Good morning. In focus today, we scan the military and political stakes behind Canada’s decision to award Sweden’s Saab a major defence contract.
Up first
In the news
Bank earnings: Foreign investors are taking a closer look at Canada, according to the heads of Bank of Nova Scotia, Bank of Montreal and National Bank of Canada, which reported quarterly results yesterday. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce report today.
World Cup: Canada’s anti-money-laundering watchdog is cautioning companies about an influx of human trafficking associated with major international sporting events such as the 2026 FIFA men’s World Cup soccer tournament.
Energy: Backers of the Ksi Lisims LNG project say a supply deal with Germany’s state-owned utility SEFE, which would be able to schedule shipments globally, moves the proposed British Columbia project closer to a final construction decision.
Potpourri
An economist from California landed this clue on last night’s Jeopardy! He answered “Alberta” – a forecast based on limited data, but one that missed by about 3,400 kilometres and suggested a temporary shortage of reliable inputs.
In focus
Carney’s buy-Canadian defence test
Canada has entered into negotiations with Sweden’s Saab on new early-warning aircraft technology, The Globe’s Steven Chase reports. The deal gives Prime Minister Mark Carney’s push to reduce dependence on U.S. military suppliers its first major procurement test.
Ottawa chose Saab’s GlobalEye system over rival bids from U.S. manufacturing heavyweights Boeing and L3Harris. The technology would be mounted on Bombardier aircraft built in Canada.
The Saab announcement was part of a speech Carney delivered yesterday in Ottawa, in which he also spoke of creating domestic defence “champions” as part of his strategy to rebuild the sector, Pippa Norman writes. The plan would identify a select group of defence-industry firms that could work more closely with government on procurement priorities.
Why Saab, and what’s the big deal?
For Carney, the Swedish manouevre (how is that not a John le Carré novel?) ticks several boxes, giving Canada new surveillance capabilities for the Arctic, tying the project to domestic aerospace jobs, and putting a live procurement decision behind his promise to send less defence spending to the United States.
But choosing Saab over the U.S. military giants presents potential political and logistical challenges.
The Boeing offering in particular would have fit more easily with U.S. systems, said Philippe Lagassé, a Carleton University professor who studies defence policy and procurement. The Royal Canadian Air Force preferred Boeing’s E-7 because it would have improved interoperability with the U.S. military, he said. It also has a nice top hat.
Carney said the Saab deal would support more than 3,000 aerospace jobs, and that Canada would produce at least 40 GlobalEye aircraft over 15 years for Canadian and foreign orders. Industry analysts have said Canada is seeking about six early warning aircraft.
A Bombardier Global 6500 jet. If Canada’s deal with Saab goes ahead, aircraft like this would be fitted with early-warning technology to monitor the Arctic.Justin Tang/The Canadian Press
Will Trump get angry?
He’s been upset over less. And he’s been upset before over what a deal like this might mean: Even as Trump has long pressed Canada and other NATO allies to spend more on defence, friction with Ottawa intensified after the federal government said it would reconsider the full order of 88 U.S.-made F-35 fighter jets and seek other options.
This deal does not represent a break from the F-35s, but the Oval Office is paying attention.
Last week, the U.S. announced it was pausing participation in the Permanent Joint Board on Defense, an 86-year-old Canada-U.S. advisory body. Experts said that move could be aimed at turning up the pressure on Canada to buy more military equipment from the U.S., such as the F-35s.
What is “GlobalEye,” and why did Prime Minister Carney call it “GoldenEye” in a news conference yesterday?
Saab’s GlobalEye is an airborne early-warning and control system that would be installed on Bombardier Global 6500 jets.
Early-warning aircraft give militaries a broader view of threats moving through the air, an especially useful capability in vast regions where ground-based radar cannot easily cover every gap.
For Canada, that points north. Ottawa is trying to improve its ability to monitor the Arctic as Russia and China develop more advanced missile and air capabilities. Hypersonic and cruise missiles have increased the importance of earlier detection because they move quickly and can be difficult to track once launched.
The GlobalEye system can detect objects and electronic activity up to 650 kilometres away – meaning one airborne early warning platform can keep radar coverage over more than one million square kilometres, according to the Nordic Defence Review. That’s larger than British Columbia.
As for why Carney accidentally called it GoldenEye at one point in his speech yesterday, I can only assume he just finished a session on his Nintendo 64. I call Oddjob!
GoldenEye on Nintendo 64, circa the early aughts. The pinnacle of visual fidelity.Supplied
Does this make Saab fighter jets more likely?
Not necessarily. It does make Saab harder to dismiss as a future defence partner. The Gripen fighter jets, also made by Saab, are under consideration as an alternative to the F-35s.
Carney declined to say whether the GlobalEye decision improves Saab’s chances on the fighters. The government will decide after looking at military requirements, industrial benefits and possible partnerships, he said.
What happens next?
Canada still has to negotiate a final contract with Saab, including price, delivery schedule and industrial commitments.
Ottawa has said it will decide by the end of the summer whether to complete the full 88-plane F-35 purchase, with the first 18 U.S.-made fighter jets scheduled to arrive this year.
The procurement decisions are unfolding as Canada heads toward the formal review of the North American trade agreement in July, giving Trump another grievance and another point of leverage in a relationship already strained by tariffs and defence spending.
Charted
Where to grow our forests back
The Globe and Mail
Canada is short billions of trees. But with enough ambition, Erin Anderssen writes, there is still time to build the forest of the future.
Quoted
I’m feeling at peace.
— Steven Guilbeault
Former star Liberal recruit Steven Guilbeault confirmed his exit from politics yesterday.
Up next
More files we’re following today
On the job: The March Survey of Employment, Payrolls and Hours is under close watch. SEPH, as it is known, is a curry of business payroll data that offers a different view of the labour market than the household-based Labour Force Survey. That survey showed employment falling sharply in April from the start of the year.
In the future: The Bank of Canada’s Financial Stability Report will show where the central bank sees vulnerabilities in the financial system. Earlier this week, the bank warned that a “low-hire, low-fire” job market is complicating rate decisions.
Morning update
Global markets eased as escalating tensions in the Middle East clouded the outlook for an imminent deal to open the Strait of Hormuz, adding to concerns about the health of the global economy.
Wall Street futures were in negative territory ahead of a U.S. inflation data release, while TSX futures followed sentiment lower.
Overseas, the pan-European STOXX 600 was down 0.54 per cent in morning trading. Britain’s FTSE 100 slid 0.89 per cent, Germany’s DAX declined 0.19 per cent and France’s CAC 40 gave back 0.32 per cent.
In Asia, Japan’s Nikkei closed 0.47 per cent lower, while Hong Kong’s Hang Seng dropped 1.27 per cent.
The Canadian dollar traded at 72.11 U.S. cents.