NATO vs Canada, its nicest truant Opinion by Politico

Canada is a committed, agreeable ally. So why, NATO countries are wondering, is it not getting up to speed on spending targets?

The analysts of POLITICO tried to find an answer.

NATO loves Canada — but hates its defence spending. 

The North American country has a reputation within the West’s military alliance as an agreeable partner: Reliably committed to transatlantic relations, never obstructionist, and, well, just pleasant to work with. 

But with a war on, that’s not enough.

Frustration is mounting over Canada’s long-standing resistance to catching up with NATO’s spending targets. The country not only remains far behind on an agreement to eventually spend 2 per cent of economic output on defence, it is now part of a tiny group resisting a push to set 2 per cent as the alliance’s spending floor, rather than the ceiling. 

Emotions are running high. Russia’s invasion of Ukraine has forced NATO to redesign its military plans, and it needs money for that. Money for more advanced weapons. Money for more ammunition. Money to get thousands of troops ready to defend NATO’s eastern flank. 

And thus far, Canada appears unwilling to hit NATO’s spending target. 

“Not so long ago, it was falling into sort of a larger group,” said Camille Grand, a former NATO assistant secretary general for defence investment. 

Now, however, Canada is “a bit more of an outlier,” he added. 

Tensions over Canada’s approach are no longer flying below the radar. Buried in the cache of classified US material dumped online earlier this year was a document venting about Canada. 

“Widespread defence shortfalls hinder Canadian capabilities while straining partner relationships and alliance contributions,” it read, according to the Washington Post. 

It’s a baffling situation to many. Canada has offered unwavering support for Ukraine and, in the aggregate, has a robust defence budget — NATO’s sixth-largest. But its reluctance to budge on spending issues is now getting in the way of the alliance moving forward on its plans for the future, including decisions officials want to make by the alliance’s annual summit in Vilnius next month.

“It’s hard for me to comprehend their stance given their profile, economy and contribution to NATO,” said one European diplomat, who was granted anonymity to discuss internal alliance matters. “It is a good moment for Ottawa to step up.” 

Pressed Thursday about whether Ottawa will commit to reaching the 2 per cent goal, Canadian National Defense Minister Anita Anand conceded the issue was still unsettled.

“We’re continuing to have that conversation right here in Brussels,” she said, arriving at a NATO defence ministers’ meeting in Brussels.

"Whatever it takes"

Canada has made some recent attempts to visibly show its commitment to the NATO alliance.

Earlier this month, Prime Minister Justin Trudeau made an unannounced visit to Kyiv, repeating as he has for more than a year that Canada will stand by Ukraine with “whatever it takes, as long as it takes,” and announcing C$500 million in new military aid.

The Canadian government likes to tout a narrative that it punches above its weight, preferring to compare overall defence budgets rather than spending compared to economic output.

Through this measure, NATO’s latest figures have Canada’s C$36 billion defence budget trailing only Italy, France, Germany, the United Kingdom and the United States.

“Irrespective of what you’re hearing out there, we are more than holding our own,” Liberal MP Julie Dzerowicz, chair of the Canadian NATO Parliamentary Association, told POLITICO in an interview. “We are playing an outsized role.”

Yet that doesn’t eliminate the 2 per cent target, which Canada agreed to alongside all other NATO allies in 2014. By that metric, Canada falls far short — last year, it spent merely 1.29 per cent of economic output on defence, according to NATO’s figures.

While the majority of allies have similarly yet to reach 2 per cent, many have boosted spending plans in response to Russia’s war in Ukraine. And now, nearly all allies agree it is time to make 2 per cent the floor, and have put forward plans for how they will meet the target in the coming years.

Not Canada, though.

Part of Canada’s reluctance is rooted in an enduring belief that it isn’t doing anything wrong: The 2 per cent target is arbitrary, of unclear origin and is only one way to judge a country’s investment in the alliance, Canadian officials argue.

It’s an accounting issue, said Yves Brodeur, who served as Canada’s ambassador to NATO between 2011 and 2015. The former diplomat said it was never explained to him where the 2 per cent number came from, making it a hard sell in Ottawa.

At the time the target was agreed upon, Brodeur said, it was “never clear” if you are “talking about the overall cost of your defence expenditures including, for instance, personal costs, operational costs, capital costs.”

Then there are the political considerations: Inside the Ottawa bubble, Trudeau’s Liberal government is facing calls from opposition Conservatives to curb budgetary spending. The debate puts pressure on the government to explain why it needs to spend more — for Ukraine and other military expenses.

“We won’t have a population that supports a massive increase in defence spending if people don’t understand that the world as we know it has significantly changed,” Dzerowicz said.

Within NATO, there is an understanding that Canada’s geography means policymakers operate in a different political environment than many of their European counterparts, whose voters are more concerned about defence.

“The domestic security situation is very different from frontline states in Eastern Europe or even in Europe in general,” said Grand, the former NATO assistant secretary general.

Canada, he added, “has always benefited from a sort of a de facto US security umbrella that enabled it to do a bit of free-riding on defence.”

"Everyone agreed to pay up"

Canada’s allies, however, argue that all NATO members need to live up to promises made a decade ago — and that Russia’s war makes it even more urgent to significantly invest in defence.

“Everybody agreed to pay up and everybody should,” said a senior European diplomat, who was also granted anonymity to discuss sensitive alliance dynamics. The alliance’s new approach to defence, the diplomat emphasized, “requires money.”

And it appears more Canadian voters are starting to agree.

A recent Angus Reid poll suggests a majority of Canadians (54 per cent) support increasing NATO spending to at least the 2 per cent threshold, jumping 11 points since 2019.

There are signs that Canada is taking defence seriously: last year, Ottawa announced Canada’s C$38.6 billion plan to modernize the North American Aerospace Defense Command (NORAD) over the next two decades. In January, the Canadian government announced a C$19 billion deal to purchase 88 F-35 US-made fighter jets.

And Canada does spend 18.76 per cent of its defence expenditure on equipment — closing in on an alliance target to dedicate 20 per cent of defence investment to this spending category.

Nevertheless, concerns persist. Shortcomings in Canada’s defence investment recently came to the fore in a controversy over the lack of proper gear equipment for Canadian troops leading a battlegroup in Latvia.

And, most damningly, the leaked US document reportedly said that Trudeau had bluntly told his NATO colleagues his country would never get to 2 per cent.

That puts Canada in lonely company. Luxembourg, the tiny European nation with less than 1,000 soldiers, is the only other country without a plan to reach 2 per cent.

Diplomats say Canada’s sheer size makes it far more difficult to explain why it should be an exception. And many Western officials are insisting that fulfilling NATO’s new military plans will require everyone finally meeting their commitments.

Given the alliance’s plans and ongoing assistance to Ukraine, “I think you reach the conclusion pretty quickly that all of us need to get to 2 per cent immediately,” said US Ambassador to NATO Julianne Smith in a recent interview with POLITICO.

While declining to comment on any individual ally, Smith was clear that Washington expects everyone to at least make an effort to get to the 2 per cent — and for some to go beyond.

“If you are not going to get there immediately,” the ambassador said, “it’s important that your country has a plan to do so.”