For decades, NATO has maintained a clear benchmark for defence spending: 2% of a nation’s GDP. This figure signifies a commitment to collective security. However, as of 2024, Canada spends only about 1.4% of its GDP on defence. With increasing pressure from NATO allies and a shifting global security landscape, Canada faces the pressing question: Can it realistically achieve the 2% target by 2028? Insights can be drawn from nations that have swiftly met this benchmark in response to geopolitical challenges.
NATO’s 2% target gained renewed focus following Russia’s 2014 annexation of Crimea, prompting Eastern European nations to rapidly increase their defence budgets. In contrast, Canada, geographically distant from immediate threats, continued to lag. By 2023, only 11 of NATO’s 31 member countries had met or exceeded the target. These nations not only boosted their defence spending but also overhauled their military strategies.
Canada’s defence budget in 2024 stands at approximately CAD $35 billion, well short of the estimated CAD $50 billion needed to meet the 2% target—a daunting 43% increase. Several factors contribute to this shortfall:
- Economic Pressures: High social and healthcare spending limit fiscal flexibility.
- Public Opinion: Many Canadians perceive military spending as less urgent than domestic issues.
- Geographic Security: Unlike Eastern Europe, Canada faces no immediate existential threat.
Other NATO countries offer valuable insights into achieving rapid defence spending growth.
- Poland: Increased its defence budget from 1.85% of GDP in 2014 to over 2.4% by 2023, driven by the threat posed by Russia. Investments included modern tanks, F-35 fighter jets, and advanced missile defence systems. Poland prioritized modernization and linked defence spending to national security through effective public messaging. Canada could adopt a similar strategy by emphasizing Arctic sovereignty as a strategic priority.
- Germany: Traditionally hesitant about defence spending, Germany underwent a dramatic shift following Russia’s 2022 invasion of Ukraine. It established a €100 billion special defence fund to accelerate military upgrades. Canada could follow this model by creating a dedicated defence fund to bypass annual budget constraints.
- The Baltic States: Estonia, Latvia, and Lithuania consistently exceed the 2% target due to their proximity to Russia. These nations built public support by emphasizing existential threats. Canada can draw parallels by framing defence spending as essential for Arctic and cybersecurity.
To meet the 2% target by 2028, Canada requires a clear and actionable roadmap:
- Increase Budgets Gradually: Incremental spending tied to GDP growth can help reach the target without compromising critical social programs. For instance, committing an additional CAD $3 billion annually over five years could make the goal attainable.
- Streamline Procurement Processes: Canada’s defence procurement system has faced criticism for inefficiency, with delays in acquiring fighter jets and naval vessels. Learning from countries like the UK and Germany could expedite these processes and ensure timely modernization.
- Focus on High-Impact Areas: Prioritize investments in cybersecurity, Arctic defence, and NATO interoperability to maximize returns and enhance national security.
- Engage the Public: Building public support for defence spending is crucial. By linking spending to job creation in the defence sector and emphasizing the importance of national security, the government can foster a stronger consensus.
Despite a clear strategy, significant obstacles remain:
Economic Uncertainty: A potential global recession could strain government finances.
Political Divisions: Achieving bipartisan consensus on defence spending is critical but challenging.
Geopolitical Perception: Canada’s relative safety may make it harder to justify increased spending to a skeptical public.
Failing to meet the 2% target risks damaging Canada’s credibility as a NATO ally. In an era of escalating geopolitical tensions, bold leadership and strategic investments are crucial. Achieving this target by 2028 requires immediate action, as delays in national defence carry significant risks.
Photo: A Polish Army PT-91 Twardy tank taking part in the Canadian Army Trophy tank competition creates a dust cloud as it moves around the training ground at Ādaži in Latvia (2024) by North Atlantic Treaty Organization via Flickr.
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
