The Trudeau government is distancing itself from Ottawa's $15-billion deal to supply combat vehicles to Saudi Arabia, with Foreign Affairs Minister Stéphane Dion calling the Mideast country's human rights record "terrible" and pointing out that the Liberals did not endorse the transaction.

The minister portrayed the Liberal government as powerless to end the contract, revealing that Canadian taxpayers would likely be forced to pay a big monetary penalty if Ottawa cancelled it.

"The government doesn't approve this contract," Mr. Dion told the Senate on Thursday in a rare appearance by a cabinet minister to answer questions from senators. "The government simply refuses to terminate a contract that has already been approved by the former government. ... This is an important difference."

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Mr. Dion noted he has the authority to suspend exports in this transaction, but offered no indication he might do so. Canada's export control rules call for Ottawa to curb weapons shipments to countries with a "persistent record of serious violations of the human rights of their citizens." Arms exports are forbidden if there is a chance the customer could turn the arms against civilians.

The Trudeau government finds itself in an increasingly awkward position on this deal, one that Ottawa's federal defence export corporation trumpets as the "largest advanced manufacturing contract in Canadian history."

Polls suggest the contract with a country that Freedom House regularly ranks among the "worst of the worst" on human rights has only minority support among Canadians. However, the Liberals are unwilling to take steps to cancel it.

Cesar Jaramillo, executive director of Project Ploughshares, a Waterloo, Ont.-based group that monitors arms shipments, said the Liberals are underplaying Ottawa's power over the export of weapons to Saudi Arabia.

"This isn't a question of the government allowing the contract to stand, as if it were a purely discretionary matter, but of the government applying its own export controls to determine whether the requisite export permits are warranted."

Mr. Dion was grilled on Thursday in the Senate over the Saudi deal by Senator Serge Joyal, who was appointed to the chamber by former Liberal prime minister Jean Chrétien.

Senator Joyal asked Mr. Dion how he could conclude this sale of armoured vehicles does not violate Canada's export control rules. He pointed out Saudi Arabia has an "absymal record" on human rights, metes out lashes to people like writer Raif Badawi, convicted of blasphemy, has a high rate of executions, and treats women as inferior to men.

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The minister said he agreed with the senator's summary of Saudi Arabia, but said Canada could face big fines if the government intervened.

"We are firmly opposed to the terrible human-rights record in Saudi Arabia that you have just described very aptly, and we say it forcefully," he said.

Still, Mr. Dion warned, "if we had to terminate a contract that was approved, there would probably be quite hefty penalties payable by Canadian taxpayers."

The minister said leaving it to another country to supply the Saudis would not improve human rights there.

"What would happen very surely is that the equipment in question would be sold to Saudi Arabia by a country that has fewer scruples, and this would not change one iota the situation of human rights in Saudi Arabia," Mr. Dion said.

The minister did not mention the fact the deal supports 3,000 jobs in Canada over 14 years. Many of the jobs are in London, Ont., where General Dynamics Land Systems, a subsidiary of a U.S. defence contractor, will assemble the combat vehicles.

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Mr. Dion on Thursday insisted the transaction is "between a private company and Saudi Arabia." In fact, the federal government is the prime contractor and is ultimately responsible for the delivery of the armoured vehicles to Riyadh.

The department of Global Affairs must issue the export permits after it has determined there are no risks to human rights in Saudi Arabia, which has dispatched armoured vehicles to help crush uprisings in neighbouring Bahrain and quell dissent in its restless Eastern Province. The Saudis also face fresh accusations of indiscriminately killing civilians in Yemen by air strikes.

With a report from Daniel Leblanc