General Dynamics Warns Against Canceling Canada-Saudi Arms Deal

General Dynamics Land Systems-Canada has warned that a possible cancelation of the sale of armored vehicles to Saudi Arabia would cost Canada billions of dollars in penalties, CTV News reports.

The Canada-based affiliate is producing LAV III armored vehicles for Saudi Arabia’s National Guard under a contract worth up to C$15 billion. GDLS-Canada indicated that its workforce could be negatively impacted if the sale is canceled. In a statement, GDLS-Canada said, “We are continuing to execute our valid and binding contract. Were Canada to unilaterally terminate the contract, Canada would incur billions of dollars of liability to General Dynamics Land Systems-Canada. In addition, terminating the contract would have a significant negative impact on our highly skilled employees, our supply chain across Canada, and the Canadian defence sector broadly.”

The warning follows a statement from Prime Minister Justin Trudeau, who said in an interview aired on December 16, 2018, “We are engaged with the export permits to try and see if there is a way of no longer exporting these vehicles to Saudi Arabia.”

Referencing the killing of journalist Jamal Khashoggi, Prime Minister Trudeau stated, “The murder of a journalist is absolutely unacceptable and that’s why Canada from the very beginning had been demanding answers and solutions on that.” Khashoggi was killed inside the Saudi consulate in Istanbul in early October 2018, in a premeditated attack that the U.S. Senate says Crown Prince Mohammed bin Salman ordered.

Saudi Arabia denies that the Crown Prince had a role in Khashoggi’s killing and has stripped some of the involved officials of their powers following international outcry. A number of European arms suppliers have since announced that they are suspending arms sales to the Kingdom, though major sellers like the U.K., France, and the U.S. continue to implement agreements.

While Prime Minister Trudeau supported continuing the LAV deal, inked by his predecessor Stephen Harper, upon taking office, the Canadian government has previously issued concerns about the usage of the vehicles, which are reported to have been used in a crackdown in Awamiyah in Saudi Arabia’s Eastern Province in 2017. Furthermore, the LAVs are believed to have seen significant action as part of the Saudi-led coalition campaign to remove Ansar Allah, a rebel group allegedly supported by Iran, from power in Yemen.

In August 2018, the governments of Canada and Saudi Arabia engaged in a diplomatic row after the former Canadian Ambassador to Saudi Arabia called for the release of imprisoned Saudi activists Raif and Samar Badawi. Riyadh accused Ambassador Chrystia Freeland of interfering in Saudi politics and expelled her from the Kingdom. The incident prompted speculation that Saudi Arabia could cancel the LAV III purchase as a way to pressure Canada, though ultimately the Kingdom did not made such a move.

About Derek Bisaccio

Military markets analyst, covering Eurasia, Middle East, and Africa.

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