Canada urges UK to join its defence bank under new Burnham government

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LONDON — Canada has urged the new-look British government to join its defense bank, as it tries to deepen its European presence.

In an interview with POLITICO, Canadian Minister of National Defence David McGuinty said he is “hopeful” Britain will now sign up to Ottawa’s Defence, Security and Resilience Bank after several of its backers were given key jobs under new Prime Minister Andy Burnham’s administration.

McGuinty said Canadian Prime Minister Mark Carney will raise the issue directly with Burnham, and that he had already spoken to Britain’s Chancellor John Healey about it when the pair were defense ministers. “He was overtly supportive, openly supportive,” he said.

Earlier this month at the NATO summit in Ankara, both the U.K. and Canada unveiled the initial membership of their separate funding mechanisms for partners’ defense industries. Rachel Reeves, removed as chancellor by Burnham this week, had resisted Britain’s membership of Canada’s scheme.

The DSRB aims to raise £100 billion by providing loans to governments and defense firms and was backed by nine countries . Britain has partnered with the Netherlands, Finland and Poland on its own Multilateral Defence Mechanism — which is more geared towards joint procurement than to lending AAA-rated capital.

McGuinty said he doesn’t see “any reason why creative negotiation and smart thinking” cannot pull the work of the two schemes together.

He added: “Personally, I don’t think it’s as productive having two separate mechanisms, and I think this is a wonderful opportunity for the U.K. and Canada to align on this front. So, I’m hopeful.”

“Using Canadian language: I think it’s smart hockey,” he said, “using public finance and triple-A ratings and government-backed capital in order to be able to fund your SMEs who are having a hard time dislodging capital from commercial banks and other sources, and creating an international one in order to be able to foment greater investments in defense.”

Streeting to reopen the case for joining

On Wednesday, the new U.K. Defense Secretary Wes Streeting set out a positive case for Britain joining the DSRB as he spoke to journalists at the Farnborough International Airshow.

Asked about his views by POLITICO, Streeting referenced comments made last month, when he asked the government to reconsider its position on Canada’s defense bank. Streeting also talked up his existing relationship with Mark Carney, from Carney’s time as governor of the Bank of England.

He described the scheme as a “really innovative and interesting mechanism for defense financing” and said examining the case for participation is “an early priority for me” in future discussions with Burnham and Healey.

“I don’t see DSRB or MDM as being in any way in competition. I think they can be complementary to each other. I do think they are distinctive, different, and valuable projects,” he added.

Canada hunts for European partners

Ottawa’s push for involvement in more international and European defense projects comes after it was announced as the first observer nation for the GCAP jet fighter scheme on Tuesday.

Asked about the vague terms of Canada’s new status in the project, McGuinty said it will involve learning about the classified details of the proposed technology, finding any critical gaps, and seeing if “there’s any ability for Canadian know-how to fill those gaps,” such as on AI or quantum.

“Personally, I think that’s the only way forward on so many defense issues. You got to work together. You got to share tech. You got to build these things together,” he said.

These partnerships also extend to Canada’s vast reserves of critical minerals, with the nation having 11 of the 12 deemed as critical for defense by NATO, which China currently hopes to be the dominant source of materials across South America and Africa.

“We’re moving away from digging stuff up and selling it,” said McGuinty, adding that his ministerial colleague Tim Hodgson is “pulling together a package involving partners who’ve got that ability and who can help us execute on the plan to process and stockpile” minerals.

He added that Canada is looking to Europe for “strong, credible, trustworthy partners” to process, stockpile, and have access to its reserves.

“I was talking to the minister from Italy. They don’t process critical minerals. In fact, they don’t do much mining, the Italians, but boy do they want access to it. Okay, we can talk about that.”