[Recorded by Electronic Apparatus]
Tuesday, May 2, 1995
.1532 
[English]
The Chair: I will call the meeting to order, even though you might note that I don't have my gavel.
Mr. Mifflin (Bonavista - Trinity - Conception): How can you run a meeting without a gavel?
The Chair: Exactly. I mean, it's unheard of in the annals of parliamentary history that we start a meeting without a gavel. I'm sure that clerk has noted its absence.
Before we start, I also want to tell you that one person in the room said to me that although Paul Martin was in front of the foreign affairs committee today, they thought this was by far the more interesting meeting and decided to attend this. Now, I'll say no more about that, but I thought I'd share that with you.
I want to welcome Margaret Bloodworth, the deputy clerk for security and intelligence of the Privy Council Office. I would ask her if she would introduce the people with her and if she would care to make an opening statement, after which we will proceed to questions.
Welcome, and please proceed.
Ms Margaret Bloodworth (Deputy Clerk, Security and Intelligence, Privy Council Office): Thank you, Mr. Chairman. I have with me Mr. Stewart Woolner, the chief of the Canadian Security Establishment.
We do have copies of the opening statement coming. I apologize for their being delayed, but we should have them shortly for you.
If it's all right with everyone, I think that in the interests of time I'll begin.
Mr Chairman, I'd like to thank you for inviting me to appear. With the agreement of the committee, I would propose to start by briefly describing the mandate of the Canadian Security Establishment, including my responsibilities as deputy minister for the CSE.
I'm very pleased to be here because I think it is very much an opportunity to shed some light on the CSE and on the Canadian security and intelligence sector generally.
While there are some limitations to what I can reveal about this intelligence agency or its operations because of the subject-matter, the present government is committed to greater openness, and this includes the security and intelligence sector.
The Minister of National Defence has therefore asked me to disclose some up-to-now classified information about CSE, including some specific budget and resource figures, as well some details about its activities and the nature of some of the intelligence relationships with foreign countries.
.1535
[Translation]
I'm appearing today in my capacity as Deputy Minister responsible for the CSE. But, as the Deputy Clerk, Security and Intelligence, I am also responsible for advising the Prime Minister and Cabinet on security and intelligence issues. In this role, I am responsible for overseeing and co-ordinating the security and intelligence activities of all government departments and agencies.
I will be pleased to answer questions about that role also, but I understand your primary interest is in discussing my responsibilities as they relate to the CSE.
[English]
On that note, Mr. Chairman, perhaps I could begin by outlining the accountability structure for CSE.
As you are aware, the accountability relationship to Parliament is straightforward and similar to other departments of government. Only one minister is responsible to Parliament for this agency, and that is the Minister of National Defence. This minister approves CSE's major capital expenditures, its multi-year operational plan and major CSE initiatives with significant policy or legal implications.
He's supported in this function by two deputy ministers, the Deputy Minister of National Defence and me. The Deputy Minister of National Defence is responsible to the minister for the administration of CSE. I am responsible to the Minister of National Defence for CSE's policy and operations.
That may seem to be a somewhat unusual reporting structure because of the two deputy ministers, but in fact it works very well. The unusual reporting structure reflects a recognition that greater senior-level attention is appropriate for an agency such as this. It ensures that CSE responds to the foreign intelligence needs of the government as a whole in a manner that is lawful, effective and sensitive to changes in international relationships. As I mentioned, in practice the arrangements work well.
As chief of CSE, Mr. Woolner reports to me on all policy and operational matters. On the financial and administrative matters, he is accountable to the Deputy Minister of National Defence.
Of course, both of us are accountable to the minister, who is ultimately accountable to Parliament. On a day-to-day basis both I and the Deputy Minister of National Defence keep in close touch with both Mr. Woolner and with each other to provide CSE with the appropriate direction that may be necessary.
In addition to appropriate senior-level attention, it's useful to note that CSE has in-house legal counsel from the Department of Justice, who have access to all information concerning CSE's operations.
Let me turn now to CSE's mandate, what it does and how it does it. It derives its mandate from the powers conferred on the Minister of Defence under the National Defence Act. It has a two-pronged mandate: first, the collection of foreign signals intelligence, and second, ensuring the security of government communications.
Its signals intelligence mandate is to collect and study foreign radio, radar and other electronic emissions. This is more commonly called SIGINT in the intelligence trade.
It's assisted in this signal intelligence capacity by the Canadian Forces Supplementary Radio System, a component of the Canadian Armed Forces that operates from a number of stations in Canada, including Alert in the Northwest Territories, Masset in B.C., Gander in Newfoundland, and Leitrim just outside Ottawa. The processing analysis of these signals provide foreign intelligence to the Canadian government as a whole.
.1540
[Translation]
It may be useful for me to explain briefly what we mean when we refer to ``foreign intelligence''. This, in my view, is fundamental to understanding what CSE does.
``Foreign intelligence'' is information relating to the capabilities, intentions or activities of a foreign state, foreign person or foreign corporation. In other words, it is information on the developments of foreign states. Occasionally, it can include some overlapping security issues such as terrorism. By definition therefore, foreign intelligence is not information which targets Canadians; rather, it is foreigners that are targeted.
Canada needs and uses such information for obvious defensive reasons, such as support to peacekeeping missions involving the Canadian Armed Forces. This information is also used, more generally, to assist in the development of its foreign or defence policies.
[English]
I've indicated what CSE does. Let me just take a moment to say what it does not do. CSE does not, in any part of its collection, target Canadians or the communications of Canadians. It simply does not have any great antennae in the sky that are scooping up every possible form of communications. Like all government departments and agencies, CSE is subject to all Canadian laws, including the Criminal Code, the Charter of Rights and Freedoms, the Privacy Act and the Canadian Human Rights Act. CSE scrupulously abides by these laws.
Let me turn now to the second and equally important part of CSE's mandate, which relates to the protection of information and communications.
This part of CSE's mandate provides a valuable service to the government that is not necessarily well known. CSE provides technical advice, guidance and service to the government, on the means of ensuring the security of federal government telecommunications and electronic data processing. This is commonly known as INFOSEC or information technology security.
The purpose of such a service is quite simple. It is to prevent access to government telephone and computer systems by any unauthorized person or organization. One of the key achievements of this program was the establishment of the government secure telephone network. This is made up of secure phones, which you may have seen referred to as the the STY-III phones, and the cryptographic keying material the CSE creates and maintains to encode and protect government information.
CSE's expertise in this area is also made available to Canadian industries involved in the manufacture of equipment related to information technology security. One example is the testing and evaluation of trusted computer products - that is, products designed to meet certain security standards.
The need to protect our telecommunications has become particularly crucial, considering the changing threat environment, rapidly advancing technology and increasingly sophisticated methods used by those who seek unauthorized access to government communications.
Let me turn now to the budget and what it costs CSE to do some of the things I've described. I'd like to start by saying that CSE's resources have always been included, but not singled out, in the overall budget for the national defence department. However, for the first time, the government has decided to specifically set out these resources separately.
So for fiscal year 1995-96, the following figures relate to CSE's resources: a salary budget of $60.5 million, an operations and maintenance budget of $23.6 million, and a capital budget of $29.1 million, for a total budget of $113.2 million. CSE has approximately 900 full-time-equivalent people working for them.
Let me turn now to another subject that has not been the subject of official public discussion before, and that is Canada's intelligence relations with foreign countries.
It's important to note, Mr. Chairman, that CSE's signals intelligence and information security programs derive great benefit from our international agreements, which in fact date back to the Second World War. Canada collaborates with some of its closest and long-standing allies in the exchange of foreign intelligence and in the sharing of sensitive information security technology. These close allies are the United States, the United Kingdom, Australia and New Zealand, and they each have organizations that are akin to CSE.
.1545
These agreements have been mutually beneficial to all five countries. However, without going into the details of this relationship, I think it is important for you to know, Mr. Chairman and members of this committee, that Canada, as one of the smaller partners, benefits significantly from these arrangements. Some might say that we benefit more than the others because of our small size, although others have said we're certainly treated as an equal partner.
The intelligence we receive from our allies assists CSE in fulfilling the foreign intelligence needs of the Government of Canada.
Now, a fundamental aspect of these relationships and key to the continuing trust and cooperation, which has continued for over 50 years, is the agreement that we do not target each other's communications.
As a side note to this, we do not ask them to target Canadian citizens on our behalf, nor are we asked by them to target their citizens.
I have described at some length the functions of the Canadian Security Establishment and its place in the structure of government. I've done so, Mr. Chairman, in order to emphasize that there are structures and mechanisms in place to ensure the accountability and to ensure that CSE responds to overall government direction.
These mechanisms do work, so the minister can provide assurances to you and to Canadians that CSE works to further Canada's foreign policy interests within the framework of and subject to Canadian law. However, in that vein, as most of you may be aware, a motion was recently passed by the House of Commons calling for the establishment of an independent external review mechanism. In response, the minister has indicated that he will be looking into ways to supplement the existing structures with an external oversight mechanism.
I will finish there, Mr. Chairman, and certainly be happy to answer any questions you may have.
The Chair: Thank you very much. We will now go to questions.
Before we do that, I should tell you that there is a vote this afternoon and we should aim at being out of here roughly around 5 p.m. if we can. The bells will start to ring at 5:15 p.m. So I just give you that for your guidance. There's ample opportunity. It gives us well over an hour.
I'll begin with Mr. Jacob, and then we'll go on to Mr. Richardson. I look for hands after that.
[Translation]
Mr. Jacob.
Mr. Jacob (Charlesbourg): Welcome, Madam Deputy Minister. Welcome, Mr. Woolner.
My first question will be on the budget. You mentioned salaries, operations and maintenance, and capital. Do these amounts cover all the expenses of the agency called CSE or does the agency use additional resources provided by the Canadian forces?
[English]
Ms Bloodworth: Those are the total resources of the Canadian Security Establishment, but you're quite right, Mr. Jacob, it does utilize and benefit from some of the resources of the Canadian Forces Supplementary Radio System, which I referred to in my opening statement.
Those figures are not included in that. That's not a budget controlled by the CSE. It is a budget that is included in the National Defence figures because that organization does other things besides supporting CSE. There are other resources there.
[Translation]
Mr. Jacob: There is no way to put a figure on the resources allocated to CSE activities by other agencies. You said that CSE employed 900 people. Can you tell us how many people from the Canadian Forces contribute regularly and permanently to the CSE's activities but are not counted among its employees?
[English]
Ms Bloodworth: I'll make a stab at that, and I'll let Mr. Woolner correct me if I go wrong.
In that 900 figure at CSE there would be some military people as well who are part of the CSE establishment, but it does not include personnel associated with the Canadian Forces Supplementary Radio System. But there are some military people who are part of the Canadian Security Establishment, and they would be within the 900.
.1550
The Chair: [Technical Difficulty]...yourselves for the record, and it gives me an opportunity to -
Mr. A. Stewart Woolner (Chief, Communications Security Establishment): Stewart Woolner, the chief of CSE.
The Chair: Mr. Woolner, thank you. I say that because we are now in the process of establishing a new method of reporting on committees, and it's electronic reporting. So it's important for the people who are reporting this to know who's speaking. When the questioning is back and forth, when it changes, we need to identify the new speaker. So thank you very much.
Mr. Woolner: I understand, Mr. Chairman.
Margaret, perhaps just to amplify on your answer, there are on the order of 90 members of the Canadian Armed Forces who work in CSE on a rotating basis. These 90 people are over and above the 900 figure that Ms Bloodworth gave you.
[Translation]
Mr. Jacob: Thank you, Mr. Woolner.
We often heard it said that CSE was spying on Canadians who belong to some political parties, such as sovereignist parties.
When Ms Bloodworth talked about the CSE's mandate, she said that the agency's mission was to collect information on foreign states, foreign persons and foreign corporations. Can you give this committee assurances that there is no electronic eavesdropping by satellite or off-air on long distance calls between Canadians or provincial governments and foreign states?
For example, if the Government of Quebec were communicating with the French Government, would your agency have the mandate to listen in in order to get information?
[English]
Ms Bloodworth: The mandate of the Communications Security Establishment is foreign intelligence. It does not target Canadians.
[Translation]
Mr. Jacob: Let me be more precise. When the Quebec Government has contacts with the Government of France or other countries, since those contacts are with foreign states, does CSE have a mandate to tap those communications and to study them?
[English]
Ms Bloodworth: If your question is, is it ever possible in the course of foreign intelligence to pick up a Canadian somewhere in that, it is possible to do that. There are Canadians overseas. It is possible.
Its mandate is foreign intelligence, and as such it has very strict procedures in place, first, to minimize the chances of that occurring and, second, if that does happen, to safeguard to make sure that information is not used for any purpose other than foreign intelligence - because it does not target Canadians.
[Translation]
Mr. Jacob: Just to pursue in the same vein, some electronic eavesdropping or communications specialists have suggested that the CSE could act as a huge funnel picking up all communications or telecommunications in Canada. The information thus obtained would be compiled in the form of electronic data and sent to the Americans who would then analyze it and send back whatever information they would deem appropriate. Is it true?
Ms Bloodworth: I'm not sure I understood your question completely, but let me answer, and if I haven't answered it fully, I'm sure you'll ask me again.
.1555
[English]
As I said, a fundamental part of the agreements we have with our close allies is that we do not target each other and we do not ask each other to target our own citizens either. We simply do not do that and they do not do that. We believe them...that they do not do that, and they certainly do not do it on our behalf.
[Translation]
Mr. Jacob: I'd like to be a little bit more precise. With all the electronic equipment it owns, CSE picks up all kinds of communications. Some say that these are sent in the form of electronic data to the Americans, namely the National Security Agency in Fort Meade, Virginia. This data is then supposed to be analyzed by the Americans because CES cannot interpret it.
In that case, how can you assure us that CSE has never picked up conversations or communications which could lead to an invasion of the privacy of some Canadians? You send them even before they are analyzed.
[English]
Ms Bloodworth: I can simply repeat what I've said. Part of our agreements with the Americans and the British, for that matter, and the Australians is that we do not target one another. In other words, we have agreed with the Americans that we will not target them and they have agreed with us they will not target us. And we do not use each other to get around each other's domestic law. So we don't target Canadians, and part of our agreement is that the Americans don't target Canadians.
[Translation]
Mr. Jacob: Regarding your capital equipment budget, you said earlier that it was set at $29 million for 1995-96. Is this equipment managed by the Department of National Defence or by CSE?
Do your capital equipment expenses have to be justified before the Department of National Defence?
[English]
Ms Bloodworth: Sorry. I was just confirming with Mr. Woolner that it is in CSE's budget.
[Translation]
Mr. Jacob: So that's how things work.
I have another question. Are the secure phones, Phase I, and restricted-access systems part of the CSE equipment?
[English]
Ms Bloodworth: I'm sorry, not all government secure telephones. The cost of all of them would not be in CSE. Government secure telephones are found in all government departments, and they would bear the cost of them themselves.
The cost CSE would bear would be the cost of development, maintenance cost, the general overall systems cost and the cryptographic material to do that, but not the cost of the actual equipment. It would be the department that has the telephone that pays for it.
[Translation]
Mr. Jacob: Is it the same thing for DND's integrated tele-informatics networks? Is that part of your equipment or does it belong to the National Defence Department or to both?
[English]
Mr. Woolner: In a case like that, Mr. Jacob, the Department of National Defence would pay for its own equipment acquisition, for its computers or whatever. Our role would be to provide them with cryptographic advice and information if they were being used in a classified capacity, to ensure the integrity of the equipment the department had purchased. But the purchase of that equipment would come from the funds of the Department of National Defence, not from CSE.
Ms Bloodworth: The capital budget I referred to is CSE's capital budget, CSE's computers, CSE's furniture, or whatever; all the capital equipment of CSE. But there would be others in the Department of National Defence.
.1600
[Translation]
Mr. Jacob: But does the capital equipment, such as the secure telephone network, belong to CSE? Is that part of your equipment?
[English]
Ms Bloodworth: The government secure phones?
Mr. Jacob: Oui.
Ms Bloodworth: CSE obviously has a number in its own organization, but I'm saying, for example, that I have a government secure phone in my office that's not part of CSE's budget. It's part of my budget. The same is true of National Defence or any of the other departments. They would bear the cost of the telephones, as they would for any other telephone.
Mr. Woolner: Perhaps I could add a word in amplification. My organization acts as the funnel or the medium for purchasing these equipments from the U.S. We provide that service, rather than each individual department going bilaterally to the U.S. to buy them. We act as the custodian. In response to departmental requirements, we will buy that number of telephones and we will distribute them, set them up, and maintain them from a cryptographic point of view; that is, make sure they're secure.
However, the funds for buying those telephones will come from the individual departments. They are not part of the CSE budget.
I should add one other note. At the outset, when the secure telephone network was being established, CSE did, from its own funds, pay for a certain number of telephones. I don't have the number at my fingertips, but we bought a number of them to make sure that ministers and deputy ministers who needed to participate in this network had the technology. We paid for that to get the network up and running; subsequently, now, each department pays for its own.
Mr. Richardson (Perth - Wellington - Waterloo): Just a point of information first,Ms Bloodworth. I gather that the deputy clerk has the same rank as a deputy minister in the service?
Ms Bloodworth: Yes.
Mr. Richardson: And you, Mr. Woolner, have the grand task of answering to two deputy ministers, one for policy and one for financial administration?
Mr. Woolner: That is correct, sir.
Mr. Richardson: From the estimates, is the budget a standard-alone budget, or is it included in the estimates? I reviewed National Defence, but I didn't notice. Maybe it's an oversight on my part. Was it included in the National Defence budget?
Ms Bloodworth: It wasn't an oversight on your part, Mr. Richardson, because it's not identified. It is included; the number is there under the joint operations of the National Defence budget. This is the first time it has been identified separately.
Mr. Richardson: I want to go a step further, because there is a lot of mystery around every time.... I know that since the Second World War the focus has been international, but we know that there is eavesdropping within the Canadian sphere. Is that the sole responsibility of two groups, CSIS and the Mounties, or is it just CSIS?
Ms Bloodworth: If you mean the ability to intercept Canadian conversations -
Mr. Richardson: That's right.
Ms Bloodworth: - obviously, if they get a warrant, the police and CSIS have the ability to do that, yes.
Mr. Richardson: I just asked that for clarification around this table. I would like to see that defined, because I think there is some mystery there.
Ms Bloodworth: It has to be done in accordance with Canadian law.
Mr. Richardson: You have to get a warrant to -
Ms Bloodworth: But CSE has no ability to seek a warrant of that type. It would be CSIS or the RCMP or some other police force in the appropriate circumstances.
Mr. Richardson: So the budget itself for 900 people is approximately $112.6 million as a consequence, and only 90 members of communications are assigned to work with you - mainly technicians, I imagine, in the area of communications.
If it wasn't for the communications personnel from National Defence headquarters, would this organization be separated from National Defence headquarters?
.1605
Ms Bloodworth: Over the years there have been discussions about the right place for CSE. It's not simply, though, the use of its personnel that makes CSE part of National Defence. A good part of what CSE does, as I mentioned in my opening statement, relates to support for the Canadian Armed Forces, such as peacekeeping. So there is an important reason for it to be closely linked to defence, whichever organization we would happen to be in.
Mr. Richardson: I know the intelligence-gathering network was part of our overall security in the Second World War and wars thereafter.
Ms Bloodworth: Peacekeeping is increasingly not so peaceful. Therefore this becomes an important factor.
Mr. Richardson: In peacekeeping your role isn't intelligence gathering, then. In other words, it's just direct communication.
Ms Bloodworth: Provide intelligence support to Canadian forces wherever they might be, but particularly in peacekeeping, yes.
Mr. Frazer (Saanich - Gulf Islands): I would like to welcome you again to our committee. It's refreshing to get a little in-depth information that clears some of the clouds away and provides amplification of what people may be concerned with.
I would like to go to the telephone monitoring aspect of your efforts. Recognizing that you are not targeting Canadians by your mandate, as I understand it, you must nevertheless in fact intercept telephone conversations between Canadians or between Canadians and, as my colleague has said, foreign agencies. When you intercept these telephone calls, what is done when it's ascertained that this is of no interest to Canada? Is there some direction for destroying that evidence?
Ms Bloodworth: As I indicated a few moments ago in response to Mr. Jacob, the mandate of the agency is foreign intelligence. It is targeted at foreigners. I did say to him, I cannot say to you that in the course of that they would never pick up a Canadian, because there are Canadians around the world, obviously, outside of Canada. But first of all, they have strict procedures to guard against that possibility, to try to minimize the chances of that occurring. Secondly, there are very strict procedures, if that does happen, to ensure any information they have collected is not used for any purpose for which it's not collected; in other words, to comply with the Privacy Act.
Therefore they would indeed destroy some information if it was not appropriate to have or they would make sure it was not used in some way at all. There are very strict procedures in this regard.
Mr. Frazer: Who judges when and if a conversation is to be destroyed rather than retained for future reference or for collation with other stuff?
Ms Bloodworth: In the first place, there are strict procedures to try to avoid it, because we're dealing with electronics. I don't pretend to be an electronics expert, but there are very strict procedures to try to avoid it. That's the first line of defence. Then there are the supervisory people in CSE. Then there is Mr. Woolner. If it came to my knowledge, there's me. We would stop it from occurring.
Mr. Frazer: Let me hypothesize that you have a Canadian company in Canada talking to an American company in the United States. If I understand you correctly, part of your mandate is industrial espionage. Is that true?
Ms Bloodworth: Not in the sense of particular companies, no. That example is perhaps not the best example, since we do not target Americans either.
Mr. Frazer: I understand that. But if you're protecting Canada against industrial espionage, how do you go about it?
Ms Bloodworth: But that's not a role of CSE.
Mr. Frazer: It's not? I misunderstood you.
Ms Bloodworth: I believe domestic security is the role of CSIS. They provide some advice to companies on protecting themselves, I believe, but I'm not the person to answer for that. I don't know that. That's not something CSE would do.
What you may be referring to is that I said what CSE does on the information technology security side is provide expertise to companies that are developing encoding products that are used by companies. For example, there are products that try to protect computers against unauthorized access. So CSE's role there is a technical one, advising them whether this product indeed would protect the company or not. But it's not industrial espionage in that sense.
.1610
Mr. Frazer: Let me move into the terrorism aspect of it. I understand it is one of your mandates to look for terrorist activities.
Ms Bloodworth: It's not a mandate directly. CSIS, again, is the one responsible for domestic security in Canada. However, in the course of foreign intelligence gathering, it is possible that we may gather some information that would be useful from a terrorist angle and we would certainly provide that to the appropriate people.
Mr. Frazer: Who judges that this is germane to CSIS? You have a staff that assesses every bit of intelligence that comes forward.
Ms Bloodworth: Yes, and there are procedures in place. There would be a whole management structure that would do that. CSE is not directed at terrorism, but of course if they came across evidence of terrorism they would not ignore that. They would pass it on.
Mr. Frazer: To CSIS?
Ms Bloodworth: Probably to CSIS. If it were evidence that somebody was proposing to blow up a plane crossing the ocean - they might be more direct if it were something else - they would do something about it. That was all I was indicating. The point I was making was that some foreign intelligence involves terrorism and it would be one of the roles in foreign intelligence to gather information about terrorism around the world.
Mr. Frazer: I'm not certain whether I should address you or Mr. Woolner on this. I was interested in your external oversight mechanism. While I understand this will be imposed on you, obviously you would have some concept or idea of how it might be effected. Could you give me some idea of how you would see this operating?
Ms Bloodworth: I can't right at the moment because the government hasn't decided what it will be. While it's true one could say it's imposed, in fact there's no one at CSE concerned about that, including me. In some ways it is not a bad idea to have somebody else be able to say yes, you are obeying the law, which is what we're saying.
Regarding the mechanism, as you know, the motion was passed not that long ago and the minister hasn't decided the exact format in which it would take place. So that will be looked at and he is considering that in the near future.
Mr. Frazer: It would appear to me that perhaps his best advice might come from within your organization because you know the whys and wherefores and how things are effected.
Ms Bloodworth: I certainly expect we will be providing him with advice, yes. But all I can say to you, Mr. Frazer, is that it's not decided yet.
Mr. Mifflin: I want to welcome our witnesses here today on this very important subject.
My question involves volume of activity. I don't recall what the budgets were before. First of all, there was a general sense that CSE was great in the days of the Cold War and that was all good stuff, but now that the Cold War is over, there's some question in some Canadians' minds about why we still need this to exist. It appears in the media on a cyclical basis about once every eighteen months, so perhaps at the outset you could address that.
The second point, and the one I'm really most interested in, is in the sense of resources and 900 people and volume of activity. How does the volume of activity with respect to your operations compare with the volume at the height of the Cold War, let's say ten years ago?
Ms Bloodworth: Let me address first the question of the Cold War. I think perhaps all of us, and I would include myself in that because I certainly had no involvement in intelligence at the time the Cold War ended, thought of the world becoming a safer place than it has become because of the end of the Cold War. In fact, there are still many dangerous people out there and many people exist who are adverse to Canada's interests.
Mr. Frazer: You read our report.
Ms Bloodworth: I agree with your report, although that's always dangerous for a public servant to say. I think it's probably been best described by Jim Woolsey, a former director of the CIA, who described the Cold War as being an era in which we were all engaged in fighting a dragon. We are now in a jungle fighting 1,000 snakes. Now, that's a rather vivid analogy, but it is not an unuseful analogy to think about that.
Yes, there was a very obvious target and a very direct target that you didn't have to look around very hard to find in the Cold War. But in fact we have discovered, perhaps to the chagrin of some of us, that the world is perhaps not quite in the danger of nuclear holocaust that it was, but there are dangers and forces around that are adverse to Canada's interests and that we need to protect ourselves from.
.1615
In terms of resources, I am not sure I can give you an exact answer on that.
Mr. Mifflin: A ballpark answer would be fine.
Ms Bloodworth: I know that CSE, like all government departments, has faced its fair share of cuts over the last few years, but I don't think I could give you a ballpark figure for ten years ago. Perhaps we can look into that to see if we find something more direct for you than that.
Mr. Mifflin: Mr. Woolner, could you help out in that regard?
Mr. Woolner: I could suggest, for example, if you go back to, say, the Cold War as we know it, as we are describing it, that came to an end five years ago and in the last five years the CSE budget - and we gave you the figures at the outset - is more than 10% less than it was then, as the basis of comparison.
As Margaret has said, as we move away from the monolithic approach and diversify into economic intelligence and a lot of other types of intelligence, the demands on an intelligence agency, the requirements for areas of specialization, computer support, languages, cryptanalysis, that kind of thing that my agency does - the requirements, the demands placed on an agency like mine, become in fact more difficult to respond to.
Mr. Mifflin: Could you give us some indication of the balance of effort between the two mandates you have?
Ms Bloodworth: We have considered carefully how far we could break down the budget without doing benefit to those adverse to Canada's interests, if I can put it in that way. So we have not broken it down by INFOSEC and the other. I think it is fair to say that it is smaller than the other, but it is still a very significant portion of the budget. We are not talking about 5%; it is a good chunk of the budget.
Mr. Mifflin: I notice that you highlighted the cooperation with the allies, I think as a member of the G-7 and as a country in the OECD and all these other good things. I think this is an issue that cannot be forgotten.
If we didn't belong to an organization that did what CSE does - and I think you spell out the mandate quite well - what would be the impact on national security? I guess that's really my question.
Ms Bloodworth: If Canada did not have a CSE?
Mr. Mifflin: Yes.
Ms Bloodworth: First, the arrangements I've referred to would no longer exist. To be a part of those arrangements, you have to have a similar organization in your country. We would lose a significant amount of foreign intelligence in this country, including a significant amount of the intelligence we use to provide support to peacekeepers and to other Canadian interests. So there would be a very significant loss to Canada, because there would be no reason.... Yes, we can assume they might give us some, but it would be when it suited their interest to give us some.
I might also say that, in the world I just described, we have with those five, the four countries plus ourselves, what I would call tried and true allies. In other words, we have friends that we know go back a long way and that have been our friends for a long time. It doesn't mean that we always agree with them. We disagree with them on occasion. But in a world of the kind I've described, it is probably wise to continue with the friends we know, at the same time as we try to develop other allies, obviously.
Mr. Mifflin: My final point really is a corollary of what we have been talking about. I gather, Ms Bloodworth, from what you said and suggested, that because we have an organization like CSE and because we cooperate closely with our allies, we get information that is beyond our individual capabilities that we glean from belonging to this allied membership.
Ms Bloodworth: That's correct.
The Chair: Before we go to Mr. Leroux, I wonder if I could ask some questions of clarification, if the committee would indulge me for a moment.
Did you say that the budget is less now than it was before?
Mr. Woolner: Yes, I did say that. The only stipulation I guess I should add is that figures like this get a little complicated when one starts comparing the 1995-96 budget with the 1990-91 budget in terms of budget year dollars. But I feel comfortable in saying as a generality that the budget of my organization would be on the order of 10% less.
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The Chair: We live in a more insecure world, yet we have a more insecure budget, and I am trying to square those two things. I wonder if you could comment on that for me. We're glad you read the report. You're the second person who told us you read it and we're even more glad you agree with it. We believe strongly that the world is more insecure. It seems to me we need more intelligence rather than less. But perhaps I'm not right.
Ms Bloodworth: We did not come here to complain we don't have enough. I think CSE is like any other government department. We are all in the process of having to try to rationalize our organizations and to do more with less. We certainly didn't mean to suggest by that that we can't do the job the government wants to do. I think we are able to do that. One of the reasons we are able to do that is our relationships with the allies. Those are certainly very important to that.
But we are not immune, any more than the Department of National Defence or any other department, to the fact that the government has to reduce expenditures; and the CSE is in the process of doing that. They have attempted to the greatest extent possible, and are continuing, to do that by rationalizing and by finding efficiencies rather than by stopping doing things. So it is not a plea for more money you are hearing, it is a fact of life that the government has to try to do what it does with fewer resources.
The Chair: However, if the committee wanted to recommend that your budget be doubled, you wouldn't object to it, would you? I am not sure they will - but if they wanted to.
Anyway, I will go on to Mr. Leroux, although I had some questions on coding and so on. I would be interested in knowing how that was done. But we will see what time we have later on.
[Translation]
Mr. Leroux (Shefford): My first question relates to the so-called French problem within CSE. The Solicitor General and the Prime Minister have said more than once in the House that the government spies neither on the Quebec Government nor on sovereignist political parties. Nevertheless, according to a book recently published by an ex-employee of the CSE, Mike Frost, it would seem that the CSE's so-called French problem section carries such spying activity. Could you confirm that the so-called French problem section of the CSE is always in operation and could even be larger than ever?
[English]
Ms Bloodworth: There is no French-problem section at CSE. Indeed, there would be no necessity for it, because we do not target Canadians. It includes Canadian citizens, it includes Canadian political parties, and it includes Canadian governments.
[Translation]
Mr. Leroux: Are you telling me that Mike Frost is lying in his book, that he doesn't tell the truth? Is that it?
[English]
Ms Bloodworth: I am telling you there is no French-problem section at CSE.
[Translation]
Mr. Leroux: And there was none before your time?
[English]
Ms Bloodworth: No.
[Translation]
Mr. Leroux: Do you also confirm this, sir?
[English]
Mr. Woolner: Yes, I do.
[Translation]
Mr. Leroux: Therefore, Mike Frost has made up this story. According to you, there is not a shred of truth to it?
[English]
Ms Bloodworth: I don't propose to comment on Mr. Frost's book.
The Chair: Mr. Hopkins.
Mr. Hopkins (Renfrew - Nipissing - Pembroke): During the Second World War, when in a previous incarnation CSE was part of the signals intelligence organization, how many people would you have had in the organization? Have you any historical round figure?
Ms Bloodworth: I don't remember, but perhaps Mr. Woolner does.
Mr. Woolner: When the communications branch of the National Research Council was created by the then Prime Minister William Lyon Mackenzie King on September 1, 1946, I believe there would have been - I was going to say roughly 500, but there might not have been that many. I don't have a good handle on that. I'm sorry. It would have been more than 100 and less than 500, in that range.
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Mr. Hopkins: I don't pretend, by any stretch of the imagination, to question Mackenzie King, but what was the rationale for CSE being part of NRC?
Mr. Woolner: During the Second World War, as your colleague Mr. Bryden has described, there was a very active signals intelligence - fledgling, but nonetheless active among the services, External Affairs, and the National Research Council. When the war came to an end, the first decision that needed to be made was, should there be a continuation of the signals intelligence effort in peacetime? The answer to that question was yes.
The second question was, if so, it being yes, where should it be? I suppose that issues such as rivalry among the services, rivalry perhaps between the Defence department and External Affairs - I believe the National Research Council was assumed to be an uncontentious place in which to put an organization such as this, and we remained there until April 1975.
Mr. Hopkins: When it was transferred to DND in 1975, what numbers were we looking at?
Mr. Woolner: I don't remember, but I would say perhaps 600.
Mr. Hopkins: Have we continued to this date our relationships with the U.S.A., Britain, New Zealand, and Australia? How many of the 900 personnel, the figure that you gave, would be working inside Canada and how many outside?
Ms Bloodworth: The vast majority of them are inside Canada, are they not?
Mr. Woolner: Yes. We have a very small liaison office in the U.K.; we have a small liaison office in the U.S.A. With those exceptions, all CSE staff are in Canada.
Mr. Hopkins: We don't have anything in New Zealand or Australia today?
Mr. Woolner: No. We maintain a relationship with those countries, but we do not exchange liaison officers with them.
Mr. Hopkins: And there is nothing in the Middle East?
What relationship do you have now in your communications system? You mention the Cold War being over, and everyone talks about that, but today you have many other challenges on your plate. If all your people are inside Canada, then I gather we have no communications to monitor in these other areas. How do we monitor them?
Ms Bloodworth: I think you are getting into an area that is difficult for us to answer without revealing to those maybe adverse to Canada some things we would prefer them not to know.
Yes, the personnel are in Canada, but they do gather foreign intelligence outside the country.
Perhaps I could use as an example something I can speak of. Alert is being remoted, which means that they will still have antennae at Alert, which is a long way away, but they will in fact physically gather the signals here at Leitrim. It is possible to do that.
Mr. Hopkins: So we have upgraded our electronics and modern technology and all the rest of it and have made use of any services that are already in place?
Ms Bloodworth: Yes.
The Chair: I didn't have my glasses on and I neglected to see Mr. Proud on my list, but I gather that his questions have been answered by Mr. Mifflin's questions or answers.
Mr. Proud (Hillsborough): Mr. Mifflin and Mr. Hopkins asked about the number of countries you are involved with. I wondered why we wouldn't, for instance, be involved in the NATO countries. Whether I agree with you or not, you have pretty well answered that question.
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On another point, if we here as members of this committee requested to visit one of your sites, one of your headquarters, what kind of security clearance would we have to have to go there, if we could go there in first place? Would we be able to hear and see some of the things you do, or is that totally off limits?
Ms Bloodworth: These areas are very high-security areas. They don't normally allow too many people in and the people let in have very high security clearances, probably the highest that are available. We would have to deal with the minister as to whether there were parts of it that would be possible to visit or not.
Mr. Proud: We visited NORAD, for instance, last summer and I just wondered if this same type of thing is a possibility or not.
The Chair: I guess these people have to have good reputations to get in there.
Mr. Proud: That's right.
The Chair: Now, Mr. Frazer wanted to redirect and Mrs. Hickey wanted to ask questions, so perhaps I could move to Mr. Frazer.
Mr. Frazer: I would defer to Mrs. Hickey.
Mrs. Hickey (St. John's East): I wanted to know if you could explain to me the difference between your group and CSIS, because I understood them to be the same. Why are you two groups in that one and why would you have to work separately?
Ms Bloodworth: The major difference is that CSIS is concerned with domestic security - in other words, they do operate in Canada and it's their job to make sure Canada is safe - whereas CSE is a foreign intelligence agency.
Why are they separate? Most western countries have historically separated their foreign and domestic intelligence organizations. There's no rule that says you have to, but it has been a pattern. Part of that is aimed at a desire to protect, to the greatest degree possible, your citizens, whoever they might be.
It also reflects the difference in approach. Domestic security agencies are operating in the country to protect citizens in the country, often from other citizens. In other words, they're more akin to a police agency. Although they do not have police powers, they're interested in some of the same kinds of things, whereas a foreign intelligence agency is interested in the capacity and intentions and motives of foreign governments.
Mrs. Hickey: Do you ever work together?
Ms Bloodworth: Yes, there would be some areas where we would. I mentioned earlier that if CSE were to find in the course of foreign intelligence some information related to terrorism, since terrorists and terrorist organizations don't necessarily respect international boundaries, we would certainly make sure that CSIS had the information to the degree we had it that was necessary to ensure protection of Canadians.
Mr. Frazer: I really wanted to explore a little bit more this avenue Ms Hickey has led us into. When there's a determination that in fact there is an interface requirement between CSIS and CSE, what is the control mechanism that says either to CSE or to CSIS that this is an area you should look into? How is that interface directed and approved? Since we're dealing with the Minister of National Defence and the Solicitor General, is there an oversight requirement in there that has to be fulfilled?
Ms Bloodworth: As you may be aware, CSIS has a very detailed oversight. Any involvement that CSE would have with CSIS would be subject to that oversight mechanism. In other words, SIRC, the Security Intelligence Review Committee, would be able to look at or investigate anything in which CSE had any involvement with CSIS.
Mr. Frazer: I'm talking more on an operational basis, because SIRC certainly oversees them from time to time, but not on a regular basis.
Suppose a signals intercept revealed that there was a requirement for interface. Who would approve it and how would it be monitored for when the objective had been achieved?
Ms Bloodworth: Well, there are two stages. First, as a matter of policy, any involvement would be approved at the ministerial level, but that doesn't mean necessarily.... What they have is a memorandum of understanding that sets it out and that memorandum of understanding would dictate to CSE and to CSIS how they should conduct themselves.
But as a policy matter or a decision to do this or have any involvement, it would be at a ministerial level to decide that.
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Mr. Frazer: You have an operator who intercepts the signal, and whether he or she determines that it's of interest or not to the other organization or whether it's the person who assesses that information, what does either one of those individuals do to say that this requires that we contact and establish a relationship, and who oversees that? Does it come to you? I bet it goes to the Minister of National Defence or the Solicitor General. But surely somewhere in there a decision is made to contact CSIS.
Ms Bloodworth: I'm trying to answer your question, but I can't go into operations. So I'm trying to find a way to answer your question without getting into areas I have difficulty with.
Let me start by saying this issue of the interface between CSIS and CSE was specifically addressed. It's an ongoing thing that SIRC can look at at any time, but the inspector general for CSIS reported to SIRC in October 1991 specifically on the issue. He had found no instances of unreasonable or unnecessary use by CSIS of any of its powers in the exchange of information and intelligence with CSE.
It is one area where there is not just SIRC, but the inspector general. Any involvement that takes place is subject to oversight on that side.
Mr. Frazer: Maybe I'm making it too complicated. You have a crew on shift and presumably there's a shift chief. Is that the individual who makes the decision? You were talking about intercepting an indication that there was going to be an airplane bombed or something. Obviously that requires precipitous action, and the same thing may apply to terrorist activity and so on. Is that decision made by the shift chief, and if so, does he or she have to refer to other people to get approval or what?
Ms Bloodworth: Let me see if I can answer it generally without getting into the area where I have difficulty.
First of all, there are agreements that set out the relationship. Then there are detailed procedures that govern anything the organization does. So it may be that something would be covered by that. If it were not, there would be the shift supervisor or management at CSE. It would depend on the issue where it would be decided.
Mr. Frazer: I don't thing I'm going to get an answer, Mr. Chairman. Thank you.
The Chair: We know how many shifts there are, and we will now shift crews, if not crew shifts. I have run out of questioners around the table.
I was interested in how coding is done, the effect of it and the procedure for doing it.
Ms Bloodworth: With me it will be very brief since I am certainly not an expert in it, but let me try to explain it in an ``un-expert'' way, and I'm sure Stewart will correct me.
Most coding now is electronic and very sophisticated. You now need computers to break codes. It is done electronically by mathematicians who do things I don't purport to understand or be able to explain, but it is done by computers because it is so complicated. We've gone far past the days - I'm sure we've all read about the enigma machine in the Second World War and so on. It's vastly more complicated. They not only use computers to break codes, they use computers to make codes. Also, those who are able to do it are much more sophisticated, so those protecting against it such as CSE have had to get increasingly sophisticated. But it uses computers.
Stewart, do you want to add anything?
Mr. Woolner: I'd say that's a very good answer. Even though the equipment has changed light years beyond the enigma machines and Second World War equipment, the principles of encryption still remain the same.
If your communications are to be secure, they must be encrypted in a pattern that is totally random. This is where you need mathematicians, computer scientists and engineers to design programs to ensure that when you communicate to someone else, the communication between you is scrambled and is not reconstructable in any kind of fashion because the scrambled communications are totally randomized.
If your computer scientist and your mathematician have not done the job properly, if your equipment doesn't work properly, if someone leaves keying material out, then computer exploitation can take place and the pattern of your communication can be reconstructed. That's sort of the basic principle of encryption and decryption.
Ms Bloodworth: It's also very important, obviously, not to have the key around or accessible because that would allow the randomness to be broken by some who wanted to.
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The Chair: So international conversations are still done with camouflage in the same way that some conversations here on the Hill are.
I have no further questions around the table. Is there anybody else who wants to redirect?
I want to thank you very much indeed for coming. You have given the lie to the fact that Canadian intelligence, unlike postal service, is not an oxymoron but in fact is alive and well. Thank you very much for coming.
Ms Bloodworth: Thank you.
The Chair: This meeting is adjourned.