General Dynamics gets $10 billion Saudi arms order

By on Monday, February 17th, 2014

The Canadian subsidiary of US arms maker General Dynamics has won a $10 billion order for armored vehicles for Saudi Arabia, Canada’s Trade Minister Ed Fast announced Friday.

The deal comes as Saudi Arabia is accumulating weapons at a rapid pace and amid growing tensions in the Middle East, and drew criticism from the Canadian opposition.

For a US company, albeit its Canadian arm, to sign such a deal could be a sign that close defense cooperation continues despite recent tensions between Washington and Riyadh.

US President Barack Obama is due to fly to Saudi Arabia next month to reassure America’s ally, which was angered by his outreach to Iran and perceived lack of leadership in Syria.

The vehicles will be produced by General Dynamics Land Systems-Canada (GDLS) in London, Ontario, and the deal could be worth up to $13 billion if all options are exercised.

The agreement also includes associated equipment, training and support services, the firm said.

Canada’s Fast said the 14-year “landmark contract” will create and sustain more than 3,000 jobs in Canada, and boost more than 500 companies that supply parts and materials to General Dynamics.

“This is an Olympic win for Canada and for Canadian manufacturers,” rejoiced Jayson Myers, president of the Canadian Manufacturers and Exporters industry association.

Fast said the Canadian subsidiary’s bid beat out competitors in France, Germany and other European countries.

But the Canadian opposition questioned the virtue of selling arms to a country with Saudi Arabia’s human rights record, warning they could be used to oppress its own people.

“Is this just open-for-business for whomever wants to buy arms from us?” New Democratic Party MP Paul Dewar was quoted as saying by the daily Globe and Mail.

“I am concerned what these arms could be used for.”

In 2011, concerns were raised after Saudi Arabia sent troops in armored vehicles to help its ally Bahrain put down Shiite protests.

Similar protests erupted again Friday on the anniversary of the uprising.

Canada’s advanced manufacturing sector supports 1.7 million Canadians and posted combined revenues in 2012 of Can$164.6 billion, according to the most recent government figures.

Canadian trade with Saudi Arabia is relatively modest at Can$900 million last year, but Fast has sought to change that by embarking on two trade missions to Riyadh in the past two years.

- Bahrain protests -

Canada’s arms manufacturing sector is also considered small but Ottawa has vowed to beef up arms exports as part of its overall economic strategy.

Saudi Arabia meanwhile has emerged as one of the biggest buyers of Western military equipment, alongside its neighbor the United Arab Emirates over the past year.

The kingdom was already ranked as the world’s tenth largest weapons importer two years ago and is quickly moving into the top five, according to the Stockholm International Peace Research Institute, which tracks arms sales.

Its recent military procurements include American and British fighter jets, as well as various munitions and missiles produced by US firms Boeing and Raytheon.

Saudi Arabia has been annoyed at Washington over what it sees as the United States abandoning its leadership role in the Middle East.

Obama has been reluctant to arm the rebels fighting Saudi Arabia’s enemy Bashar al-Assad of Syria, and his allies see him as naive for for seeking a negotiated end to Iran’s nuclear program.

The United States currently dominates worlds arms sales, which are estimated at more than $43 billion annually, followed by Russia, Germany, France and China.

India, China, Pakistan, South Korea and Singapore are the top buyers, accounting for nearly one-third of all arms purchases.

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