Canada’s evolving opportunities to contribute to European Security

Canada’s announcement to reach the NATO 2% spending target five years ahead of schedule comes as Prime Minister Mark Carney and his government remain motivated to explore new partnerships amidst continued unreliability from the US and rapidly increasing competition worldwide. This new funding package, which will increase Canadian defence spending to $62.7 billion by March 2026, includes $9.3 billion dollars that will be added to the existing $40 billion dollar Department of National Defence (DND) budget as well as an extra $14 billion dollars stemming from defence-related expenditures in other departments.  

To enhance the capabilities of the Canadian Armed Forces (CAF), the Canadian government will channel this funding towards efforts to improve recruitment and retention, sustain key infrastructure, strengthen Arctic military capabilities, launch a new “made-in-Canada” Defence Industrial Strategy, and develop cybersecurity capabilities for the CAF and the Communications Security Establishment. Another significant part of this spending is the plan to move the Canadian Coast Guard under the DND umbrella. This increased defence budget presents important opportunities for how Canada can further its goal to strengthen ties with its international partners.   

On the defence procurement side, the most significant aspect of this decision is the $2 billion dollars allocated to diversify Canada’s defence partnerships away from the US. A significant part of how Canada plans to accomplish this goal is by joining ReArm Europe, which includes a €150 billion euro loan program to fund various defence projects like drone systems and electronic warfare. Beyond this initiative, Ottawa has already started this diversification process through plans to acquire over-the-horizon radar systems from Australia, which was first announced in March 2025. It is also considering purchasing new submarines from South Korea or from a joint Norwegian and German bid that could be facilitated by joining ReArm Europe.  

Alongside the efforts to diversify its defence partnerships, Canada is also reconsidering some of its current agreements with the US. This includes reviewing the $19 billion dollar purchase of 88 F-35s from Lockheed Martin, a project first announced in January 2023 after years of political indecision. The move to conduct this review was further bolstered by a recent report from the Auditor General of Canada, which found that the fighter jet program is currently projected to cost almost 50% ($8.7 billion dollars) more than originally forecast. While Canada is unlikely to cancel the contract in its entirety, any reduction to the number of fighters that it purchases from the US could open the door for European suppliers to step in. 

Canada’s new defence spending also creates opportunities to strengthen ties with Europe through increased participation in smaller regional coalitions, both within and outside of the NATO Alliance. This includes the chance to increase its contributions to NATO’s operations in Northern Waters, such as participating in the Baltic Sentry program to prevent undersea cable sabotage. Canada’s Arctic digital infrastructure, particularly its undersea fibre-optic cable network, is vulnerable to damage. Canada could gain new expertise and credibility from participating in the testing of sea drones though this program. 

Outside of NATO, Canada could join the UK’s Joint Expeditionary Force (JEF), which is a military partnership between like-minded countries focused on maintaining stability within the Arctic and Baltic regions. This initiative could give Canada access to British nuclear deterrence while also further integrating command and control structures with its Allies. Such a move would also strengthen Canada’s Arctic presence and provide valuable assurances as several members within the region would be members of the Arctic Council, the JEF, and the EU’s Common Security and Defence Policy.  

To conclude, Canada’s increased defence spending could help decrease its dependency on the US by giving it more flexibility to work with European Allies and international partners. Several new opportunities are arising for Canada to deepen its ties with non-US partners, such as through ReArm Europe, NATO task-specific groups, and external coalitions. For Canada to succeed in its goal, however, it must utilize this new spending wisely by re-orientating its defence industry and diplomatic focus away from the US and towards new opportunities in Europe and abroad.