Canada’s EU Defense Pact Faces Headwinds

Experts warn of potential pitfalls despite aims to diversify from U.S. reliance.

A new security and defence partnership between Canada and the European Union, championed by Prime Minister Mark Carney, may encounter significant hurdles, potentially slowing its progress and limiting benefits for Canada, according to former government officials.

U.S. Dependence and New Alliances

The agreement seeks to decrease Canada’s dependence on U.S. military contractors while boosting the Canadian defense industry. It also positions Canada to participate in the EU’s re-armament efforts amid concerns about Russian expansionism under President Vladimir Putin.

Potential Risks and Challenges

A forthcoming risk analysis report suggests caution, highlighting potential political and fiscal challenges. One concern is potential retaliation from Washington if Canada reduces its reliance on U.S. defense suppliers, in addition to difficulties in increasing military spending.

The report’s authors include several prominent figures, such as Vincent Rigby, a former national security and intelligence advisor; retired vice-admiral Mark Norman; former deputy international trade minister Tim Sargent; Perrin Beatty, a former defence minister; and Fen Hampson, a professor at Carleton University.

Strategic Shift

The EU defence pact signifies a major shift in Canada’s national security and economic strategy. For decades, Canada has heavily relied on the United States for its defense needs, with approximately 75% of its military equipment being purchased from the U.S.

Motivated by former U.S. President Donald Trump‘s protectionist policies and rhetoric, Mark Carney sought more dependable economic and security partnerships within the European Union, where defence spending is projected to reach $1.25-trillion by 2035.

U.S. Pushback

The report warns that the United States might penalize Canada should it shift defense investments from American to European suppliers. A substantial decrease in U.S. military goods purchases “could trigger tariffs or sanctions.”

“Lockheed Martin and other U.S. contractors are also likely to lobby aggressively against Canadian diversification,” the report states.

Provincial Hurdles and Critical Minerals

The report identifies Canadian provincial governments as a potential vulnerability in providing essential minerals for EU supply chains. British Columbia’s mining sector, for instance, has experienced project delays due to regulatory processes and Indigenous consultations. The Fraser Institute reports that it takes an average of 10.5 years to obtain permits for mines in Canada (Fraser Institute, 2022).

“Canada has substantial export potential for critical minerals like nickel and lithium, but failure to streamline permitting could jeopardize its ability to supply international markets, including in the EU.”

Spending Targets and Internal Divisions

Many EU member states face challenges in meeting NATO’s new defense spending target of 5% of gross domestic product, the report cautions. Spain has already opted out of the 5-per-cent target.

Canada also faces challenges, given its history of procurement delays and budget overruns, and the need to significantly increase military spending.

Achieving the core military spending target of 3.5% of GDP would necessitate adding roughly $48-billion to the defense budget permanently. Additionally, Canada must allocate 1.5% of GDP to security- and defence-related infrastructure.

“Political resistance, bureaucratic inertia, and public ambivalence about defence spending” in Canada may hinder efforts to substantially increase military spending, the report warns.

Mark Norman, a report author and former vice-chief of the defence staff, questions whether Canada “has mechanisms in place to responsibly spend this kind of money and actually deliver the kind of investments that the Prime Minister has said that he wants to invest in.”

Perrin Beatty emphasizes that revising Canada’s relationship with the United States and significantly increasing military spending will demand discipline, political determination, and a sustained national consensus supporting a larger defense industrial base—priorities that must extend beyond a single government term.