Canada Deepens EU Defence Ties as Allied Spending Rises Sharply

Canada has been steadily deepening its defence cooperation with European partners through 2025 and 2026, with formal participation in the European Union's SAFE loans-for-weapons programme, sustained engagement with NATO operations, and continued commitments to the alliance's evolving defence-spending targets. The pivot toward Europe, increasingly visible in Carney government policy, runs in parallel with the broader strategic recalibration of Canadian foreign relations in response to the Trump administration's tariff pressure and the changing global security environment.

The SAFE programme

The European Union's Security Action for Europe initiative, known as SAFE, is the largest single European defence financing instrument launched since the start of the Russian war on Ukraine. The programme provides up to 150 billion euros, roughly 244 billion Canadian dollars, in loans to member and partner countries for military procurement and industrial expansion.

Canada formally joined SAFE through an agreement signed at the Munich Security Conference in February 2026. The arrangement gives Canadian defence companies access to the European procurement pipeline and positions Canadian-built equipment, components, and technology for participation in European force-modernisation programs. Companies including General Dynamics Land Systems Canada, Lockheed Martin Canada, CAE, and a network of smaller defence-technology firms stand to benefit.

For European partners, the inclusion of Canada in SAFE provides additional industrial depth at a moment when European defence capacity is being rapidly expanded. The programme is structured to support both individual member-state procurement and broader EU-level capability development, with Canadian participation calibrated to ensure mutual benefit on both fronts.

NATO commitments

At the 2025 NATO summit in The Hague, Canada and other allies agreed to a new defence-investment pledge of 5 per cent of GDP by 2035. The pledge is structured as 3.5 per cent of GDP on direct defence spending and an additional 1.5 per cent on related security investments, including resilience, infrastructure, and cyber capabilities.

Canada announced on March 26, 2026 that it had reached the previous NATO target of 2 per cent of GDP on defence spending, a target that had been the subject of years of US pressure on Ottawa. Hitting the previous benchmark was a significant political achievement for Prime Minister Mark Carney's government, although the path to the new 5 per cent pledge requires substantial additional investment.

NATO's overall European and Canadian defence spending increased by 20 per cent in 2025 in real terms, according to the alliance's most recent reporting. The pace of increase reflects the broader recognition across the alliance that the Russian war on Ukraine, the Iran war, and the more transactional US posture under the Trump administration require sustained higher European investment.

Operational deployments

Canadian military deployments in Europe have expanded significantly under the Carney government. The Canadian-led NATO multinational battle group in Latvia, which Canada has led since 2017, has been reinforced and expanded multiple times. The deployment now includes additional combat enablers, intelligence assets, and integrated air defence capabilities.

Royal Canadian Navy ships have been increasing their presence in European waters, with regular deployments to the Standing NATO Maritime Group in the North Atlantic and the Mediterranean. The Royal Canadian Air Force has continued its rotational fighter deployments to Romania and other allied airbases under NATO's enhanced air policing missions.

The cumulative deployment level represents one of the largest sustained Canadian military presences in Europe since the end of the Cold War. Personnel rotations, equipment maintenance, and family-support programs have all been adjusted to support the operational tempo, although the broader Canadian Armed Forces capacity constraints remain a real challenge.

Industrial implications

The growth in European defence spending and Canadian access to it through SAFE has created significant opportunities for Canadian industry. Heavy armoured vehicles, naval ship components, simulation and training systems, and intelligence-and-surveillance technologies are all areas where Canadian companies have established export records.

General Dynamics Land Systems Canada, based in London, Ontario, has been particularly visible in the broader transatlantic defence-industrial conversation. The company's Light Armoured Vehicle production has supplied multiple allied military forces, and the broader European demand for ground-combat platforms has reinforced the company's position in the global market.

Smaller Canadian defence firms in technology, electronics, and specialised systems have also seen demand growth. The Atlantic Canadian shipbuilding industry, including Halifax-based Irving Shipbuilding, has been expanding its export-focused work alongside continued Canadian Surface Combatant program activity.

The strategic logic

For Carney, deepening European defence ties has been part of a broader strategic narrative that emphasises Canadian diversification across multiple foreign-policy and economic dimensions. The US tariff pressure and the broader unpredictability of the Trump administration's foreign policy have given urgency to building stronger relationships with European partners.

The strategic logic extends beyond purely defensive considerations. Energy diversification, critical-minerals supply chains, and broader industrial cooperation all benefit from stronger Canada-Europe relationships. The Comprehensive Economic and Trade Agreement, in force since 2017, provides the broader trade framework that complements the defence cooperation.

Within Canadian domestic politics, the European pivot has generally been welcomed across the political spectrum, although individual elements of defence spending and procurement remain politically contentious. The Conservative opposition has supported a stronger Canadian defence posture, although it has criticised specific spending and procurement decisions. The NDP has been more cautious about combat capability expansion, preferring spending on humanitarian and disaster-response missions.

Procurement complexities

The Carney government has accelerated multiple defence procurement programs, including the Canadian submarine acquisition project, surveillance aircraft replacements, and modernised air-defence capabilities. Each program comes with its own complexities, including industrial-participation requirements, schedule challenges, and budget pressures.

Submarine procurement has been one of the highest-profile programs. The Carney government has signalled willingness to work with European partners on submarine acquisition, with options including German, Norwegian, French, and South Korean designs all being considered. The choice will have significant implications for industrial cooperation, training partnerships, and operational interoperability.

Aircraft procurement, including replacements for ageing fleets and additions to existing capabilities, will produce its own decision points through the coming year. The mix of US, European, and other potential suppliers reflects Canada's broader approach to keeping multiple partnership options viable rather than committing exclusively to any single source.

The personnel challenge

Underlying all defence-policy discussions is the basic challenge of personnel. The Canadian Armed Forces have struggled to meet recruiting targets for years, and General Jennie Carignan's options package for cabinet on potential force expansion to as many as 500,000 personnel will be among the most consequential decisions of the coming months.

Recruitment, training, and retention all face structural challenges. Bilingual recruiting, in particular, has lagged in recent years, and specialised trades face severe shortfalls. The challenges are not unique to Canada, with most NATO members facing similar pressures, but the Canadian situation is particularly acute given the broader expansion plans being considered.

The European partnership through SAFE could provide some indirect personnel benefits through training cooperation, technology transfer, and broader industrial-base support. The fundamental challenge of attracting and retaining Canadian Forces members, however, requires domestic solutions involving compensation, infrastructure, family support, and broader social recognition of military service.

The Asia-Pacific dimension

Canada's broader defence cooperation also extends into the Asia-Pacific, with continued participation in operations involving allied partners across the region. Royal Canadian Navy deployments to the Western Pacific have continued, along with Royal Canadian Air Force participation in regional exercises. The broader Indo-Pacific Strategy launched in 2022 continues to guide Canadian engagement in the region.

The Asia-Pacific dimension intersects with European cooperation through partnerships involving Australia, New Zealand, Japan, and South Korea, all of which have expanded their own engagement with European defence cooperation. The trans-regional dimension of Canadian defence policy reflects the broader recognition that European, Atlantic, and Pacific security concerns are increasingly interconnected.

Industrial cooperation also has Asia-Pacific elements. Canadian defence companies have been pursuing partnership opportunities with Asian allies, including potential participation in submarine programs, aircraft maintenance, and broader military-industrial cooperation. The Carney government's foreign-policy posture supports those efforts within the broader strategic framework.

What's next

The next significant marker in the Canada-Europe defence relationship will be the implementation of the SAFE programme through specific procurement decisions and Canadian industrial participation. The early flow of contracts and projects will indicate how effectively Canada has positioned itself within the broader European defence-industrial picture.

NATO summits scheduled through the next several years will produce additional opportunities for Canadian commitments and operational deployments. The progression toward the 5 per cent of GDP target by 2035 will require sustained Canadian fiscal effort across multiple federal budgets, with implications for other government priorities.

For Canadian businesses and workers in the defence sector, the broader environment offers significant opportunities but also requires careful navigation of geopolitical, regulatory, and market considerations. The next year will provide important early signals about how effectively Canada can convert its strategic positioning into concrete economic and operational results.