All eyes are on the federal budget as members of Parliament return to the House of Commons this week. With a $56-billion deficit and a focus on economic recovery, experts are skeptical about the spending future of the Department of Foreign Affairs and International Trade.

Meanwhile, documents obtained by Embassy show the department has been planning to implement a "hub-and-spoke" system and is focusing on 25 priority countries and regions.

Spending cuts should not take any department by surprise, considering Canada's current deficit, said Gilles Paquet, senior research fellow at the Centre on Governance of the University of Ottawa.

However, while "it's quite clear no department will be spared," Mr. Paquet said, "it is reasonable to expect that [DFAIT and CIDA] will be more vulnerable."

The reason, he said, is that domestic affairs take precedence, since organizations like CIDA, for example, do not help people who have voting rights in Canada.

For now, the government is expected to keep its commitment to double aid funding from 2001/02 levels by the end of this coming fiscal year. As well, the military's continued presence in Afghanistan likely means no major cuts just yet, while the end of the mission will produce significant savings for the Defence budget next year.

However, experts say DFAIT, which has seen several spending cuts in the last few years, is a different matter altogether.

"It's an ongoing drama within Foreign Affairs.... There will definitely be a squeeze," said John Curtis, DFAIT's former chief economist and now a distinguished fellow with the Centre for International Governance Innovation.

A budget cut announcement for DFAIT won't come as a surprise, said former ambassador Gar Pardy, who now heads the Retired Heads of Mission Association. The government has already indicated it won't touch "big-ticket items" such as transfers to provinces and health-care, and this makes it more likely that DFAIT will be affected, he said.

"Overall in the near term, the budget will be going down, no doubt. This is a government that doesn't think much of Foreign Affairs anyways, everything is run from the Prime Minister's Office, and they think they are doing just fine," Mr. Pardy said.

DFAIT's initial planned spending for the fiscal year 2008-2009 stood at $2.2 billion, while the actual spending totalled $2.5 billion, according to the department's performance report, continuing a trend of overspending.

Although the department estimates it will spend about the same amount for 2009-2010, its plans and priorities report forecasts clear spending cuts for the next few years.

Funding allocated to diplomacy and advocacy is estimated to drop from just over $1 billion for 2008-2009 to about $936 million by 2011-2012.

While DFAIT will start spending more to support its headquarters, funding for missions abroad is estimated to decrease from the forecast spending of $525 million in 2008-2009 to $438 million by 2011-2012. This at a time when the government says it wants to deploy more diplomats abroad.

"My sense is they will group more missions together and hire more locally-engaged people," said Mr. Curtis, reflecting a broad consensus that has emerged over the government's plans to transform the department.

Changing make-up

In 2007, DFAIT came out with a strategic review meant to transform the department.

"The transformation process will create a modern, integrated 21^st century foreign and trade ministry, flexible to respond to the future while focused on its core mandate," reads one report, "with the right people in the right places, and able to generate continuous innovation and new thinking."

Documents obtained by Embassy under the Access to Information Act show that the department is looking to implement a more regional approach to Canada's missions abroad.

The documents, which were prepared for Foreign Affairs Minister Lawrence Cannon after he took over the portfolio in late 2008, state: "We will revamp property management to achieve greater savings and seek a light, but effective footprint abroad in some regions through hub-and-spoke representation." At that time, Canada had 174 missions in 110 countries.

The same papers show the department is focusing on 25 priority countries, four countries and territories "of immediate interest" (Afghanistan, Haiti, Sudan, and the West Bank and Gaza), and five international organizations.

"These countries, regions and missions will receive greater policy focus and/or be at the core of initiatives serving Canadian interests and values," the documents read.

The 2007 strategic review also outlined the department's plan to increase the number of staff abroad by 400 by 2011-2012 through a reduction in headquarters employees over five years. But based on an internal memo sent to all DFAIT staff, Embassy reported last fall that that plan had been shelved.

"While we remain committed to increasing our positions at our mission network by 400 over the next four years as part of the Representation Abroad process, the current financial pressures may affect how fast we can activate these deployments," the memo read.

A few weeks later it was revealed that the department was indeed slashing positions at headquarters, but not to facilitate the deployment of more foreign officers abroad. Rather, it was planning to hire more locally-engaged staff.

The department has been criticized in the past for having a high ratio of headquarters staff versus staff overseas: 2.5 to 1 in 2007, according to a DFAIT document. That same document listed Australia as having the next highest ratio at 2 to 1, followed by the UK with 1.6, and France and Germany with 0.8 HQ staff each for every person posted abroad.

Meanwhile, at the end of last summer, sources told Embassy that DFAIT had cut the program budgets for all missions by 50 per cent. The program budget pays for such things as attending and hosting events and conferences, public diplomacy efforts and human rights advocacy. The changes were introduced five months into the new fiscal year, meaning many missions had already spent a good part of their program budgets.

The issue?

"You can say with confidence that Canada's foreign representation is already completely cash-poor (except in Washington)," Jeremy Kinsman, former Canadian ambassador to Britain and the European Union, wrote in an email.

"We need embassy programs to get our message across abroad. Influence is earned by what you do and also by your information programs about what you do. Your people have to network to generate initiatives and promote ideas."

Canada's bid on the Security Council seat is certainly important, said Mr. Pardy, and the country is paying a political price by closing embassies because it needs as much support as it can get in the UN, even that of smaller countries.

Overall, DFAIT's budget is not very big compared to that of other departments, Mr. Pardy said. Spending cuts in the defence budget, on the other hand, could bring the government significant savings very quickly, he added.

But Mr. Paquet said it is important to determine whether the past mission closures left Canada in any way worse off.

"While it appeared to be terrible, the impact that that had on the Canadian economy was minimal," he said. "If you have a choice between a better intelligence system in the US and one or two more people in Togo, for example, I know where I would put my money.

"On the other hand, how deep will these cuts be before they hit on something important?"

The broader issue is to also reflect on the new role of diplomacy and representation in a modern world characterized by enhanced communication and fast transfer of information, Mr. Curtis said.

"I think so far there hasn't been much innovation in this area," he said. "This is in fact a global problem, and we've not been leaders nor laggards."