Canadian soldiers with the 5th Canadian Division during Operation Nanook, the Canadian Armed Forces' annual Arctic training and sovereignty operation in March, 2025.COLE BURSTON/AFP/Getty Images
Jessica Shadian is president and CEO of Arctic360.
Pete Hoekstra, the U.S. ambassador to Canada, had it right when he spoke in Halifax last month: framing Canada’s troubles as a U.S. trade war isn’t a helpful strategy. The current crisis is much bigger, and it’s anchored to our neglected geography as an Arctic nation.
Canada’s Arctic coastline is bookended by Alaska and Greenland. Russia sits across the pond, sharing its Arctic borders with our Nordic neighbours. The Nordic countries are seeking greater Canadian co-operation as non-Arctic states – China, India, Iran – expand their presence in Russia’s Arctic, and the U.S. continues to pursue annexing Greenland and upend global trade. This is not about fighting a trade war; it’s about building a wartime economy.
The 2025 budget is expected to substantially increase defence spending while making significant cuts elsewhere. It will include building the five named nation-building infrastructure projects, with more to come, including several Arctic projects, requiring tens of billions of dollars in investment. In good times, Arctic investments are a hard sell; in times of austerity, the challenge will be exponential.
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When the budget lands, it must be sold to Canadians. The federal government must explain that being strong on defence and strong on the economy requires a wartime economy. Moreover, the seemingly fragmented social, economic and defence pieces – infrastructure investments in the sparsely populated North, grocery prices in Toronto, the war in Ukraine, personal data and home energy security, critical minerals, and Canada’s Arctic and thus national sovereignty – are all connected. The economy and defence are two sides of the same coin.
Our European allies are already adapting to a wartime economy, making regulatory and investment shifts that unlock private capital for dual-use projects, including defence applications. Banking changes by the Nordic Investment Bank, Allianz Global Investors, UBS Asset Management and Danske Bank now enable financing for dual-use and conventional weapons projects. Some funds have dropped exclusions on conventional weapons manufacturers from their ESG portfolios; others have called for European Defence Bonds to support the EU’s new ReArm program, which Canada hopes to join.
At home, Canada has committed to NATO’s 5-per-cent-of-GDP defence spending. Financial mechanisms and policies will be essential in unlocking institutional and private capital to reach this target. Bay Street is paying attention: RBC, for instance, is assisting in developing the NATO Defence, Security and Resilience Bank.
Yet attracting more than a billion dollars in private capital for Arctic projects will not happen by Northern will and good intentions alone. The new Major Projects Office business development teams must build the case – and the financing mechanisms to move Arctic projects from brochure to execution. In a wartime economy, projects must serve defence and the economy, and contribute to NATO obligations and attract private capital. It also represents opportunity.
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No single Arctic project can stand alone; each requires satisfying every other infrastructure need. Fibre-optic cables require reliable, affordable energy. Energy projects need high-speed internet for data collection, cybersecurity, efficiency and operation. Transportation infrastructure – from roads and ports to airports – are necessary for connecting energy to grids and supply chains. Infrastructure must be sensor- and AI-embedded for interoperability, to guard against cyberattacks, and measure and monitor everything from permafrost melt to subsea activity – or, in other words, be future-proofed.
Not least, Canada’s Arctic sovereignty requires data sovereignty, an enormous undeveloped potential. Cold-weather innovation will be the new source of Arctic maritime and land-defence advantage. It could also represent the missing return on nation-building investments. In April, Prime Minister Mark Carney announced the creation of BOREALIS – the Bureau of Research, Engineering and Advanced Leadership in Innovation and Science. True to its name, it should be rooted in the Arctic and focused on developing the cold-weather frontier technologies needed for NATO modernization, mining, and critical infrastructure, from housing to ports for Canada and for export.
Without strategic interdepartmental coordination, and untethered to a national Arctic investment strategy, nation-building projects risk wasted federal dollars, leaving the North dependent on nefarious investors, undefended, insecure, and excluded from another era of nation-building. It will reaffirm the naysayer’s narrative that everything Arctic is impossible, and Northerners will – despite their warnings – again be merely recipients of defence spending and bystanders to the national economy. At worst, it will lead to the continued erosion of Canada’s Arctic (thus national) sovereignty, upon which Canada’s entire project of Indigenous self-determination rests.
Northerners, especially Inuit, have made it clear. The tired excuse that the Arctic is too cold and too remote no longer holds. It’s time to head North to build a wartime economy. Canada’s future depends on it.