Five years after the infamous diplomatic freeze between Canada and Saudi Arabia, trade relations have quietly resumed, but experts warn the economic opportunity cost has been enormous. As I arrived in Riyadh last week, the transformation was immediately apparent – gleaming skyscrapers and construction cranes dot the horizon, physical manifestations of the Kingdom’s ambitious Vision 2030 economic diversification plan.
“We’re essentially rebuilding from scratch what was once a robust trade relationship,” explains Fatima al-Rashid, senior economist at the Gulf Research Center. “Canadian companies effectively surrendered market share to European, American and Asian competitors during the diplomatic crisis.”
The 2018 diplomatic rupture began when Canada’s foreign ministry posted tweets criticizing Saudi Arabia’s human rights record and detention of activists. The Kingdom’s response was swift and severe – expelling Canada’s ambassador, freezing new trade deals, and ordering thousands of Saudi students to leave Canadian universities.
Though diplomatic relations were officially restored in 2022, the economic fallout persists. Canadian exports to Saudi Arabia plummeted from $1.45 billion in 2017 to just $716 million by 2020, according to Statistics Canada. Meanwhile, competitors like France and the United Kingdom significantly increased their Saudi market presence.
Walking through Riyadh’s King Abdullah Financial District, I met with Ahmed Khalid, CEO of a Saudi investment firm. “There was genuine enthusiasm for Canadian partnerships in healthcare, education, and clean technology before the dispute,” he told me. “Those sectors aligned perfectly with our diversification goals. Now we have Swiss medical technologies, German engineering solutions, and British educational partnerships filling those spaces.”
The Canadian Chamber of Commerce estimates the opportunity cost at approximately $8-10 billion in potential exports and investments over the five-year period. Healthcare technology, renewable energy infrastructure, and educational services – all Canadian strengths – were particularly affected.
“What’s often overlooked is how deeply the Saudi-Canada rift affected specific Canadian communities,” notes Ibrahim Hassan, director of Middle East Studies at the University of Ottawa. “Universities in smaller Canadian cities that had built entire programs around Saudi students saw immediate financial impacts. Halifax alone lost an estimated $30 million annually from the sudden withdrawal of Saudi medical students.”
Despite the gradual thaw, persistent challenges remain. Canadian businesses report hesitancy from Saudi counterparts, concerned about potential future diplomatic volatility. Meanwhile, European competitors have secured long-term contracts in critical sectors like infrastructure development and healthcare modernization.
Perhaps most significantly, Saudi Arabia’s sovereign wealth fund – the Public Investment Fund (PIF) – which manages over $700 billion in assets, has directed minimal investment toward Canadian opportunities since relations resumed. Instead, the PIF has made significant investments in American technology firms, European green energy projects, and Asian manufacturing.
“This isn’t just about missed commercial contracts,” explains Noura Al-Malik, a Saudi business consultant who frequently works with Western companies. “The relationship breakdown happened precisely when Saudi Arabia began its most ambitious economic transformation in its history. The timing couldn’t have been worse for Canadian interests.”
One bright spot has emerged in Saskatchewan, where agricultural exports to the Kingdom have rebounded to pre-dispute levels. “Food security transcends politics,” notes Michael Thompson of the Canada-Saudi Business Council. “Saudi Arabia imports nearly 80% of its food, and Canadian agricultural products maintain their reputation for quality.”
The experience offers broader lessons about the complex interplay between diplomatic principles and economic pragmatism. Canada maintained its human rights stance but paid a substantial economic price. Meanwhile, countries that moderated their public criticism while engaging in quieter diplomacy preserved economic relationships while still advocating for human rights through less visible channels.
During my visit to the Saudi Ministry of Investment, officials emphasized their focus on “reliability” in partnership selections. “We’re looking for long-term partners who understand our development priorities and can commit to being present through inevitable diplomatic fluctuations,” said one senior official, speaking on condition of anonymity.
For Canadians seeking to reenter the market, cultural intelligence and relationship-building are now more essential than ever. “The relationship reset requires significant investment in trust-building,” advises Jamal Khashoggi, a Montreal-based consultant specializing in Gulf markets (no relation to the late journalist). “Canadian businesses need to demonstrate commitment beyond transactional relationships.”
As Saudi Arabia continues its ambitious economic transformation, the question remains whether Canadian businesses can recover lost ground. The experience provides a sobering case study in how diplomatic tensions can create lasting economic consequences, even after official relations normalize.
From the ground in Riyadh, the message is clear: the door has reopened, but regaining Saudi trust and market share will require sustained commitment, cultural sensitivity, and recognition that other global competitors have used Canada’s absence to establish deep roots in the Kingdom’s evolving economy.
