SAFE is Not a Silver Bullet: What Canada Gains from Europe and Why the United States Still Matters

In Davos last month, Prime Minister Mark Carney declared a “rupture” in the global order. The speech capped off a whirlwind few weeks of deal-making from Carney, with stops in China where he announced a new Strategic Partnership with Beijing, and in Qatar, where he finalized a long-delayed investment deal. In a few weeks, Carney is expected to travel to India, pursuing more trade deals. All of this strategic diversification is driven by a realization that the United States is no longer the reliable and predictable ally it once was. 

Beyond trade, Ottawa has also moved to diversify its defence partnerships, including by joining the European Union’s (EU) “SAFE”—Security Action for Europe—program, becoming the first non-European country to participate in the EU’s flagship effort to boost defence production. At a moment of growing geopolitical uncertainty and strain in the US-Canada relationship, this move signals a welcome effort by Ottawa to diversify its defence partnerships beyond its southern neighbour. But SAFE is not a silver bullet. The scale of available funding and the conditions attached to it mean that deeper integration with Europe should complement, not replace, Canada’s long-standing defence ties with the United States.

Better SAFE than sorry

Canada and EU member states find themselves in a similar situation: confronting years of chronic underinvestment in security as the global security environment worsens. As Russia’s war machine in Ukraine rages on and threats to wider transatlantic security become ever more real, the North Atlantic Treaty Organization (NATO) allies including Canada are increasing their defence spending with the drive to reach five percent of the gross domestic product (GDP) spent on defence. But recent events, such as the crisis over Greenland, have once again damaged trust between Canada and Europe on one hand and the United States on the other.

In this context and with a longer-term lens, Europe has been working hard at the EU level to construct new frameworks to facilitate the continent’s defence reindustrialization. SAFE, part of the EU’s larger funding mechanism “ReArm Europe Plan/Readiness 2030,” mobilizes €150 billion in low-interest loans to be spent on purchases of priority categories, which range from ammunition and missiles to cyber and critical infrastructure protection. Some examples already include Mistral air defence systems, procured jointly by Romania and France, and gunpowder plant investments by Bulgaria with Germany’s Rheinmetall. Canadian Prime Minister Mark Carney has sought to similarly incentivize Canadian defence procurement schemes and boost national spending on security—such as with the $357-million Regional Defence Investment Initiative as part of the government’s forthcoming Defence Industrial Strategy—and sees SAFE as one way to do so. 

To participate in SAFE, Ottawa will pay a one-off contribution of €2.5 million upfront and then €7.5 million per year of participation, beginning in 2026. Canadian firms will then be able to purchase defence supplies using the loans allotted to Canada through EU-backed financing mechanisms. As an effort by the EU to boost local European economies, SAFE’s design also includes a “Buy European” clause, requiring a minimum of 65 percent of the value of a weapons system purchased using the funds to be manufactured in Europe—but by paying €7.5 million per year to participate, Canadian arms makers can produce at home in Canada beyond the 35 percent limit.

Not a zero-sum game

Canada is right to look to Europe as a partner. Brussels and Ottawa see more eye to eye than possibly ever before in recent times, further accentuated by Greenland and the decision by Canada, as well as France, to open a consulate in Nuuk in the face of Washington’s pressure toward the Danish territory.

But Canada should not overlook its close and long-standing ties with the United States, no matter how fraught the relationship has recently become. The US provides a strong defence market which fuels Canadian companies and innovation, and the two countries have a long and storied history of defence co-production and mutual investment. Furthermore, despite recent tensions, the US and Canada share a unique threat perception that Ottawa is unlikely to find elsewhere, even among other NATO allies. The two nations have a shared responsibility for the defence of North America, are both members of the Five Eyes intelligence sharing network and cooperate closely on the international stage in the long run. The benefits to Canadian security are deeper than what initially meets the eye. 

A pivot away from the US risks leaving Canada without the capabilities it needs and limiting access to a crucial market for Canadian defence companies. In 2024, estimates put the total dollar value of Canadian defence exports to the US at $1 billion. By comparison, Germany, Canada’s largest European export market, received $186.5 million worth of goods, predominantly armored ground vehicles, which may have at least in part been sent to Ukraine by Germany. Ukraine was the third-largest recipient of Canadian military exports.

SAFE’s €150 billion is an impressive top-line figure, but it will be divided among every country which participates in the scheme; 19 applied on November 30, and Poland alone requested €44 billion. In early January, the Commission approved the first wave of allotments to eight member states, with for example just €16.68 billion going to Romania and €1.18 billion to Cyprus. There is no guarantee that SAFE funding will flow to Canada at the scale to make a notable impact—where, for instance, the government’s 2025 budget on defence allocated $20.4 billion just for compensation increases and healthcare for personnel in the Canadian Armed Forces. 

Canada also has structural benefits in continuing its defence partnership with the US.  The Defence Production Sharing Agreement, signed in 1959, classifies Canadian defence companies as domestic sources of production, allowing them to bid on US DoD contracts. In the US, title three of the Defence Production Act classifies Canada as a domestic source of production, allowing for the Department of Defence to directly invest in Canadian companies and resource production. To date, the US has invested more than $70 million USD in Canadian critical minerals projects via the DPA.

Crucially, Canada cannot change its geography, and the security of Canada is linked to the security of the United States. The US and Canada operate the world’s only bi-national command via the North American Aerospace Defence Command (NORAD). NORAD protects and defends North America from adversary threats and attacks, and both countries are committed to its modernization. Beyond its beloved Santa flight tracker every winter, NORAD helps Ottawa coordinate responses to both overt and covert attacks against Canada, including increasingly in the hybrid battlespace-like cyberattacks on Canada’s energy infrastructure. 

In the Arctic, Canada’s Arctic Foreign Policy recognizes the US as Canada’s closest partner and ally. The two countries are both members of ICE Pact, the trilateral icebreaker initiative launched alongside Finland. For Canada’s own self-interest, cooperation and coordination with the US in the Arctic and for the defence of the homeland is crucial. Continued partnership with Washington is not only a clear economic win, but a strategic one as well. 

Going forward, Ottawa should advocate for a defence procurement and partnership strategy which strengthens selective partnerships with Europe and Asia while reinforcing, not replacing, Canada’s foundational ties with the United States. Doing so can position Canada on the path to be more resilient and gain a competitive advantage in an era of mounting global threats. It may be a bitter pill to swallow in today’s geopolitics of tension in the US-Canada relationship. But undoing or undermining long-term bilateral defence ties—whether in NORAD, in the Arctic, or in the defence industry—would be a major strategic loss for Ottawa.