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Foreign Affairs Minister Stéphane Dion says he believes cancelling the Saudi deal would have big ripple effects.

Fred Lum/The Globe and Mail

Foreign Affairs Minister Stéphane Dion says a major economic backlash from Saudi Arabia would result if Ottawa were to cancel a controversial $15-billion arms deal with Riyadh – but he was unable to say whether a Liberal government would have actually signed the combat vehicle contract in the first place.

Mr. Dion is defending his decision to quietly sign export permits earlier this month covering 70 per cent of the $15-billion deal by Ottawa to sell weaponized combat vehicles to Saudi Arabia. The revelation, which runs counter to Liberal insistence that the Saudi deal was a fait accompli arranged by the Harper Conservatives, was important because exports of weapons are not considered to have been assured until permits have been granted.

Asked who was involved in the decision to approve the export permits, and whether Prime Minister Justin Trudeau or his top advisers played a role, Mr. Dion said it was he alone, in consultation with International Trade Minister Chrystia Freeland, who made the decision.

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"It's not a cabinet decision. It's a minister's decision," he said during an editorial board meeting with The Globe and Mail. "I made my decision with the consultation of the Minister of Trade Madame Freeland."

Mr. Dion said economic repercussions would likely kill other Canada-Saudi arrangements such as the 16,000 Saudi students who study at Canadian postsecondary institutions each year. These foreign students generate millions of dollars in revenue each year for universities in this country.

Mr. Dion said he is speculating but he believes annulling the Saudi deal would have big ripple effects. "If you cancelled a contract of this magnitude, it will resonate everywhere – until the United Nations. And Saudi Arabia will have to react. Don't think they will praise Canada," Mr. Dion said.

He noted Sweden endured blowback from Riyadh in 2015 after Stockholm, citing a dispute over human rights, cancelled a defence agreement with the Saudis that had reaped hundreds of millions of dollars for Swedish businesses in the past.

"Sweden did a bit the same about a contract and the reaction has been very harsh. Saudi Arabia reacted in a way that cut many things. … They cancelled a contract and the reaction has been very harsh," Mr. Dion said.

He added this threat shouldn't affect Canada's determination to exercise control over shipments of arms to a country like Saudi Arabia. Freedom House regularly ranks Saudi Arabia as "among the worst of the worst" on human rights.

Yet, Mr. Dion also said the Liberals don't believe they have a mandate to restrict arms exports to a limited number of countries, such as perhaps only democracies.

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"If the view of Canadians would be that we should not sell weapons to countries that are not democracies … it is an issue for an election. … Because there are a lot of consequences to that," he said, noting that 70,000 Canadians work in defence and security-related jobs and the industry is a boon for research and development here.

The Liberal minister could not say whether or not his party would have made the same decision to sign the contract as the Harper government did in 2014.

"That I don't know. Would a Dion government, or a Rae government, or a Trudeau government in 2014 have done what the Conservatives have done?" Mr. Dion said.

"I think it's fair to say we are more concerned about human rights than the Harper government. That's what I think as a Liberal. That is for you to assess [whether] it's the case."

He said it's a tougher decision to consider cancelling a deal that employs thousands in Canada and might trigger lawsuits – either from Saudi Arabia or the maker of the combat vehicles, General Dynamics Land Systems, the Canadian subsidiary of a U.S. defence contractor that is based in London, Ont.

"There is a big difference between asking yourself: Will I sign this contract and will I cancel this contract, because the cancellation has huge consequences. If you don't sign the contract it would have been taken by France or Germany and nobody would have noticed that Canada did not sign the contract and Saudi Arabia would not be mad," Mr. Dion said, adding that Berlin was aggressively seeking the deal for German companies.

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Mr. Dion, who has warned of big penalties if Canada cancelled the deal, clarified that it is not certain that Canadian taxpayers would have had to pay out a lot of cash if the contract had been cancelled. "I am not saying certainly they would pay. We would argue no. The [plaintiff] would argue yes. And the court would come with a number."

The awarding of export permits – like Mr. Dion did April 8 – is the point at which Canada sanctions the shipment of weapons abroad. In cases where an export destination has a terrible human-rights record, Ottawa is supposed to determine "there is no reasonable risk" the goods might be used against civilians.

In this case, documents released last week suggest Ottawa consulted no human-rights groups but rather asked only the Department of National Defence, several bureaus within Global Affairs and Innovation Canada. "No concerns were raised," the Global Affairs memo said.

Mr. Dion on Monday insisted Global Affairs consulted more broadly than just federal departments. But both Alex Neve, secretary-general of Amnesty International Canada, and Cesar Jaramillo, executive director of Project Ploughshares, a Waterloo, Ont., anti-war group that monitors arms exports, say they were not consulted.

"I don't know of any human rights, arms control,‎ or development organization that was consulted on this," Mr. Jaramillo said.

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