Canada is making a bet on Saudi Arabia despite war and political risk

An unmistakable flare-up in the torpid conflict between Saudi Arabia and its Houthi neighbours in Yemen on Monday was a stark reminder of the risks of Prime Minister Mark Carney's strategy of drawing closer to the kingdom.

The Houthis accused Saudi Arabia of an air attack on the international airport at Sanaa, capital of the Houthi-controlled north of Yemen, and fired missiles of their own toward the kingdom for the first time in years. 

The Saudi government did not immediately respond, but the Saudi-backed Yemeni government said its armed forces had targeted the runway at Sanaa International Airport to prevent an Iranian plane from landing.

Carney announced during his visit to Jeddah, Saudi Arabia, late last week that Canada would be sending a permanent defence attaché to its embassy in Riyadh to "increase exports from Canada's defence sector," and opening a Canada exhibit at the World Defence Show there 18 months from now.

But a resumption of a war in which Saudi Arabia was accused of indiscriminate bombing of targets such as wedding tents would likely complicate future arms sales.

More trade, but at what cost? Carney's Saudi Arabia dilemma

The department added that specific Saudi arms requests were already denied last year "in instances where officials could not verify that approving the permit would be consistent with Canada's foreign policy priorities."

But Canada's interest in Saudi Arabia goes far beyond arms sales. Carney stressed during his visit that Canada was at least as interested in opportunities for Canadian businesses inside the kingdom as it is in tapping Saudi wealth funds for investment in Canada.

One example is mining. 

"This is a whole new industry for the kingdom because oil was so easy," said Jeff Steiner of the Canada Saudi Business Council. 

"Mining is a Canadian specialty and Saudi Arabia, in the last five to six years, has embarked on making mining their second pillar."

Vision 2030, a strategic plan to revolutionize the country's oil-dependent economy, includes an aggressive focus on mineral exploration. The geological formation known as the Arabian Shield holds an estimated $2.5 trillion in untapped gold, copper, zinc, rare earth elements and other minerals.

Canadian mining companies, which include some of the world's dominant players, are making deals to start digging it up.

Vision 2030 also foresees massive investments in transportation and communications infrastructure, health and biotech, aerospace, artificial intelligence, education, clean energy and carbon capture — all areas where Canadian companies could find opportunities.

MOUs signed during Carney's visit represented over $1 billion US in business, including a major mining project for Canadian firm Hatch and an AI contract for Canada's Cohere with Saudi Arabia's Humain.

Two days after Carney's departure, another Canadian firm secured a contract to provide low-carbon concrete for Riyadh's airport.

The 2018 Canada-Saudi dispute, sparked by a tweet from then foreign affairs minister Chrystia Freeland, appears to have receded into the past, said Steiner.

He said the countries have since appointed "fantastic ambassadors to each other," which he characterized as a silver lining to the dust-up.

Many foreign observers have noticed a change in the approach of Crown Prince Mohammed bin Salman, often known as MBS. 

Saudi crown prince approved murder of journalist Jamal Khashoggi: U.S. Intelligence report

Saudi Arabia women hit the road as world's last female driving ban lifted

Wildly ambitious plans of building futuristic cities in the desert have been largely replaced by the more pragmatic reform schemes of Vision 2030. 

MBS has also enacted reforms in the area of women's rights — the topic that underlay the dispute with Canada.

In Jeddah, Carney said he could see the scale of social change that had occurred since his first visit in 1994. 

Journalists travelling with him, who were able to move around Jeddah freely without government minders, also saw examples of more liberal dress — although the niqab remains ubiquitous — and a less visible presence of repressive state organs than might have been seen a decade ago.

"That's not to say they're into political liberalization," cautions former ambassador Dennis Horak, who was expelled from the kingdom during the 2018 dispute. 

"But the kinds of economic and social reforms that they have brought in have had an impact, have been meaningful and have touched the lives of Saudis."

Thomas Juneau of the University of Ottawa said that while political liberalization isn't coming any time soon, the social and economic reforms have been "changing the country at an extremely rapid pace."

Juneau said it's "overly simplistic" and inaccurate to dismiss these changes as a facade "to justify the continued iron grip of Mohammed bin Salman on Saudi politics and society."

Carney has clearly chosen to focus on those areas where Saudi Arabia has liberalized, rather than its continued authoritarianism, or its harsh and often arbitrary justice system, says Juneau.

"There seems to be a pretty clear hard-nosed pragmatic calculus on the part of the Carney government to put aside issues of human rights and other disagreements and to focus on those real but limited areas in which we do have a common interest," he said.

In Jeddah, Carney appeared to make a veiled criticism of the Trudeau-Freeland approach.

"I do see that lecturing countries from afar is an ineffective strategy," he said. "It's satisfying, but it's ineffective. Engagement can be effective."

But former foreign minister Lloyd Axworthy said Carney's message also contradicts "a long legacy of Canadians playing a strong role in being peacemakers, mediators, supporters of international law and rules."

Axworthy says he doesn't hear the word "peace" being used much by the prime minister.

He said peace "won't come from these kinds of characters with their autocratic views," referring to leaders such as MBS and Turkey's Recep Tayyip Erdogan, who also met with Carney at the NATO summit last week. 

"It's really time that we do a lot more serious scrutiny of what the foreign policy and principles and proposals are of Mr. Carney," he said.

Carney says 'lecturing' countries is ineffective during Saudi Arabia visit

Carney said MBS and Erdogan were key to achieving peace in the region, particularly in the Israeli-Palestinian conflict. 

The war in the Persian Gulf also "matters for the world, matters for Canadians because there's a knock-on effect on food and energy prices," he said. 

"One of the key influencers is the Kingdom of Saudi Arabia, which is one of the reasons why we're here talking to them, not sitting in front of a lectern lecturing them."

Mark Carney’s Saudi Arabia reboot

Carney courts Saudi Arabia as U.S.-Iran ceasefire collapses

Carney said Canada would not trade away its concerns in exchange for market access.

"We care deeply about human rights. We care deeply about self determination for nations," he said. "We care deeply about territorial integrity of nations. We care deeply about Canadian consular cases."

Juneau said Saudi Arabia, like Canada, feels a need to diversify away from its dependency on the United States, which failed to take Saudi interests into account when it launched its recent war on Iran. (U.S. President Donald Trump's proposed plan to tax vessels passing through the Strait of Hormuz at a rate of 20 per cent of the value of their cargo will be even less welcome.)

Canada, like many other Western governments, has concluded that Saudi Arabia is too influential not to engage with.

"It's a country of more than 30 million citizens. It's the holder of the largest oil reserves in the world. It is where there are the two holiest sites of Islam, and it is simply a heavy regional power," Juneau said. 

"There is no going around it."

Senior Reporter

---

---