The Decibel - The future of Canada’s military and joining Europe’s defence fund

Episode Date: December 5, 2025

Canada is in the midst of reframing its approach to military spending. The reasons for this are twofold; a commitment to fulfilling NATO spending as part of GDP, and the push to diversify spending away from the U.S. To that end, Prime Minister Mark Carney has recently signed a deal joining the EU’s military procurement fund, granting Canada access to both selling and purchasing defence materiel.Steven Chase, The Globe’s senior parliamentary reporter, is on the show to discuss what this means for our burgeoning national defence industry, the political considerations involved, and where our national armed forces go from here.Questions? Comments? Ideas? E-mail us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

This week, Prime Minister Mark Carney announced that Canada is going to participate in a new initiative to buy and sell military equipment with Europe. The cost to join is about $16.2 million. It's the latest development in Canada's efforts to bulk up its military defense sector, and comes after the federal government's budget earmarked $84 billion over the next five years for defense spending. Stephen Chase is our guest today. He's the Globe's senior parliamentary reporter, and he's been looking into what more money would mean for the military and what we know about the vision the Carney government is building for Canada's armed forces.

I'm Cheryl Sutherland, and this is the decibel from the Globe and Mail. Steve, thanks for coming on the show. Glad to be here. So to start, let's get the details of this new military initiative that Carney announced this week. what exactly did Canada sign on to? Canada has signed on to a fund. It's called the Security Action for Europe program. And it's basically a 150 billion euro pool of cash that lends money to European countries

as they ramp up their military spending. Much of Europe is ramping up its military spending in anticipation that Russia will be a long-term threat and will actually threaten the sovereignty of other countries. So we're the first non-European country to join, and this means a couple of things. It doesn't mean we have access to the money that is being lent to European countries from this pool, but it means we can participate in a buyer's club to purchase military equipment and, of course, presumably get, you know, scale of economy savings by being part of a greater pool of buyers for military for gear. And also it means that Canadian companies will be eligible to bid,

on contracts that are let under procurement finance but this pool of money. So it's a potential new business market for Canadian defense contractors who want to expand their sales to Europe. Okay. So you describe this as Canada being part of this kind of buyers club and Canada is the first non-European country to be a part of it. Is this a big deal?

Help me understand that. It's potentially a big deal. It depends what we make of it. As you recall, this was first announced back in the early days of the Trump presidency when Mr. Trump was starting to ramp up the pressure on Canada, talking about making it the 51st state and talking about all the bad things he was going to do to Canada. So as part of the elbows up diversification plan that Mr. Carney had laid out, this was an element of that. And of course, what's new this week is we find it concluded

negotiations. So it depends how much we take advantage of this. Are we going to find other European countries who want to participate in purchasing weapons with us. And also, will we find contracts for our defense contractors in this procurement? So it's the beginning of the journey. It's going to take some work on our part to actually make it important. Can't Canadian military manufacturers sell to Europe right now? Or do we need to be part of this group to do that? Basically, yes, we can sell to Europe now, but this will give us preferential access to contracts that are let by procurement that is financed by this $150 billion pool. Okay. So you touch on this a bit already, but I'd like to kind of get more details here.

So how will it affect how we buy military equipment? It depends what we do. We have to step up here and find other countries in Europe who are looking for the same gear as us and then agree to do it jointly. So this is open to door. It's certainly not any kind of deliverable in and of itself. And there's a lot of pitfalls. First of all, analysts in Canada are saying that there's still politics involved. European defense contractors who are also bidding for the contracts under this program are going to still see us as rivals.

The suggestion is that we would have to award a big contract to European defense contractor as sort of a tit for tat here. So, for instance, we're thinking of buying the Swedish sob gripen planes as an alternative to the United States Lockheed Martin F-35s. the point these analysts are making is that, you know, we're going to have to show them some love before they show us some love. So it's still politics here. And furthermore, our commerce with the European Union is based on a free trade deal we signed like eight years ago. And 10 countries in Europe still haven't ratified that, including France and Italy. So that means equal treatment

of foreign firms, transparency, all these things. The rules aren't bound. France and Italy, for instance, aren't bound by these rules. So this is, you know, and I guess as I said at the beginning, this is an open door, and we now can step through it, but it's up to us how much we make of this. Right. And of course, if we buy the Swedish planes, that might upset the U.S. because we're supposed to be buying those fighter jets from them. Oh, yeah. Nothing is easy these days. Yeah. Yeah. And something else, Steve, you know, like we know there's going to be a lot of competition for military equipment, you know, because so many NATO countries are trying to spend more. And like you're pointing out here, like this deal that's not going to, um,

help Canada in terms of competition? We're not sure yet. We're not sure yet at all. One of the things Mr. Kearney has done, the Prime Minister, has done, is try to move closer to the European Union. We did not only signal that we wanted to join this initiative, but we've also talked about ways to deepen the European Canada free trade deal to open more doors and so on. So there is other things going on besides this that could also help.

For instance, the European Union and Canada are negotiating ways to deepen our free trade agreement to improve the mobility of people, improve the mobility or the access for investment and trade and so on. So this is part of the pivot away from the United States, but we've just started on that journey. I want to put this all into the wider context, Steve. How does this new commitment to be a part of this European initiative jive with Carney's strategy for beefing up Canada's military? Because we know that dispense spending is much higher now. So yeah, how does this drive with that strategy? Just to sort of set the table on that and answering that, Mr. Kearney brought military spending in Canada to a level that his predecessor said we couldn't reach. Mr. Kearney

pumped an extra $9 billion per year into defense spending and brought us up to a NATO standard that we were supposed to meet 10 years ago. But we have a much bigger commitment ahead of us. NATO countries in June said they would move their core defense spending up to a higher benchmark. We said we would move our core defense spending up to three and a half percent by 2035. Mr. Carney has started spending that money, but he's nowhere near that level of spending. And I guess when it comes to this initiative, Mr. Kearney has made a point since he got elected of saying that we need to diversify trade away from the United States and we need to become less reliant on the United States. So pooling our defense buying efforts with European allies is part of this attempt to move.

move away from the United States. And again, we have to actually pull a trigger on some acquisitions, but this is the first step in that direction. Okay. As you mentioned, this increase in spending on the military by the Carney government is a big change in policy from previous governments. What is the effect of years of underfunding for Canada's military spending been? The effect is that we have a military that wasn't able to train properly, that didn't have enough equipment, that had weapons platforms and equipment rusting. out and being used beyond its expected lifespan, and recruitment has been a long-term problem. The former defense minister, I think last year, said that recruitment and attrition, the trend

was in a death spiral. So the effect was low morale, people who went into the military acquired skills, but would leave early. And for instance, go become pilots in commercial airlines and so on because they didn't see a future here. So it was generally a sort of erosion of its ability to be a relied partner in NATO, in NORAD. Our readiness levels were tragic. The injection of money that was first announced in June and was enacted in the budget is a significant pay hike for the military. We're talking like a 20% pay increase in some cases. So the pay increase is a remarkable part of this. It's something they can do easily as opposed to, for instance, procurement. And so this is a real shot in the arm. It is a significant change in direction. But of course, having said that,

there are still a lot of unanswered questions and possible pitfalls. We'll be right back. So beyond pay increases, what do we actually know about how Carney wants the military to spend the $84 billion it has allocated over the course of the next five years? We have some rough descriptions of things. they have not been particularly transparent. For instance, the pay increase is about 25% of that. There's another, you know, I would say 20% to deal with aging infrastructure. If you think of the military in Canada and the Defense Department, it's like a small city in terms of its needs,

in terms of its population. It has infrastructure, some of it dating back to World War II and on bases across the country. We have military accommodation barracks. We have storage depots and so on. That stuff has been rusting out, has been aging out, and part of the money, let's say 25% is towards starting to repair that or continuing repairs on that. The budget also earmarks about $18 billion over five years for new equipment. That's new armored vehicles, long-range precision strike capabilities, and counter drone technology, that is equipment to jam or bring down enemy drones. And of course, domestic ammunition manufacturing, which has been a problem.

That's by no means, the complete list of things that Canada has to buy or needs to buy. And so, as I said, this is just a first injection and there's a lot more to come. Earlier, Steve, you mentioned that part of the reason why Carney joined this European initiative is that it will help Canadian defense contractors. So was there money in the budget for that sector? They put $6.5 billion into a defense industrial strategy, which is still, to be unveiled. This is going to try to improve access to capital for defense contractors and drive research and innovation and boost stockpiles of critical minerals. One of the other

sort of facets of the Kearney defense plan is to sell it to Canadians as an economic booster in the sense that he wants to build our military industrial base in Canada so that we have more jobs attached to the defense industry and more prosperity. So, that's another aspect of the of the current government's approach to defense is they want to turn it into more of a homegrown business. Obviously, we're not going to be able to build everything in Canada. We don't build fighter jets here. We don't build tanks. We don't build long range precision strike equipment. But there's a lot of other things in between that we could do. And they're hoping to make the lasting impact of this increased military spending to be

something permanent in the Canadian economy and again help us recover. from the increasingly protectionist U.S., which is damaging our industries and in some cases placing them in peril, such as the steel industry, because of the degree of the tariffs that Donald Trump was imposed on Canada. What have experts and people in the defense industries told you about what they think about these plans? Well, the defense community, the sort of commentary at in the defense community, which is professors, think tanks, former military leaders, they're all happy that money.

is arriving. The former chief of defense staff, Wayne Eyre, said he'd been banging his head at guns the wall for years to get this kind of money. So they're all happy. At the same time, however, there is a concern that we don't have a plan in place. And I know this sounds like a processing thing, but it's a serious concern because normally you put out a defense policy and then you implement the defense policy. The last defense policy was the Trudeau government several years ago.

That was for a level of defense spending that was far below. what we're at now. As I said before, the current government has boosted defense spending to what amounts to about 2% of gross domestic product. You know, we're talking about $62 billion a year. Well, I can imagine like, you know, spending that money is not easy, right? Like finding a plan to do that. It's complicated. It is. And in fact, the Defense Department has had trouble spending money. What happens is money goes unspent. It's called it lapses. That reflects the fact that the Defense Department has had trouble in procurement process in the process of selecting and purchasing new equipment, new gear and stuff. Many of the military experts say that without a

plan, the problem is, is that money could go in the wrong direction or it may go unspent again. And this should have begun with the defense strategy. Instead, it began with a NATO summit in which Donald Trump was pushing allies to take over the sort of collective defense burden. So we sort of put the cart in front of the horse by committing to spend what amounts to tens and tens of billion dollars more each year on an ongoing basis before we had a plan. Okay. And now we've got to sort of reverse engineer this plan. Okay. So, you know, experts are saying that the government doesn't have a plan here.

But has the government said anything about how they're going to make sure procurement doesn't get bogged down in the bureaucracy that has slowed down spending decisions in the past? Yeah. they've created a defense procurement agency, which is a standalone shop to sort of select and purchase gear. Now, this is an idea that other countries have used, Australia, for instance, and this procurement agency is going to have the mandate to buy defense equipment more efficiently. However, the problem with defense procurement in this country has been that it's slow and it's inefficient, and by the time, they go ahead to buy something, the cost has already risen. But a defense procurement agency alone is not going to solve this. We have bought equipment fast before without a defense procurement agency.

And we did that in the early knots in the early 2000s when we were at war in Afghanistan. What we had was political will. We had a prime minister and the cabinet putting pressure on public service to deliver quickly. And that political will can disappear. Steve, can you give me an example of when political will has disappeared? Like, for instance, Stephen Harper came in in 2006 with a commitment to spend money at home on the military. He was obviously quickly caught up in the Afghanistan war on our mission there. But after, I would say, around 2012, he sort of lost interest in the military and military spending.

And, of course, military spending dipped famously to around 1% of GDP in the later years of the Harper government. And of course, the most famous example was this ambitious plan by the Moruni government in 1987 for a huge injection of defense spending. Well, within two years, that was dust. The finance department had sort of kiboshed that. And, of course, the NATO summit in June, which committed to this huge increase in defense spending, also set 2029 as a year to revisit this commitment. And of course, I should point out that 2029 is the year that Mr. Trump is supposed to be gone from office. Yes, very interesting.

You know, is there a fear that perhaps the spending might evaporate or disappear as it did in the past? People are delighted with the pay increases. People are delighted with the commitments. But yes, there's a sort of institutional memory here. And, of course, it's going to have to be borne out over the years. A defense procurement agency isn't enough. You need sustained political will.

Just to end here, Steve, I want to talk about the bigger picture with the military. Canada's military was known for its peacekeeping efforts, but over the last few decades, that identity has changed. Now it has all those money to kind of reinvent itself. So I was wondering, what's the focus of the Canadian Armed Forces going to be moving forward? That's a good question. A defense policy paper would help explain that, which we so far haven't seen from this government. but we can tell from the broad strokes that they painted that the Arctic is going to be an increased priority for us. All our allies expect us to be spending more time in the Arctic, to be the sort of master of our own domain.

And right now, I would argue we're not. We need, for instance, more listening devices, more presence in the north. We have been increasing our northern military exercises. Generally, they come under the name Operation Nook, but they have a lot of, lots of different names. We're increasing them to seven times a year, and that means there'll be a more persistent presence than the Arctic. That doesn't mean we actually have a permanent presence in the Arctic.

Often all these exercises involved transporting people from the South up there. So a more sustained presence in the Arctic is going to be an important part of that, our ability to respond in the Arctic, whether it's through drones, fighter jets, ships, satellites, et cetera. Steve, as always, great to have you in the show. Thank you so much. Great to be here. That was Stephen Chase, the Globe's Senior Parliamentary Reporter.

That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Michal Stein, and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening, and I'll talk to you soon.