Statement made on 14 December 2009 by Senator Jerahmiel Grafstein (retired)
Hon. Jerahmiel S. Grafstein:
Honourable senators, first, thank you for the indulgence of this motion. This has been on the Order Paper for some time, probably close to a decade in one form or another, and I took very careful note of the comments made by other senators with respect to endorsing this as opposed to approving it. It is important that I give you a bit of history because it is an important resolution that I believe goes to the heart of peace and stability in the Middle East.
Some time ago, shortly after 9/11, I was invited to attend a think tank conference in Wilton Park in England, attended by 60 or 70 outstanding economic experts from the Middle East countries. Aside from one American, one member from the United Kingdom and me, the rest were Muslim officials who were economic advisers to the 22 Muslim states. I was surprised to be invited to that conference. I think I was invited because of the activity I had on this front at the OSCE in talking about economic progression in the Middle East. In Wilton Park and met with most of the officials from the Arab states on this subject matter. It was here that I devised my peace plan for the Middle East based on economics.
The history of this is set out in the resolution. You will see when the Helsinki Accords took place in 1975 that one of the parts of the declaration that brought together the European countries from Vladivostok to Vancouver that called for not only economic development within the OSCE space but also with respect to the Mediterranean region. Even then, it was recognized there could not be peace in the world unless there was economic stability, not only in Europe and North America but also in this fragile area in the Mediterranean basin.
We started a series of meetings to try to develop a plan, and the plan was essentially one that we promoted to develop a free trade zone for the Middle East that would include Israel. In private conversations with the economic advisers of every one of the 22 Arab countries in that region, — and I have had such conversations — no one disagreed. Everyone thought the way to peace and stability in the Middle East was through economics, but the political track was clogged, the political track was difficult.
I argued that, as happened in Europe, economic progress came before political progress. I argued that the two tracks could be separate. One could proceed on the economic track and ultimately the political track would catch up. That was the history of the EU. One man, Jean Monnet, a brilliant French wine merchant decided that one of the keys to putting together a peaceful relationship between the giant adversaries in Europe, France and Germany, was economics. He devised the scheme with others that there be a common coal and steel community. Jean Monnet is at the core of the EU. This was in 1952-53, right after the World War II.
Remember, until that time, both Germany and France, for 100 years before had been at each other's throats in a series of wars. They slaughtered each other. Jean Monnet felt that economics was the heart of moving these two adversaries together. He then convinced parliamentarians and both Chancellor Konrad Adenauer of Germany and Prime Minister Robert Schuman of France, and they entered into an historic agreement in 1954 to have a free trade zone of steel and a free trade zone of coal to bring these two economic giants together. It was a free trade agreement called "The Community, The Common Pact".
From those two free trade agreements, they moved quickly to economic integration. The result was the European Union, the largest unit of integration in history in Europe took place, and it started with economics. Therefore I felt, and others felt, that if we could start the ball rolling with respect to the economic track in the Middle East we might bring this horrible, difficult, complex region together on one common track, while the politics would follow.
In the EU, we must remember historically that economics came before politics. Politics are difficult, complex and emotional, but economics are scientific and correct. Essentially, it is a direct means to increase the general welfare of the public. We looked at the Middle East and after 9/11 here is the irony: The region that was most detrimentally affected by 9/11 was not North America or Europe; it was the Middle East. The economics there were bad and went from bad to worse, and all the statistics are there to prove it.
For instance, here it is, in some respects some of the richest states in the world, yet those rich Arab oil states never invested in their own region. They will invest in Europe, North America, China and Japan, but not in their own region. This situation to my mind is the heart of a difficult problem and that is why even economic advisers in Egypt in particular, and in Jordan, Morocco and Algeria, understood this particular problem, as well as in Syria and elsewhere. I had a great conversation with an economic adviser to the current President of Syria and we both agreed. He said, "Sotto voce, we all agree." Economics are the key to peace and prosperity. Therefore the question is how to move the agenda forward.
These resolutions started to take place at the OSCE Parliamentary Assembly and regional meetings. We convened meetings in Rome. We had meetings in Rhodes. We had meetings in Malta, in Montenegro, in Washington several times, and recently in Athens. We called it an OSCE Mid-East Forum. At these forums, Israel was represented as well as these Arab countries in the Mediterranean Basin. They all spoke, they all agreed and they argued, and the horrible rhetoric we hear publicly was not present at these particular meetings. The most recent one in Athens was a successful meeting. I was given the responsibility of chairing and organizing these meetings right across the face of the Middle East in the last decade.
At every meeting, when the doors were closed and they discussed economics, they all agreed. Let us take a look at the facts laid out in this resolution. Listen to this: Therein lies a horrible factual situation that can be corrected.
In the Middle East, two thirds of the population is under 35 years old. It is the youngest population in the world. What are these kids, who do not have jobs and cannot find a job, doing? They throw rocks, they obtain guns and they kill people. We have not provided an alternate vision of economic prosperity. If honourable senators take a look at it as well, direct foreign investment is down. Economic growth is down and the recent financial crisis has made it worse.
Now, there is some good news. The good news is that President Sarkozy, deeply influenced by some of these resolutions and also, I believe, deeply influenced by Jean Monnet, decided that he would take the lead on this track. Several years ago, he introduced a fresh economic model for the region. I urge honourable senators to look at the background of his proposals and I will not belabour the point, but President Sarkozy understood that he wanted to create an economic model that would culminate in a free trade zone for the Middle East, especially in the Mediterranean Basin.
Who are the problems with the free trade zone? First, amongst Arab countries, and of course with Israel, the United States has shown the lead and Canada has followed suit. Canada entered into a free trade agreement with Jordan. The Americans predated that agreement by doing the same thing. The Americans came up with a brilliant plan both for Egypt and Jordan with their free trade agreements, and I commend it to honourable senators who are interested in free trade.
In connection with the free trade agreement with Jordan, the Americans said they would set up qualified investment zones, QIZs, which are not any different from the maquiladoras between Mexico and the U.S.A., free trade zones where the products assembled there would get free trade access without tariffs into the United States.
In the U.S.A.-Jordan Free Trade Agreement, there was a condition, and the precondition. Part of the cost inputs into manufacturing and assembly would include not only the Jordanians but also the Israelis. As a result of these free trade zones, 40,000 to 50,000 jobs have been created. That was the American free trade agreement. Then the Americans had a partial free trade agreement for certain products with Egypt that accomplished the same thing. Company after company is now lined up in Egypt to enter into assemblies, manufacturing and services in these QIZs together so products can enter into the United States tax free with three conditions. It must have Israeli input; it must have Egyptian input; and it must be within limited product cost categories. These, at an economic level, are creating jobs at the grassroots.
On the economic front, there are things we can do. We have examined this situation. We have talked about it, and I hope that after Senator Cools has an opportunity to consider this resolution, rather than taking note of this resolution, honourable senators will pass this resolution unanimously to indicate to the Middle East that Canada has a plan and that Canada is ready to participate.
Honourable senators, I commend the Conservative government because after years of urging the Liberal government to enter into a free trade agreement with Jordan, the government has done so. I hope they will follow that agreement with a free trade or partial free trade agreement with Algeria and Morocco. Good on them if they do so. Both states are all standing ready to do this.
What is the problem? The crucial problem for a free trade zone in the Middle East is farmer resistance. Why — because the largest tariff walls in the world protect farmers in Europe. Because of the farm tariffs in Europe, we have had high farm tariffs in the United States, and because of the farm tariffs in the United States we have had farm tariffs in Canada. For that reason, the basic agricultural products in the Mediterranean region cannot be transported tax-free into Europe. This is a problem here that must be resolved. The Doha Round is not working. The World Trade Organization will not succeed on this particular round, for the heart of the issue is to ultimately reduce agricultural tariffs so agricultural products in these developing countries can move freely into Europe and North America. Canadian farmers are ready for it. We can take it. We have some of the most productive farmers in the world and we can take it.
The Europeans are not prepared to take it; the Americans are partially prepared to take it, but we in Canada are ready. Our farmers are the most productive farmers in the world. We have not helped them. They have succeeded on their own. There is a way through this morass: services, manufacturing, agricultural products and free trade.
I believe that with a free trade zone in the Middle East we will see jobs created, we will see women participating in the workforce, which they do not as actively as they could and literacy rates will go up. Everyone should understand that if they examine the history of the common law and the rule of law, the foundation of democracy.
Honourable senators, I end with this point: The common law was based on civil rights. However, before the common law came the law of commerce. Commercial law preceded the civil law. People made business and did business under the commercial rule of law before the civil rule of law. That argument is another one, honourable senators, for proceeding with the economic track while the political track remains clogged.
I urge the adoption of this resolution. We have worked intensely across the face of Europe for the better part of a decade. I have had a small but, I think, important role in trying to bring this issue to the Canadian public attention, so I urge the adoption of this resolution — not to note it, but endorse it.