Toronto: Canada has formally signed on to a major European Union defence financing programme, becoming the first country outside the bloc to be included. The development represents a notable shift in the country’s defence strategy, as Ottawa looks to reduce its dependence on U.S. military suppliers and strengthen its own defence industrial base.
The agreement grants Canada access to the EU’s SAFE loan fund, a financing mechanism valued at €150 billion (around USD 170 billion). The programme supports efforts to make military equipment more affordable for member nations and encourages closer collaboration in defence production.
Prime Minister Mark Carney’s office said Canada expects the partnership to help address long-standing shortcomings in its defence capabilities. With the Canadian Armed Forces facing equipment gaps across several branches, the government has been searching for new procurement avenues and international partnerships that offer greater diversity and long-term sustainability.
Officials described the collaboration as a mutually beneficial arrangement. European investors and defence manufacturers will receive opportunities to participate in Canadian projects, while domestic companies gain expanded access to European defence markets. The expectation is that innovation and investment will flow more freely between industries on both sides of the Atlantic, bolstering strategic cooperation.
Currently, Canada directs roughly 70 percent of its military capital spending toward the United States. For decades, Washington has been the dominant supplier of Canada’s defence equipment — from combat aircraft and missiles to surveillance and naval systems. While that partnership remains important, Ottawa now appears intent on broadening the range of suppliers and allies involved in its procurement decisions.
The SAFE programme offers an alternative route, one that European partners have been keen to build amid shifting geopolitical dynamics. Strengthening defence cooperation beyond national borders has become a priority for Europe as global tensions rise and technological demands increase. Canada’s entry adds another significant NATO member to the effort, helping align broader defence production goals.
Carney’s office noted that the new collaboration could also generate opportunities for Canadian companies in fields such as aerospace manufacturing, advanced sensors, cybersecurity solutions and defence technology exports. Opening those doors is expected to improve industry competitiveness and reduce supply chain limitations.
The decision coincides with Ottawa’s reevaluation of multiple high-cost procurement projects. One notable example is its search for alternatives to the U.S.-built F-35 fighter jet programme. While Canada has participated in the project and ordered the aircraft, government officials have acknowledged interest in exploring broader options to ensure future fleet upgrades and support systems remain cost-effective and reliable.
Analysts suggest the move toward Europe reflects a broader rebalancing in defence relationships. With global alliances experiencing increased strain and the defence market becoming more competitive, governments are working to secure better deals and avoid overreliance on a single supplier nation.
By joining the SAFE fund, Canada signals its readiness to engage more deeply with European partners on matters ranging from industrial cooperation to joint capability development. The EU, meanwhile, gains an established NATO partner whose extensive geographic and security connections could strengthen collaboration across the alliance.
The partnership is expected to evolve over time as loan programmes are utilised, equipment proposals mature and joint ventures take shape. While defence interactions with the United States remain central to Canada’s security strategy, the government’s latest steps show a clear intent to diversify and modernise how it acquires the tools required for national and allied defence missions.
With the agreement now formalised, officials from both sides will work on setting priorities for investment and identifying projects that can deliver early results — for Canada’s military readiness and for the European industry’s global reach.
