A leading Canadian business leader has warned that Canada faces “diplomatic isolation” if it is not ready next month to present a concrete plan to increase defense spending to meet NATO standards.
The Business Council of Canada, which has become increasingly involved in national security discussions in recent times, made the assessment in a letter to Prime Minister Justin Trudeau.
The letter came as NATO defence ministers and G7 leaders prepare to meet for separate meetings in Europe, and as leaders of NATO allies prepare for a summit in Washington DC next month.
The council said its next meeting in Washington could focus particularly on Canada, the only country among its 32 member states that has not publicly stated plans to devote at least 2 percent of its gross domestic product to military spending by the end of the century.
“The consequences of this diplomatic isolation, both in terms of security and economic partnerships, will have far-reaching implications for all Canadians,” the two-page letter to the prime minister, dated June 7, 2024, said.
“Fortunately, it is not too late. The government should be able to officially announce before the summit that it will review and revise its defense spending plan to achieve the full 2 percent target by 2029-30.”
The council, made up of CEOs and entrepreneurs from Canada’s leading companies, said Canada needs NATO in dangerous and uncertain times.
“It is vital that Canadians work with our NATO allies to defend our borders, interests and values,” the letter states. “If the Canadian government does not make this baseline level of national defence investment, as committed by successive Canadian governments, including yours, people’s lives and livelihoods will be put at risk.”
The Liberal government released its latest defence policy in the spring, pledging to increase defence spending by billions of dollars, but Canada’s military spending is expected to reach just 1.76 per cent of GDP by the end of the decade.
According to documents leaked to the Washington Post several years ago, Trudeau told allies that Canada would never meet the 2% threshold.
Both the Liberal government and the Conservative opposition have pledged only to “work toward” the goals, and U.S. ambassador to NATO Julian Smith recently pointed out that Canada is the only NATO member state that has not set a deadline for reaching them.
“We were called in.”
A bipartisan group of U.S. lawmakers also recently wrote an open letter urging Canada to fulfill the commitment made by all NATO members at last year’s summit in Vilnius, Lithuania. All 32 countries committed to a “permanent” target of 2% of GDP. In other words, this is a minimum expected investment, not a maximum.
A bipartisan group of U.S. senators has written to Prime Minister Justin Trudeau urging Canada to meet NATO spending targets first agreed to in 2014. Sen. Kevin Cramer, who co-authored the letter, said Canada “needs to do a little more” to help ensure freedom.
“This is an area where we’ve been criticized,” Goldie Hyder, president and CEO of the Canadian Business Council, told CBC News. “It used to be something that was criticized quietly in Washington, but now it’s being done very openly.”
Haider said business leaders believe the country should have the sovereign ability to protect its people, adding that Canadians believe their government must honor its commitments to NATO.
Foreign Affairs Minister Melanie Joly faced sharp criticism for Canada’s intransigence on Tuesday while speaking on a panel at the U.S.-Canada summit in Toronto, sponsored by Eurasia Group and BMO Financial Group. Sitting next to Sen. Chris Coons (D-Delaware), one of the U.S. officials who signed the open letter, Joly defended her government’s military investment record.
She said Canada’s possible purchase of new submarines and other equipment not yet costed for in its defence policy would go a long way towards meeting its NATO commitments.
“I’m confident we’re on the path to getting to 2 percent,” Joly said. “I know the defense minister is working on this and I think there will be more progress on this.”
Coons responded, joining other U.S. officials in saying Canada’s defense spending was trending well, but he did not completely absolve Joly.
“If we can see a path to 2 percent, that’s credible,” he said. “That would go a long way to strengthening our defense ties.”
In a recent report, the Parliamentary Budget Office estimated that to meet the two per cent target, Ottawa would need to spend an additional $57 billion on defence from 2023-24 to 2026-27 (an extra $15.5 billion in 2023-24, $14.5 billion in 2024-25, $14.1 billion in 2025-26 and $13 billion in 2026-27).
Haider said he was asked at a business conference in Europe why Canada had not presented a concrete defense spending plan.
“What we’re telling the government is that Canadian business sees this as a priority because it’s so important not only to our national security but also to our relationship with the United States,” he said.
“So it shouldn’t be too hard to commit to a 2% target.”
