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Investing.com -- Canada will reach NATO’s 2% defense spending target by the end of this fiscal year, Prime Minister Mark Carney announced Monday in a major shift that aims to reassert the country’s role within the alliance and respond to heightened global security threats. The commitment marks Canada’s largest increase in military outlays since World War II and comes nearly a decade ahead of the previous government’s 2032 timeline for hitting that threshold.
The policy was unveiled during Carney’s keynote at the University of Toronto’s The Munk School of Global Affairs and Public Policy, where he cast a sober assessment of the evolving global order. “We stood shoulder to shoulder with the Americans throughout the Cold War and in the decades that followed, as the United States played a dominant role on the world stage. Today, that dominance is a thing of the past,” Carney said.
The plan, estimated to require $18 billion to $20 billion in new investment, includes accelerated procurement of submarines, drones, ships, armored vehicles and Arctic surveillance tools. Also on the docket: boosting pay for military personnel, expanding health care infrastructure, and improving services for military families.
Strategically, the spending is not only geared toward achieving NATO’s 2% guidance but is also designed to position Canada for proposed future targets as high as 3.5%, a scenario being discussed ahead of NATO’s June summit in The Hague. Carney emphasized the broader context, stating, “Rising great powers are now in strategic competition with America. A new imperialism threatens.”
Recent NATO data pegged Canada’s military outlays at just 1.45% of GDP for 2024, the fifth consecutive year the country fell below the alliance goal. Allies, particularly the U.S., have long criticized Canada for under-investing; calls for increased contributions intensified during Donald Trump’s presidency, with added pressure on NATO members to match U.S. capabilities.
Carney’s remarks framed the spending not as deference to external leverage but as a response to generational geopolitical change. “Our goal is to protect Canadians, not to satisfy NATO accountants,” he said, while highlighting the opportunity to transform Canada’s economy through defense modernization and industrial investment.
In alignment with NATO’s defense industrial pledge, Ottawa will commit to developing a strengthened domestic defense manufacturing base and investing in advanced technology across cyber, AI, quantum computing and space domains. These efforts aim to curb Canada’s reliance on foreign suppliers and close longstanding capability gaps.
The dramatic shift in posture contrasts sharply with the policy of former Prime Minister Justin Trudeau, who as recently as 2023 downplayed the 2% target as a “crass mathematical calculation.” Carney, by contrast, called the present moment a “hinge moment” for Canada, underscoring a pivot not only in defense strategy but in foreign policy orientation.