Written by Elizabeth Thompson, iPolitics
Canada’s arms exports shot up while Prime Minister Stephen Harper’s Conservative government was in office, fuelled by higher sales to countries like Saudi Arabia, Jordan, Mexico and Austria, an analysis by iPolitics has found.
Between 2006 and 2013, the last year for which numbers are available, Canada’s exports of military goods to countries outside the United States rose 89 per cent. However, that number is likely to hit a new high once figures for 2014 become available and a controversial $15 billion General Dynamics armoured vehicle sale to Saudi Arabia is added to the totals.
While the United Kingdom was the top destination outside of the United States for military equipment manufactured in Canada when the Liberals left office in 2005, that title now goes to Saudi Arabia, whose human rights record — particularly the recent beheading of a Shiite cleric — has made the armoured vehicle deal a target for opposition critics, including the Conservatives who approved of it in government.
During the election campaign, Harper defended the deal, saying that while Saudi Arabia may have committed significant human rights violations, it is an ally in the fight against the Islamic State and cancelling the deal would punish Canadian workers.
The Liberal government has said it has no plans to cancel the deal.
The Middle Eastern country accounts for near a quarter of the military goods exported by Canada to countries other than the U.S. in 2013. In 2012, a year that Canada set a record for arms exports with $1 billion worth of sales, Saudi Arabia accounted for 40 per cent of military exports.
Ken Epps, a policy advisor to Project Ploughshares, a peace group that monitors Canada’s arms sales, says the destination of Canada’s military exports has shifted.
“In recent years it is clear that the government has been trying to promote arms exports to outside of the more typical markets of the U.S and Europe and NATO in particular because defence spending has declined in both the U.S. and Europe and in order to try and sustain the Canadian arms industry new markets have been sought,” he said.
“In the case of the Conservatives, they were almost indiscriminate in the markets they were seeking because they were looking at the Middle East, they were looking at Latin America, they were looking at South Asia and in many cases at countries where there are very legitimate concerns – either about regional security or human rights violations."
Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries (CADSI) agrees that sales to Europe and the U.S. are down – in part because of Buy America policies and budget sequestration in Washington. However, she disagrees that there has been any loosening of the rules in selling to countries with questionable records.
“The export regime has been in place and is quite vigorous,” said Cianfarani. “So the rules, to my knowledge, have not changed and they have not loosened with respect to the countries where we have been allowed to sell controlled goods to.”
She adds that it’s a mistake to say that because other areas were softening that the government was more lackadaisical on the export regime. “We certainly haven’t seen any evidence of that whatsoever.”
The Trudeau government is taking a closer look at Canada’s arms sales, trying to determine what steps Canada must take to accede to the United Nations Arms Trade Treaty. The landmark multilateral treaty, which entered into force in December 2014, seeks to regulate the international trade in conventional weapons.
Former Prime Minister Stephen Harper’s government refused to sign the treaty, making Canada one of only a handful of countries — and the only NATO member — that wasn’t a signatory.
Foreign Affairs Minister Stéphane Dion’s ministerial mandate letter calls for him to take the steps necessary to accede to the treaty and Tania Assaly, spokesman for the department of Global Affairs, says that is underway.
“Before acceding to the treaty, Canada must ensure that it has put in place domestically all legislation or regulations that would be required to ensure that we can fully meet the obligations under the treaty,” she wrote. “Officials are currently undertaking internal legislative and policy reviews in order to identify those changes that might be necessary before Canada accedes to the ATT.”
Epps believes that the shipments of military goods to Saudi Arabia, including the $15 billion armoured vehicle deal, could be called into question if Canada accedes to the arms trade treaty.
“Our view is that the provisions of the arms trade treaty, if interpreted correctly, would require Canada to reassess and even deny sales of armoured vehicles to the Saudi National Guard,” he said.
If political parties are reluctant to touch the Saudi deal, it could be in part because of the role the defence industry plays in Canada’s economy.
A 2012 study by the accounting firm KPMG commissioned by CADSI estimated Canada’s defence and security industries generated $12.6 billion in revenue in 2011 and employed 71,000 Canadians. While nearly half of the goods and services produced remained in Canada, 50.4 percent or $6.4 billion was exported.
The federal government’s Report on Exports of Military Goods from Canada lists a far more modest number — $1.04 billion for 2012 and $681.4 million for 2013. However, the report does not include sales of military goods to the United States, which the government estimates account for half of Canada’s military exports each year.
Cianfarini points out that the federal government numbers also don’t include Canada’s growing service support industry.
“Traditionally, things that end up getting collected under the controlled goods regime are of a product nature because they’re trackable. What people don’t understand about the defence industry in Canada is that it has a very large service component which has been growing over the past 10 years as Canadian industry diversifies its business.”
For example, the government’s statistics wouldn’t include contracts Canadian companies have to service and maintain military aircraft from countries like Mexico where the aircraft is flown to Canada for maintenance, she said.
Exports by Canadian defence manufacturers also benefit Canada in other ways as well, Cianfarini pointed out. Foreign sales of equipment lead to lower prices for the Canadian Armed Forces and many innovations or new developments in military equipment can have non-military applications that also create jobs.
While the numbers can vary widely from year to year because of the nature of defence contracts, figures show that Canada’s exports of military goods has crept steadily upwards since 2005 when sales totaled $322 million under former Liberal Prime Minister Paul Martin’s government. The exports reached a high of $1 billion in 2012 before slipping down to $681.3 million – the third highest level since 2003 when exports under former Liberal Prime Minister Jean Chrétien reached $723.5 million.
One of the countries where Canadian military exports rose the most during Harper’s government was Jordan – a country whose human rights record has been questioned by groups like Amnesty International. Military exports jumped from only $6,580 in 2006 to $15 million in 2011 before falling back to $888,467 in 2013 — the year that Harper named the head of his RCMP security detail, Bruno Saccomani, as Canada’s ambassador.
According to government figures, Jordan’s biggest buys are in imaging equipment.
Sales to Mexico also grew during those years. In 2006, when Harper came to power, Mexico’s purchases of military goods had dropped to $15,573 from $1 million in 2003. By 2012, military exports to Mexico had risen to $1.2 million before dropping back to $889,854 in 2013. Mexico’s biggest spending is on ground vehicles and imaging equipment.
Austria, which was already a strong customer for Canadian military goods, had the third largest rise between 2006 and 2013 – particularly during the last two years, when it jumped to $11.3 million then $88.6 million. According to federal government figures, the growth was in guns and ground vehicles.
Sales to a number of other countries, however, have declined. For example, Greece, which bought $8.4 million worth of military goods in 2006 dropped to a fraction of that amount the following year and in 2013 it only bought $56,875 worth of goods – much of it aircraft equipment. Oman, which imported $3.5 million in Canadian military goods in 2006 and $24 million in 2008, spent only $266,512 in 2013 – largely for simulators.
The top five buyers for Canada’s military goods also changed almost completely from 2006 to 2013. In the Liberals last year in power in 2005, the United Kingdom led the list, buying aircraft and parts, followed by Australia buying ground vehicles, France, South Korea and Singapore.
By 2013 the top buyers came from Saudi Arabia, principally purchasing ground vehicles, then the United Kingdom shopping for aviation and imaging equipment, followed by Austria, Italy and Germany.
Cianfarini says Canadian defence manufacturers have been shipping goods to Saudi Arabia since the 1990s and consider it a good market.
“Canada has nurtured a long-standing relationship with Saudi Arabia, because the Middle East is particularly important to us – not only from an oil perspective but also from a regional politics perspective going way back,” she said. “You’re seeing that from a Canadian business community point of view — it has a relatively open market, in that there aren’t great impediments. If you put those two together it’s logical that it would be perceived by Canadian companies as a market that has opportunity for us.”
Hélène Laverdière, NDP foreign affairs critic and a former Canadian diplomat, says Canada needs more transparency and consistency in its reporting on military exports.
“It is absolutely essential that parliamentarians and Canadian have that information,” said Laverdière.
Laverdière would like to see the Liberal government make public the evaluation that would have been done before the Conservative government agreed to allow armoured vehicles to be sold to Saudi Arabia. She also wants Canada to accede to the arms trade treaty.
“We will continue to push the Trudeau government to assure that we do that as soon as possible. We are the only NATO country that hasn’t signed.”
Conservative Foreign Affairs Critic Tony Clement has not yet responded to requests for an interview.