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In this image taken from RTP Portugal TV, filmed in Tripoli, Libya, Thursday March 17, 2011, showing Libyan leader Moammar Gadhafi, during an interview as he comments on the prospects of a United Nations resolution against Libyan government forces.

RTP TV/AP/RTP TV/AP

The revolutions in the Arab world have, in their wake, left an unpleasant stain on Western corporations, exposed for dealing with the likes of Moammar Gadhafi.

Should Canadian businesses be doing business with despots? Yes, but not every last despot, and not without certain protections.

Companies should steer clear of kleptocrats who disregard human rights. In Equatorial Guinea, a torture-practising petro-state, the son of the president has reportedly commissioned a yacht costing three times the annual health and education budget.

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But other cases are more complex. China is an undemocratic, one-party state, but it is not run for the personal enrichment of a single leader and his family.

Canadian companies should invest in countries, even relatively unfree ones, showing improvement on respected indices, like those of Freedom House (which measures democratic practices), and the Mo Ibrahim Foundation (on governance in Africa). But first, companies can be more forthcoming about the labour practices in areas they work in that are prone to abuse, such as construction and mining. One model to address corruption in undemocratic countries may be the U.S.'s recently-passed Dodd-Frank bill, which requires publicly traded companies to disclose their tax and revenue payments to foreign governments.

Tyrannies are more likely to be unstable, to lack the rule of law, to put the employees and contractors working for Western companies in personal danger, and to create political blowback at home. With an aggressive but transparent stand, Canadian companies can reduce the risk, and provide leadership internationally and prosperity both at home and abroad.

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