Canada's defence spending fell behind NATO's forecast last year, alliance says

Canada is not quite as far ahead on defence spending as NATO predicted last year, according to the latest annual report compiled by NATO's secretary general.

The report, released Thursday in Brussels by NATO Sec.-Gen. Jens Stoltenberg, shows Canada spent 1.36 per cent of its gross domestic product on the military and new defence hardware in 2021.

That's a slight dip from the 1.39 per cent of GDP projected for Canada's defence budget in the western military alliance's last assessment of member nations, which was published last June.

NATO calls on its members to spend at least two per cent of national GDP on their militaries to keep them operational and equipped with modern technology.

In a media statement, the Department of National Defence said that "the fluctuation in the NATO estimate since June 2021 is the result of changing GDP forecasts, due to the economic impact of the COVID-19 pandemic and current economic recovery."

Out of 30 NATO nations, Canada ranks 25th in terms of its military spending. After Russia's annexation of Crimea in 2014, alliance members agreed to increase their defence budgets to bring them up to the two per cent benchmark by 2024.

Stoltenberg said allies have invested an additional $270 billion in their militaries since that commitment was made — and at last week's emergency meeting of NATO leaders, assembled to discuss Russia's invasion of Ukraine, many pledged  to do more.

"Allies agreed that we must redouble our efforts to invest more, and more quickly, in our defence," Stoltenberg said.

In an interview with CBC's Power & Politics late Thursday, Stoltenberg said that when he met last week with NATO leaders, Prime Minister Justin Trudeau assured him that "Canada would consider significant further increases in defence spending."

He noted the contributions of Canadian troops, ships and aircraft to NATO missions but underlined the alliance's expectations.

"I expect all allies, including Canada, to make good on the promises we have made," Stoltenberg said.

The Liberal government has steadfastly avoided committing to the two per cent goal, preferring instead to focus on its 2017 commitment to increase defence outlays to 1.5 per cent of GDP by the 2024-25 timeframe.

To hit the NATO target, Canada's defence budget would have to increase to roughly $58 billion — instead of the projected $32 billion set out in the federal government's defence policy almost five years ago.

Trudeau was asked directly last week whether his government is prepared to spend more than it has committed. He didn't answer the question.

The new federal budget will be released on April 7. Defence Minister Anita Anand attempted Thursday to manage expectations.

"I think we also have to remember that Canada's contribution militarily must be recognized not only in terms of our NATO commitments but also in terms of our commitment to the current crisis in Ukraine," she said.

"We are working very hard to ensure that we support our NATO commitments in kind. We have recently increased, indeed doubled, our person commitment in terms of Operation Reassurance. We are there on land, at sea and in the air for NATO and I am working on a robust modernization package for NORAD that will ensure that we continue to live up to our military commitments."

Canada faces growing international pressure to make some kind of firm dollar commitment to its military. Germany — a NATO ally that tends to align with Canada's outlook on defence and to pursue a more pacifist approach to foreign policy — has committed to meeting the two per cent target in response to Russia's invasion of Ukraine.