Saudi Deputy Crown Prince, Defence Minister and Chairman of the Council for Economic and Development Affairs Mohammed bin Salman.

Saudi Arabia and Canada are currently locked in a diplomatic spat over human rights, with both countries refusing to back down despite a breakdown in future trade deals, suspended passenger flights and a flurry of other sanctions.

The war of words between the two countries stems back to a series of tweets from Canada's Foreign Ministry last week, when Ottawa expressed concern over arrested civil society activists in Saudi Arabia.

Riyadh called the move a violation of its sovereignty and sought to impose a string of diplomatic sanctions against the North American country.

What prompted the dispute?

In a tweet posted Friday, Canadian officials urged Riyadh to "immediately release" women's rights activists Samar Badawi and Nassima al-Sadah. Both campaigners were arrested in Saudi Arabia in late July, according to Human Rights Watch.

Saudi Arabia's Foreign Ministry took exception to Canada's online plea, calling it a "grave and unacceptable violation of the kingdom's laws and procedures."

Shortly afterwards, the Middle Eastern country announced punitive measures against Ottawa, including the expulsion of the Canadian ambassador.

Some analysts say Saudi Arabia's move to sever diplomatic ties with Canada could be seen as both a power play for the kingdom's relatively young leader and a sign it is no longer willing to quietly ignore Western demands for political liberalization.

Saudi Arabia's Crown Prince Mohammed bin Salman recently went on a global tour to promote economic reforms in the country and even championed the kingdom as the "next Europe," although global concerns about domestic human rights practices persist.

What happened next?

Saudi Arabia has placed a flurry of diplomatic sanctions against Canada. On Monday, the country recalled its ambassador to Canada for consultations and gave the Canadian ambassador 24 hours to leave the kingdom.

The government also froze all new trade with Ottawa, ordered around 16,000 students in the North American country to either return home or complete their studies in another part of the world and canceled all direct flights to Toronto via its state airline.

More recently, Saudi Arabia stopped all medical treatment programs in Canada and is coordinating for the transfer of all Saudi patients currently receiving care in Canadian hospitals to be moved outside of the country.

And on Wednesday, the Saudi central bank and state pension funds ordered overseas asset managers to offload their Canadian equities, bonds and cash holdings "no matter the cost," the Financial Times reported, citing two unnamed sources.

Saudi Foreign Minister Adel al-Jubeir threatened additional measures on Wednesday, telling reporters that mediation is not an option because the fault lies with Canada alone, Reuters reported.

Chris Wattie | Reuters
Canada's Prime Minister Justin Trudeau listens to Foreign Minister Chrystia Freeland during news conference in Ottawa, Ontario, Canada, May 31, 2018.

Despite the backlash, Canada doubled down over its push for Riyadh to immediately release arrested campaigners and activists.

In her first public response to the dispute on Monday, Canada's Foreign Minister Chrystia Freeland said: "Canada will always stand up for human rights in Canada and around the world — and women's rights are human rights.

What is at stake?

Trade between Canada and Saudi Arabia came in at slightly over $4 billion last year, with a significant portion stemming from a controversial deal to sell combat vehicles with machine guns and cannons to the Saudis, The Globe and Mail reported.

The arms deal, which received a critical stamp of approval from Prime Minister Justin Trudeau's government in 2016, could now be under treat amid Saudi Arabia's imposed trade freeze.

In terms of trade volume, Saudi Arabia is Canada's 17th largest trade partner — with oil, perhaps unsurprisingly, accounting for most of the Islamic kingdom's exports to Ottawa.

What has the response been around the world?

The United Arab Emirates, Bahrain and the Palestinian Authority have all stood by Saudi Arabia amid the country's spat with Canada, according to the kingdom's state media.

Yet, the U.S. — traditionally one of Canada's most important friends — has stayed on the sidelines of the dispute thus far.

State Department spokesperson Heather Nauert told a briefing Wednesday: "Both sides need to diplomatically resolve this together. We can't do it for them; they need to resolve it together."

Elsewhere, leading women's rights campaigner Manal-al-Sharif thanked Canada for "speaking up" on Monday, before questioning whether other global leaders would be prepared to follow suit.

Amnesty International also called on the broader international community to follow Canada's lead and speak out against human rights abuses.

The campaign group specifically urged Western powers with influence over Saudi Arabia — such as the U.S., U.K. and France — to stand up for civil society activists.

"The world cannot continue to look the other way as this relentless persecution of human rights defenders in Saudi Arabia continues. It is now time for other governments to join Canada in increasing the pressure on Saudi Arabia to release all prisoners of conscience immediately and unconditionally, and end the crackdown on freedom of expression in the country," Samah Hadid, Amnesty International's Middle East director of campaigns, said Monday.

source: CNBC