Prime Minister Mark Carney is greeted by NATO Secretary General Mark Rutte, right, and Prime Minister of the Netherlands Dick Schoof at the NATO summit Wednesday.Geert Vanden Wijngaert/The Associated Press
Prime Minister Mark Carney has committed Canada to the biggest increase in military spending since the Second World War, part of a NATO pledge designed to address the threat of Russian expansionism and to keep Donald Trump from quitting the Western alliance.
Mr. Carney and the leaders of the 31 other member countries issued a joint statement Wednesday at The Hague saying they would raise defence-related spending to the equivalent of 5 per cent of their gross domestic product by 2035.
NATO Secretary-General Mark Rutte said the commitment means “European allies and Canada will do more of the heavy lifting” and take “greater responsibility for our shared security.”
For Canada, this will require spending an additional $50-billion to $90-billion a year – more than doubling the existing defence budget to between $110-billion and $150-billion by 2035, depending on how much the economy grows. This year Ottawa’s defence-related spending is due to top $62-billion.
“The world is increasingly dangerous and divided. Canada must strengthen our defence to better protect our sovereignty, our interests and our allies,” Mr. Carney said. “These investments won’t just build our military capacity – they will build our industries and create good, high-paying jobs at home."
NATO members also agreed to reassess the new spending target in 2029 to make sure it aligns with “the global security landscape” at that time.
That’s when Mr. Trump’s second term in office is due to end.
Mr. Carney was asked whether NATO picked 2029 for that reason. He declined to answer directly, saying instead that it will be a natural time for a review.
He also said he believes an alliance-wide commitment to more military spending will make the world safer.
“The fact the United States is fully behind this, the fact that we’re working together, is going to reduce the threat environment 10 years from now.”
Prime Minister Mark Carney says Canada and its NATO allies agreed to substantially hike their defence spending target to 5 per cent of annual GDP by 2035.
The Canadian Press
The new NATO spending target is really two separate targets: core military spending equivalent to 3.5 per cent of GDP or annual economic output, and another 1.5 per cent of GDP for defence-related infrastructure spending.
Mr. Carney said Wednesday he’s confident Canada can easily meet the second target by claiming investments in critical infrastructure such as new airports, ports, telecommunication networks, emergency preparedness systems and other projects that serve both defence and civilian readiness purposes.
The tough challenge for the federal treasury will be the 3.5-per-cent target, which will require military spending to increase by 7 per cent to 10 per cent a year over the next decade.
The new target is far higher than NATO’s previous, 2-per-cent benchmark for military spending, which Canada under Mr. Carney will only meet for the first time in March of next year.
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David Perry, the president of the Canadian Global Affairs Institute, who was in The Hague for the NATO summit, said the last time Canada raised defence spending so much was in the period from 1939 to 1942, when the country mobilized for war in Europe and the Pacific.
He said he doesn’t think there is much public support for this magnitude of defence spending but added that Mr. Carney can gain the backing of Canadians by explaining the rationale for such expenditure. European leaders have warned that even when the war in Ukraine eventually ends, the danger Moscow poses will not disappear.
As Mr. Rutte said last week, Russia is reconstituting its military with Chinese technology and producing weapons faster than NATO thought it could. “This year alone, Russia is expected to roll out 1,500 tanks, 3,000 armoured vehicles, and 200 Iskander missiles,” he wrote in Foreign Affairs magazine this month.
Mr. Trump acknowledged that Russian President Vladimir Putin has territorial ambitions beyond Ukraine. “Possible. It’s possible,” he told reporters.
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Mr. Carney downplayed the challenges of rapidly increasing defence spending, saying it could take Canada a few years to ramp.
“If you all of a sudden start spending a lot more money in one area, you can end up spending a lot more money on rising prices,” he said.
The Prime Minister said he expects Canadians will back bigger defence budgets because Ottawa will prioritize domestic spending. “More of this will happen in Canada, more of it will help build our economy at the same time as it improves our defence, and we’ll get the benefit.”
Randall Bartlett, deputy chief economist at Desjardins Group, said the defence spending to which Mr. Carney has committed will require Ottawa to borrow more unless it cuts back on other spending or transfers or finds new sources of revenue.
He said 3.5 per cent of Canada’s GDP in 2035 could very well be $150-billion.
“Planned increases in defence expenditures are likely to lead to significantly larger deficits, higher debt and increased issuance, he wrote in a note to clients. “With the federal government reducing personal and corporate income tax revenues, while at the same time increasing expenditures on other election priorities, much of this new defence spending will need to be debt financed.”
The NATO summit was carefully choreographed to deliver the 5-per-cent target for Mr. Trump, who regularly argues that other countries rely too much on U.S. military might. Since his 2024 presidential election campaign, he has demanded that NATO members hit this benchmark. The NATO charter’s Article 5 collective-defence clause obliges members to consider an attack against any member country to be an attack against all, but in March Mr. Trump said he won’t defend allies that are not paying enough for their defence.
Mr. Carney, who signed a security and defence pact with the European Union on Monday, said he talked to EU officials about buying European-made fighter jets and submarines. He did not reveal more about the conversation, but a joint German-Norwegian project to build diesel-electric submarines has been pitching Canada to join the program.
Ottawa is currently reviewing whether to scale back plans to buy 88 U.S.-made F-35 fighter jets. The runner-up in the competition for new fighters was Sweden’s Saab Gripen. Mr. Carney said the review will likely wrap up this summer.
In March, during an election campaign stop in Halifax, Mr. Carney promised to buy new submarines and heavy-duty icebreakers, among other items. These have yet to be selected or accounted for in budget projections.
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The NATO summit communiqué, which represents all member countries, affirmed the alliance’s “irconclad commitment” to collective defence. “An attack on one is an attack on all,” it said.
Spain, however, stood out at the summit for refusing to agree to raise its defence spending to 5 per cent of GDP. Spanish Prime Minister Pedro Sanchez said his country can meet its military capability targets by spending just 2.1 per cent of GDP. Summit organizers worked around Spain’s opposition by saying in the communiqué that “allies” will boost spending instead of “all allies.”
Mr. Trump sharply criticized Spain Wednesday, threatening to punish the country. “I think Spain is terrible, what they’ve done,” the U.S. President told reporters. “We’re negotiating with Spain on a trade deal – we’re going to make them pay twice as much. I’m actually serious about that.”
Russia’s invasion of Ukraine got short shrift during the relatively short NATO summit, which was attended by Ukrainian President Volodymyr Zelensky – even though his country is not a member. The communiqué said member countries’ contributions to Ukraine’s war effort will count toward the military spending target and that Kyiv’s allies have vowed to “reaffirm their enduring sovereign commitments to provide support to Ukraine, whose security contributes to ours.”