Frankly, the LAV deal is a shitty deal for anyone in Canada but the Tories, and I honestly don't believe the Trudeau, Dion, and the rest like it any more than of us. I think they probably know they've got no good defence for their decision. They've got advisors looking at the tea leaves and wondering what the next of war in the region will look like. We've got no idea where and how any weapons in the region will be used and by whom.
Dion, Trudeau, others, and their advisors would have done a cost-benefit analysis around this, I'm sure. It might have come up with the following:
First, if they'd cancelled, the Americans and Europeans would have made noises because it impacted their arms industries too given the distributed global supply chains involved (e.g. for LAV gun turrets).
Next, the Saudis (and General Dynamics Land Systems) would have sent a fleet of Suezmax tankers full of lawyers to compel us to fulfil the order or compensate them into the gazillions, probably both. I'm the contracts have pretty nasty penalties written in. We might have had a serious diplomatic spat too, and watched Canadian investments in the Kingdom run into serious trouble. There's $4 billion in trade between the countries and we weren't going to mess with that by axing the armour deal.
Despite having a majority, the Grits are also worried about public opinion. If we'd squashed the deal, a few (but not all!) of the same folks now vexed at them for signing it would have been yelling at them for not signing it. They'd cite protecting Canadian manufacturing jobs, screwing-over a key partner in the fight against ISIS (and therefore coddling up to the terrorists!), opening Canada up to lawsuits, and so on. The PR mess is bad now, but I wonder if it would be a hell of a lot worse if Canada was faced with penalty payments in the middle of a loud public protest about cancelling the deal.
Here's the thing: Canada makes a lot of weapons. We have a sizable, top-shelf arms industry. We mostly export to NATO allies and other friendly liberal democracies. But there are customers who aren't in that category and buy big ticket weapons from our allies too. The ugly fact is that selling big ticket items to employs a lot of people and brings in a lot of cash. The LAV platform is the major heavy weapon system made in Canada in large numbers and it sells very, very well around the world.
What should they have done? Revoke the export permit and faced the kind of backlash that would have material impact in terms of industry and labour relations, penalties and lawsuits? Let the deal go ahead, and face the rhetorical lashing from the public and the perhaps comparatively minor cost of facing off a court challenge?
My sense is that there was no good answer in front of them, and they defaulted to spin and mistruths. What would have been a better way for the Liberals to handle it? Perhaps being more direct about the pros and cons of the deal and the whole rationale for their decision, whatever decision it was. They can definitely revisit Canadian arms manufacturing and export law.
The arms trade is a dirty business for everyone involved. Best to stay the hell out of it.