Between idealism, political reality
PM eyes killing Saudi LAV deal, despite backlash
Could the federal government really cancel the multibillion-dollar contract to supply Saudi Arabia with armoured vehicles?
After all, it is the eve of an election year, and southwestern Ontario — where the light armoured vehicles are made, in London — will be a key electoral battleground. The Liberals hold two of five seats in the city and have their eyes on a third.
The General Dynamics Land System-canada plant employs more than 1,800 Londoners and there are 240 companies in the region that provide supplies for the massive contract.
Given the circumstances, many people have treated the Liberal government’s bellicose statements on the subject with skepticism.
But sources suggest Prime Minister Justin Trudeau government is deadly serious. Senior officials from the departments of Global Affairs and Finance recently met with the Saudis and representatives of General Dynamics, with cancellation of the contract very much on the agenda.
Chrystia Freeland, the global affairs minister, is said to be keen to follow through on comments she made publicly at the end of last month, when she linked arms sales to Saudi Arabia to the murder of journalist Jamal Khashoggi inside the Saudi consulate in Istanbul.
No new arms export permits will be issued to the desert kingdom, she said.
“I also want to be clear that in the past, we have suspended already issued export permits and, as the prime minister has said, that is action that we have taken in the past and we stand prepared to take in the future.”
One government official said a number of options are on the table, and it is not simply a binary choice between keeping the contract and cancelling it.
“We are serious when we say we are reviewing export sales to Saudi Arabia — therefore, we are doing the prudent thing by examining all scenarios. But no final decisions have been taken while the review proceeds,” he said.
The problems a cancellation would create for the government are obvious. Trudeau has already talked about the potential of incurring “significant financial penalties” of over $1 billion. Then there is the prospect of thousands of people in the London area losing their jobs. General Dynamics would not say how much of their business is dependent on the Saudi LAV deal but it is sizable.
CBC reported in September that the number of vehicles ordered has already been reduced to 742 from the original 928. It is not known how many have already been delivered
But one fact that is known is the $15-billion price tag, making it the largest export deal ever brokered by the Canadian Commercial Corporation, a Crown corporation that takes a cut of the deal as the prime contractor.
Canada imposed sanctions on 17 Saudis after the October killing of Khashoggi, though Crown Prince Mohammed bin Salman was exempted from censure. Those measures were taken under the Justice for Victims of Corrupt Foreign Officials Act, known as the Magnitsky Act after Russian whistleblower Sergei Magnitsky, who was killed in a Russian prison in 2009.
Many people assumed those sanctions and a freeze on future export permits would be the extent of the Canadian government’s response, regardless of the lip-service paid to cancelling existing permits.
That premise is now looking suspect. The Trudeau government trumpets its belief that “doing the right thing” must top electoral calculations.
In the London area, the Liberals hold London North Centre (Peter Fragiskatos) and London West (Kate Young), while the Conservatives hold Lambton-kent-middlesex (Bev Shipley) and Elgin-middlesex-london (Karen Vecchio).
Retiring NDP MP Irene Mathyssen is in the incumbent in the riding of London Fanshawe, where the General Dynamics plant is located. Her daughter, Lindsay, will be the party’s candidate next time. Both believe the contract should be cancelled, even if it means job losses in the riding.
A November Angus Reid poll found Canadians are in favour of banning future arms sales but were split on the cancellation of the LAV deal.
The public mood soured on Saudi Arabia after Freeland issued a tweet calling for the kingdom to release two jailed human rights activists last summer. The new crown prince reacted angrily, expelling Canada’s ambassador Dennis Horack (who happened to be on leave in Toronto at the time), freezing new trade deals and ordering Saudi students to return home.
If the tweet was the immediate cause of the fracture in relations, the Saudis had for some time been nursing a sense of grievance with a Liberal government that has not sent a full ministerial delegation to the kingdom since being elected.
Trudeau attempted a reconciliation of sorts on the fringes of the United Nations General Assembly meeting in New York in September, according to people familiar with the file, but the Khashoggi murder derailed those efforts.
The consequence is that the Saudis have frozen relations with Canada, which is having consequences far beyond the arms export sector.
The crown prince controls the Royal Court and stands accused of exercising power without understanding the responsibility that goes with it.
“It is an irrational situation,” said one Saudi-watcher familiar with the LAV contract. “But we could also be irrational.”
He remains optimistic that a compromise can be achieved. “The chances of the LAV deal going down in flames, I would say are maybe 30 per cent. There are just too many moving parts.”
But that assessment does not fully take account of the caprices of an idealistic prime minister, who, for better or worse, wants to win with “integrity” — or is prepared to lose.