Prime Minister Mark Carney has launched one of the boldest reorientations in Canadian defence policy in decades, announcing a multi-billion-dollar surge in military spending to meet and eventually exceed NATO’s evolving benchmarks. This marks a dramatic shift as Canada pledges to hit NATO’s traditional 2% of GDP defence spending target this year, and strives towards a new, more ambitious 5% target by 2035.
Since taking office in April, Carney has repeatedly warned that Canada’s military is not equipped to confront the growing threats facing the country. He has cited the prospect of Russian aggression undermining Canadian sovereignty in the Arctic and the United States’ increasingly uncertain role in shaping global security, among other risks.
Mark Carney said “The international order built after the Second World War, and reshaped following the Cold War, is under pressure,”. He added, “We have taken our security for granted for too long,”.
Key Details of the Announcement:
Immediate Increase: Carney’s government has committed an extra CAN$9 billion in military enhancements for the current year. Notably, CAN$2 billion is directed at boosting personnel compensation, including a significant 20% pay hike for junior soldiers.
NATO’s New 5% Target: The new NATO deal mandates members to dedicate 5% of GDP to defence by 2035. Of this, 3.5% is earmarked for direct military spending, while 1.5% can be spent on infrastructure, critical minerals, and dual-use facilities crucial for both civilian and defence readiness.
Equipment Modernization: Investments will flow to drones, combat vehicles, aerospace technologies, and a host of advanced systems, with a strategic emphasis on Arctic sovereignty and technology innovation.
Industrial Backing: Carney emphasized leveraging Canada’s rare earth mineral wealth and defence industries as a core part of the country’s NATO contribution. New domestic initiatives like the planned BOREALIS research bureau will focus on frontier defence technologies, including AI and quantum computing.
Why Now?
The timing is acute. Global tensions—particularly in the Arctic, Russian assertiveness, and a shifting, more transactional U.S. stance on alliance commitments—have heightened the sense of urgency. Carney refers to this as a “hinge moment” for Canada’s security: “a new imperialism threatens. Middle powers must compete for interests and attention, knowing that if they’re not at the table, they’re on the menu”.
Much of the spending has a sovereignty-protection flavour, especially in the Arctic, where Canada faces both Russian and Chinese ambitions.
Critics and experts argue that rapidly increasing defence budgets could stretch Ottawa’s finances and challenge the government’s ability to deliver on social programs. There are warnings of possible “creative accounting” and deep-seated bureaucratic inertia complicating rapid allocation and spending.
The new 5% target, strongly encouraged by the United States under President Trump, represents a watershed for NATO burden-sharing. Canada, long chastised for underperformance, is positioning itself as a leader in alliance adaptation.
Challenges Ahead
Despite the announcements, experts caution that transforming promise into practical capability is formidable. The Department of National Defence faces procurement bottlenecks, a shortage of operational equipment, and the practical hurdles of scaling up both spending and defence output within tight timelines. President Donald Trump has demanded that NATO allies commit to spending five percent of their GDP on defense, and warned the United States could refuse to protect countries that do not devote what he considers to be adequate funds towards their military.
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Carney’s defence spending plan responds to both the harsh realities of global geopolitics and sustained pressure from NATO allies. If fully implemented, it signals a new era for Canada’s international posture: more muscular, technologically advanced, and assertively embedded within the Western alliance system. The coming years will test whether this ambitious agenda can be fully realized on the ground and in Canada’s defence industries.