Canada pledges 5% GDP defence spending by 2035, proposes Defence, Security and Resilience Bank at NATO summit

During the summit, Canadian Prime Minister Carney declared:

"The threats facing us today are real, and they will be met by a Canada prepared to defend our interests, our citizens, and our Allies. We are rapidly scaling our capabilities through historic investments in new submarines, icebreakers, aircraft, and cyber defences, while strengthening our partnerships with Allies around the world. Today, we are a stronger, more capable member of NATO with greater ability to advance its mission of collective security. This is a strong, confident Canada taking full responsibility for our defence, for a more secure and more prosperous world."

The statement reflects a visible change in tone. Whereas the previous government under Justin Trudeau resisted committing to NATO's 2% spending targets, Carney's government is presenting Canada as a more active contributor to collective security and a country willing to shoulder a greater share of the Alliance's burden.

Key Defence Commitments

• Ottawa has pledged to meet NATO's new benchmark of investing 5% of GDP in defence by 2035.
• The government is seeking to shape the Alliance's future through new institutional initiatives, rather than simply increasing military spending.

Proposal for a New Defence Financing Institution

Among the most significant announcements in Ankara was Canada's proposal to establish the Defence, Security and Resilience Bank (DSRB) — a new multilateral financial institution designed to mobilise private capital for defence investment.

Key features of the DSRB include:

• Securing a triple-A credit rating to provide low-interest financing for defence projects
• Targeting governments and companies that struggle to access affordable capital
• Providing long-term financing for defence, security, and resilience projects across Allied supply chains
• Offering loan guarantees to commercial lenders supporting defence manufacturers
• Potential to mobilise as much as $134 billion in financing

Overlap with Existing Initiatives

The proposal enters an increasingly crowded landscape of Western defence financing initiatives. As Defence24 has previously reported, the DSRB might overlap with several existing projects:

• Security Action for Europe (SAFE) – Launched by the European Union in 2025 to help member states rapidly increase defence spending, strengthen Europe's industrial base, and support joint procurement.
• Multilateral Defence Mechanism (MDM) – A UK-led initiative supported by the Netherlands, Finland, and Poland, designed to facilitate multinational procurement, reduce acquisition costs, and accelerate defence investment.

The apparent overlap prompted Ottawa and London to issue a joint statement emphasising that the two initiatives should be viewed as complementary rather than competing. As 10 Downing Street stated two days after the MDM was unveiled:

"The efforts of the countries supporting the DSRB and the MDM have a high degree of complementarity and, taken together, can improve defence investment throughout the supply chain."

Founding Members

Before the summit, Canadian officials had indicated that as many as 10 countries would join the DSRB as founding members. Ultimately, the following countries joined Canada in launching the initiative:

• Albania
• Belgium
• Greece
• Latvia
• Luxembourg
• Romania
• Türkiye
• Ukraine

Notably absent from the founding membership are Canada's fellow G7 partners. Nevertheless, Ottawa insists the institution remains open to additional participants.

Future Outlook

Some policymakers, including UK Chancellor of the Exchequer Rachel Reeves — a leading political advocate of the MDM — have suggested that the MDM and the DSRB could eventually be integrated or merged due to their complementary mandates.

• The London-led initiative focuses on joint defence procurement.
• The Ottawa-led initiative is intended to provide long-term financing for defence and resilience investments.

Both institutions are expected to become operational in 2027.

Whether the proliferation of defence financing mechanisms ultimately strengthens Allied capabilities or creates unnecessary institutional duplication remains an open question. What is already clear, however, is that Canada's role within NATO is changing. Rather than simply responding to Alliance initiatives, Ottawa seems to be seeking to design them.