Defense spending

Trudeau nudges defense spending closer to NATO target

Polls credit “Trump Factor” in moving Canadian attitudes.

By KYLE DUGGAN

Donald Trump threatened to abandon any NATO ally country that does not spend at least 2 percent of its gross domestic product on defense. Now the traditionally laggard Canada government is starting to pay up, just as polling suggests the former president’s threats are moving public attitudes in a country where military preparedness has traditionally ranked low among voter concerns.

Finance Minister Chrystia Freeland is expected to deliver Canada’s largest defense spending increase in seven years in the federal budget to be released Tuesday — but will still fall far short of meeting the country’s NATO commitments.

The increase follows decades of anemic spending that’s drawn criticism from successive U.S. administrations, yet critics warn Canada will still deliver too little, too late.

Ottawa will ramp up its defense spending with an C$8.1 billion-cash injection, moving it from 1.38 to 1.76 percent of GDP by 2029-30 — missing the 2-percent target over the next five years and with the bulk of the spending taking place after Canada’s next election.

The planned increase is a small piece of today’s budget, expected to focus on new domestic spending aimed at shoring up the government’s standing with key political constituencies, such as a suite of new supports for young voters struggling to find affordable housing.

The Trump factor

The spending plan nonetheless marks a notable turn for the Trudeau government. Just last year, the Washington Post published secret U.S Defense Department documents alleging that Trudeau told NATO allies that Canada won’t ever meet the alliance goal. The Pentagon’s assessment noted that Canada’s “widespread” military deficiencies were harming ties with security partners and allies but that the situation was not “likely” to change without a shift in public opinion.

That shift now appears to have arrived in the wake of threats by Trump to turn his back on NATO members failing to meet their spending commitments.

“It’s the Trump factor that’s moving it,” said Shachi Kurl, pollster at the Angus Reid Institute who has quizzed Canadians on their attitudes.

When asked whether they would support increasing military spending to 2 percent, more Canadians said they would if Trump made good on his threats to not defend underspending allies.

“With that Trump factor, you see that number [support for increased defense spending] goes from 53 percent to past 60 percent. So, Canadians are under no illusions this time around in 2024 that when Trump says something, he probably means it.”

Polls from last fall and early this year found support rising for boosting defense, but Canadians are also concerned about government overspending in general.

The Biden administration appears to be cutting Ottawa some slack for once again missing the formal NATO target, and the Trudeau government is signaling to Canadians it can sell its allies on the cash increase as enough.

U.S. Ambassador to Canada David Cohen praised the spending plans when they were previewed in a defense policy review unveiled last week, hailing it as “real progress” and a “substantial down payment” on the pledge.

But former U.S. NATO reps are rebuking the Trudeau government for short-changing the alliance yet again.

Kurt Volker, U.S. ambassador to NATO under George W. Bush, called it a “big mistake on Canada’s part.”

“There is a war going on. The world wants the U.S. to help deal with it. But if others aren’t even paying 2 percent of GDP on defense to do their share, it is going to be hard to persuade the U.S. to do even more in order to cover for Canada … and that would lead to a failure for all of us.”

Ivo Daalder, who was U.S. NATO ambassador from the Obama era, said what allied nations agreed to was “a floor, not a ceiling,” meant to be “met in 2024, not 2030.”

“What Ottawa proposes will neither provide Canada with the military means it needs in a dangerous world nor satisfy any of its NATO allies,” he told POLITICO. “It just won’t do.”

Conservatives call for more

The budget plan, expected to be swiftly approved by Canada’s Parliament, comes as Prime Minister Justin Trudeau’s Liberals are trailing in the polls by double digits behind Pierre Poilievre’s Conservative Party, putting Trudeau on track to a sweeping defeat in the next federal election, which must take place by the end of next year.

Although defense spending wasn’t any better under Conservatives when they held power from 2006 to 2015, Canada’s failure to meet the 2 percent target has now become a rallying cry for Conservatives who want to see a more muscular Canadian military.

Long-time Conservative Sen. Claude Carignan told POLITICO Canada’s failure to keep pace with NATO commitments is “embarrassing” when he travels for diplomacy, pointing to a recent meeting in Brussels where European colleagues rebuked Canada’s sputtering defense funding.

“We need to invest more in our army, in our capacity,” he said. “We need to respect our obligations.”

“Defense spending is the price for being taken seriously in the world now,” Conservative member of Parliament Adam Chambers told a crowd at a Public Policy Forum conference in Toronto last week.

Canada’s former parliamentary budget watchdog, Kevin Page, who now heads the Institute of Fiscal Studies and Democracy in Ottawa, says it’s more doable now than it has been for decades.

“It’s not like we can’t do it,” the independent analyst tells POLITICO. “It’s hard to make the case that we can’t move towards 2 percent because we’re fiscally constrained.”

Canada has the fiscal capacity — even if it makes for tricky budget politics.

“Particularly, when you look at other countries that have higher debt, higher budgetary balances, and they’re meeting their NATO targets or they’re just spending more as a percentage of GDP than Canada,” Page said. “We’ve seen under this government that it’s possible to add percentage points to the program spending base without too much fallout.”

As they prepare for July’s NATO summit in Washington, the Trudeau Liberals are gambling that they’ll get credit from allies merely for showing some progress.

Defense Minister Bill Blair told POLITICO Canada is committed to “going to 2 percent” and is finally on the right path to get there, vowing to reach it once Ottawa decides on key procurement questions, such as what kind of new submarines it wants.

“I could have just said in this document, we’re going to book some money to eventually spend it on submarines,” he said. “We made a responsible decision.”

But critics question whether the government can make good on its announcement. The last defense policy update from seven years ago outlined how the military would fix its recruitment woes, which remain a major problem to this day. Blair himself has likened the armed forces’ personnel crisis to a death spiral.

And finding the money’s just the first step. When it comes to getting it out the door and through the procurement process, that’s a whole other challenge.

Pressed in a recent media briefing on whether the government could even spend 2 percent right now if it tried, a defense official said Canada “would need to build towards that.”

“It takes a while to invest in and build military capabilities.”

The problem is it’s taken this long already.

“We have under-invested for decades, and we’re at the point where that’s essentially all catching up with us because we’ve got ships that are 30 years old and airplanes that are in their 40s,” said David Perry, president of the Canada Global Affairs Institute think-tank.