In Saudi-Canada standoff, Riyadh should stand down
The last time Canada undertook an act of aggression was in 1999, when it declared war on the United States — in the comedic universe of “South Park,” that is. But few were laughing Monday when Saudi Arabia shockingly cut ties with Canada and enacted severe punitive measures against Ottawa.
Riyadh’s gripe? A Canadian Foreign Ministry tweet criticizing the kingdom’s arrests of several human-rights activists. After new arrests last week, the total number of detained activists is now 18. In retaliation for what it described as Canadian meddling, Riyadh divested from its Canadian assets, froze new trade and investment, halted flights to the Great White North and recalled Saudi doctors and students from Canadian hospitals and universities.
The kingdom called Canada’s response an “unacceptable affront” and a direct violation of its sovereignty. That’s a valid, diplomatic response. But every other measure is utterly disproportionate.
Riyadh’s actions undercut its recent unprecedented progress. Women finally got behind the wheel of their cars in June — legally. Movie theaters opened. Western visitors have lined up. The once-dreaded religious police have been effectively declawed. And many regulatory changes have been implemented to open up the Saudi economy for foreign investment.
Mohammed bin Salman, the energetic crown prince helming this vast metamorphosis, has articulated his vision to put the kingdom on the right track. He vowed to roll back fundamentalist Islam and return the kingdom to a “tolerant, moderate Islam” — unprecedented words from a Saudi leader, given the kingdom’s historical role in spreading Wahhabism.
Saudi reform could have enormously positive consequences for the region. Which is why MbS, as he’s known, should be lauded every time he takes a step in the right direction, and why legitimate criticism is important, too.
Of course, the Saudis don’t always take criticism well. In 2015, Riyadh temporarily recalled its envoy to Sweden after the latter criticized human-rights violations, and last November it recalled its ambassador to Germany after its foreign minister protested Riyadh’s meddling in Lebanon. Saudi Arabia even blacklisted some German companies as a result.
Such moves may play well in Saudi Arabia, but may not have much of an impact in the current fracas. Riyadh is Canada’s 17th-largest trade partner, and total trade last year amounted to $3 billion. That may sound like a lot, but compared to the $673.9 billion that Canada traded with the US in 2017, that’s a drop in the bucket for Ottawa.
Saudi institutions shed their Canadian asset holdings, but these divestments will likewise be small. Similarly, the Saudi decision to halt wheat and barley imports from Canada will not have a severe effect given that the kingdom had already been importing less in recent years.
Pulling Saudi students and doctors from universities and hospitals could have more of an impact: In 2017, Saudis made up about 2 percent of Canada’s international students. Yet yanking them from their studies undercuts the kingdom’s goal of creating a knowledge economy more than it will affect Canadian universities’ bottom lines.
Whether this holdout lasts for a semester, a year or longer, it’ll deprive the kingdom of the talent and knowhow that it needs to increase private-sector employment.
Neither is Canada likely to feel much of a pinch from the drop in 75,000 to 80,000 barrels of Saudi crude that it imports per day. That’s less than 10 percent of Ottawa’s total oil imports and a gap that could be plugged by the US. But for Riyadh, that’s a loss of $2.48 billion. Perhaps that’s why the Saudi energy minister put out a quick message that this diplomatic spat will “not, in any way, impact Saudi Aramco’s relations” with Canadian customers. More concerning for Ottawa would be an $11 billion arms deal to supply the Saudis with light-armored vehicles, which it doesn’t want to lose.
But whatever pain Saudi Arabia ultimately inflicts on Canada, the kingdom may get the worst of it. Western institutional investors, actors that avoid risk whenever they can, are undoubtedly spooked. Foreign investment in Saudi Arabia had already plummeted to a 14-year low after last year’s opaque anti-corruption purge that put a number of high-profile Saudis under house arrest.
Riyadh certainly has a right to contest Canada’s statements. But it must find a way to climb down from this senseless escalation. And in the process, it wouldn’t hurt to reassure its supporters that it remains committed to reform, not to mention human rights.
Jonathan Schanzer is senior vice president at Foundation for Defense of Democracies, where Varsha Koduvayur is a senior research analyst on the Gulf Arab states.
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