Canada strikes new deal with Saudi Arabia, clearing way for armoured vehicle sales

Canada has struck a new contract with Saudi Arabia that eventually will allow it to resume exports of light armoured vehicles (LAVs) to the kingdom, the foreign affairs minister announced Thursday.

Francois-Philippe Champagne said the revised $14 billion agreement — which for years has been a political flashpoint because of the desert kingdom's dismal human rights record — will allow the Liberal government to speak more freely about its terms.

"What we are doing today is improving a situation we have inherited," the minister said. 

The original contract, signed by the previous Conservative government, was cloaked in terms of extraordinary secrecy that prevented public discussion of some of its most basic details. Champagne claimed the previous contract was so strict that the mere mention of it has resulted in "billions of dollars in damages to the Government of Canada."

He said there have been significant improvements to the contract. Champagne added that, had the federal government cancelled the LAV deal — something critics have demanded for more than five years — the Saudis would have been able to sue for the full value of the agreement.

Finance Minister Bill Morneau led a team that negotiated amendments to the deal, which now gives the government a bit more room to speak about the arrangement. It can now acknowledge the penalties in the deal for cancellation or default, which the government has cited often in defending the deal — or as political cover, in the eyes of its critics.

The transparency gains, however, appear somewhat elusive.

Large parts of the deal remain hidden from the public — including the total number of vehicles being sold, the kinds of armaments they carry, how many have been shipped already and what kind of service support arrangements have been made. In defence contracts, in-service support usually equates to about half the dollar value of the deal.

"We really cannot talk about the specifics of the contract," Champagne acknowledged.

The minister faced questions Thursday about the timing of the deal, coming as it does in the middle of an economic crisis that is being driven partly by an oil price war between Saudi Arabia and Russia.

Export permits related to the project have been sitting on Champagne's desk unsigned — caught up in a diplomatic and trade dispute that erupted after former foreign affairs minister Chrystia Freeland criticized the Saudis' handling of human rights critics almost two years ago.

Each permit will now be reviewed on a case by case basis, the minister said.

NDP foreign affairs critic Jack Harris said he wondered what prompted the Liberals to move ahead when many of the concerns about Saudi Arabia's political and human rights records remain.

"The reasons the Liberals put a ban and moratorium [on armoured vehicle exports] in place originally still stand," Harris said in a statement. "Saudi Arabia remains an authoritarian regime with one of the world's worst human rights records."

At the same time, he acknowledged the jobs at stake at the General Dynamic Land Systems Canada assembly plant in London, Ont.

"Doing the right thing should not impact workers. We can stand up for Canadian jobs and stand up for human rights. We must do both," he said.

Champagne insisted the timing was coincidental: the Saudis signed off on the contract amendment at the end of March.

One of the side benefits, no doubt, will be that General Dynamics can keep working at a time when the bottom has fallen out of the Canadian job market, with more than one million people driven from the workforce by pandemic-driven shutdowns.

Relations between Canada and the Saudi regime went into the deep freeze in the summer of 2018 after Freeland tweeted her support for jailed women's rights advocates in the kingdom. The Saudi government reacted by expelling the Canadian ambassador, suspending future trade deals and recalling students attending Canadian universities — a measure that was relaxed marginally later on.

The brutal assassination of dissident Saudi journalist Jamal Khashoggi — murdered and dismembered by Saudi government agents, allegedly at the direction of Crown Prince Mohammed bin Salman — damaged relations even further.

Champagne said no one should interpret the renewed contract as a sign that the countries are about to normalize relations.

"The human rights record of Saudi Arabia remains troubling. We will continue to advocate for human rights," he said, citing jailed dissidents and the unequal legal and political status of women in the kingdom.

Questions remain about how the Saudis will use the vehicles. Champagne acknowledged that the combat vehicles will be used by the internal security force that is responsible for the protection of the country's royal family.

He declined to say whether Canada sought assurances from the Saudis that the troop carriers will not be used in foreign military operations.

A review that examined whether the Saudis had violated the terms of the 2014 contract by using the armoured vehicles to suppress an uprising in the eastern part of the country, and in combat in Yemen, was carried out for over a year by the Liberal government. It found no evidence that Canadian-made equipment was used in alleged human rights abuses; Champagne committed Thursday to releasing more information on the review in the coming days.

He insisted that, by signing the refreshed agreement, Canada was still an international standard-bearer for human rights and pointed to the government's desire to strengthen the review regime under the recently enacted international Arms Trade Treaty.

What Canada would like to see, Champagne said, is an inspection system that would verify compliance whenever one country sells arms to another country.

"It is in line with Canadian values because human rights is at the core of what we do internationally," Champagne told reporters in a conference call late Thursday from Shawinigan, Que. "It's in line ... because we are strengthening both an existing contract and a process that existed, and we are going to rally the international community behind an international inspection regime."