In the last few months, there has been a conspicuous shift in public opinion regarding defence spending. The majority of Canadians are now in support of the federal government increasing spending on Canada’s defence. Accordingly, in the recent federal election campaign, defence has figured more prominently in public discourse and in promises that political parties made. In fact, we saw little daylight between the political parties’ positions on the need for defence spending to reach 2% of GDP.
This shift in Canadian public opinion is hardly surprising, given the current geopolitical environment we find ourselves in. Threat assessments have indeed significantly changed. Intensifying competition in the Arctic, relentless activities in the cyber domain and efforts to acquire or expand long-range strike capabilities, to name a few, are amongst the contributing factors for a growing sense of insecurity in the country. Further, many take a dim view of our country’s state of readiness to detect, deter and defend against these growing threats.
As Canada is gearing up to spend more on our national security and on our defence capabilities, shouldn’t we be thoughtful and strategic about how we want to go about this, while ensuring we do it with a sense of urgency? Shouldn’t we be purposeful and shrewd in identifying where Canada has domestic capabilities and competitive strengths, and could play a leadership role amongst our allies? Such an approach may be advisable for our country’s longer-term, geopolitical, geostrategic and geoeconomic interests. Certainly, Canada cannot and should not be, a “jack of all trades”, but we could be deliberate in pursuing domains where we can preserve and grow sovereign capabilities.
Clearly, despite the turbulences we are going through in our relationship, the United States remains our most important security partner, as Prime Minister Carney recently said. We should always seek collaboration, integration and interoperability with the United States. However, this should not preclude Canada from standing on its own in key areas and becoming a contributor of national security knowhow and technologies for our allies. Further, this should not preclude Canada from diversifying its national security partnerships, notably with Europe, but also Australia, South Korea and Japan. These are not mutually exclusive objectives. Take South Korea as an example. They have been able to pursue concurrently a strong defence equipment relationship with the United States, while developing its own defence industrial capabilities and noticeably accelerating its exports in the defence sector in the last years.
This defence industrial strategy should be underpinned by a comprehensive capability map with a view to having a firm grasp of where we have strengths, where we have comparative advantages and where we have gaps.
A strong and ambitious defence industrial strategy
To be able to achieve these objectives, it is paramount for Canada to have in place a strong and ambitious defence industrial strategy. Several jurisdictions have taken this initiative, including the United States, the European Union, Australia and the United Kingdom. Canada is, in fact, playing catch up.
As a critical first step, this defence industrial strategy should be underpinned by a comprehensive capability map with a view to having a firm grasp of where we have strengths, where we have comparative advantages and where we have gaps. We should also recognize that our economic security and national security go hand in hand. Cyber threats to our critical infrastructure and strategic sectors, as well as threats to our sovereignty and resources in the North and the Arctic, are as much about protecting our economic interests, as they are about protecting our national security.
We also need to harness and stimulate intersections and synergies between our civilian and military industries. Economist and academic Mariana Mazzucato, in her book “The Entrepreneurial State”, provides examples of widely used technologies in our society that originate from government-funded research initiatives, and often defence projects, including global positioning system (GPS), multi-touch screen, voice recognition and the internet. In aviation, several aircraft manufacturers developed their fly-by-wire technologies from their military aircraft programs and subsequently transposed them to their civilian products.
However, increasingly, the reverse is also true. Civilian innovation is supporting defence needs. It is and should be a two-way street. For instance, Bombardier’s defence business is built around supplying its business aircraft platforms for defence applications, like airborne early warning (AEW) and detection, signal intelligence, communications, surveillance and reconnaissance. The company provides aircraft modification, engineering and certification support, to enable the installation, by system suppliers and integrators, of radars, sensors and systems onto the aircraft.
In aviation, this interconnectivity between civil and military aviation has been long standing. John F. Kennedy once said in a speech in 1963 to a graduating class of the U.S. Air Force Academy in Colorado Springs that “Civilian aviation, long both the beneficiary and the benefactor of military aviation, is of necessity equally dynamic. Neither the economics nor the politics of international air competition permits us to stand still in this area.” To this day, these assertions remain both accurate and salient.
In the recently released white paper entitled “European Defense Readiness 2030” or “ReArm Europe Plan”, the European Commission states that: “In the realm of deep tech, the distinction between civilian and defence is blurred. As a result, innovative civilian startups and relevant R&I results can play a crucial role in developing cutting-edge solutions that can significantly enhance military capabilities and improve operational readiness”. The U.S. Department of Defense, in its inaugural National Defense Industrial Strategy (NDIS) published last year, draws similar conclusions and calls on the defence industrial apparatus to expand its collaboration horizons to encompass civilian know-how.
Canada has formidable strengths
Undeniably, this is the task at hand for Canada as well. Canada has formidable strengths in several areas that can be leveraged for our national security needs and defence industrial base, including critical minerals, artificial intelligence, quantum computing, aerospace, advanced manufacturing, digital technologies and financial sector.
We should not settle for a downstream role only, meaning we content ourselves with being a strong link in value chains led or controlled by firms in other countries. We should also be aiming at upstream roles in innovation chains by commercializing products and systems in Canada. These roles create high value R&D and engineering jobs, in addition to manufacturing and technical employment. These roles ensure more sovereignty and autonomy, and make Canada a more potent international player, if we can be a leader, not only a follower, in key areas like aerospace, shipbuilding, surveillance, remote sensing and cyber security technologies.
We should avoid at all costs a branch-plant economy mentality to guide the development of our defence industrial base. We can do so by ensuring that our defence industrial base strategy includes critical features, such as enabling early engagement with domestic industries and proactively supporting exports.
Early Engagement
Early engagement with industry, before any formal tender process, would provide demand signals that may direct and drive private sector investments towards areas and capabilities which may be beneficial for Canada.
Barriers preventing this early engagement to take place should be removed. These include lack of mechanism for industry to obtain pre-contract or pre-tender security clearance, to enable earlier, meaningful exchanges between the Armed Forces, government and industry; risk aversion to innovative procurement approaches; and inability or shortage of resources within the government and armed forces to engage in longer term planning.
Exports
Exports ought to be an integral part of any defence industrial strategy. The Business Council of Canada in its paper “Security & Prosperity, The Economic Case for a Defence Industrial Base Strategy” correctly points out that: “Many of Canada’s allies – including France, Sweden, and South Korea – have recognized that their domestic markets are often too small to incentivize domestic defence firms to expand their operations and to develop industrial capabilities which are core to their country’s national security”. The goal would be to provide scale for Canadian firms, by positioning the Canadian industry as a supplier of choice for allies’ needs.
Canada has a once in a generation opportunity to turbocharge its economy, productivity and innovation for the benefit of our national and economic security. We can do this via a strategic approach, leveraging Canadian innovation, maximizing economic benefits for our country, and enhancing our country’s relevance and indispensability on the international scene by being able to support our allies with our solutions. An ambitious and results-oriented defence industrial strategy can generate nation-building dividends. Let’s not miss the boat!
Explore more about the topic
Click here to watch the replay of our conference on May 14th « Defence and sovereignty: what strategic role for Canada and its businesses in the face of global tensions? » with leaders from Davie, Rheinmetall and Bombardier (in english and french)
Listen to our podcast episode « Can we reinvest in defence without buying from the US? » (in french)