After facing months of pressure, senior government sources tell CTV News that Canada will unveil its plan on Thursday on how to reach its NATO commitment to spend two per cent of its GDP on defence.
Canada is currently the only member of the alliance without a timeline to reach that target. According to NATO’s latest figures, Canada is on track to reach 1.37 per cent of GDP this year. Twenty-three of 32 NATO member countries are on track to meet or exceed the two per cent pledge in 2024.
Defence Minister Bill Blair is in Washington with Prime Minister Justin Trudeau for the NATO summit, which is marking the 75th anniversary of the alliance.
On Monday, Blair spoke at the Foreign Policy Security Forum and signalled more details were to come on Canada’s defence spending.
“Over the course of the next few days, I will be able to share that credible, verifiable plan with our allies to provide them with assurances that Canada understands its responsibility and we’re going to live up to our responsibilities,” Blair said.
Speaking on a panel at the NATO Public Forum on Wednesday afternoon, Blair reiterated that Canada will meet the pledge, and perhaps more.
“We’ll meet the 2 per cent pledge and I think we even need to go beyond that 2 per cent pledge.” Blair said that Canada has to invest well and hinted at a path forward to reaching its defence spending targets through partnership with other NATO members. Blair told the audience that Canada had entered into an agreement with Norway and Germany to “work together on issues around production.”
“We are going to create real value by working together,” Blair said.
In April, the federal government released its long-awaited defence policy that pledged Canada would see military spending rise to 1.76 per cent of GDP by 2030, but no target to hit two per cent. The policy also unveiled a new overall investment of $8.1 billion over five years and $73 billion over 20 years.
Criticism from NATO, alliance members
Leading up to the summit, Canada has faced increasing pressure from NATO and its members to reach the two per cent target.
In 2014, NATO members pledged to commit at least two per cent of GDP to defence spending. But since Russia’s illegal invasion of Ukraine in 2022, NATO Secretary-General Jens Stoltenberg has referred to that target as a floor and not a ceiling.
In an exclusive broadcast interview with CTV Question Period host Vassy Kapelos in June, Stoltenberg said he expects more from Canada when it comes to defence spending.
“We live in a more dangerous world, and therefore we need to invest more in our defence and our security,” he said. “I welcome the increase you have seen in Canada over the last years, but I expect more.”
This week, Canada has also faced new criticism from prominent U.S. politicians.
On Monday, at a security forum on the margins of the summit, U.S. Speaker of the House of Representatives Mike Johnson accused Canada of “riding on America’s coattails.”
“They have the safety and security of being on our border and not having to worry about that. I think that’s shameful. I think if you’re going to be a member nation and participant, you need to do your part,” Johnson said.
Meanwhile, Republican Senate minority leader Mitch McConnell in a post on X acknowledged shared values and economic ties between Canada and the U.S., but said “it’s time for our northern ally to invest seriously in the hard power required to help preserve prosperity and security across @NATO.”
Back in May, a group of 23 bipartisan U.S. senators also issued a rare open letter to Trudeau, imploring him to make good on his commitment.
In the letter, the senators wrote, “As we approach the 2024 NATO Summit in Washington, D.C., we are concerned and profoundly disappointed that Canada’s most recent projection indicated that it will not reach its two percent commitment this decade.”
Canada to purchase new submarines
On Wednesday, the federal government announced it is launching a process to purchase 12 new submarines to replace its aging fleet.
Senior government sources say the purchase will be part of Canada’s commitment to reach two per cent of GDP on defence, but there is no estimated cost or target date for the new fleet.
The Department of National Defence is in the process of meeting with manufacturers and potential partners.
“This new fleet will enable Canada to protect its sovereignty in a changing world, and make valuable, high-end contributions to the security of our partners and NATO Allies,” Blair said in a statement. “We look forward to delivering this new fleet to the Royal Canadian Navy.”
The Canadian navy currently only has four submarines that were purchased second-hand from the British government in 1998, and delivered between 2000 to 2004.
With files from CTV News Parliamentary Bureau’s Spencer Van Dyk
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
