Which Canadian sector is ailing the most from spat with Saudi?

August 17, 2018 8:00 am


No, it’s not an oil supply shortage that will hurt Canada or its economy in the continuing saga with Saudi over a tweet regarding detained women activists deemed “interference in Kingdom affairs”.

It’s not going to be arms deals, flights or feeble trade numbers between the two countries.

What will really hurt is Canada’s healthcare sector.

Related: Top 7 business ramifications of the Saudi-Canada row

Taking pulse

The BMJ, a weekly peer-reviewed medical journal, said more than 800 doctors from Saudi who work in Canadian hospitals, plus thousands of Saudi students in Canadian universities and medical schools, have until the end of August to settle their affairs and leave the country, quoting peremptory orders from their government.

Saudi’s foreign ministry said that it was arranging the immediate transfer to other countries of Saudi patients being treated in Canadian hospitals.

According to the Independent, Saudi citizens living and studying in Canada face a logistical nightmare after the order to ‘end all ties and apply for a return ticket to the kingdom within one month’

“At least 1,000 Saudi medical trainees work in Canadian teaching hospitals as part of a longstanding extensive training programme and have been given until 31 August to leave the country,” said The Independent.

“Many of the [Canada-based] trainees are fairly senior, doing fellowships, getting subspecialty experience,” Salvatore Spadafora, a vice dean with the University of Toronto’s medical school, where 216 students are affected, told the British media.

“You just know they’re going to go back and do so many great things for their country, and that potential loss is unfortunate,” he says.

There are around 8,300 non-medical Saudi students enrolled at universities around Canada, all of whom have been ordered by the Saudi education ministry return.

Related: Who is affected the most by the Saudi-Canada standoff?

Healthy income gone

According to Canadian Broadcasting Corporation (CBC), in Canada, medical school grads who spend 3-5 years working in Canadian hospitals as residents and qualifying as doctors are earn something in the area of $65,000 a year.

In 2018, Canadian provinces funded 3,308 residency positions.

“Saudi medical school graduates arrive with lots of money and are warmly welcomed. Not only does the Saudi government cover their salaries, it pays Canadian governments for the privilege of training in our hospitals and caring for Canadian patients,” said CBC.

According to Prof. Joe Schwarcz, who specializes in science and public policy at McGill University, the Saudis hand over roughly $100,000 per resident per year.

This year, there are 800 Saudis in addition to the 3,308 Canadian-government-funded positions, meaning the Saudis comprise about 20% of the 4,108 residents in Canadian hospitals.

“Taking into consideration the salaries hospitals don’t have to pay them and the money their government pays for their training, those Saudi residents effectively bring $165,000 apiece per year with them, for a total this year of about $132 million,” said CBC.

Related: Saudi-Canada trade row: What business is at stake?

Other losses

The Independent said The severe new measures are not expected to have a huge financial impact. Two-way trade between both countries is modest – according to Bloomberg, Canada exported $1.04bn worth of goods to Saudi Arabia and imported $2bn in goods in 2017, which made up just 0.4% of Canada’s total trade for the year.

As reported by the Vancouver Sun, Peter Tertzakian, executive director of the ARC Energy Research Institute, says many Canadians are just learning that despite Canada’s abundance of oil and gas, as fifth-largest producer of oil and gas in the world, the country still imports 11% of its oil or, from Saudi, the number 2 supplier after the US.

According to Statistics Canada, in June, Saudi Aramco shipped 136,321 barrels of oil per day to Canada’s east coast in June, which is down from a year-to-date peak of 200,811 bpd in April.

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A potential construction storm brewing

Canada’s diplomatic clash with Saudi Arabia is threatening SNC-Lavalin Group, the Montreal-based builder who gained additional exposure to the kingdom with its two biggest acquisitions, the 2014 purchase of Ireland’s Kentz Corp. and last year’s deal for WS Atkins of the UK, Bloomberg reports.

“SNC CEO Neil Bruce is counting on business in the Middle East to bolster his drive to increase profit more than 50% by 2020,” said Bloomberg.

“The flare-up between Saudi and Canada spooked investors in Canada’s biggest construction company, which gets about 115 of sales in Saudi Arabia.”

SNC posted its biggest weekly decline in more than a year in the wake of the dispute. The shares fell again Monday in Toronto, dropping less than 1 percent to $40.5, the lowest price in more than five months.

SNC, has about 10,000 employees in the country, at stake is almost $760 million in annual revenue from Saudi, Bloomberg reports.

“The company has another $487 million in sales in the rest of the Middle East, where countries such as the UAE sided with Saudi in the dispute with Canada,” said Bloomberg.

“Last month, SNC signed a five-year agreement to provide engineering services to a joint venture between Saudi Aramco and Kuwait Gulf Oil Co.

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.