OTTAWA - Global economic sparring and overseas conflicts will cause more "aggressive economic espionage operations in Canada" in the coming years, according to the country's spy service.

Canadian Security Intelligence Service documents obtained by CanWest News Service say that while economic spying is often thought of as a Cold War relic, rapid globalization since then is actually making it worse.

The final results, the spy service concludes, are lost jobs, lost corporate and tax revenues and a diminished international competitive advantage.

"Global economic competition and the evolving economic/strategic requirements of emerging and existing powers will spur aggressive economic espionage operations in Canada," it warns.

"Canada enjoys a rare, if not unique, combination of an open and democratic political system; a diversified economy that has exhibited consistent growth and stability; and a multicultural society which draws from a variety of traditions and influences," the May report adds. "As such, Canada remains an appealing target for foreign powers whose goal is to steal secrets in order to advance their own interests."

Although the CSIS report doesn't name names, Michel Juneau-Katsuya, a former spy with the agency for 20 years, says globalization is increasingly turning traditional allies into new economic foes.

"Basically since the end of the Cold War we've moved on from a military confrontation to an economic confrontation," he said in an interview. "Now the battlefields are the market shares. The world order before was established on the size of your military forces. We've moved from that to economic capability."

The former spy authored a 1996 report that estimated Canada was losing $1 billion every month due to economic espionage.

He suggested with better communications and an increasingly border-less economic world, the problem is likely worse now.

CSIS has identified a minimum of 24 countries that are officially using their national intelligence service to conduct industrial espionage and economic espionage in Canada, said Juneau-Katsuya. In addition to the usual suspects such as Russia and China, countries like the United States, Britain, France, Germany and others also take part.

The situation is especially worrisome for Canada, he added.

"One of the reasons why it's problematic for Canada is because Canada is ill equipped to deal with the problem," he explained. "We don't have laws to protect ourselves, we don't have anything to deter the spies of the world to come to us.

"Because we are a knowledge-based society, with hundreds of very, very fine research centres, that means we've got a lot of technology at the cutting edge in many, many fields," Juneau-Katsuya added, citing mining, biotechnology and communications as vulnerable sectors.

"They come to Canada to steal in those fields, and they know if they get caught they'll get a slap on the hand, if they get anything."

Although the 2001 Security of Information Act aimed to shore up laws around government information, there is little to protect Canadian companies from intellectual property theft. In addition, there is nothing to guard those companies against takeovers that could pose national security concerns.

A briefing book prepared for Industry Minister Maxime Bernier and obtained by CanWest News in June revealed federal bureaucrats are worried about Canada's inability to block foreign investment deemed dangerous. The concern stems from the attempted 2004 takeover of Canadian mining giant Noranda by Chinese state-owned China Minmetals Corp.

The former Liberal government proposed legislation in 2005 allowing cabinet to review any foreign investment that "could be injurious to national security," but it died when an election was called and hasn't been revived.

The CSIS document, obtained under the Access to Information Act, also says in addition to the traditional economic espionage culprits foreign states new threats include foreign governments-in-waiting, governments-in-exile and terrorist groups.

"There is also growing concern about foreign powers which have engaged in espionage operations on Canadian soil in order to support their political agenda or a cause linked to a homeland conflict," reads the study. "They have collected information in an unauthorized manner, so as to advance their own interests related to that conflict."

Juneau-Katsuya said terrorist and political groups can use intellectual property and state secrets as a fundraising tool.

"It's simply become a commodity that you sell and resell for money purposes," he said.

Ottawa Citizen