Baird defends looming diplomatic budget cuts, including sales of real estate

OTTAWA - Foreign Affairs Minister John Baird insists no harm will come to Canada's international interests in a $170-million, cost-cutting plan that will include selling diplomatic residences.

But leading analysts say the plan — part of a cost-saving effort for Foreign Affairs announced in Thursday's budget — will undermine Canadian diplomacy at a time when the government wants to deepen trade to bolster the economy.

Finance Minister Jim Flaherty's budget contained few details about the new austerity measures that Canada's already stretched diplomatic corps will be facing.
But it did outline a $170-million cut to the department's $2.6-billion budget over the next three years.

And it did say the government will sell some official residences abroad and move to smaller ones, generating $80 million in revenue.

The government also plans to leave some diplomats in their foreign postings for longer periods of time to cut down on relocation costs. It will also lower the rent ceilings for diplomats, meaning they will have to find cheaper accommodations.

"Extending some postings will help deepen Canadians' contacts on the ground and will also reduce the administrative costs associated with frequent relocation," the budget said.

"More modest quarters will not impact the ability of our diplomats to do their jobs and will reduce the number of required staff, resulting in further operating savings."

Baird had few specifics to add on Friday, but he defended the moves.

"Do we need $20 million official residences in some capitals? Can we look for modest savings? I'm confident we can."

Baird said he was "very confident that we will continue to be able to do a great job in diplomacy, a great job in trade."

That's simply not true, say analysts and retired diplomats.

"You're not going to be able to serve Canada if you serve ginger ale and Ritz crackers from a basement apartment," said Fen Hampson, the head of the Norman Paterson School of International Affairs at Carleton University.

"At the end of the day, the residences are not there for the diplomats to live it high. They're there to symbolize the importance of a relationship with a country."

Selling expensive properties may play well domestically, but sends the wrong message to a host country.

"The message is: You don't count and you don't matter as much as you used to. That's the great danger when you start selling residences."

Roland Paris, head of the Centre for International Policy Studies at the University of Ottawa, said Canada has some strategically located residential properties in city cores around the world that have become terrific investments over the years.

Selling them now might bring an apparent financial gain. But the cost of moving to a new location — as well as giving up prime, well-situated real estate — can quickly become a bad business decision.

"A lot of the work of diplomacy involves informal interaction at receptions and in private meetings. That is the vital social grease of advancing national interests by working within the political system of another country," said Paris.

Canada sold its historic ambassador's residence in Dublin four years ago in a property swap that netted almost $5 million, but not before overcoming the vociferous objections of retired diplomats and a petition by Irish-Canadians.

In 2007, reports surfaced that Macdonald House, a Canadian property in London's Grosvenor Square which contains the high commissioner's residence and offices, might be put up for sale. The estimated value of the mansion in the tony Mayfair district was reported to be $500 million.

Other properties rumoured to be on the block include apartments in New York City that house Canada's ambassador to the United Nations and the Canadian consul general.
The apartments, located about 20 blocks north of the UN on Manhattan's East Side, were purchased in the 1950s and have appreciated dramatically since.

But some ex-diplomats say Canada would have trouble finding good housing deals even in Brooklyn or the Bronx at today's market rates.

Canada's ambassador to The Netherlands lives in a mansion on a sprawling eight-hectare estate that is considered one of the most desirable addresses in the country.
Canada could reap a financial windfall by selling, but that could deeply offend the Dutch.

The property was once the headquarters of the German high command in the Second World War. The Dutch government gave it to Canada as a gift for hosting Queen Juliana and her children in Ottawa during the war.

"It's a property that's fit for a king," said Hampson. "But it's a symbol of a very special relationship we've had with the Dutch people. And they gave it to us.

"You have to be careful what you chop … You have to be damned careful in how you go about it."