Trudeau's dilemma: how to be tough on Saudi Arabia and save jobs

LONDON, Ontario (Reuters) - Canadian Prime Minister Justin Trudeau faces a dilemma as an election approaches - how to credibly clamp down on Saudi Arabia over its human rights record while sparing a $13 billion weapons deal with Riyadh.

FILE PHOTO: A pair of armoured personnel carriers are parked on the grounds of the General Dynamics Land Systems - Canada factory in London, Ontario, Canada October 23, 2018. REUTERS/Chris Helgren/File Photo

Trudeau, who has promised “consequences” for the Oct. 2 murder of Saudi journalist Jamal Khashoggi, is under pressure to freeze an already unpopular $13 billion contract for armored vehicles built in Canada by U.S.-based General Dynamics.

The problem is that the deal underpins 3,000 jobs in the small city of London, Ontario, a recovering manufacturing center and a likely battleground in next year’s general election.

The debate over the deal is worrying to members of Trudeau’s ruling Liberal Party, including Peter Fragiskatos, the lawmaker from the London North Centre parliamentary constituency.

“A lot of jobs depend on this contract,” Fragiskatos said in an interview, noting Trudeau has visited the city several times and “understands very well the challenges that London has faced. I am advocating very strongly for my community.”

A source directly familiar with official thinking said “we don’t want to lose those jobs”, but added it was also important for Canada to take a stand when human rights are violated.

“Canada is committed to upholding human rights, freedom of expression and the protection of journalists around the world,” Trudeau said last week.

Trudeau said Ottawa would review its export permits to Saudi Arabia in response to the death of Khashoggi, whose murder in the Saudi consulate in Istanbul has been condemned worldwide.

On Thursday, Canadian Foreign Minister Chrystia Freeland reiterated that Ottawa was ready to suspend export permits for weapons if it was proven they had been misused.

“We are really considering carefully the appropriateness of arms sales as we continue to seek full transparency” in the Khashoggi affair, Freeland told reporters on a conference call.

Export permits that have already been issued are being respected, a government official said. That should spare General Dynamics any immediate impact.

A 2016 document from the foreign ministry shows the firm had already received approval for C$11 billion worth of exports.

As for further penalties, the official said Canada was carrying out a “comprehensive review of our relationship with Saudi Arabia”.

In recent years, Trudeau has cast himself and his government as standard-bearers for progressive values at a time when the United States is withdrawing from the global stage under President Donald Trump.

Canada is particularly sensitive to Khashoggi’s murder. Riyadh severed diplomatic ties after the Canadian embassy sent a Twitter message in August demanding the release of jailed activists.

Trudeau backed Freeland after the tweet and the two have been generally aligned on Khashoggi’s murder. But asked last week why Ottawa would go ahead with the arms deal, Freeland replied it was “a very good question” and declined to be more specific.

Trudeau has said scrapping the deal would cost “billions” in penalties.

Opposition critics and human rights groups say that if Trudeau is serious about standing up for human rights, he should cancel the deal.

Other nations are also grappling with how to send a strong message to the oil producer about its need to respect human rights while limiting the economic impact.

Germany halted new weapons sales to Riyadh, and Chancellor Angela Merkel is pushing for the rest of the European Union to adopt a similar position. Berlin is also reviewing sales that have already been approved.

But in Britain, the second-largest exporter of arms to Saudi Arabia after the United States, the government has repeatedly rejected calls to end weapons sales.

“There are jobs in the UK ... at stake so when it comes to the issue of arms sales we have our procedures,” Foreign Secretary Jeremy Hunt told lawmakers on Wednesday.


London’s newly elected mayor Ed Holder, a former Conservative minister who helped found the Canada Saudi Business Council and led a trade delegation to the kingdom in 2016, said the contract should not be canceled.

“I’ve been in contact with the federal government about that and I’m advised that they don’t intend to cancel the contract,” he said in a radio interview after his Oct. 22 election.

The political fallout of scrapping the deal could be significant. The Liberals control two of London’s four seats and have a narrow, 12-seat parliamentary majority heading into a re-election campaign for a vote due by Oct. 21, 2019.

The Liberals, at 36 percent, are just one point ahead of the Conservatives, with the left-leaning New Democrats, who say the Saudi military contract should be scrapped, are at 20 percent, according to the latest opinion poll by Ipsos Public Affairs polling company.

Canada shipped C$166.9 million worth of armored vehicles and parts to Saudi Arabia in July, trade statistics show.

“We are continuing to build that vehicle on schedule, and we see no indication that contract has changed,” General Dynamics Chief Executive Phebe Novakovic said on a conference call last week. “Steady as she goes.”

Reporting by Allison Martell; additional reporting by Steve Scherer and David Ljunggren in Ottawa and Guy Faulconbridge in London; Editing by Susan Thomas and Grant McCool