Prime Minister Justin Trudeau’s Liberals released its annual budget last week and there was no additional funding earmarked for defense.
Not since 1972, when Trudeau’s father Pierre Elliott Trudeau was PM and first cut military spending, has Canada contributed two percent of its GDP to defence. Canada currently spends just under one percent of GDP on defence and is in the lower half of NATO nations in its percentage of GDP spent on defence.
But as President Donald Trump calls for all NATO allies to pay their fair share in defending the West–the agreed upon two percent–it’s unlikely Trudeau’s government’s continued underfunding of Canada’s military will given a pass by the White House.
During German Chancellor Angela Merkel’s visit to Washington Trump said, “Many countries owe vast sums of money and it’s unfair.”
He then proceeded to specifically call out Germany shortly after the visit, tweeting: “Nevertheless, Germany owes vast sums of money to NATO & the United States must be paid more for the powerful, and very expensive, defense it provides to Germany!”
So far Canada has avoided being singled out by Trump’s wrath. Trudeau’s first White House visit with the the President in February appears to have gone relatively smoothly, and there was no mention of Canada’s failing commitment to NATO.
In other meetings in February between Secretary of Defense James Mattis and Canadian Defence Minister Harjit Sajjan the U.S. Department of Defense readout stated Mattis “thanked Canada for its commitments to NATO and the counter-ISIL campaign.”
However, the same readout also highlighted the need for continued investment in the military. “The secretary and minister also discussed the importance of defense investments and modernization to ensure continued cooperation.”
Defence Minister Sajjan’s press secretary Jordan Owens says Canada is fully committed to NATO. “The two percent of GDP pledge is an aspirational statement which aims to reverse the trend of declining defence expenditures and to make the most effective use of defence funds. We have stopped the cuts to spending, are focused on military outputs…” explained Owen by email.
Sprott School of Business professor and public policy expert Ian Lee believes there could be horse-trading going on between the two countries behind the scenes. Instead of Trump demanding Canada increase its defense expenditures, the president could instead ask for further concessions from Canada in the renegotiations of the NAFTA agreement, like opening market access to American businesses for Canadian government contracts and the agriculture sector currently protected by a supply-management system. The Globe and Mail reported last Friday that Trump’s administration has been circulating a draft letter with 40 agenda items for possible renegotiation.
“Given that Trump says he wants to at the same time renegotiate NAFTA–and he’s certainly been very clear on that–and he’s also talked about other aspect like buy American, hire American … and given our economy is more integrated with the American economy than any other economy, I can potentially see linkages between our underperformance on our two percent commitment and renegotiations with NAFTA. I’m sure both parties would deny it, but I’m not so sure there wouldn’t be linkages there,” explained Lee by phone.
The CBC and National Post have both pointed out that the Canadian Armed Forces is in a dilapidated state. The procurement of new equipment and fleets also continue to be delayed. The Trudeau government has stalled on the purchase of F-35 aircrafts, instead signalling their intention to buy 18 of the cheaper Super Hornets in the interim. As the federal shipbuilding program continues to be mired in setbacks, Canada’s navy only has 12 outdated patrol frigates and four failing diesel submarines to defend the biggest coastline in the world.
“To be very blunt, we are right next door to the United States–the largest economy in the world and the superpower–and we’re under the protection of the American umbrella. We know that if there was… any kind of incursion into North American space … the Americans would respond,” said Lee.
Trudeau’s most recent budget–which will be the second consecutive budget to run nearly a $30 billion deficit to pay for new infrastructure and innovation projects–has been widely reported as deferring the spending of an $8.5 billion in defense procurement fund until 2030.
However, the defence minister’s press secretary denies the 2017 budget defers the funds. “[W]e will be spending it much earlier to pay for acquisition and maintenance of new equipment over the life of the equipment. Since we cannot begin paying the procurement or maintenance costs on equipment before we receive it, we re-profile the funds – setting them aside for later – to ensure that we have cash on hand when the bills are due. The bulk of the costs re-profiled in this year’s budget were for Fixed Wing Search and Rescue aircraft that we will begin to acquire and pay for in 2019; new ships for our Navy, which we expect to begin receiving and paying for in the late 2020s; and upgrades to Army LAVs,” countered Owens.
On Friday Secretary of State Rex Tillerson told his counterparts at an annual foreign ministers meeting that the U.S. wants NATO nations to have a plan by the time Trump meets with the other countries’ leaders in two months’ time.
Trudeau responded in Toronto later in the day: “Canada has always been one of the handful of countries that has always been ready and capable of stepping up on important missions of participating and of punching well above their weight.”
And during budget week Canadian Finance Minister Bill Morneau said the Canadian Armed Forces were “appropriately provisioned.”
Trudeau’s Liberal government is expected to release a defence policy review looking at the future of Canadian military expenditures, but the government has given no timeline for its release.