What is NATO's new 5% defense spending commitment? How will Canada meet? – National
Canada joined NATO allies on Wednesday, agreeing to a new defense spending target of 5% of GDP, but the details are more complicated.
Members of the alliance must meet new spending targets by 2035. 5% falls into two categories: “Core Defense Requirements” and the broader defense-related infrastructure and industries.
Speaking at Hague reporters at the NATO summit, Prime Minister Mark Carney said Canada will achieve its new goals after lagging behind the league's spending targets for many years.
“We have arrived at this summit and look forward to a plan to help lead new investments to strengthen our strength,” he said.
“In view of the new threats facing Canada, our investment in defense and security, broader security – we are not making trade-offs, we are not sacrificing for it.
Carney did point out that at the end of the decade, Canadians may need to have a conversation around “trades” for ongoing high defense spending.
David Perry, president of the Canadian Institute of Global Affairs, who participated in the Brussels summit, said Canada's increased defense spending will be the largest since it rose “large-scale” during World War II.
“This is the complete game changer for Canadian defense,” he told Global News.
Here is a knowledge of new spending commitments and what Canada plans to do to achieve this.
What is the 5% expenditure commitment?
The official statement of the NATO Leaders Summit promises to invest in 5% of GDP each year in a new commitment “core defense requirements and defense and security-related spending by 2035.”
The commitment marks the alliance's previous commitment to spending at least 2% on defense, which was agreed in 2014 and Canada has failed to meet for years.
The new target includes at least 3.5% of GDP in defense spending, which NATO defines as the armed forces primarily used in a country. This includes from large military equipment such as fighter jets and submarines, ammunition, salary and pensions for military members, to related defense forces such as the National Police and Coast Guard.
According to the summit, the second expenditure category is 1.5% of GDP, which aims to “protect our critical infrastructure, defend our networks, ensure our citizens are prepared and resilient, unleash innovation and enhance our defense industry base”.
NATO leaders agreed to review the new spending plan for 2029 to ensure it is aligned with the global threat environment at that time.
“Our investment will ensure that we have the strength, capabilities, resources, infrastructure, combat readiness and the resilience we deserve to deal with the three core tasks of deterrence and defense, crisis prevention and management, and maintain the resilience we deserve,” the statement said.
How will Canada get there?
Canada has long lagged behind NATO's top 2% of NATO. Canada's defense spending could hit 1.45% last year, according to an annual report released by NATO Secretary-General Mark Rutte in April.
Carney previously announced that Canada will reach 2% at the end of the current fiscal year in March, a decade ahead of previous estimates – with new funds of $9.3 billion.
Much of this money will be spent on salary increase for Canadian armed forces members and strengthen existing military bases and equipment, while also adding the domestic defense industrial base.
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“Of course, at the heart of our defense investment is the men and women of the Canadian Armed Forces,” Carney said Wednesday in an earlier announcement of the “working” and “working” a new 3.5% core defense target.
Carney noted that the military members “have not been paid to reflect what we want them to do” and were stranded by outdated or inactive equipment.
“We are making up for that and setting it up, which is a big part of what we’re doing with defense this year.”
As for the 1.5% portion, Carney said this will include “ports, airports, infrastructure to support the development and export of critical minerals, telecommunications and emergency preparedness systems.”
He added that allies “will buy more equipment and technology that Canadian workers in Canada, shipyards, labs and store floors buy in Canada”, which will not only contribute a 1.5% share, but will also grow the Canadian economy.
“We will build drones, icebreakers, aerospace technology, and more, and more needed to build a safer world,” he said.
Carney noted that much of the work on these plans is already underway.
He had previously said that major project legislation passed by the House of Commons last week, which could become law on Friday after Senate review, ensured that “national building” projects would be quickly established.
“Canada has one of the largest and most diverse key minerals and we will develop with international partners,” Carney told CNN in an interview aired on Tuesday.
“Some of these expenditures involve this five percent. In fact, this will happen in this 5 percent due to infrastructure spending, ports and rail, and other ways to get these minerals. So it's something that benefits the Canadian economy, but it's also part of our New NATO responsibilities.”
Carney also pointed out to CNN and reporters that as the nature of the war changes, threatening players turn to drone technologies such as cyber warfare and unmanned driving technology, Canada will shift to these priorities to these priorities, and costs and expenditures will change accordingly.
He said Wednesday that makes it difficult to predict how much it will cost Canada from now on a decade.
Can Canada achieve all this?
Carney estimates that CNN believes that 5% of Canada's GDP is currently equivalent to C$150 billion per year.
Perry said Canada could meet new spending targets on a timetable set by NATO, “if the government is actually a priority,” noting that it will cost less than Ottawa than it would cost to fight the COVID-19 pandemic with Ottawa and provide financial support in a relatively short period of time.
“That’s hundreds of millions of dollars a year,” he said. “It’s going to be hundreds of millions of dollars in spending – a lot of money, don’t get me wrong, but there’s nothing like what we’ve hit the pandemic every year.
“So if the Canadian government wants to pass this, it will definitely happen.”
Carney said that Canada’s No. 1 defense partnership signed with the EU this week, and partnerships negotiated with the United States, will help reduce domestic costs.
“If you suddenly start spending more money in a region, you may end up spending more money on rising prices and killing points,” he said.
“This is why we work more closely with Europeans, and that’s part of the reason we continue to work with the United States in the right field, and that’s part of why this growth happens at a measured rate, or we’ll try to operate at a measured pace.”
Perry noted that the wording of the agreement allowed Canada and other allies to “less strictness and loyalty within the other 1.5% of non-core defense spending.”
Kevin Page, former parliamentary budget officer and president of the Institute for Fiscal Research and Democracy at the University of Ottawa, told Global News that the increase in overall spending is “workable, but it will be challenging.”
“We will need to look at the strategy and plan,” he said in a detailed report on defense spending, as well as other detailed reports.
Where are the other allies?
NATO said it expects all 32 alliance members to reach their earlier target this year, compared with only three allies in 2014.
Only Poland met or exceeded the new 3.5% core defense spending target, reaching 4.07% last year, according to Rutte's annual report.
U.S. – President Donald Trump pushes the 5% target, as well as Estonia, Latvia and Lithuania, to spend more than three-thirds of its GDP on defense in 2024.
The annual report noted that the United States accounted for 64% of defense spending among all NATO allies last year, with the rest of the members.
Rutte attributed Wednesday to Trump, who criticized the coalition and even threatened to defend members who were not enough to pay for the Defense Department to change the dynamic.
“He's completely right that Europe and Canada are basically not offering NATO what we should offer, and the United States spends much more on defense than Europeans and Canadians,” he said.
“Now we are correcting that. We are equal.”
– Files with Global's Nathaniel Dove
