Will you pay for Carney’s NATO pledge?
Finance Minister orders years of spending cuts from Ministers
Good morning – Here is your weekend newsletter.
Today Chris Holcroft asks how will Carney pay for his military spending spree? Economist Angella MacEwan has part of the answer. She writes on Substack that the Finance Minister has written to every cabinet minister demanding whopping spending cuts of 7.5% for 2026, 10% for 2027, and 15% for 2028.
In peace,
Steve
Shooting Down Carney’s Faulty NATO Pledge
The PM vows military spending will zoom. He’s failed to show the need or how we can afford it.
Guest column by Christopher Holcroft. See the full version published by The Tyee on July 8, 2025.
Less than a week before Canada Day, the Mark Carney Liberal government announced it was joining other North Atlantic Treaty Organization countries in agreeing to dramatically increase spending on national defence to five per cent of gross domestic product, or GDP, within 10 years.
As with most ill-advised political decisions these days, this one has its roots in the appeasement of Donald Trump. The U.S. president had been badgering NATO countries to increase their military spending.
For Canada, the sudden five per cent decision is momentous, and potentially disastrous.
In today’s dollars, the new defence spending would amount to $150 billion per year, an astronomical sum. Even if accounting for only the 3.5 per cent “core defence spending” NATO target, this would still equate to more than the federal government spends on all health and social transfers to the provinces and territories combined.
In the government statement supporting its NATO spending announcement, the prime minister declared, “The world is increasingly dangerous.”
But is the world in 2025 uniquely more dangerous, in terms of military threats, to warrant such an upheaval in public spending?
None of this is to suggest the world is lacking in significant — even unprecedented — threats to human safety and well-being. Indeed, conflicts and suffering in Ukraine, Sudan and the Middle East, including, notably, Gaza, are alarming. Territorial competition in the Arctic is troubling.
Yet the world faces risks beyond conventional acts of military aggression. Exhibit A is climate change, as the apocalyptic scenes from Canadian forest fires make clear. Unchecked economic inequality, unfiltered disinformation networks and unregulated artificial intelligence companies pose additional and enormous challenges to the sovereignty, security and social cohesion of Canada and countries around the world.
Certainly, Donald Trump’s return to power makes the world more dangerous in a multitude of ways, particularly for Canadians.
Consider the following concerns.
Where will the money come from?
Details on how these tens of billions of new dollars will be spent are vague.
Where governments will quickly find this new money is an immediate concern. C.D. Howe Institute senior fellow and former clerk of the Privy Council Michael Wernick, for example, suggests a new, dedicated two per cent consumer tax similar to the GST. In the absence of such national tax increases or deficit financing, governments are likely to have to reduce public services that sustain democracies, cut programs that protect the vulnerable, delay investments in human capital that grow economies, and abandon efforts to confront equally, if not more urgent, risks to global security. Carney has warned of government cuts to come, and yesterday his finance minister ordered cabinet ministers to slash deeply.
It is clear the government is prioritizing conventional military defence over responding to other threats [such as climate change]. It is just not clear there is a persuasive or values-aligned case for doing so.
Where’s the evidence of need?
Defence analysts, peace advocates and even a former Liberal foreign affairs minister are already challenging the government’s recent statements and actions concerning national defence policy.
Cesar Jaramillo, former executive director of Project Ploughshares, has criticized the lack of evidence behind previous calls to commit to “arbitrary” NATO spending measures. He is not the only peace advocate to do so.
Past Liberal minister Lloyd Axworthy has strongly rebuked Carney’s NATO spending decision and advised against joining Trump’s “Golden Dome” plan, warning it would be a “betrayal” of most Canadians’ desire for more independence from the United States.
In justifying the need for even greater defence spending, the Carney government points to threats such as Russia, China and Iran. Indeed, the governments of these countries have sought to interfere in our elections, detained our citizens and threatened our allies.
The governments of Saudi Arabia, India and the United States, meanwhile, have sought to disrupt our democracy, killed and detained Canadian citizens, and threatened our sovereignty, yet the Carney government invited their leaders to Canada to attend the G7 summit.
Did Canadian voters get Trumped?
Unfortunately, there was very little advance public debate about such a significant spending commitment, and there was no talk of a five per cent commitment during the spring federal election campaign. Additionally, according to opinion polling, only about one-third of Canadians believe spending five per cent of GDP on defence is a fair target that we should try to meet.
In the absence of an unprecedented global risk environment, persuasive arguments made in a broad public debate, or a groundswell of popular support, citizens should be contemplating the fundamental question asked since the ancients: Cui bono? Who profits?
With hundreds of billions of dollars — cumulatively, trillions — to be spent by governments on expenditures like military equipment in the coming years, a massive opportunity exists for the defence industry, including arms manufacturers. Among these players, U.S. companies make up more than half the global market cap, and the United States has more than a 40 per cent market share in global arms exports.
Noted military affairs journalist David Pugliese notes the connection, writing that the “spending boost announced by NATO could also prove to be a big winner for the American economy,” as “the U.S. is the world’s largest arms manufacturer.”
Canadians have reason to be confused about whether we are taking enough steps to respond to our increasingly hostile neighbour directly to our south. In fact, while we’ve seen the announcement of a Canada-European Union mutual security pact, the Liberal government has signalled an intention to strengthen ties with the United States.
In addition to Carney’s confirmed talks to join Trump’s absurdly costly Golden Dome missile defence plan, Canada’s chief of the defence staff has reportedly urged our country to “stick with America” and purchase U.S.-built and -controlled F-35 military jets.
Canadian business leaders who are prepared to water down Canada’s sovereignty for closer economic and security ties with the United States are increasingly emboldened. Carney’s NATO announcement and corresponding acquiescence to Donald Trump will do nothing to discourage them.
Citizens concerned about the federal government’s five per cent NATO pledge must not be discouraged from asking legitimate questions, challenging unwarranted assumptions and confronting spurious declarations.
We can respect difficult choices while rewarding political courage. To truly have a “more secure world” and a “stronger Canada,” Canadians must challenge our government on its NATO pledge.
Christopher Holcroft is a writer and principal of Empower Consulting. Reach him by email.
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Readers agree with Lloyd Axworthy’s critique of PM Carney
Over recent weeks former Liberal cabinet minister Lloyd Axworthy has expressed his concerns about how PM Carney is handling Donald Trump.
PeaceQuest readers agree with Axworthy, with 4 out of 5 respondents saying they are growing more concerned (84%). One-in-ten (11%) feel it is too soon to judge Carney’s performance, but this a drop from the nearly three-in-ten (27%) who said they were willing to give Carney a chance in his dealing with Trump, when I asked readers at the end of May.
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Steve
Public opinion is almost always produced through advertising of various kinds. That's how we keep marching to disaster as long as somebody can turn a profit for themselves.
When I first learned that boys could get drafted, I totally assumed that before that happened, the arms factories would have been nationalized. Making a profit from war should be a capital offense. In a defensive war it is unpatriotic, and in an offensive war it is the worst of crimes.
Everything has gone wonky- where is the politician who recognizes our real security challenge?
military spending for what for whom which allies? It only serves to maintain fiendships