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Prime Minister Justin Trudeau says it could cost taxpayers as much $1-billion to cancel or suspend a massive sale of armoured vehicles to Saudi Arabia, arguing that his government is restricted in measures Canada could take if Riyadh is found responsible for Jamal Khashoggi’s death.

Mr. Trudeau said that because of terms in the military-equipment sale negotiated by the government of former prime minister Stephen Harper, Canada could face a prohibitive charge if it suspended or walked away from an agreement brokered by Ottawa to furnish the Kingdom with hundreds of weaponized light-armoured vehicles (LAVs). The 14-year deal was signed in 2014 under Mr. Harper, but it was the Liberal government in 2016 that green-lit exports to the Saudis under Canada’s arms export-control rules.

His comments, aired on Tuesday in a Toronto media interview, stand in contrast to statements he made the day before in which he said his government is willing to freeze exports of the armoured vehicles. The NDP opposition has been pressing the federal government to follow Germany’s lead in suspending military shipments to the Kingdom over the alleged murder of Mr. Khashoggi, a dissident Saudi journalist.

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A pair of armoured personnel carriers are parked on the grounds of the General Dynamics Land Systems-Canada factory in London, Ont., Oct. 23, 2018.


Explainer: Who killed Jamal Khashoggi and why? Here’s what we know so far

Opinion: After Khashoggi, we can no longer ignore Saudi Arabia’s contempt for human rights

The United States is reportedly considering imposing sanctions under the Magnitsky Act, which targets the property of officials who have committed gross violations of internationally recognized human rights. Ottawa has made no commitment to bringing in such sanctions against Riyadh, saying it wants to see the results of a reputable investigation first.

The Prime Minister and his cabinet have faced repeated questions about Canada’s business relationship with Saudi Arabia in recent days as international concern mounts over what really happened to Mr. Khashoggi. The Saudis have now conceded that he was killed at the country’s consulate in Istanbul, Turkey.

Over the course of two conversations with Canadian reporters on Tuesday, Mr. Trudeau emphasized why he feels his options may be limited.

One the one hand, the Prime Minister said, he realizes he will be expected to bring measures against Saudi Arabia if the country is firmly implicated in Mr. Khashoggi’s death.

“If indeed the stories that are widely being reported turn out to have been the case, then Canadians expect us to act,” he told journalists during a visit to Humber College in Toronto.

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But he predicted that it would be costly to abrogate the deal. And he specifically named Mr. Harper as being responsible for this.

“The contract signed by the previous government, by Stephen Harper, makes it very difficult to suspend or leave that contract. We are looking at a number of things, but it is a difficult contract,” Mr. Trudeau said on CBC Metro Morning in Toronto.

He told the radio program that he finds this all “incredibly frustrating."

Mr. Trudeau implied that there was a massive kill fee in the Saudi LAV contract but would not elaborate. “I do not want to leave Canadians holding a billion-dollar bill because we are trying to move forward on doing the right thing, so we are navigating this very carefully and that’s pretty much all I can say.”

The Prime Minister’s Office declined to provide more detail about Mr. Trudeau’s Tuesday remarks or explain how the cancellation penalty would work.

Thomas Juneau, an assistant professor at the University of Ottawa’s Graduate School of Public and International Affairs, said he believes that Tuesday is the first time a Canadian government official has publicly put a price on the cost of cancelling the Saudi LAV deal. He said, however, that without sufficient detail, it’s impossible to verify the exact costs, particularly since Canada has already delivered some of the machines to Riyadh. The Saudi LAV contract has never been made public.

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Arms-control advocate Cesar Jaramillo said Mr. Trudeau is wrong to try to shift the blame to Mr. Harper over the fate of the light-armoured vehicle contract, initially valued at close to $15-billion.

“The Prime Minister’s offloading of responsibility for this deal squarely on the previous government is misleading at best, given that the relevant export permits were authorized under the current Liberal government,” said Mr. Jaramillo, executive director of Project Ploughshares, a disarmament group that is an agency of the Canadian Council of Churches.

“The assassination of a peaceful critic of the regime is only the latest in a consistent pattern of disregard for human rights by [the Saudis]. If Western arms exporters to Saudi Arabia do not back their expressions of concern with concrete action, including the suspension or cancellation of export contacts to the known culprit, their human-rights credibility will have died with Jamal Khashoggi.”

Mr. Trudeau’s decision to call out Mr. Harper personally over this issue is noteworthy given that a federal election is less than a year away and the Liberals have been trying to remind voters of their party’s old nemesis, whom they defeated in 2015. Liberal strategists have reportedly been attempting to brand federal Conservative Leader Andrew Scheer as a Harper clone and government MPs have called him “Stephen Harper with a smile.”

The Liberal government may seek to blame the Conservatives for the 2014 deal, but records obtained and published by The Globe and Mail in 2015 show Global Affairs staffers saying that export-permit approval is the stage at which Ottawa really sanctions shipments. In 2014, the department undertook an initial review of the deal to check for “red flags.” It found none, but Debbie Gowling, a senior official in the export-controls division, reminded colleagues in an e-mail that there was no guarantee that the sale was officially approved by Ottawa until actual export-permit applications were processed.

The Trudeau government has offered two different explanations in recent days as to why it might not be able to cancel the contract. Last week, Foreign Affairs Minister Chrystia Freeland said it would harm Canada’s reputation.

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Prof. Juneau said he believes that the main reason for upholding the deal is the thousands of jobs in Southwestern Ontario that rely, at least in part, on the contract.

He said Mr. Khashoggi’s death has thrust the Saudi arms deal back into the national debate in Canada − an unwanted turn of events for the Liberal government given Saudi Arabia’s terrible record on human rights.

“The politics are very unappealing domestically. … In an ideal world, the Liberals would have pocketed the $15-billion and nobody would have talked about Saudi Arabia," Prof. Juneau said.

A Canadian Crown corporation is the prime contractor for the LAV deal, and the machines are being manufactured by General Dynamics Land Systems in London, Ont.

General Dynamics on Tuesday declined to discuss how far along the contract is. “General Dynamics Land Systems-Canada is unable to disclose and discuss information due to contractual and confidentiality reasons. What I can tell you is that we continue to perform on this contract,” spokesman Doug Wilson-Hodge said in an e-mailed statement.

International calls for an independent investigation into Mr. Khashoggi’s death intensified on Tuesday when the Group of Seven wealthy industrialized countries issued a joint statement condemning the incident.

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“We reiterate our expectation for a thorough, credible, transparent and prompt investigation by Saudi Arabia, in full collaboration with the Turkish authorities, and a full and rigorous accounting of the circumstances surrounding Mr. Khashoggi’s death," the G7 statement said. "Those responsible for the killing must be held to account. Saudi Arabia must put in place measures to ensure something like this can never happen again.”

Mr. Khashoggi, who had been living in self-imposed exile in a suburb of Washington, vanished on Oct. 2 after entering the consulate to obtain papers so he could marry his Turkish fiancée.

Saudi Arabia initially claimed Mr. Khashoggi left the consulate a short time after arriving. But Turkish pro-government newspapers said that he was actually killed and dismembered with a bone saw by a 15-man assassination squad dispatched from Riyadh.

Last Friday, Saudi Arabia acknowledged that Mr. Khashoggi was killed in the consulate, but said his death was the result of a fistfight. It said that 18 Saudi nationals had been detained and that two top security officials were fired.

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