Canada braces for economic pain following Saudi spat

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It is one thing when the US President Donald Trump berates countries on Twitter but when Canada chooses the same route, there are economic consequences and painful lessons.

Trouble started after Global Affairs Canada called for the “immediate release” of women’s rights activists Samar Badawi and Nassima al-Sadah.

Canada is gravely concerned about additional arrests of civil society and women’s rights activists in #SaudiArabia, including Samar Badawi. We urge the Saudi authorities to immediately release them and all other peaceful #humanrights activists.

The Saudis took umbrage at being publicly called out by the Canadians and their response has been unprecedented, swift and unexpected.

The Saudi central bank has instructed its overseas asset managers to sell Canadian equities, bonds and cash holdings regardless of the cost. It was reflected on our stock exchange.

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Managers are estimated to invest more than $100 billion worth of Saudi funds in global markets. Hard to shrug that off as small change.

What could possibly follow is our dollar rate could fall and investment capital could start moving out of Canada.

The Saudis have expelled Canada’s ambassador, frozen new trade and investment, suspended a student exchange program and halted flights by state-owned Saudi Arabian Airlines to Canada for what it called “blatant interference” in its domestic affairs.

The Saudi Grains Organization also announced it is halting purchases of wheat and barley from Canada.

In 2015, the Canadian Wheat Board was taken over by the state-owned Saudi Agricultural and Livestock Investment Co. and U.S. grain company Bunge. Now known as G3 Ltd., the majority-controlled Saudi firm said it has no plans to change or reduce its purchases of Canadian crops.

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Meanwhile hundreds of jobs are at stake in London, Ontario where General Dynamics Land Systems sell light armoured vehicles, known as LAV IIIs, to Saudi Arabia in a $15-billion deal in 2014.
Thousands of Saudi students have been ordered to leave Canada.

That one tweet is quite possibly one of the costliest tweets out of Canada. It will potentially cost Canada billions of dollars in lost trade and investment.

Thankfully Saudi Arabia announced on Thursday that its oil supply to Canada will not be affected despite an escalating diplomatic rift between the two countries. -CINEWS

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