Canada Hikes Defense Budget as Trump Demands Allies Step Up (1)

(Bloomberg) — Justin Trudeau’s government plans to increase annual military spending by two thirds over a decade as Canada braces for a more isolationist U.S. under Donald Trump.

Defense Minister Harjit Sajjan released a policy review Wednesday, outlining a 20-year military procurement strategy that reiterates plans to replace its existing fighter jets and renew its fleet of warships. Defense spending will increase to 1.4 percent of gross domestic product within eight years, Sajjan said. That’s up from 1.2 percent currently but still short of a North Atlantic Treaty Organization goal of 2 percent.

The increased spending comes as Trudeau’s government begins to raise questions about Trump’s commitment to international alliances, including whether the U.S. remains a reliable guarantor of global security. Canada laid out its world view in a major policy speech Tuesday by Foreign Affairs Minister Chrystia Freeland, in which she made a staunch defense of the rules-based global order and pledged to press ahead with international alliances even if it means drifting away from the U.S.

“This defense policy is for Canada” and “our responsibility to the world,” Sajjan told reporters at an Ottawa press conference, when asked whether the spending increase was driven by U.S. pressure.

U.S. Secretary of Defense Jim Mattis welcomed Canada’s plan. “It’s critical for Canada’s moral voice to be supported by the hard power of a strong military,” he said in statement.

U.S. Turns Inward

In her rationale for more military spending Tuesday, Freeland said the country should be careful not to become a “client state” of its neighbor. “Although we have an incredibly good relationship with our American friends and neighbors, such a dependence would not be in Canada’s interest,” the foreign minister said.

Trump’s decisions to pull the U.S. out of the Paris agreement on climate change and the Trans Pacific Partnership trade pact are testing the decades-old system of international rules built in the aftermath of World War II. That includes questions over the U.S.’s military commitments following Trump’s lukewarm approach to NATO and his insistence that allies foot more of the bill for collective defense.

The sense that the U.S. is becoming an unpredictable partner is being echoed throughout much of the world — prompting German Chancellor Angela Merkel to call on Europeans to “take our destiny into our own hands.” Yet the situation is more delicate for Canada, which is linked with the U.S. by geography, trade and history like no other country. About three-quarters of Canada’s exports are shipped to the U.S., and the two countries share the longest international border.

Wednesday’s defense document forecasts that annual spending will increase to C$32.7 billion ($24.2 billion) by the 2026-27 fiscal year, from C$18.9 billion in 2016-17. Over 20 years, new military funding will total C$62.3 billion. 

Fighter-Jet Purchase

The country’s air force will replace its existing fleet of CF-18 jets with 88 new fighter aircraft after a competition. Canada will continue exploring the potential acquisition of an interim aircraft until the new fleet is in place. The cost of the planned air force equipment purchases including the fighter jet replacement has been estimated at C$26.4 billion over 20 years.

Sajjan was peppered with questions about whether, given Canada’s history of falling short on pledges to acquire military equipment, he can guarantee the new plan will materialize. The jet-fighter purchase is a case in point. Former Prime Minister Stephen Harper had previously committed to acquiring 65 F-35 jets from Lockheed Martin Corp. in 2010, only for that plan to be abandoned by Trudeau.

Canada also seems to be wavering on a plan to acquire 18 Super Hornet fighter jets from Boeing Co. as a stopgap measure. Freeland threatened to review its military contracts with the Chicago firm last month, after Boeing filed a trade complaint saying Montreal-based Bombardier Inc.’s C Series aircraft was being sold at unfairly low prices.

Sajjan also reiterated Canada’s plans to replace its current fleet of destroyers and frigates with 15 new vessels, at a new estimated cost of C$56 billion to C$60 billion. Irving Shipbuilding Inc., based in Halifax, Nova Scotia, has already been chosen as the prime contractor.

(Updates with U.S. comment in fifth paragraph.)

©2017 Bloomberg L.P.

Go to Source