Government of Canada is lifting a freeze on weapons exports to Saudi Arabia and has renegotiated a much-criticized $11.3 billion (CA$14.8 billion) contract to sell General Dynamics Corp LAV VI (marketed as the LAV “6.0”) armored vehicles to Saudi Arabia. The “significant improvements” to the contract would secure thousands of jobs at the U.S. firm’s Canadian subsidiary, where the vehicles are being made. Under the terms of the renegotiated agreement, Canada could delay or cancel permits without penalty if it discovered Saudi Arabia was not using the vehicles for their stated purpose. Ottawa would also boost its scrutiny of all proposed weapons sales Foreign Minister Francois-Philippe Champagne said on Thursday.
The announcement marks a retreat by the Liberal government of Prime Minister Justin Trudeau, who said in December 2018 he was looking for a way out of the deal. A month earlier the government had frozen new permits pending a review. Human rights groups and political opponents, citing the killing of journalist Jamal Khashoggi and Saudi Arabia’s involvement in the Yemen war, had insisted Ottawa scrap a deal agreed by the previous Conservative government in 2014. The cancellation of this $11.3 billion contractâ€”or even the mere disclosure of any of its termsâ€”could have resulted in billions of dollars in damages to the Government of Canada. This would have put the jobs of thousands of Canadians at risk, not only in Southwestern Ontario but also across the entire defence industry supply chain, which includes hundreds of small and medium enterprises.
According to a Canadian government report, Saudi Arabia was Canada’s largest non-U.S. defense export destination in 2018; the kingdom received approximately $1.3 billion in Canadian military exports that year, which makes up for 62 percent of Canada’s total military exports, excluding to the United States. The LAV deal is the second of its kind signed between General Dynamics Land Systems-Canada and Saudi Arabia, with an estimated 1,400 LAVs going to Saudi Arabia over the previous two decades. Those vehicles are equipped with a variety of weapon systems, ranging from 25mm cannons to 90mm guns. Saudi Arabia doesn’t owe General Dynamics (GD) anything; military sales are run through the Canadian Commercial Corporation (CCC), which acts as a middle man. GD effectively is taking the hit, as CCC can’t pay for the vehicles if the kingdom doesn’t hand over the cash.
Saudi Arabia order 900 modified LAV-III, known as the LAV VI. The LAV VI is equipped with an upgraded, next-generation 6.0 suspension and a 450-hp power pack. It offers enhanced protection provided by its blast-deflecting double-VTM hull and energy attenuating seating, while also improving ingress and egress. The vehicle also features a fully digital electronic architecture with increased electrical generation and situational awareness. Some of the 900 combat vehicles will be fitted with an autoloading 105 mm anti-tank gun, known as the Cockerill CT-CV 105HP Weapon System (gun and turret). This weapon can also fire a Falarick 105 missile, which can hit a target at distances up to 5,000 m and can perforate up to 550 mm of armour. The rest will be fitted with a CPWS 20-25-30, which can be armed from a 20 mm to a 30 mm autocanon and 150 ready to fire munition.