Complex Made Simple

Are things easing up between Saudi Arabia and Canada?

As we near the 1-year anniversary of the Saudi-Candian feud, we look at where things currently stand between the two nations.

Canada is easing up its business restrictions in Saudi Arabia A $11.5 billion defense order commissioned by Saudi, and possibly Canada's largest, is on the line Many students still remain in Canadian educational institutes, universities and colleges - but not for long

As of this writing, it has been around 11 months since the spat between Saudi Arabia and Canada unfolded.

Now, tensions between the two nations have somewhat settled but not yet subsided. Could there be a sliver of hope that things are improving?

Canada to resume business activities in Saudi Arabia?

After Canadian Foreign Affairs Minister Chrystia Freeland tweeted back in August of 2018 calling for the release of female activists detained in the Kingdom, Saudi Arabia retaliated by withdrawing its ambassador to Canada, expelling the Canadian ambassador, announcing it would sell off Canadian assets, calling on its students in the Western state to return, and more. 

What started with a 249-character tweet has blown up into a real diplomatic crisis, one that is closing in on its first anniversary pretty quickly. 

Now, after a suspension of business activities in the Kingdom, Canada seems to be reconsidering. 

A report by Canadian publication The Globe and Mail stated that Export Development Canada (EDC) said it would resume providing Canadian money and support to businesses in Saudi Arabia.

EDC, as Canada’s export credit agency, supports and develops Canada’s export trade by helping Canadian companies respond to international business opportunities. Once the feud with Saudi Arabia blew up, the EDC placed a “closed” status on Saudi Arabia-related activity. 

Now, citing improved business conditions in the Kingdom, it has changed its position on Saudi Arabia to “open on a restricted basis,” Reuters reported. According to Amy Minsky, a senior advisor at EDC, this means that “we recognize there are risks, but are open to assessing transactions on a case-by-case basis to verify whether each meets our requirements for sustainable and responsible business.”

The EDC supports about 65 Canadian exporters active in Saudi Arabia with an exposure of C$2.2bn ($1.68bn), according to Minsky.

CBC News notes that “Saudi Arabia has previously been a key partner for Canada in the Middle East and… the countries had more than $4 billion worth of trade in 2017. That year, Saudi Arabia had $1.28 billion worth of direct investments in Canada.” This is information CBC learned from Canadian government documents. 

Massive defense deal on the line for Canada

Saudi Arabia continues to allocate a huge percentage of its annual budget to defence, with $51 billion dedicated to the sector in 2019. Saudi was the world’s largest importer of arms between 2014-2018, according to the Stockholm International Peace Research Institute (SIPRI). 

Canada happens to be one of the countries expected to deliver to the Kingdom a major order, one for Light Armored Vehicles (LAVs).

In 2014, then-Prime Minister Stephen Harper agreed to have Canada produce armored vehicles for a Saudi order, NPR explains. The order is worth $11.5 billion ($15 billion Canadian dollars) – the “largest export contract in Canadian history,” Gerry Macartney, the CEO of the London Chamber of Commerce, stated.

With Saudi relations as they are today, the order’s fate has been called into question. 

Justin Trudeau, Prime Minister of Canada 

The Canadian unit of U.S. company General Dynamics is the company commissioned to fulfil the order. The defense firm warned back in December of 2018 that cancelling the order would incur the Canadian government “billions of dollars of liability.”

Discussions in Canada are wavering between fulfilling the order or cancelling it, especially given the thousands of jobs that would be lost in the Western nation and at its international branches. 

News reports have signified that payments from the Kingdom have ceased following the feud. Prime Minister Justin Trudeau has so far kept the deal.

Many Saudi students remain in Canada

Following Freeland’s tweet, Saudi Arabia said it would withdraw all of its students in Canada. 

At the time, The Globe and Mail, citing a Saudi government source, said that more than 15,000 Saudis were studying in Canada on government-funded courses or grants at universities, colleges, or other institutions. 

Since then, some students were pulled out, but many remain. 

“Data from Immigration, Refugees and Citizenship Canada shows that as of December 2018, when universities publicly report their enrolment, there were still 5,100 Saudi students studying at Canadian universities, compared to 7,620 in December 2017,” CBC News reported in an in-depth report on Saudi students in Canada. 

Paul Davidson, president and CEO of Universities Canada, told CBC that many of the Saudi students, primarily medical students, graduate students and those nearing the end of their studies, were allowed to stay and keep their scholarships. Additionally, students can continue to study in Canada if they have the ability to fund their own education and the appropriate study visas.

While the full outcome of Saudi Arabia’s decision to withdraw its students has not unfolded yet, it eventually will, as the Saudi government is not expected to sponsor any new students in Canada when current students complete their programs, CBC stated. 

As we near the feud’s one-year anniversary, a lot has happened, but not a lot of progress has been made. 

Whether the two countries can sit and talk it out at this point is still unclear, but something must be done as the status quo won’t necessarily be held for long, and something will have to give. Be it the defense deal, the students, or bilateral trade.