Canada eyes EU defense contracts, challenging U.S. dominance
Canada is in advanced discussions with the European Union regarding participation in defense contracts, as reported by "The New York Times" on Wednesday. The report highlights that Canadian companies might gain access to the EU market as an alternative to U.S. military equipment suppliers.
The agreement on Canada’s involvement in the European defense industry "will bring contracts to Canadian manufacturers and help lessen dependence on the United States," wrote the "NYT." According to the newspaper, these talks are well-progressed.
According to sources from both Canada and the EU cited by the "NYT," the discussions focus on Canada joining a new EU defense initiative. The goal is to bolster the EU defense industry and find alternatives to U.S. arms supplies.
Alternative to the F-35
Canada could participate in projects such as the production of the Saab Gripen fighter jet, which competes with the F-35 aircraft produced by Lockheed Martin in the USA, emphasized the "NYT." However, the talks currently do not involve specific contracts.
Last week, Canadian media reported that Canadian Prime Minister Mark Carney initiated a review of the $14 billion plan to purchase F-35 aircraft from the USA. He also asked Defense Minister Bill Blair for a review of the contract with Lockheed Martin to determine whether it is the best investment for Canada and if there are better alternatives.
Defense white paper
The European Commission published a defense white paper on Wednesday. Areas needing enhancement within Europe's rearmament include air and missile defense, artillery systems, ammunition, and the Eastern Shield to strengthen land border protection.
The white paper, prepared by Defense Commissioner Andrius Kubilius from Lithuania, elaborates on the previous rearmament plan presented by EC President Ursula von der Leyen. It proposes total expenditure of $867 billion. The document mentions loans amounting to $162 billion for defense projects, relaxation of budget discipline for member states regarding defense spending, and the possibility of reallocating funds within the EU budget. This proposal will be discussed by the leaders of the 27 member countries at the Brussels summit on Thursday.
Components originating from the EU
The EC proposed that 65% of the defense loan funds should go exclusively to components originating from the EU. However, there will be flexibility if technology from the USA or the UK becomes hard to replace. The white paper emphasized that the presence of U.S. armed forces in Europe has contributed to its dependence on the USA.
Third countries that enter into a "security and defense partnership" with the EU will be able to participate in procurements.
According to the "NYT," Canada may be preferentially admitted to the EU market as an alternative to U.S. suppliers.
Carney spoke on Sunday with von der Leyen, ahead of his visit to Paris and London. The Canadian Prime Minister wrote on Platform X that their conversation focused on Europe's rearmament plan and the work Canada is doing to "strengthen its defence at home and abroad." Carney added that Canada is making new investments in defense and "working with allies."
The "Financial Times" reported on Wednesday that companies from the USA, the UK, and Turkey will be excluded from procurement orders from the $162 billion loan plan unless their governments sign defense and security agreements with Brussels.
