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Canada has been steadily increasing ties with Saudi Arabia since it was declared a priority country – one that has high potential for growth and Canadian commercial interests. There have been high-level visits from Foreign Affairs Minister John Baird as well as International Trade Minister Ed Fast.

RUBEN SPRICH/REUTERS

The Canadian government is making plans to welcome a high-ranking member of the Saudi Royal Family to Ottawa, the latest chapter in a complicated relationship that has seen Riyadh roil oil markets while buying $15-billion of arms from Canada.

Prince Turki al-Faisal, who served as the kingdom's U.S. ambassador for two years, is a leading member of the Saudi Royal Family. Government scheduling documents obtained by The Globe and Mail show Ottawa is planning to play host to the Prince in the capital on Feb. 17. Government officials declined to comment or confirm the meeting.

Foreign Affairs Minister John Baird met with Prince al-Faisal during the World Economic Forum in Davos, Switzerland, this week, where he raised Canada's concerns about the flogging sentence of blogger Raif Badawi, according to a government official. Mr. Badawi's wife and children have been granted asylum in Canada.

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Canada has been steadily increasing ties with Saudi Arabia since it was declared a priority country – one that has high potential for growth and Canadian commercial interests. There have been high-level visits from Mr. Baird as well as International Trade Minister Ed Fast.

A government official described the relationship as "important and frank," and one that includes discussions around regional security as well as human rights.

Mr. Baird plans to travel from Switzerland to Saudi Arabia to pay his respects to the Royal Family, after the death on Thursday of King Abdullah. Mr. Baird also plans to meet with the current government.

Prince al-Faisal will be arriving in Canada as this country's oil industry is reeling from the decision by the Saudis in November to forgo its traditional role of swing producer and allow glutted markets to dictate crude prices. Saudi Oil Minister Ali al-Naimi has made it clear the country is engaged in a price war to win back its share of the global oil market from growing non-OPEC producers, including Canada and the United States.

The Saudi decision to maintain the country's production – announced at a meeting of the Organization of Petroleum Exporting Countries – accelerated the decline in crude prices. North America's benchmark, West Texas Intermediate, traded Friday below $46 (U.S.) a barrel, down from its peak of $107 last June.

His visit also comes as a 2014 arms agreement between Canada and Saudi Arabia is under increased scrutiny after much-publicized incidents of torture and mistreatment by Saudi authorities, including the videotaped beheading of a woman in Mecca this month and the flogging and jailing for blasphemy of Mr. Badawi, who was sentenced to 1,000 lashes.

The agreement to ship made-in-Canada light armoured vehicles to Saudi Arabia is by far the largest export deal ever brokered by the government's Canadian Commercial Corp. and the manufacturer is General Dynamics Land Systems Canada in London, Ont.

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The Canadian government is refusing to say whether it obtained assurances that the vehicles would not be used against the Saudi people – a key guarantee required by federal export controls when arms are destined for countries with a "persistent record of serious violations of the human rights of their citizens."

The Harper government calls the export contract a major success, one that will sustain 3,000 advanced manufacturing jobs for the 14-year length of the deal, as well as thousands of other jobs for suppliers across the country.

For Canada, the death of Abdullah also raises questions about whether the power change will affect the kingdom's oil strategy. His successor, King Salman, pledged Friday to maintain continuity in energy and foreign policies.

That's bad news for Calgary's oil producers, who are slashing investment plans and laying off staff. It's also bad for Prime Minister Stephen Harper who has delayed this year's budget until at least April due to market turmoil. The Conference Board of Canada estimates the drop in oil prices would reduce federal revenues by $4.3-billion in 2015.

Finance Minister Joe Oliver insists Ottawa will balance its books, but many economists expect a deficit. That's a prospect shared by the world's largest oil producer, as the Saudi government needs a global oil price of about $80 to stay out of the red. But unlike Ottawa or Alberta, the Saudis have vast savings to fall back on.

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