IT'S GOING to be a new agency, and that in itself is an exciting possibility." Moira Johnson of the Canada Council was talking about the "Canada Council for the Arts and for Research in the Social Sciences and Humanities." The new agency was conceived in last year's federal budget. Not as a cost-cutting measure, but as a part of government restructuring, the Social Sciences and Humanities Research Council (SSHRC) was moved back under the wing of the Canada Council, which also took in the cultural relations portion of the Department of External Affairs. But the agency has not yet been born: at the time of writing, the bill to implement these changes has not been passed. Nearly a year after the announcement, the Canada Council and External Affairs are still working out the details of "the merger."

What looks like mere paper shuffling turns out to be much more - the change in the way Canadian international cultural relations are handled could have implications for the autonomous status of the Canada Council. The budget legislation amends the Canada Council Act to state that "in performing its international functions and duties, the Council shall take into consideration the foreign policy of the Government of Canada." Thus the council will have a new relationship with External Affairs; it remains to be seen what that will be in practice.

The new council cobbles together its old "foster and promote the arts" mandate with a statement on research and scholarship, and another on the support of the arts and scholarship abroad. While the council has modified its mandate, External Affairs has not. In effect, External gives up the budget and the responsibility for the cultural program, while maintaining that part of its mandate as defined by cabinet in 1974: the promotion of international cultural relations in a manner consistent with, and in support of, general foreign-policy objectives.

Freeman Tovell, a former ambassador, explained it to me this way: "It is important to make a distinction between giving an arts group money to perform abroad because they want to go to a certain country, and giving money to a group you've asked to go abroad because they will serve a foreign-policy purpose."

What hasn't changed is that the Canada Council is still a corporation, and "not an agent of Her Majesty." Nor are its employees part of the public service. This is in keeping with the Canada Council's arm's-length relationship with the government. But what will happen to that distance when the Canada Council is in effect carrying out the policies of a government department? As Tovell put it, in an article on this topic in bout du papier, the council, by taking a more active role in cultural diplomacy "will do so as an agency involved in executing the government's foreign policy." How does this square with the council's independence? Isn't this transfer part of an increasing politicization of the arts?

The official line at the Department of External Affairs is that they are happy with "the merger." From talking to foreign service officers who have handled culture abroad, however, I got the sense that the transfer will set Canada back when, as seems likely, cultural representation abroad is lost. The anxiety about such losses arises from the fact that most posts do not have a full-time cultural officer; instead, the duties are carried out as a small part of a foreign-service officer's job description. Will those officers continue to cover culture, reporting to the Canada Council, or will culture be dropped from those posts? The officers stressed that diplomacy is a complex and sophisticated matter these days; for Canada to compete for attention on the world stage, External needs not just the basics of trade and political policy, but also culture. But is this the time for a utilitarian approach? At the very least the transfer means that cultured diplomats (one thinks of Charles Ritchie, of R. A. D. Ford) will be replaced by bureaucrats who have spent their youth studying international relations and their adulthood climbing the career ladder of the department.

On a more positive note, David Adams Richards and Guy Vanderhaeghe, both of whom participated in an Externalsponsored reading tour, are looking forward to the change. Vanderhaeghe thinks "External is not set up to handle writers," and generally derides bureaucratic involvement in culture. The Canada Council will have the staff who are knowledgeable about culture, who devote more than part of their jobs to its promotion, and who are more interested in culture than career diplomacy. But will that staff keep their balance on the tightrope between serving the arts and serving the government?