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PART I: THE GLOBAL SECURITY INTELLIGENCE ENVIRONMENT
PART II: CANADA'S COUNTER-TERRORISM PROGRAM
PART III: CANADA'S COUNTER-INTELLIGENCE PROGRAM
PART IV: OTHER NATIONAL SECURITY PROGRAMS
| Economic Security | |
| Weapons Proliferation | |
| Transnational Criminal Activities | |
| Information Technology | |
| Security Screening | |
| Government Screening | |
| Foreign Screening | |
| Immigration and Citizenship Screening | |
The tabling in the House of Commons of the annual Public Report of the Canadian Security Intelligence Service (CSIS) provides an opportunity to report to Canadians on the activities of the Service. Consistent with its responsibilities for national security and public safety, and the practice established in previous years, the Service is committed to a policy of public accountability and welcomes this opportunity to report.
Last year's Public Report provided Canadians with an update on trends affecting national security and public safety, including terrorism and a variety of national security threats emanating from states, groups and even individuals. Emphasis was placed on the international efforts to counter the increasingly global reach of some of these threats, including the initiatives begun with the G7/P8 Summit at Halifax in June, 1995, and subsequent cooperative efforts, including the Anti-Terrorism Summit at Sharm El Sheik, Egypt, in the spring of 1996. The trends described last year are still evident and there is little indication that these threats will become less challenging.
This year's report continues with the security trends which should be of concern to all Canadians. In particular, the mixture of traditional and non-traditional threats is discussed in the areas of Counter-Terrorism and Counter-Intelligence and an update is provided on other national security problems, including economic security, weapons proliferation, transnational criminal activity and emerging threats to information technology. Increasingly, we find that the globalization of threats demands an international as well as a domestic response and Canada has not been slow to take action in both areas.
Canadian national security and public safety depend upon the existence of a stable security environment.
By now, we are far enough removed from the days of the Cold War to discern certain changes in the security environment. For the decade of the 1990s to date, the global environment which spawns many of the threats to national security and public safety has undergone a more profound change than at any time since the Second World War.
It is not clear that the process of change is complete, but three important characteristics are evident. First, the global security environment in which Canadians must live and do business continues to be more unstable, diverse and unpredictable than that experienced during the long years of the Cold War. Second, many of the traditional threat activities have not gone away, but remain, albeit in a changed or changing form. Third, new types of threats are emerging, as described last year, particularly for the more developed democracies which have the most to lose from instability.
Optimistic expectations of a new world order following four decades of bipolar confrontation have not been realized. The threat of nuclear war has abated, and encouraging progress has been made in reducing the number of countries from the former Soviet Union which once held nuclear weapons. There is greater concern, however, about the security of nuclear materiel and components, and the chances of their increased proliferation around the world.
According to the 1996 Yearbook of the Stockholm International Peace Research Institute, major armed conflicts around the world declined from 36 in 1994 to 30 in 1995, but the reality remains that there are more than 80 known territorial disputes extant and at least that number of potential ethnic conflicts. As an active member of such organizations as the United Nations, the Commonwealth, La Francophonie, Asia-Pacific Economic Cooperation (APEC) and the Organization of American States, and one of the few remaining countries willing to receive large numbers of immigrants and refugees, Canada cannot be indifferent to these conflicts. Most immigrants and refugees are happy to leave their homeland conflicts. A few, unfortunately, bring their conflicts with them.
The last five years of this decade have seen the worst outbreaks of atrocities since the Second World War, which the various multi-national organizations to which Canada belongs have been unable to prevent. Sometimes, the unfortunate victims of these tragedies and some of the perpetrators end up in Canada. Even if Canada already is involved in diplomatic, humanitarian or peacekeeping efforts in a country where a crime is committed, the faraway atrocity then has the potential to become a Canadian domestic problem.
Many of the overt threats of the last five decades have receded. Some of Canada's former intelligence adversaries in Eastern Europe, for example, have chosen co-operation over confrontation. The advance of democracy has improved living standards, the rule of law and the quality of life in many countries, but too many other countries have regressed to the point of failed or failing states. According to the annual report of the New York-based Freedom House, the number of free countries has risen from 76 to 79, leaving more than 100 countries whose citizens enjoy little freedom. Too many other causes of conflict remain around the world.
While the democratic world prospers, much of the rest of the world struggles with increasing instability, which can lead ultimately to threats to the national security and public safety of the countries and citizens of the developed world, including Canada. Some of the causes and symptoms of instability include the following:
In this unstable environment, approximately 23-million people are registered with the UN High Commissioner for Refugees, and several times that number are dislocated from their countries of origin. A recent and disturbing trend in countries where the worst population dislocations have occurred is the deliberate targeting of unarmed volunteer relief workers.
The reports of murdered Western aid workers in Chechnya, Rwanda and Somalia are noted when they include Canadians, but the statistics that include attacks on hundreds of other local aid workers across the world tend to be forgotten. This phenomenon has been described by the Director of Operations at the International Committee of the Red Cross as a "new barbarity" which threatens "what centuries of civilization have forged in the name of the common good."
The security environment described in this report is the breeding ground for many of the national security and public safety concerns which ultimately affect Canadians at home and overseas. The following parts II, III and IV of this report discuss the threats and the Canadian response.
International terrorism threatens public safety and challenges the civil authorities and democratic structures of developed states. In Western Europe, the governments of France, Germany and the United Kingdom, to name three of the more populous countries, have had to deal with difficult problems from the effects of terrorism. In Israel, the assassination of Prime Minister Yitzak Rabin on November 4, 1995 by an Israeli extremist, and a campaign of suicide bombings by Palestinian extremists, helped to persuade the Israeli electorate to replace a government responsible for the peace process with one thought more likely to adopt a harder line.
Annual international terrorist incidents in the 1990s number in the hundreds. Examples of some of the indiscriminate and targeted killings by terrorists in the last two years included, amongst others:
As other developed countries tighten their responses to terrorism, Canada will continue to be attractive to terrorists as a safe haven and a means of ready access to the United States. The 1985 Air India disaster that claimed 329 lives, which remains under active investigation, was a reminder that Canada has no guarantee of immunity. Less well known is a series of terrorist incidents involving Canada at home and abroad over the last 15 years, including:
At the start of 1997, trends in international terrorism mix the old and the new and include the following:
Activities are selected and used by terrorists in proportion to their demonstrated success or failure, as reported instantaneously by the worldwide news media. The hostage-taking at the Japanese embassy in Lima, Peru is one example. The challenge for governments is to devise responses appropriate to the given crisis that will be neither an overreaction nor a violation of democratic values.
Overseas, US interests present targets of opportunity for terrorists, with transportation facilities being vulnerable. Since 1991, transportation infrastructure and facilities have been the target of 20 per cent of all international terrorist attacks. In 1995, there were 170 attacks worldwide against transportation systems. Canadians could be at risk simply by being in the wrong place at the wrong time, as was the Canadian couple travelling in the Paris underground train ripped apart by an explosion on December 3, 1996. The wife was one of four passengers killed, and the husband was one of dozens injured.
In Canada, the threat from international terrorism will continue to be associated with homeland conflicts. Many of the world's terrorist groups have a presence in Canada, where they engage in a variety of activities in support of terrorism, including:
These activities in Canada are an obvious concern for intelligence and law enforcement officials. Insufficient effort in either area could leave Canada open to charges of being implicated indirectly in acts elsewhere against other states. To avoid such a possibility, even greater cooperation with like-minded countries will be needed for the foreseeable future.
Domestic terrorism by disaffected individuals and groups can be expected in many developed societies and is difficult to prevent due to the less predictable nature of this type of threat. Inspired by extremist beliefs, or by real and imagined grievances, groups and individuals resort to random unconstrained terrorist attacks. The Oklahoma City bombing and the gas attack on the Tokyo subway by the Aum Shinrikyo cult are examples.
By contrast, the domestic security environment in Canada recently has appeared relatively calm, despite a number of contentious issues which elude consensus and attract a very few people who would move the political agenda through violence. Incidents that may have a potential for life-threatening violence include blockades and occupations by armed native activists in support of treaty claims. The extreme right in North America comprises a number of different racist factions without a central leadership, whose decentralised decision-making adds to their unpredictability. Prominent members of the extreme right establish the broad directions of the movement, and decisions on what actions to take rest with individuals or small cells. Tensions between racists and their adversaries have the potential for violence. Two pipe bombs were mailed to white supremacists in the summer of 1995 by a previously unknown group calling itself the Militant Direct Action Task Force.
Canada's response to terrorism is integral to the response by the G7/P8 countries reported last year. A great deal of international cooperation has taken place since the Ottawa Declaration of December 1995. Canada, for example, played a full part in the Anti-Terrorism Summit at Sharm El Sheik, Egypt, in March, 1996, and the international ministerial Counter-Terrorism conference at Paris on July 30, 1996. Canada also will work on the Counter-Terrorism group preparing for the heads of government meeting to be held at Denver in the summer of 1997.
If the campaign against terrorism is to succeed, bilateral and multilateral intergovernmental cooperation, as well as the momentum generated by the G7/P8 countries, will need to be sustained. Terrorism affects the responsibilities of several Canadian federal departments and will demand even more interdepartmental cooperation in the future, particularly when Canada hosts such high-profile events as the upcoming APEC conference in Vancouver in November, 1997.
The abrupt end to the Cold War raised expectations in the West that have not been completely fulfilled. The intelligence services in most Western democracies downsized and reorganized at approximately the same time that traditionally adversarial foreign intelligence services were being tasked to undertake other collection activities, considered by their governments to be in their best interests. In addition to conducting traditional espionage, several countries have enlisted their intelligence services for new purposes and the long-term effects of this trend are not yet clear.
After a period of hesitation, the Russian intelligence services, for example, were reinvigorated by the passage of a new bill on foreign intelligence collection, signed into law by President Yeltsin in July, 1992. Since then, there have been several examples of traditional espionage activities by Russia. In May, 1996, two Russian illegal officers living in Canada under the assumed identities of deceased Canadians were arrested as a result of a Service investigation. Dmitriy Olshevsky and Yelena Olshevskaya, living in Toronto under their developing legend of Ian and Laurie Lambert, admitted membership in the Russian Foreign Intelligence Service to an immigration hearing and were deported from Canada.
In the United States Aldrich Ames, a former CIA employee, was convicted in 1994 of spying for the former Soviet Union and Russia. Over a period of years, his activities caused the deaths of several US agents. In November, 1996, Harold Nicholson, a relatively senior CIA officer, was arrested on charges of espionage for Russia. Shortly after, Earl Edwin Pitts, a 43-year-old lawyer and FBI special agent, was arrested on charges of selling national security secrets to Russia.
Traditional espionage, therefore, has not gone away; it has entered a period of change in which traditional and non-traditional forms of espionage will co-exist for some time. Although Canada now is cooperating in some areas with former intelligence adversaries from the Cold War, traditional espionage by many countries continues.
Several countries consider it in their interests to attempt to steal leading-edge technology from Canada, because they lack research and development, or because it is cheaper than buying the technology. Some expect an intelligence return from scientists and university students sent abroad at government expense. China, for example, developed its weapons of mass destruction with the help of Chinese scientists trained in the Former Soviet Union and in the West.
Other countries attempt covertly to monitor, influence or coerce émigré communities. Not only do such foreign intelligence activities violate Canadian sovereignty and our national security interests, but Canada cannot allow its citizens to be harassed or intimidated by other governments. CSIS has a responsibility to investigate and forewarn the government of such activities.
Canada will continue to develop liaison arrangements with other countries, including the intelligence services of the former Warsaw Pact. While these relationships provide Canada with information important to its own security, another purpose is to convince former adversaries that their legitimate security needs can be satisfied through liaison and cooperation, without the need to spy on Canada or Canadians.
In addition to these new relationships, Canada has long-term liaison agreements with a number of allied intelligence services. Such agreements have proven to be immensely beneficial in the past, remain essential to the security intelligence mandate, and properly serve the best interests of Canada and the Canadian public.
As long as there are disparities in wealth and technology, there will be a market for economic, military, political, scientific and technical intelligence. As long as there are perceived gaps in security, or a desire by one country to exercise hegemony in a particular region, there will be a market for conventional, nuclear, biological and chemical weaponry and their delivery systems, and the temptation to proliferate for profit. Canada must continue to be vigilant, because these activities are an everyday reality.
For the foreseeable future, therefore, espionage activities will not diminish. These activities will be more diverse than ever before and will be used by various countries in response to perceptions of the national interest by individual governments. The need will remain for the close intelligence-sharing relationships with allies that have served Canada well for so many years.
Economic espionage, which may be defined as illegal, clandestine or coercive activity by a foreign government to gain unauthorized access to proprietary or classified information for economic advantage, has become more prevalent. Intense international economic competition is a major source of tension and conflict among world powers. Some developed countries eager to maintain their standards of living, and developing countries determined to improve their standards, will use whatever means they have to enhance their productivity and economic security.
A number of Canadian companies have been targeted by foreign governments to obtain economic or commercial advantage. The damage to Canadian interests takes the form of lost contracts, jobs and markets and a diminished competitive advantage. Information and technology that has been the target of economic espionage includes trade and pricing information, investment strategy, contract details, supplier lists, planning documents, research and development data, technical drawings and computer databases.
The Canadian government has identified economic growth as one of its priorities and has modified its national requirements for security intelligence accordingly. The economic security mandate is to investigate clandestine activities by or on behalf of foreign governments that are detrimental to Canada's economic and commercial interests. The intention is to forewarn government when the otherwise level playing field of free market competition is deliberately tilted against Canadian interests. CSIS does not investigate commercial industrial espionage, or the practice of one private-sector company spying on another. Activities of a criminal nature would be investigated by law enforcement agencies.
A national Liaison and Awareness Program to deal with economic espionage and proliferation issues was started in January, 1992. The program seeks to develop an ongoing dialogue with public and private organizations concerning the threat posed to Canadian interests by foreign government involvement in economic and defence-related espionage. The program enhances the collection and assessment of information that will assist in the investigation of economic espionage activities against Canada and in the subsequent provision of advice to government. The program now consists of more than 1700 contacts within Canadian industry and government.
Canada has world-class skills in many technology-intensive fields. Aerospace, biotechnology, chemical, communications, information technology, mining & metallurgy, nuclear, oil & gas and environmental technology are key industrial sectors in the Canadian economy. Canadian enterprises maintain and develop information and technology of economic significance. The protection of this technology is essential to the viability of these sectors and, by extension, the economic well-being of Canada.
As a technologically advanced state, Canada will remain a target for economic espionage, particularly within the government, or Canadian enterprises which are at the forefront of the technological revolution. Most businesses and departments of government need to be alert to the threat of economic espionage and routinely should review and update their economic security requirements.
The spread of nuclear, biological and chemical weapons of mass destruction and advanced delivery systems to unstable parts of the world can both aggravate existing conflicts and result in unprecedented levels of damage and human suffering should war break out. Canada, in the near-to-medium term, can be affected indirectly by the creation of new threats to its military forces and those of its allies deployed abroad in peacekeeping activities.
The home territory of some of Canada's allies is already directly threatened by the proliferation of weapons of mass destruction and, in the longer-term, North America itself may come under a similar threat. Meanwhile, the proliferation of weapons, materials, technology, and expertise increases the chance of terrorist groups acquiring and threatening or actually using weapons of mass destruction against Western interests, including those of Canada.
Canada is party to a number of international treaties and other agreements seeking to limit the spread of weapons of mass destruction or materials and technology. Much of it is "dual-use", having both a military and civilian application that may contribute to proliferation. Agreements include formal treaties, such as the 1970 Nuclear Non-Proliferation Treaty, 1975 Biological and Toxin Weapons Convention and the recently-concluded Chemical Weapons Convention, due to enter into force in April, 1997.
Less formal export-control arrangements exist, such as: the Nuclear Suppliers Group; the Australia Group, covering chemical and biological agents, precursors and equipment; the Missile Technology Control Regime; and the Wassenaar Arrangement, covering both conventional arms and dual-use goods and technologies. Despite the continued strengthening of these regimes, non-signatory states and states ignoring their treaty commitments continue to undermine proliferation control efforts, often by engaging in elaborate and deceptive methods such as the development of clandestine and illicit international procurement networks.
Canada already has experienced covert attempts to acquire technology applicable to the development and production of weapons of mass destruction by countries of proliferation concern. This should not be surprising, given our skills in many high-technology industries including the nuclear, chemical, electronics and aerospace sectors. The illicit export of materials related to weapons of mass destruction, technology, and expertise from Canada, or the use of Canadian individuals, companies or territory for transfers of this kind could strain Canada's ability to fulfill its commitments to stem proliferation. It could also do considerable harm to its diplomacy and reputation generally.
Since Canada does not produce any weapons of mass destruction of its own, CSIS devotes particular attention to the transfer of dual-use technology and expertise. As part of the Canadian government's effort to counter proliferation, the Service works closely with several federal departments and agencies having either an enforcement role or the technical knowledge to support a comprehensive assessment of the proliferation threat.
Through its mandated investigations in Canada, the analysis of both classified and open information and the use of its international liaison network, CSIS contributes to the government's overall assessment of the threat to Canadian interests while seeking to identify attempts by countries of proliferation concern to acquire Canadian technology and expertise. The resulting analyses are shared with other relevant departments and agencies, helping keep them abreast of events that may impact on Canadian defence and foreign policy.
As a leading advocate of arms control, and a potential source of technology and expertise, Canada will continue to need the best available intelligence on weapons of mass destruction and the intentions of those trying to acquire them.
Transnational criminal activities involve, among other things, the illegal traffic of drugs, people and money across international borders. In Canada, the RCMP has the lead role for combatting crime, but the globalization of crime requires governments to harness all their resources, including their intelligence services, in the cooperative fight against these criminal activities. Elsewhere, the increasing scope and power of groups involved in transnational crime has unsettled governments around the world. There is general agreement within the G-7 and beyond that the nature of the threat posed by this phenomenon transcends the sum of individual crimes committed. Canada, with its open society and contiguous border with the USA, has particular cause for concern.
Transnational crime is seen as a threat to political, economic, environmental and social systems because this type of crime and related activities:
Many governments, recognizing the need for strategic intelligence in this vital area, are drawing upon the particular skills and capacities of their security and intelligence services. CSIS has established relationships with many of these services. In January of 1996, the Service created a Transnational Criminal Activities Unit as part of the Service's contribution to the government-wide effort to combat transnational crime. This unit, which draws upon both the Service's operational and strategic analysis resources, has a mandate to ensure that police forces and decision-makers receive timely strategic intelligence regarding transnational criminal activity.
Information technology is an essential tool of government and business throughout the developed world. It is not only a means by which Canada stays at the forefront of new technology, but is also an important employment sector and export earner. As an attractive commodity for other countries, organizations and individuals, however, information technology presents a security challenge. Lax security will provide opportunities for any or all of the national security threats previously mentioned.
A number of states, individuals and groups possess the expertise and the hardware and software to compromise computer systems and the information they hold. Any action taken to degrade Canada's information technologies and computer networks would threaten national security and our social, political and economic interests. Consequently, information security is no longer the sole preserve of intelligence and security services, but is everyone's business. Information protection is now the responsibility of individual companies and all departments of government. CSIS has the mandate and capability to assist in this area, and to provide advice from a national security perspective.
The potential for physical conflict to be replaced by attacks on information infrastructures has caused states to rethink their concepts of warfare, threats and national assets, at a time when information is recognized as a national asset. Information Warfare is the term used to describe threats to states emanating from the attack on or the manipulation of information technologies. Traditionally, the definition of Information Warfare was used by armed forces to describe protecting their own information while degrading that of their enemy.
Recently, the widespread dependence by the armed forces, government and the private sector on computers and public communication links has resulted in an altered definition. The term now reflects the need for a state to maintain national security by protecting its information infrastructure. The offensive application of Information Warfare looks at the protection of the state's information infrastructure, while exploiting that of an adversary.
The adoption of new information technologies and the use of new communication media, such as the Internet, creates vulnerabilities that can be exploited by individuals, organizations and states. The more sophisticated the state, the more dependent it is on computer-based information technologies, and the more vulnerable it is to attack using information warfare tools, such as viruses, malicious code and hacking/cracking software.
Future policies involving the adoption of new information technologies will need to take into account the security vulnerabilities of the given technology. Given that information is a national asset in a knowledge-based economy, its protection is vital.
The Security Screening Program is the Service's most visible function. In the course of performing screening enquiries, CSIS personnel come into daily contact with the general public. CSIS completes thousands of security assessments per year, in three categories: Government Screening; Foreign Screening; and Immigration and Citizenship Screening.
The Service acts as the investigative and security assessment agency for all government institutions except National Defence and the RCMP, who conduct their own field investigations. CSIS carries out security assessments when public servants or contracted employees require security clearances for access to classified government information in the performance of their duties.
The Service responds to requests from client departments with an assessment that contains an appraisal of the loyalty and reliability of the individual. The decision to grant a security clearance is the responsibility of the individual's department head.
Another component of the Government Screening Program concerns security assessments for site access. For example, the Airport Restricted Area Access Clearance Program was established in 1986 to improve civil aviation security and a site access program for contractors requiring access to the parliamentary precinct and official residences was added in 1996.
The Service has reciprocal screening agreements with a number of foreign governments and agencies, all of which are approved by the Solicitor General after consultation with the Department of Foreign Affairs and International Trade. All persons affected by this procedure provide their agreement in advance.
With the large number of homeland conflicts throughout the world, preventing the importation of these conflicts into communities in Canada is of particular concern to all Canadians. The Service provides advice to the Minister of Citizenship and Immigration on prospective immigrants. Such advice relates directly to the security inadmissibility criteria contained in Section 19(1) of the Immigration Act, with the final decision resting with the Minister of Citizenship and Immigration.
The Service also provides Citizenship and Immigration Canada with security assessments on individuals applying for Canadian citizenship who are considered to be a threat to the national interest in accordance with the provisions of Section 19 of the Citizenship Act.
Security screening protects Canadians from the unauthorized use of information and assets vital to the security of Canada, or the admission to Canada of individuals posing a threat to national security or public safety.
Since 1991/92 the Service, like other departments and agencies, has been subject to the Government's fiscal restraint program. Between 1993/94 and 1998/99, the budget of the Service will have decreased by 37 per cent ($91.5-million). Excluding the construction capital for the new national headquarters building, the reduction is 21 per cent. This includes the reductions associated with Program Review Phases I and II, which comprised cuts of five per cent in each of the 1995/96 and 1996/97 fiscal years, along with an added 3.5 per cent in 1998/99, amounting to a base reduction of $22.7 million.
Budget reductions inevitably impact on the number of employees in the Service. Between 1992 and 1999, the Service's staff will have been reduced by 760, or 28 per cent.
The charts on the following page illustrate the Service's human and dollar resource levels. A major portion of the reduction since 1993/94 is due to the completion of the national headquarters building.
The Service is able to meet its budget cuts primarily by staff reductions, achieved through normal attrition. Having been identified as a "most affected" agency, CSIS has been able to offer unionized employees the Early Departure Incentive Program. The Service has also focused on reducing administrative overhead, where possible, and developing technological innovations to realize efficiencies.
Priority will continue to be placed on maintaining the operational integrity of the Service. Although there have been directed reductions in some areas, essential positions must continue to be staffed by people with the qualifications and specialized skills related to security intelligence. Therefore, the Service will continue to recruit high-calibre university graduates to become intelligence officers. In support of this, the Service has chosen to apply the majority of its latest cuts to its operating and maintenance budget (O&M).
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