Saudi Arabia holds little power over the larger economies of Canada and the United States, says one University of British Columbia professor, as countries worldwide condemn the Arab nation following the death of Saudi journalist Jamal Khashoggi, which the kingdom is accused of orchestrating.
“In both cases, the economies of Canada and the U.S. are far, far larger, more complex and intricate than that of Saudi Arabia,” said Hani Faris, a political science professor at UBC who specializes in Middle East politics.
“Saudis only have crude (oil) to give you or cash to buy,” he said “(Both Canada and the U.S.) can live without it without any major issue.”
Faris pointed out that Saudi Arabia’s major export is crude oil, which is not an export Canada or the U.S. rely on too drastically.
“Since the development of fracking, the U.S. now is producing more oil than Saudi Arabia,” Faris said. “If you had asked me seven or eight years ago, I would have to say Americans would be in deep trouble because they relied on Saudis a lot more, but fracking has changed the whole scene.”
In terms of Canada, Faris said the country exports its oil from the Prairies and the West Coast and imports from refineries on the East Coast. Canada has the ability to readjust that movement of crude oil using its pipelines across the country.
Faris also highlighted that Canada has many other countries to turn to if it’s in need of oil, such as Mexico, Venezuela, Iran or Kuwait.
In actuality, Faris believes Saudi Arabia may be the country in a bind because it owns refineries in the U.S. and has to supply them with crude oil. If the U.S. denies the Saudis the ability to import their crude oil then “they’re in trouble.”
“Saudi Arabia has to be very careful,” he said.
Saudi Arabia has been in the hot seat ever since the death of Khashoggi, who was last seen entering the Saudi consulate in Istanbul, Turkey, on Oct. 2.
Saudi Arabia has said that Khashoggi died in the consulate as a result of a “fist fight,” but countries such as Canada, the U.S. and Germany are skeptical of this explanation, and Turkey is conducting its own investigation into the death.
U.S. President Donald Trump has said there will be “severe” consequences if Saudi Arabia is found to be behind the attack, and U.S. senators have suggested placing sanctions on the country.
The incident comes as the Saudis are attempting to diversify their economy and move away from oil. The country is currently holding an international business summit that has been called “Davos in the desert.” Already, large investors and businesses have cancelled their attendance in protest of Khashoggi’s death.
Faris admitted that the Saudis could do some harm to the U.S. through their investments in the American financial market, which amount to several hundred billion dollars, the professor said. Faris believes this could cause some disturbance if Saudi Arabia rearranged its investments.
However, Faris said there isn’t really anywhere Saudi Arabia could take its investments outside of the U.S.
“They aren’t going to send them to the Far East or even Europe,” he said.
Additionally, the U.S. is “known to take measures to stop any such movement in situations like these.”
“The Americans can concoct any reason to prevent them from withdrawing,” he explained.
Saudi Arabia could, however, create a disturbance in the world oil market in terms of pricing if it was to reduce its production by two or three million barrels.
“It could cause a crisis,” Faris said, pointing to the oil crisis of 1973, when Saudi Arabia and other Arab countries stopped sending oil to certain countries, including Canada.
Overall, however, Faris believes the “Saudis want to sell,” adding: “It is much more important than a simple crisis over a human rights issue.”
“None of the cards the Saudis hold could cause irreparable damage to the Canadian economy or society, and that is critical,” he said.