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File photo of Iamgold’s Essakane mine in Burkina Faso

There's rarely been a Canadian aid initiative more controversial than the Harper government's plan to make some of its foreign aid work hand-in-hand with Canadian mining. But the head of the United Nations Development Program, Helen Clark, says it's okay to put your money where your mine is.

The Conservatives are eager to re-focus a substantial part of Canadian aid around its so-called "extractive industries," arguing that building an aid initiative around a business project can create benefits that will be more lasting. But critics have derided it as a PR plan for the overseas interests of Canadian mining companies.

However, Ms. Clark, a former prime minister of New Zealand who now oversees UN efforts to promote development, sees the idea as a useful one, if done right.

"We think of Canada as Canada Incorporated. It's got very big companies in the extractive industries, and they're out there around the world. Now what Canada can be is a leader in companies which are environmentally and socially responsible," she said in an interview during a visit to Ottawa. "We are very engaged in UNDP in the debate about extractive industries, and how to make them a blessing, not a curse, for countries."

In countries like Nigeria and the Democratic Republic of Congo, she said, those industries have often been a curse, fuelling division and conflict. But now countries like Ghana, which began producing oil in the 1990s, are "getting it right," she said. They have set up legislation and rules, and independent scrutiny "to try and get the benefits more broadly spread."

"If the big companies from Canada, with the very strong encouragement of the Canadian government, can be part of the blessing-not-a-curse story, that has to be a positive."

The Conservatives have taken up the idea as an important shift in direction for Canadian aid.

On the weekend, International Co-operation Minister Julian Fantino spoke at a Toronto conference on the topic organized by the federal government and the World Economic Forum, a confab that was timed to coincide with a major mining convention. Mr. Fantino argued that development led by the private sector is more sustainable, and that Ottawa doesn't want to spend money on "band-aids" anymore.

But there has been a variety of criticisms. Some argue that profit-focused private companies just don't share the long-term, altruistic goals of aid agencies, and that the mining industry has a poor environmental and human-rights record in developing countries.

One agency that got involved in a project with a mining company, Plan Canada – which joined with mining firm Iamgold and the government's Canadian International Development Agency to provide skills training for people in Burkina Faso – said it felt a backlash from donors who didn't approve of the NGO working with a mining firm.

Ms. Clark argues there's little point in simply shunning mining companies as pariahs, and more value in encouraging them to aid the countries where they invest.

"Don't we want them to be clean and responsible mining companies?" she said. "Here's the rub. Canada has mining companies. Those companies are going to invest offshore. So Canada has an interest in its good name being protected by ethical practices. I think that's where I'd be focusing."

The Conservative initiative faces a lot of mistrust when it comes to ethics, however. The Tories opposed a corporate social responsibility bill for resource companies in 2007, and they've been accused of working to water down efforts at developing international standards with teeth. But they also know Canada, with a large mining industry that acts as a global financing centre for exploration firms, may find its companies face an increasingly tough reception if their investments are not viewed as bringing broader benefits.

Ms. Clark argued that if big Canadian mining companies train local people and do business with local companies, it can have a powerful impact on development.

"Make it work for development. Give these small companies in countries a chance to enter the value chain as suppliers to the big multi-national companies, if the multi-national skills will invest in the local skills of people, that's very, very powerful for the whole economy, Ms. Clark said. "Private sector actively engaged in thinking about the development spinoffs from its activity can be very, very helpful."

Campbell Clark covers foreign affairs in The Globe and Mail's Ottawa bureau.

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