Canada's Defence Spending Hike: A Shift Away from the US and Towards Europe

Strategic Insights -

Canadian Prime Minister Mark Carney is in Europe to sign pacts aimed at boosting defence spending, but the escalating war in the Middle East has shifted the ground beneath these summits. Despite backing the US action against Iran, Canada is distancing itself from the US and pivoting towards Europe, with a focus on reducing its dependence on US military equipment and increasing defence ties with the European Union. As Canada increases its military spending, it will join other NATO members in committing to raise their defence spending target to 5% of annual economic output.

Key Takeaways:

  • Canada is committing to raise its core military spending to 3.5% of GDP, with an additional 1.5% of GDP allocated to defence- and security-related infrastructure.
  • This commitment will cost Canada at least $50 billion in additional military spending every year.
  • The European Union has unveiled an 800-billion plan to revitalize European defences, and Canada will join buyers' clubs with EU member states to procure military equipment more efficiently.
  • Canadian companies will be eligible to bid on EU military projects after signing a separate deal with the European Union.
  • The NATO charter's Article 5 collective-defence clause obliges members to consider an attack against any to be an attack against all, but US President Donald Trump has said he won't defend allies that are not paying enough for their defence.
  • NATO Secretary-General Mark Rutte has justified the new 5-per-cent target citing the threat of Russia and China, and their partnerships with Iran.
  • Canadian officials are confident they can meet the 3.5% of GDP benchmark, with opportunities for deeper defence industrial co-operation between Canada and the EU.
  • A bigger NATO military spending target will place steep new demands on the federal treasury, at a time when Canada's economy is hurting from trade wars with the US and China and a significant federal budget deficit.

Statistics:

  • 5 per cent: the new NATO military spending target
  • 3.5 per cent: the target for core military spending in each country
  • 1.5 per cent: the target for additional defence- and security-related infrastructure spending
  • $50 billion: the estimated annual cost of additional military spending in Canada
  • 800 billion: the EU's plan to revitalize European defences
  • 445 million: the population of the EU
  • 43 billion: the Canadian federal budget deficit last year
  • 10-15 years: the timeline for reaching the 5-per-cent target, although allies have yet to agree on a specific deadline.

Sources:

  • "PM Carney to pledge military spending hike in Brussels, in bid to distance Canada from the US" by Steven Chase, Staff, Brussels
  • Reuters report
  • NATO Secretary-General Mark Rutte, writing in Foreign Affairs magazine
  • David Perry, president of the Canadian Global Affairs Institute
  • Retired general Wayne Eyre, former chief of the defence staff