Canada’s new UAE trade and investment deal is bad news

It appears that Canada federal government is entering a new era in its search to decouple from the United States. Following Prime Minister Mark Carney’s much-acclaimed speech at the World Economic Forum in Davos this January, it appears the “friend-shoring” strategy—the promise to align trade with democratic values—has been effectively dismantled. In its place is an opportunistic embrace of raw realpolitik. We have swapped “inclusive trade” for Canada First, and democratic friends for rich ones. 

A recently concluded investment treaty and planned free trade deal with the United Arab Emirates (UAE) offers a good example of the new approach.

The centerpiece of the Canada-UAE bargain is a $70 billion investment pledge from sovereign wealth funds like Mubadala into Canadian “nation-building” projects. These include liquefied natural gas (LNG) projects—through XRG, the newly created foreign investment arm of Abu Dhabi’s state owned energy company, ADNOC—and investment in Canada’s critical minerals sector.

But while the “middle power” branding appears like a masterclass in pragmatism, it masks a more subservient reality. Canada is acting less as a middle power than a high-end middleman: a stable, democratic conduit used to funnel Emirati capital into energy assets that would enrich American institutional investors. 

Pursuing new trade at all costs is far from the sovereignty-reinforcing development Canada needs. Instead, it reveals a level of desperation, a strategy of geopolitical arbitrage intended to appease a hostile U.S. administration.

De-risking Wall Street

The federal government has framed UAE investment as a boost for domestic growth, hoping it will create high-paying careers and long-term prosperity. However, the data reveals that Canada may act merely as pass-through for wealth gained through worker exploitation, climate degradation and from one regime actively involved in human rights abuses to the next.

As of early 2026, U.S. institutional investors maintain a significant stake in Canada’s energy sector. According to the October 2025 report, Exporting Profits, by Canadians for Tax Fairness and the Alberta Federation of Labour, roughly 73 per cent of the equity in Canada’s “Big Four” producers is held by foreign entities, predominantly American.

The report highlights that between 2021 and 2023, 76 per cent of the net value added in the oil and gas industry went to owners as profits, while only 24 per cent went to workers. This gap is widening as firms deploy artificial intelligence (AI) and automated machinery to “de-risk” their operations from human labour. Industry projections suggest automation could threaten over 30 per cent of direct oil and gas jobs as early as 2040, even as production volumes remain high.

When XRG, ADIA or Mubadala provide the capital for infrastructure, they are performing a specific service for Wall Street at the behest of a U.S. administration eager to bring fossil fuel returns home. The structure of the deal means UAE capital allows Canadian firms to build LNG pipelines without diluting the equity of their primary U.S. owners, who will then repatriate their profits across the border. 

Because the U.S. investor-owned “Big Four” oil and gas companies in Alberta prioritize share buybacks and dividend payouts, significant profit generated by these UAE-funded projects could flow directly out of Canada to U.S. brokerage accounts, while providing little benefit to Canadian public revenues and workers. Even with foreign investment from the UAE, pipeline construction is extremely costly—millions of dollars per kilometre—and would likely require massive public subsidies to become viable. 

Far from being a visionary or crafty move, Canada’s emirates strategy (Canada launched investment treaty talks with Saudi Arabia and expedited similar negotiations with Qatar in January) is in line with a pre-existing private sector thirst for Gulf capital. Throughout 2024 and 2025, global finance giants like BlackRock led the way, securing commercial licenses in Abu Dhabi to tap into petrodollars. 

In August, Mubadala completed its acquisition of Toronto-based global wealth and asset management firm CI Financial. The Canada-UAE investment treaty and future trade deal effectively provide a diplomatic safe harbour and legal guarantees for financial flows that would otherwise be politically radioactive due to the UAE’s human rights record.

Ethical deficits: Sudan and the UAE 84

To facilitate this finance, Canada is willfully ignoring the UAE’s role in global instability. 

There are credible reports from the UN Panel of Experts that link the UAE to the funding of the Rapid Support Forces (RSF) in Sudan, a group accused of genocidal acts in Darfur as the civil war enters its third year in 2026. Earlier this year, Canadian human and economic rights groups sent a letter to Prime Minister Carney urging “the Canadian government to insist upon the UAE’s complete withdrawal of any material or diplomatic support to the RSF” as a precondition of any future trade talks.

The UAE is also a known abuser of migrant workers and domestic civil society. In 2025, it upheld life sentences for the “UAE 84,” dozens of peaceful activists in a mass trial described as a “death knell” for civil society. The UAE has long used the Kafala (sponsorship) system to manage migrant labour for large scale infrastructure projects which has been described as modern slavery.

There are also serious questions about financial links to money laundering in both the UAE and Canada–questions an investment treaty is more likely to complicate than help both countries address. 

As the UAE faces a critical June 2026 Financial Action Task Force (FATF) evaluation, Canada is inviting a high-risk hub for “dark money” into its financial system. Canada already struggles with “snow-washing” the use of shell companies to clean illicit funds, and deepening financial ties to the UAE risks aggravating this problem.

Moving toward public ownership, green transformation and the care economy

The argument that Canada “needs” foreign capital is a mask for a policy choice. Canada’s own pension funds manage around $2.5 trillion. Investing in the Care Economy (healthcare, education, elder-care and childcare) and green transformation offers a far more resilient outlook.

The federal government’s fixation on oil, gas, and defence (collectively accounting for 8–12 per cent of GDP) represents a capture of public policy by sectors of diminishing returns. While Mark Carney frames these as the bedrock of national security, they are increasingly defined by stranded asset risk and volatile global commodity cycles. These captured industries primarily benefit foreign shareholders rather than the Canadian public, yet they wield near-unlimited influence over our trade and military agendas.

In contrast, the Care Economy, encompassing healthcare, education, and social services, already contributes 12.6 per cent of GDP and supports over 21 per cent of all jobs. This is Canada’s real, non-outsourceable infrastructure, providing high long-term resilience because it invests directly in human potential. Unlike the speculative flows of Gulf capital or the extraction of fossil fuels, the Care Economy is counter-cyclical and serves as a true foundation for a stable, equitable society.

By pivoting toward a mission-driven green Industrial Policy, Canada could secure a new sovereign economic pillar, Canada’s clean energy sector is projected to reach $107 billion by 2030. Medium green-intensity industries already demonstrate a 50–60 per cent productivity advantage over traditional sectors, offering a future-proof alternative to neoliberal extraction. Implementing this at scale would break the grip of the oil and tech masters, replacing external dependency (and risk) with a domestic, high-tech manufacturing base that prioritizes collective ownership and ecological survival.

Selling out, the bottom line

Canada is not “finding new friends”; it is acting as a buffer for U.S. trade aggression and a conduit for autocracy-linked capital. We are trading our workers, our public services, and our climate future for a seat at a table where the rules are written by Wall Street and financed by petro-autocracies.

Canada’s pivot toward the UAE is also partly defensive, ahead of this year’s six-year review of the Canada-U.S.-Mexico Agreement. U.S. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick have been blunt. They expect Canada to abandon “virtue signaling” and align its resources with U.S. energy policy and efforts to force increased NATO spending.

By courting UAE capital for fossil fuels and pledging to reach five per cent of GDP in military spending by 2035, the Carney government is attempting to buy leniency at the negotiating table. We are adopting the substance of the U.S. “strong-arm” agenda—more carbon, more military spending, and less oversight, while wrapping it in “principled pragmatism” to hold on to domestic power.

If policy-makers are serious about Canada’s democratic values and protecting sovereignty, they must halt free trade negotiations pending a structural review of how this deal facilitates capital flows to the U.S. The separate investment treaties with the UAE, Saudi Arabia and Qatar should be abandoned. 

We must bring Canadian labour to the table and demand a comprehensive Human Rights Impact Assessment regarding the UAE’s role in the Sudan conflict, as well as the UAE’s treatment of migrant workers. It is time to stop relying on those who aspire only to be middlemen and start being a country that owns and defines its own future.