The 32 member alliance has seen two new members join in Finland and Sweden. These two long time neutral countries have joined because of the growing threat from Russia and aggression in Ukraine and in other areas. The key metric for NATO countries to hit in military spending is 2% including 20% on new military equipment. In another post I point out how Canada has tripled military spending under Trudeau but we are only at 1.3% of GDP. The plan is to get to 1.7% by 2030.
This is simply not good enough for our allies, especially since 10 years from now the expectation is we still don't get to 2%. Liberal cabinet ministers still talk about soft power and sanctions but they clearly are not working. Bill Blair, the defence minister, is desperately saying more announcements will push it over 2%. He specifically is talking about Navy subs that are either diesel or nuclear. The Australians are buying nuclear ones at a cost of up to $368 billion through to 2050. This would buy between three and five Virginia-class nuclear subs as well as sub manufacturing capabilities. This is part of the Labor party Australia goal of 2% of GDP although the subs would be .15% of that total over the years.
Trudeau met with U.S. senators from both parties and a non-partisan group is pushing Canada to commit to 2%. Canada is being singled out as the riches country with the lowest spending. However, as one of the richer NATO members, it means in dollar amounts it is higher than a lot of European countries. Moreover, Canada commands a brigade in Latvia as well as fully supports Ukraine.
Both the Liberals and Conservatives have not said how they will get to 2%. Pierre Poilievre is pretty quiet on this because he does not want to detail how Conservatives will do that because it is not a vote winner. Certain groups have indicated that they believe we can't hit 2% without significant debt.
The focus on Canada is making the Trudeau government squirm in ways that they likely hoped would not come. However, Trudeau should not be be surprised as his dad had the same thing happen and had to bring Canada's military spending up to avoid economic sanctions from our allies. Although the Pacific is not part of NATO, Canada has been left out of talks and alliances because soft power is not wanted.
Canada was a founding member of NATO and huge contributor to NATO. Few people were untouched by WWII. Many understood the implications of the Soviet threat and the fear Germany would rebuild and be involved in some way after the war. Soviet aggression through 1950s to the 1980s reinforced the view that NATO was needed. Canada kept forces in Germany thereafter until the 1990s when the Cold War ended with the Soviet Union break-up. Still, over the last 75 years Canadian financing of the military has ebbed and flowed. Sometimes it has been 2% and other times it has been below.
Canada's military is not the only one to be struggling. Britain has nearly 2.5% GDP spending and yet says it could not field a fighting unit for more than 30 days. Canada currently spends $27 billion a year on the military. Australia spends roughly $10-12 billion more than us and 2.2% GDP. It is no wonder Britain and the U.S. have nothing bad to say about Australia. As for Australia, they are terrified of China right in their back yard.
Canada ranks as 7th largest spender in dollars in NATO and 14the largest spender in the world. During the Harper years Canada spent .97 of GDP on defence despite big talks about how they were law and order party. It could explain why they have not been all over the media criticizing Liberal spending which literally outpaces the Tories. Next year's election will probably not bring clarity on this. It usually warrants a single line in the policy platform with no elaboration from any parties.
The problem is that Canada's allies are cutting the country out. And some of this is going to hurt economically. Trudeau and his cabinet have seemed paralyzed by this. They think our good standing won't be affected by the slow walking of getting to 2%. The announcement that Canada will purchase up to 12 submarines with requests for proposals in the fall is going to be posted. Canada in the 1980s/90s said it would order 12 submarines but it always seems that four is what the end number is. We should expect no less this time.
With the announcement of the submarines, we can expect the Norwegian/German consortium, the Swedes, the Koreans and the Spanish will all be bidding. We can expect a certain amount of competition between these parties. The last submarines purchased from the British were the Victoria-class which at the time seemed like a bargain since they were built but retired because the British had switched to all nuclear fleet. In the end they cost $750 million and that much again in refurbishments and then a $3 billion sustainability program. They have been marked by human error, tragedy and technical issues from the beginning. And now they have a hard time fielding a crew for even one.
The issue of the submarines keeps coming up because all around the world countries are building or buying them because of the threat to waterways from powers asserting themselves to access resources. Canada's Arctic is such a place. It can't be lost on Canada that even small places like Singapore have four subs. So true of Brazil, Malaysia and soon The Philippines.
Politico and Wall Street Journal have both blasted Canada and the BBC has done a story on it as well. The Sun newspaper chain blames Trudeau while never mentioning how poor the Harper government did while in majority. In Canada the blame game is usually one sided. There were cuts through Chretien, Martin, Harper and Trudeau's time. Procurement has been flawed for decades. Pierre Poilievre will have no less pressure from allies to state how he gets to 2% in next year's election.
The Trump assassination attempt is going to result in a very skittish United States over the next little while. Maybe a long while. There is not telling how the electorate will react. And it is uncertain if Biden can hold onto his candidacy after his poor performance in the debate. There could be severe consequences. Trump has already said there are few things limiting what he will do if president. And now the Supreme Court agrees.
If Trump becomes the president in November, Ukraine will likely be cut loose and the U.S. might pull out of NATO. The implications for this are immense. If Ukraine falls, it will start a refugee crisis in the millions. Canada may see a huge surge of refugees. It will certainly put all of Europe in crisis. The movement among the conservatives in the Republican party is that they should withdraw from the world save for many two places: Israel and China.
Trump thinks NATO members should be paying the U.S. actual cash for protection. The 2% is spending each country does for defence at home and for the NATO alliance. It isn't a transfer payment to the U.S. for protection. The U.S. receives the lion share of military spending contracts so they do very well in that regard. However, if Trump becomes President, he could bring about penalties immediately. Canada can't afford to have a plan that takes several years to realize. It could be a miserable four Trump years that Canada could take economic hits.
The Defence minister Bill Blair and those that previously served in the role need to make it clear to cabinet and the PM that they believe we don't have much time the avoid punishing responses economically and possibly terrible outcomes militarily.
The U.S. receives value from NATO because they have been drawn into two world wars originating in Europe and they don't want to be drawn into a third. They have managed to stay out of one in part due to NATO.
As for Canada, they will still face heat if they don't articulate in more detail what they are doing in defence. This past week it was revealed they bought a large hangar in Iqaluit that Russian and Chinese interests were looking at. The Department of National Defence had leased it in the past but foreign interest and the ability to land and shelter our new F-35 jets played a strong role in buying the hangar and lengthening the runway.
One significant agreement between Canada, Finland and the United States will see the three cooperate on icebreakers. The details are slim but all three countries need icebreakers to counter the Chinese and especially the Russians who have nearly 40 icebreakers including four nuclear ones. The talk has been that possibly 90 icebreakers might be built. That would be a remarkable number if it holds up. The U.S. is in desperate need with only two top class icebreakers.
One of the other things talked about at NATO conference that Canada looks to bring itself up to 2% spending is NORAD and air defence spending. The threat from Russia in the north is not lost on the government. The purchase of the hangar in Iqaluit is an indication they really don't want Russian or Chinese to set up operation in the north and dominate the area nor travel through it without so much as a by your leave. The problem with the $38.6 billion in spending is that a lot of it comes in the 2030s. It does nothing for 2025 when we may see huge blowback.
To mitigate the economic effects of increased spending on defence the government is likely to look at industrial policy. A military cyber warfare operations center is tied to out economic wellbeing. It isn't just international crime rings but government intervention that tries to disrupt our economic function to take our innovations without compensation. Runway expansions for military aircraft can double for northern access for civilian use as well. CFB Winnipeg and the Richardson Airport share the campus opposite one another. It is a policy that benefits both. Only Yellowknife also have a shared airport.
NORAD needs a deepwater port infrastructure and tugs and icebreakers in the north. Three are under construction in Iqaluit, Pond Inlet and Qikiqtujuarq all in Nunavut. Only Churchill, Manitoba is a deepwater port with a railway and airport attached. But the port is largely abandoned. First by the military and then by government of Canada. In recent years the military has rebuffed any mention of Churchill or the north. And yet, the NORAD commitment would imply ships, planes and yes, troops up there and not just on summer break. Canada is upgrading Iqaluit, Inuvik, Yellow Knife and Goose Bay for the military. It is worth noting that we see next to nothing in American media about NORAD. It is probably why Canada has felt no real pressure until recently.
Canada's election in 2025 could have military spending as an election issue. Wab Kinew, Manitoba's premier, has said Canada should speed up NATO spending to not run afoul of a new government in the U.S. This remark came at the premier's conference when the group agreed that the PM should stay out of provincial business save for federal transfers with no strings attached. In recent days Pierre Poilievre says he won't commit to 2% because Canada is broke. He may not get that option if the U.S. government promises punishment. There is some indication that Conservatives might pull out of assistance for Ukraine if the the U.S. does.
It is all very complicated and the election next year in Canada and this year in the U.S. will make it even more complicated. And all the while this is going on, you have Russia and China wanting to buy assets in Canada's north.
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