Row over jailed activists won't affect oil shipments to Canada, Saudi minister says

A row over human rights in SaudiArabia will not have any impact on Saudi oil supplies to Canada,its energy minister said on Thursday, reassuring customers afterRiyadh froze new trade with Canada and ruled out mediationefforts.

Saudi Arabia, infuriated by Canada's demand last week thatjailed activists in the kingdom be released immediately, expelled the Canadian ambassador on Sunday, blocked imports ofCanadian grain, and ended state-backed educational and medicalprograms in Canada.

The dispute has threatened to undermine Riyadh's foreigninvestment drive, a campaign already unsettled by a series ofassertive political and diplomatic initiatives by the top oilexporter.

Saudi Arabia has a "firm and long-standing policy" thatpetroleum supplies are not influenced by politicalconsiderations, Khalid al-Falih said in a statement.

"The current diplomatic crisis between Saudi Arabia andCanada will not, in any way, impact Saudi Aramco's relations with its customers in Canada."

The Financial Times reported on Wednesday that the Saudicentral bank and state pension funds had instructed their overseas asset managers to sell their Canadian equities, bondsand cash holdings.

The Saudi government's Center for InternationalCommunication (CIC) posted a tweet late on Wednesday saying "neither the government nor the Central Bank or the statepension fund has issued any instructions regarding the sale ofCanadian assets."

But it promptly deleted the post without providing anexplanation. CIC did not respond to a request for comment.

Foreign Affairs Minister Adel al-Jubeir on Wednesday ruled out anymediation efforts and called on Ottawa to "fix its big mistake,"saying the kingdom was considering implementing more measuresagainst Canada for interfering in Saudi Arabia's domesticaffairs, without elaborating.

Prime Minister Justin Trudeau later appeared toextend an olive branch, saying he would keep pressing SaudiArabia on civil liberties, but also thatthe Gulf Arab statehad made some progress on human rights.

"Diplomatic talks continue ... we don't want to have poorrelations with Saudi Arabia. It is a country that has great significance in the world, that is making progress in the areaof human rights," Trudeau said.

Saudi Arabia has in recent months detained several women'srights activists, some of whom had previously campaigned for theright to drive and an end to the kingdom's male guardianshipsystem, the latest to be swept up in a government crackdown onactivists, clerics and journalists.

'Impulsive policy-making'

Since rising to power in 2015, Crown Prince Mohammed binSalman has courted Western allies to support his reform plans tomodernize and open up the kingdom, offering billions of dollarsin arms sales and promising to fight radicalism in the kingdom.

The 32-year-old de facto ruler has launched a campaign ofsocial and economic change, but has not eased the absolute monarchy's total ban on political activism. He has taken a moreaggressive stance toward arch-rival Iran, began a three-year warin Yemen and led a boycott of fellow Gulf Arab state Qatar.

The latest dispute with Canada is a sign that the prince iswilling to risk riling international investors in order to remain in control of the process of change, RBC Capital Markets'Helima Croft wrote in a research note.

"Western governments expressing concerns about human rightsissues in the kingdom is nothing new and Saudi authorities havelong pushed back against what they characterize as inappropriateinterference in their internal affairs," she said.

But Prince Mohammed is more willing than predecessors tothrow caution to the wind, she said, and may be extra sensitiveto outside criticism in light of recent challenges implementinghis ambitious economic reform agenda.

The row with Canada strengthens an impression of impulsivepolicy-making.

"We have seen this before. They overreact andthen cannot find a way to back down without losing face," adiplomat in the Gulf region said.

In addition to the trade freeze, Riyadh has stopped sendingpatients to Canadian hospitals and suspendedscholarships for Saudi students atCanadian post-secondary schools, ordering them to attend schools elsewhere.

Bilateral trade between Canada and Saudi Arabia is worthmore than $3.9 billion a year. Canadian exports to Saudi Arabiawere about $1.46billion in 2017, or 0.2 per cent of the totalvalue of Canadian exports.

With files from CBC News