Top 7 business ramifications of the Saudi-Canada row
The Saudi row with Canada over that country’s Foreign Ministry demanding “immediately release” of human right activists in the kingdom is growing with no end in sight.
The Saudi Foreign Ministry called the Canadian remarks “a major, unacceptable affront,” “a violation of the Kingdom’s sovereignty” and “a blatant interference in the Kingdom’s domestic affairs, against basic international norms and all international protocols,” according to the Saudi Press Agency (SPA).
USA Today said that the Saudi government rejects mediation with Canada over the dispute.
“There is nothing to mediate,” Foreign Minister Adel al-Jubeir told reporters Wednesday in Riyadh, according to Agence France Presse, said USA Today.
“Canada made a big mistake …. and a mistake should be corrected.”
The spat, which began last week has had some major business ramifications on relations between the two countries.
1- Wheat and Barley
Reuters said Saudi’s Grains Organization (SAGO), the main state wheat-buying agency, has told grains exporters it will no longer buy Canadian wheat and barley in its international tenders, quoting European traders on Tuesday
According to Statistics Canada, Canadian wheat sales to Saudi Arabia were 66,000 tons and barley sales totaled 132,000 tons in 2017 in 2017.
2- $12bn arms deal
An $11.6 billion (bn) arms deal between the two countries was struck in 2014. CNBC reported that the Canadian unit of U.S. weapons maker General Dynamics Corp won a contract worth $11.63bn to build light-armoured vehicles for Saudi, and which Saudi took part delivery of this year.
Tanks, armored vehicles and parts and motor vehicles accounted for about 45% of Canada’s 2016 exports to the kingdom, according to Bloomberg.
CNN reported Saudi would relocate about 7,000 Saudi scholarship recipients studying in Canada and suspend new ones.
About 5,000 new students arrive from Saudi each year.
There are anywhere from 15,000 to 20,000 students in Canada with government-subsidized tuition.
Saudi investment in Canada’s education sector reached over $10bn in the past 10 years, according to the GlobeAndMail.
Saudi froze all new trade with Canada
So far this year, Canada has exported $1.08 bn in goods to Saudi and imported $1.54 bn, according to Statistics Canada data.
Saudi has invested about $6 billion in Canadian businesses since 2006, data compiled by Bloomberg showed.
Crude oil and copper ores made up about 98% of Canadian imports from Saudi, according to a Canadian government report, Bloomberg reported and Saudi is Canada’s17th largest trade partner, according to CNBC.
There is approximately $1bn in Saudi investments in a diverse range of sectors: agriculture, real estate, tourism, hospitality, infrastructure and transportation sectors, and Canadian businesses want access to the Saudi $684bn economy and neighboring Gulf Cooperation Council, said GlobeAndMail.
5- Air travel
Saudia, the country’s state airline, canceled all direct flights to Toronto. Business Insider said Saudia suspended flights to and from Toronto in an escalating feud with Canada and announced on Twitter on Monday that it would be suspending inbound and outbound flights to Toronto Pearson International Airport beginning August 13, the only Canadian destination Saudia served.
6- Medical treatment/training
SPA said Riyadh had stopped sending patients to Canadian hospitals and “is coordinating for the transfer of all Saudi patients from Canadian hospitals … according to directives by the leadership.”
CTV News said health officials across Canada were trying to determine Wednesday the potential impact if about 800 medical residents and fellows from Saudi suddenly leave the various networks next month.
Saudi medical students make up the vast majority of foreign medical trainees in Canada, according to the Ottawa-based Saudi Arabian Cultural Bureau, which persuaded the kingdom to give trainees a “grace period” until Sept. 1 to return home.
7-Stocks and bonds
Saudi Arabia is considering additional measures against Canada amid reports it plans to unload its holdings of Canadian stocks and bonds, according to Arabian Business.
Saudi holdings of Canadian dollar reserves are between $7.7 bn and $19.25 bn, with the upper end of that estimate representing 10% of daily Canadian dollar volumes, according to estimates from the Canadian Imperial Bank of Commerce.
Large Canadian company spared so far
Bloomberg reported that SNC-Lavalin Group Inc., Canada’s biggest engineering and construction company, is seeing “no immediate impact” to its operations in Saudi Arabia.
“The Montreal-based firm has been operating in Saudi Arabia for five decades and last month signed a five-year agreement to provide engineering services to a joint venture between Saudi Aramco and Kuwait Gulf Oil Co. SNC is already building various facilities at a gas processing plant operated by Saudi Aramco, the world’s biggest exporter of crude,” said Bloomberg.