The Saudi Effect: Canadian Military Exports in Context

by | Oct 18, 2019 | LCSC, Military, Strategic & Disarmament Series, War and Society | 0 comments

by Paul Esau

The arms trade is a tricky business for a self-proclaimed “middle power” like Canada. Export too little and you’ll be accused of undercutting the domestic military producers needed to maintain a Defence Industrial Base (DIB), and consequently outsourcing national security. Export too much (and to the wrong people) and you’ll face international backlash for saturating global markets, inflaming regional tensions, and enabling state repression and violence.

So what is a liberal democracy with a feminist foreign policy like Canada to do?[i]

The answer, according to the current Trudeau government, has been to continue to protect the sale of Canadian military goods to the human-rights violating regime of Saudi Arabia, but just to be more apologetic about it than the previous Progressive Conservative government.[ii] Some might argue that it was the Harper regime who committed the original sin of arranging the current deal, but the Trudeau Liberals have signed off on the export permits, dodged and deflected media attention, and generally made themselves complicit at every opportunity. As the old argument goes, if Canada won’t sell military goods to totalitarian regimes, then someone else will. Since the regime will get the goods anyway, what’s the harm if Canada benefits by supplying them?

Many Canadians, thanks to the enterprising work of reporters like Stephen Chase and Naël Shiab, and academics like Daniel Turp and Srdjan Vucetic, disapprove of this logic.[iii] Yet they also appreciate that ending the Saudi deal (among others) will cost jobs, money, and military production capability, thereby causing harm to the Canadian economy.

Still, big questions remain to be answered. Does the Canadian economy depend on military exports? Does Canada have a history of exporting military goods? Who are our customers? Most importantly, what percentage of our military exports is going to Saudi Arabia?

Canadian Military Exports as a Percentage of General Exports

Advocates of Canada’s military export deals argue that the defence industry is disproportionately important for reasons of both national security and economic competitiveness. Since most of Canada’s defence production is in components and sub-systems, the security portion of that argument is dubious. Additionally, while defence production is historically important for certain industries such as aerospace and shipbuilding, the economic argument is also flawed. The proportion of Canadian exports made up of military goods is tiny. Here’s a comparative chart drawn from government data:[iv]

Year Total Exports Military Exports Military Ex. As % of General Ex.
2018 $522,836,851,000.00 $2,068,556,027.23 0.40%
2017 $483,644,366,000.00 $1,054,900,379.84 0.22%
2016 $453,686,071,000.00 $756,251,561.25 0.17%
2015 $464,754,175,000.00 $712,763,824.28 0.15%
2014 $469,270,980,000.00 $848,787,732.04 0.18%
2013 $423,614,361,000.00 $740,182,297.78 0.17%
2012 $407,800,730,000.00 $1,142,480,173.64 0.28%
2011 $400,244,966,000.00 $705,987,763.25 0.18%
2010 $359,917,422,000.00 $467,774,984.69 0.13%

Obviously, even a significant gain or loss in Canada’s annual military exports has relatively little impact upon Canada’s general exports. The regional impact of such variation – say in the city of London, Ontario, where General Dynamics manufactures the Saudi-destined LAVs – is significant, but Canadians can rest assured that cancelling the Saudi contract will not cripple the Canadian economy. By comparison, the United States exported 2.5 trillion in goods and services in 2018, of which 192.3 billion was in arms transfers (or 7.7 percent of the total).[v]

Still, Canada’s contribution to the international arms trade is nothing to scoff at. According to the Stockholm International Peace Research Institute (SIPRI), Canada ranked 23 among all military exporters in 2018, 19 in 2017, and 15 in cumulative total between 2000 and 2018. Additionally, since SIPRI has only recently begun to track most of the dual-use items and sub-components that the Canadian DIB specializes in, Canada might place higher.

The Saudi deal is one of the few Canadian contracts that involves a complete weapons system, but that doesn’t mean other contracts are more benign. While some might argue that exporting components and sub-systems, is different than selling tanks missiles, the increasing tooth to tail ratio of most modern armies would suggest otherwise. The ability to engage in aerial surveillance using L3 Wescam’s line of high-resolution cameras (Ontario-made) can be just as valuable to a repressive regime as a tank, just as a shipment of helicopter simulators from CAE (Quebec-based) are just as valuable to a modern military as the helicopters themselves. In the 21st century, military exports don’t need to go “boom” to enhance military capabilities and aid repression.

Canada’s Military Exports Over Time

Project Ploughshares, a Canadian non-government peace research institute based in Waterloo, Ontario, possesses what is arguably the most complete public database of Canadian military exports from 1978 onward. The following is Canada’s history of non-US military exports by annual value, according to Project Ploughshares:[vi]

This graph immediately highlights three things. First of all, Canada has a long history as a military exporter, even without counting bilateral trade with the Americans. Second, the industry is volatile – see how the markets plummeted during the late 1980s as Cold War tensions decreased, former president Ronald Reagan cut American military spending, and Soviet bloc overproduction flooded the global arms market. Third, business has been booming recently, as three of the last ten years have produced record-breaking export values for Canadian military producers. Canada is back…in the arms trade.

So how important has Saudi Arabia been to the Canadian military export market? Well, in 2018, Saudi exports accounted for more than half of all non-US value exported:

In fact, the desert kingdom has been the leading destination for Canadian military exports for the last three years running:

The Canadian government likes to claim that Canada’s export controls “are among the most rigorous in the world and are in line with those of our principal allies and partners.”[vi] This is true in the sense that Canada is party to most of the essential multilateral arms control conventions, and that much of the world either lacks the capability to produce significant military exports, or is far less transparent about its customers than Canada. It is also true in the sense that most of Canada’s NATO allies and economic partners also have spent decades arming Saudi Arabia, and continue to despite the illegal and ruinous war in Yemen.

While Canada tends to take our national security very seriously in its consideration of military export destinations (as evidenced by the almost complete lack of recent exports to Russia and China), its commitments to collective security and human rights have been enforced only selectively. Consider the following graph, which shows Canadian military exports to countries in the Middle East since 1978:

Apart from a few outliers, Canada’s military exports to the Middle East have been dominated by exports to Saudi Arabia, largely consisting of LAVs. The graph shows large spike in exports in 1992; the result of an amendment in the Criminal Code in 1991 which allowed Canadian producers to being selling automatic weapons (including those mounted on LAVs) internationally.

In 2018, more value in military goods was exported to Saudi Arabia than to any non-US country since before Project Ploughshares began tracking in 1978. Indeed, Canada exported more value to Saudi Arabia in 2018 than the total cumulative value to all non-US destinations in any preceding year since records began. This is entirely the result of the 2014 deal, which, because of its size, has succeeded in warping Canadian foreign policy on issues from the war in Yemen to our accession to the Arms Trade Treaty.[viii]

So, to summarize, while Canadian military exports constitute less than one percent of general Canadian exports (and usually less than half a percent), they have grown substantially in recent years, buoyed by exports to Saudi Arabia. While the LAVs exported to Saudi constitute complete weapons systems, the majority of Canadian military exports are subsystems or components that do not pose a threat in themselves. Yet, when later integrated into complete systems and resold, or when used to enhance the military capacity of a human rights-violating regime, these military exports have real consequences around the world. The Saudi-LAV deal is the most egregious example of Canada’s continued complicity in the arms trade, and its resilience suggests that the Trudeau government would rather bow to precedent and sell weapons to a regime which charges women’s rights activists with treason than embrace a truly ‘feminist’ military export policy.

[i] In 2017, Canadian Foreign Minister Chrystia Freeland declared that Canada had a feminist government, and this orientation was at the core of Canada’s foreign policy. OpenCanada.Org, “Is the Future of Foreign Policy Feminist?.

[ii] Gadzo, Mersiha. “Canadians Seek Cancellation of Major Arms Deal with Saudi Arabia.” Al Jazeera, August 9 2019.

[iii] Steven Chase, “The Saudi Arms Deal: Why it’s a big deal,” The Globe and Mail, February 5, 2016; Steven Chase, “Canada’s $15-billion Saudi arms deal violates export rules, lawsuit argues,” The Globe and Mail, March 21, 2016; Srdjan Vucetic, “A Nation of Feminist Arms Dealers? Canada and Military Exports,” International Journal 72, no. 4 (2017); and Nael Shiab, “Marchandises militaires: la grand hypocrisie canadienne,” L’actualite, February 5, 2017.

[iv] Keep in mind that this chart includes non-US Canadian military exports, since Canada does not currently track most exports south of the border. Most observers estimate that including US exports would roughly double Canada’s current annual military exports.

[v] Kimberly Amadeo, “US Exports, Including Top Categories, Challenges, and Opportunities,” The Balance, April 6, 2019.; see also Office of the Spokesperson, “U.S. Arms Transfers Rise 13 Percent in 2018, Highlighting Administration’s Success Strengthening Security Partners While Growing American Jobs,” US Department of State, May 21, 2019.

[vi] Data compiled from the annual reports on Canadian military exports which have been published by Global Affairs Canada (usually) annually since 1991.

[vii] Global Affairs Canada, Report on the 2018 Export of Military Goods, 6.

[viii] Cesar Jaramillo and Kenneth Epps, “Canada joins the Arms Trade Treaty — but will it cancel the Saudi deal?”, OpenCanada.Org, October 1, 2019.