Saudi Arabia-Canada spat: What we know so far

The latest

• Riyadh has given more than 1,000 Saudi medical graduates permission to stay in Canada, including those who have already left, but thousands of others are still ordered to leave the country by Sept. 22 amid a diplomatic dispute with Ottawa.
• Since Aug. 5, Riyadh has taken steps to cancel scholarships for nearly 15,000 Saudi students in Canada, blocked new trade deals with Canada, barred the import of Canadian wheat and expelled the Canadian ambassador. The Saudis say Canada provoked the dispute by criticizing the arrests of two female activists.
• Last week, the Trudeau government office voiced new concerns about the jailing of more women’s rights activists in Saudi Arabia. Human Rights Watch is raising alarms about Israa al-Ghomgham and five others being tried by a terrorism tribunal. In response, Ms. Freeland’s office said "Canada will always stand up for the protection of human rights, including women’s rights and freedom of expression around the world.”

What prompted the dispute?

The dispute ostensibly arose because of this tweet, issued by Canada’s Global Affairs Ministry, decrying the arrest and detention of two female bloggers and activists, and urging Saudi authorities to immediately free the two women.

Samar Badawi is the sister of blogger Raif Badawi, who was arrested in 2012 and sentenced to lashings and prison time for his criticism of Saudi clerics. While Mr. Badawi is not a Canadian citizen, his wife, Ensaf Haidar, recently became one. She and her children, who live in Quebec, have long advocated Ottawa and other nations to help free her husband.

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The Saudi Foreign Ministry went up in arms about the Aug. 3 tweet, calling it an attempt by Canada to interfere with the country’s internal affairs. Saudi Arabia announced it was suspending future trade with Canada and severing diplomatic ties by expelling Canada’s ambassador and recalling their own ambassador to the country. Riyadh also vowed to withdraw all Saudi students it has been sponsoring at Canadian universities, colleges and other schools, which could number as high as 15,000, according to one Saudi government source who spoke with The Globe and Mail.

Some analysts perceive Saudi Arabia’s move as both a power play for the kingdom’s young leader and a demonstration put on for the benefit of countries with stronger ties to them than Canada. Crown Prince Mohammed bin Salman recently went on a global tour touting proposed economic reforms and promoting his vision for the kingdom as “the next Europe.” Despite those ideals, however, the country has continued to take aggressive actions against some neighbours, and concerns about domestic human rights practices persist.

Who’s affected?

Arms dealing: The decision to freeze new trade agreements could threaten Canada’s $15-billion arms deal that includes providing armoured vehicles to the kingdom, but Ms. Freeland said it was “premature” to comment on its status.

Business: Oil, which accounts for the lion’s share of Canada’s trade with Saudi Arabia, is not affected by the trade spat, Riyadh says. But the overall impact of other kinds of business is still unclear.

Tourism: Travel to the country will also be affected in light of an announcement from Saudi Arabian Airlines on Tuesday that it will suspend flights to and from Canada starting Aug. 13. The state airline operates at least two routes flying from Toronto.

Health care: Hundreds of Saudi medical students and graduates in Canada have been ordered to return home, their grants discontinued. Hospitals who depended on those students are now scrambling to manage services with fewer staff. The students' deadline to leave is Sept. 22, but the Saudi government gave 1,053 students permission to stay in Canada if they cannot find alternative arrangements to complete their training in another country.

What has the response been so far, at home and abroad?

Canada: The Trudeau government has said it’s alarmed by the move out of Saudi Arabia, but has not walked back the comments that apparently prompted the row in the first place. Mr. Trudeau has offered no apology when asked about the issue, and Ms. Freeland doubled down by saying Canadians expect their government’s foreign policy to be guided by their values.

United States: Both Canada and Saudi Arabia are “close partners” of the U.S., the Trump administration announced on Aug. 7, and asked the Saudi government for more information of the detention of several activists. The U.S. also said it continued to encourage the Saudi government to “ensure all are afforded due process.”

Europe: The European Commission said it’s seeking clarification about the arrest of activists in Saudi Arabia. On the diplomatic dispute, commission spokeswoman Maja Kocijancic said “we don’t comment on bilateral relations.”

Middle East: Saudi neighbours Bahrain, Jordan and the United Arab Emirates have voiced solidarity with Riyadh, according to media reports.

Human rights groups: Amnesty International is urging the global community to form a united front with Canada. Saudi Arabia’s actions "shows the real colours of the regime, and the international community should toughen its tone against the Saudi government,” says Genevieve Paul, director of Amnesty’s francophone branch.

How important of a trade partner is Saudi Arabia?

When you look at Canada‘s top trading partners by total trade volume (exports plus imports), Saudi Arabia comes in as the 17th largest trade partner, trailing behind countries such as France and Taiwan. Not surprisingly, oil constitutes the majority of the Islamic Kingdom’s exports to Canada. Eastern Canadian refineries import about 75,000 to 80,000 barrels per day of Saudi Arabian crude, said Judith Dwarkin, a chief economist with RS Energy Group in Calgary. That’s less than 10 per cent of total imports and amounts to a “drop in the bucket” compared with the United States, which accounts for two-thirds of imports and could easily cover Saudi’s share thanks to growing domestic production.

Saudi Arabia’s main state wheat buying agency has told grains exporters it will no longer buy Canadian wheat and barley in its international tenders. According to Statistics Canada, Canadian wheat sales to Saudi Arabia were 66,000 tonnes in 2017 and 68,250 tonnes in 2016. No sales were made in the first five months of 2018, and analysts say the Middle East has been importing less wheat from Canada and the United States in recent years due to higher shipping costs, while China has become a bigger barley buyer. “There will be plenty of opportunities for Canada to sell barley and wheat elsewhere,” said Chuck Penner, analyst with LeftField Commodity Research, based in Winnipeg.

On Aug. 8, the Financial Times reported that Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost." Citing sources, the newspaper said the holdings are nevertheless “fairly small in absolute terms."

What does this mean for Canada’s diplomatic presence in Riyadh?

The displaced Canadian ambassador to Saudi Arabia, Dennis Horak, who was given 24 hours to leave the country, has a lengthy diplomatic career. Prior to his appointment to Riyadh in 2015, Mr. Horak’s government biography states he was head of mission in Iran for the then-Foreign Affairs Ministry. He also spent a three-year stint as director of its Middle East Relations Division from 2012 to 2015. Ms. Freeland declined to comment on Mr. Horak’s exact location and would only say he was doing fine. Ms. Freeland emphasized on Monday that Canada retains a diplomatic presence in Riyadh. “I want to assure Canadians our embassy is still in place in Saudi Arabia,” she said.

Has this sort of thing happened before?

Yes. In 2015, Riyadh recalled its ambassador to Sweden and stopped issuing work visas for Swedes after the EU member country’s Foreign Minister described a court decision related to Raif Badawi as “medieval” and the kingdom’s ruling Al Saud family as presiding over a “dictatorship. Last year, the kingdom also recalled its ambassador to Germany following a testy exchange with that country’s then-foreign affairs minister over Saudi Arabia’s military presence in Yemen.

Analysts: Saudi Arabia’s response to Canadian criticism will rally regional support

Background on the Saudi arms deal

In 2014, the Harper government struck a $15-billion deal to sell military vehicles to Saudi Arabia. The future of this deal, which critics have already expressed concern over, is now in doubt. Peter Sutherland, a former Canadian ambassador to Saudi Arabia, and a board member of the Canada Arab Business Council, said it’s possible Riyadh could axe this agreement.

In the past, Canada has sold the Saudis military equipment for defence against possible attacks by either Islamic State or Riyadh’s Shia Muslim rival, Iran. But Saudi Arabia has long faced criticism from governments and human-rights activists for crackdowns on dissidents and the country’s Shia Muslim minority. That criticism was still simmering when the Trudeau government took office in 2015, but under then foreign affairs minister Stéphane Dion, Ottawa began approving export permits for the vehicles anyway. The government also faced mounting criticism as evidence emerged that Canadian-made vehicles were being used in the Saudi proxy war in neighbouring Yemen, and even against Saudi citizens within Saudi Arabia.

General Dynamics Land Systems Canada won the 15-year contract to make weaponized military vehicles for Saudi Arabia and they employ about 3,000 people in Canada, mostly in London, Ont., where the General Dynamics plant is located. The light-armoured vehicles, or LAVs, will be equipped with machine guns, medium- or high-calibre weapons or even big-barrel guns that can fire 105mm shells or anti-tank missiles.

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Steven Chase: The Big Deal

More reading: Armoured vehicles in Saudi deal will pack lethal punch

Commentary and analysis

David Mulroney: The Saudis deliver a sobering lesson: In diplomacy, words do matter

Peter Jones: Why two words set off our diplomatic spat with Saudi Arabia

Margaret Wente: Canada is right to stand up for Samar Badawi

Bessma Momani: Saudi Arabia’s bold move has nothing to do with Canada

From the comments: ‘Is it ethical to trade with countries that do not share our values?’ Readers debate tensions with Saudi Arabia

The Canadian Press, with reports from Reuters and Globe and Mail staff