an interview on the matter Friday.

The memo notes that the specialized Siemens facility in Montreal working on the turbine employs over 400 “highly skilled” employees and is the only one in the world certified to do maintenance on the equipment.

In a heavily redacted section, the memo warns of potential job losses or the closure of the facility, although the scenario that would cause that outcome has been removed as it contains “commercially sensitive information.”

The document also cautions that not returning the turbine could ultimately weaken support for the Western allies’ strong stance on Russia and that returning the equipment would allow Canada to “manage the narrative.”

It says without the turbine, Russia could blame Western sanctions for limiting the Nord Stream 1 pipeline’s ability to operate, and this would likely further increase world energy prices and global inflation.

“Russia appears to be leveraging this situation to blame Western sanctions for energy insecurity even though it maintains the ability to supply Europe with the natural gas that it requires,” the document says.

“Allowing Russia to maintain this narrative risks broader implications for support for Ukraine.”

The memorandum recommends that the Canadian government introduce an exception to its sanctions regime against Russia to allow the turbine to be returned and for five other turbines to be imported, repaired and returned as per their maintenance schedule.

Doing so would stop the Kremlin blaming sanctions for hardships in Europe and undermining support for Ukraine, it says.

“Reduced energy supplies will likely cause further hardship for the European citizenry in the form of inflation, lack of heating, etc., and may weaken support for the Western allies’ strong stance on Russia,” it says.

“Without the refurbished engine and Siemens Canada’s continued services, Russia can maintain the narrative that Western sanctions are creating limitations for Nord Stream 1’s ability to operate.”

It says that the Russian energy giant Gazprom has “already curbed gas flows through the Nord Stream 1 pipeline, citing a technical malfunction of an existing engine and the delayed return of the engine from Canada.”

The Ukrainian World Congress and Daniel Bilak, a Canadian who lives in Ukraine, have applied for a judicial review of the decision to return the turbine, which the Ukrainian government opposes.

Monique Jilesen, a lawyer with Lenczner Slaght who is representing the Congress and Bilak, said the Global Affairs document supports their argument that Russia’s claim to need the turbine is a ploy.

“The memorandum acknowledges that Russia is blaming Western sanctions for energy insecurity even though it maintains the ability to supply Europe with the natural gas that it requires,” she said.

“In that regard, the memorandum supports the argument in the application that Russia’s claim to need the turbine is a disingenuous ploy to evade the Canadian sanctions.”

Canada sent the turbine to Germany and it was supposed to go to Russia from there, but Russian authorities have so far refused to pick it up.

Siemens did not respond to a request for comment before publication.

Orest Zakydalsky, a senior policy adviser at the Ukrainian Canadian Congress, said they had advised the Canadian government not to allow the turbine to be released because it would “show weakness” which Russia would exploit.

“Once you accede to one of their demands, of course they are going to make more,” he said.

He said the permit should be cancelled.

This report by The Canadian Press was first published Aug. 12, 2022.