Canada turns to Europe for its security Donald Trump’s capriciousness has pushed Canada’s military spending towards Europe Jul 30th 2026 AFTER DECADES as one of NATO’s worst laggards on military spending, Canada is changing fast. On July 8th, at the alliance’s summit in Ankara, Mark Carney, the prime minister, repeated his pledge that Canada’s defence budget would rise from a measly 1.5% of GDP in 2024 to 4% within the next two years. Recent polling suggests that more than 80% of Canadians support much higher spending on defence. Two days before his pledge, Mr Carney had announced that Thyssenkrup Marine Systems (TKMS), a German defence firm, had won a contest to be preferred bidder to supply the Royal Canadian Navy with up to 12 advanced diesel-electric submarines. The first four are to be delivered by 2034. That is
by far the biggest defence deal in Canadian history, with a purchase cost of C$24bn ($17bn) rising to more than C$100bn once ongoing costs like maintainance are factored in. These plans are evidence of the Carney government’s determination to snuggle closer to Europe at a time when the United States, historically and geographically Canada’s closest ally, has become an unreliable and at times downright hostile neighbour. The procurement decision happened very quickly. Canada began thinking about replacing its four ancient, chronically unreliable Victoria-class submarines five years ago, but little progress was made. However, seven months after taking office in March last year, Mr Carney set up a new body, the Defence Investment Agency, to simplify and accelerate a sclerotic military-procurement system. The contest to build the subs was reduced from five to two bidders: Hanwha Ocean from South Korea and TKMS. Within four months of the bids coming in, the choice was made. David Perry of the Canadian Global Affairs Institute, an Ottawa-based think-tank, says: “The new agency demonstrates Carney’s sense of urgency.” Both the Hanwha and TKMS subs possessed sufficient range and endurance. The Korean vessel is equipped with a vertical-launch system from which land-attack missiles can be fired, while the German craft is probably the stealthier of the two, thanks to its unique diamond-shaped hull design and other advanced technologies. Youri Cormier, a defence expert at Ottawa University, reckons the absence of a land-attack capability suggests that the boats will play a defensive role, protecting both the Arctic and sea-lanes used by allies from Russian and Chinese aggression. “You can’t have the world’s longest coastline without a strong sub fleet,” he says. But it was the geopolitical priority of closer ties with Europe that tipped the contest in TKMS’s favour. Mr Cormier says that with seven NATO countries either operating or expecting to operate TKMS submarines “the interoperability and the availability of spares will be fantastic”. He adds that over the life of the contract, spanning many years, working with Europeans rather than Koreans will be easier from a linguistic and cultural point of view.
Two other factors sealed the deal, says Gaëlle Rivard Piché of the CDA Institute, another think-tank in Ottawa. The first was the offer by Norway to give up slots in the production line so Canada could deploy boats by 2034. The second was the guarantee by TKMS to match 100% of the value of the contract through both military and civil investments in Canada. On the face of it, the deal should not worsen relations with the United States, as its shipyards make nuclear-powered submarines, not diesel-electric ones. Moreover, analysts say that the new boats’ intelligence-gathering skills will make Canada a much more valuable member of Five Eyes, the alliance of English-speaking intelligence agencies. Mr Perry says this makes the TKMS deal a perfect opportunity for Canada to build up its security relationship with Germany, which will become its second-biggest core defence supplier after the United States. He believes the project will end up costing much more than C$100bn: “Tripling the size of the submarine fleet means tripling the size of the infrastructure and the number of workers needed to support it.” In just the first five years of the programme around 50,000 new jobs should be created. However, the Trump administration may be less happy about some of Mr Carney’s other efforts to develop stronger military ties with Europe. In February Canada became the first, and so far only, non-European country to join the EU’s €150bn SAFE financial scheme, which provides long-term, low-interest loans to improve military heft. It will allow Canadian firms to fulfil 80% of the value of approved procurement contracts. Ms Rivard Piché says that in the past Canada has spent 70% of its equipment budget on American kit. Joining SAFE is “a quick win” that will help reduce that dependency. In June 2025, Mr Carney’s government also signed the EU-Canada Security and Defence Partnership, which is intended to create a comprehensive framework for strategic co-operation. The EU’s foreign-affairs chief, Kaja Kallas, describing Canada as “a trusted friend”, said that “at a time of rising tensions, it will deepen our defence ties and unlock new co-operation.” In another Europe-focused initiative, Mr Carney is leading the effort to set up a “NATO bank”—the Defence Security and Resilience Bank. Its purpose
is to bolster the defence of allied nations by raising up to $135bn in cheap loans. So far eight countries have joined alongside Canada, but it must get the support of Britain, France and Germany, Europe’s heavyweight military powers, if it is to gain the financial and geopolitical firepower it needs. Canada is also reportedly contemplating scaling back the number of F-35 fighters it buys from Lockheed, an American firm. It is considering supplementing these with the Gripen, made by Sweden’s Saab, despite that jet being less capable than the F-35 and not being compliant with Norad, the bi-national warning-and-control command that it jointly operates with the United States. However, it is possible that Gripen might make the plane in Canada. With trust between the Norad partners at a low ebb, that is a benefit. Saab has proposed a full technology transfer, including access to the source code of the Gripen’s mission systems, giving Canada full control of all data generated by the aeroplanes, and independent upgrade and maintenance rights. By contrast, though some components of Canadian F-35s are made in Canada, the source code is closely guarded by the United States. If Canada increasingly sees Europe as its key security and military procurement partner, Donald Trump has only himself to blame. His threats to Canada’s sovereignty, his punitive tariffs and his wavering commitment to the defence of NATO allies has inevitably pushed Canada into the arms of a welcoming Europe. ■ This article was downloaded by zlibrary from https://www.economist.com/the-americas/2026/07/30/canada-turns-to-europe-for-its- security
How Filipino immigrants revitalised a small Canadian town And how Mark Carney’s immigration curbs threaten the model Jul 30th 2026 Neepawa has white-picket fences, a curling rink and a hockey arena, just like any other small town in southern Manitoba, one of Canada’s prairie provinces. But it also has something more unusual. More than half of Neepawa’s 5,600 residents are from the Philippines. This share has almost doubled since 2016. The differences in lifestyle are obvious. “Hot there, cold here,” grins one woman while shovelling snow. That so many Filipinos have settled in Neepawa is largely thanks to HyLife, a pork-meat processor, which employs a third of the town. Since it started operating in 2008 the firm has recruited hundreds of Filipinos to Canada to work as butchers. Most arrive on temporary-worker visas, work hard and
gain permanent residence. Their families join them. Some seek employment elsewhere or start businesses of their own. Their integration into Neepawa has revitalised the town. Ashley arrived in 2015 to join her husband, who had worked at HyLife for four years. The snow made it feel “like an enchanted kingdom”, she says. She still loves Neepawa. She and her husband now work at two jobs each. They and their three children have become Canadian citizens after passing a rigorous test. Her Canadian-born colleague jokes: “She knew more about Canada than we did.” There are now six Filipino-owned businesses on Neepawa’s small high street. Vego’s Home Pinoy Restaurant was opened by Catherine Vego, a Filipino, who moved from Winnipeg to join the community. Other immigrants are arriving, too. The town has its own taxi service, founded recently by an Indian. “It’s crazy…for middle-of-the-prairies Manitoba,” says Marilyn Crewe, the town’s economic-development officer, who has helped many Filipinos navigate business regulations and the routes to home ownership. Neepawa has a dozen churches, but congregations had been dwindling. Filipinos have revived them. St Dominic’s has seen numbers at Sunday mass balloon to 300 thanks to immigrant attendees. “We need a few of them,” chuckles a man whose church merged with another to survive. There are problems. Population growth strains infrastructure. The council forecasts a shortfall of 460 housing units by 2028. Neepawa’s schools are oversubscribed. Job agencies are flooded with emails from Filipinos who have heard about the town. They are directed to HyLife, but some are exploited by traffickers. And politics have been changing. Mark Carney, Canada’s prime minister, is cutting the number of visas issued to temporary workers and students. About 687,000 students and workers arrived in 2024, the year before he was elected; he plans to issue 385,000 such visas in 2026. It has also become harder to gain permanent residence. The number accepted fell by a quarter between 2024 and 2025, from 484,000 to 394,000. Neepawa
residents felt the change. “We’re so sad,” says one Filipino businessman, whose brother was denied residency. A Filipino woman is distraught after her boyfriend, a construction worker, returned to Mexico after being denied citizenship. Mr Carney is responding to discomfort about the pace of demographic change expressed by some Canadians. One of them, Darren, runs the bar at Neepawa’s Royal Canadian Legion, a club for military veterans. A 5-tonne German schwere Feldhaubitze howitzer, seized during the first world war, stands at the door. Darren is a fan of Donald Trump. But he praises his Filipino neighbours for celebrating Canada Day more than his “own freaking community” and for reviving the town: “This would be a have-not town, if it wasn’t for HyLife.” Nonetheless, he is frustrated. Newcomers have “stretched our infrastructure and our health care to the limits”. He believes that immigrants were bought in to keep “the government in power” and that “Canadians were, like, left out.” It seems Mr Carney is listening more closely to Darren than to Canada’s newer citizens. ■ This article was downloaded by zlibrary from https://www.economist.com/the-americas/2026/07/30/how-filipino-immigrants- revitalised-a-small-canadian-town