As NATO firms up military spending target, Canada is trying to broaden what counts: sources | CBC News

Canada has quietly and consistently lobbied major NATO allies for months to expand the definition of what it can include under the military alliance’s defence spending benchmark, defence and government sources have told CBC News.

The notion of being able to include what the country spends on space, cyber and artificial intelligence (AI) research has been an important topic of conversation, particularly with the United States, said two sources with knowledge of the discussions.

CBC News is not identifying the sources because they were not authorized to speak publicly.

The conversations were separate from intense negotiations among allies over the revised defence spending plans that NATO leaders are expected to support this week at the upcoming summit in Vilnius, Lithuania. 

A report published Friday by Reuters quoted two diplomatic sources in Brussels as saying countries had reached an agreement to raise the alliance’s target for military spending to at least two per cent of a nation’s gross domestic product, with the sources calling it “an enduring commitment.”

Canada has been “very active” in trying to expand the definition of what’s covered by the two per cent benchmark, the government and defence sources told CBC News.

The matter was raised in the bilateral meeting between Defence Minister Anita Anand and U.S. Defence Secretary Lloyd Austin last fall at the Halifax International Security Forum and “had resurfaced recently,” the sources said.

The response from Washington has been “a flat no.”

At the moment, Canada spends 1.29 per cent of its GDP on defence — far less than the current suggested goal of two per cent — and a long way from what’s about to become the expected standard. 

Canada’s Parliamentary Budget Officer, Yves Giroux, said last year that NATO’s definition of defence spending is broad and encompasses more than just direct military spending. In Canada, for example, both the Canadian Coast Guard and veterans’ pensions were recently included in the country’s calculation of military spending.

To meet NATO’s goal of spending two per cent of the country’s GDP on defence, Giroux estimated last year that the federal government would have to spend an additional $75.3 billion before the end of 2027. 

Precisely what elements of space, cyber and AI research Canada wants counted is unclear. However, it could amount to several hundred million dollars annually.

NATO makes ‘enduring commitment’ to target: report

The entire budget of the Canadian Space Agency is more than $530 million per year, while the federal government has in recent budgets announced different tranches of funding for cybersecurity and artificial intelligence.

For example, the 2022 federal budget pledged $875.2 million over five years, and $238.2 million ongoing, to address “the rapidly evolving cyber threat landscape.” 

Separately, the federal government is funding 11 major AI research projects over several years with a $1.4 billion investment.

A senior Canadian official, who spoke on background Friday as the prime minister’s office briefed journalists about the upcoming NATO summit, was asked whether Canada was in favour of a revised definition for the two per cent benchmark.

The official suggested the debate might not be over.

“You’re aware Canada has had a long-standing position where we think it’s important that the metrics that NATO uses accurately capture the strategic priorities within NATO, and also the kind of outputs we’re looking for,” said the official.

“And so there are discussions going on amongst allies in Brussels on all sorts of related issues, but I’m not going to get into what’s being discussed at the table beyond that comment.”

According to the Reuter report on Friday, the 31 allies are about to agree on “an enduring commitment to invest at least two per cent” of their GDP into their militaries in the future.

NATO Secretary-General Jens Stoltenberg has pushed to make NATO’s current military spending two per cent target “the floor, not the ceiling” of what allies spend.

In 2023, the old target will be met by only 11 of the 31 members of the alliance, according to NATO estimates. The original goal was set in 2014 and urged allies to move toward the benchmark within 10 years.

The 11 countries that hit or exceed the target are the United States, Britain, Poland, Greece, Estonia, Lithuania, Finland, Romania, Hungary, Latvia and Slovakia.

Bringing up the rear are Canada, Slovenia, Turkey, Spain, Belgium and Luxembourg, whose defence spending was less than 1.4 per cent of GDP.

Max Bergmann, the director of the Europe, Russia and Eurasia program at the Center for Strategic and International Studies in Washington, said all of the discussion around meeting the benchmark is rapidly running into an economic wall.

“There’s a lot of talk, a lot of good rhetoric, about two per cent being the floor, which frankly seems a little bit divorced from the kind of economic-budgetary realities that are being discussed by European finance ministers,” Bergmann said in a recent preview of the summit held by the think-tank.

He pointed to recent statements by Germany’s finance minister that the country must return to deficit reduction.

WATCH | Lithuania urges more support from NATO ahead of major summit:

Lithuania wants more NATO troops along its border with Belarus, Russia’s main ally

Lithuania has asked for more NATO troops to be stationed along its 700-kilometre border with Russia’s main ally, Belarus, but residents along that border doubt it’s a good idea given the current tensions.

“Well, if there’s a return to deficit reduction at the EU, then what is being discussed at NATO in Vilnius is simply not going to be reachable for many countries,” Bergmann said. 

“There’s no way Spain is going to be able to aggressively reduce its deficit and increase defence spending.”

There’s a lot of appetite for meeting the goal among Eastern European countries, the ones closest to Russia, but the further west you go, there’s less enthusiasm.

“There’s cross cutting trends that then make it not so clear cut, that European defensive — European militaries — will receive significant increases in funding,” he said. 

“I think, in general, they will, but perhaps not as much as currently anticipated.”