Canadian Prime Minister Mark Carney used this week’s NATO summit in Turkey to push for a new financial system to help struggling allies expand their defense production and security infrastructure.
Mr. Carney said eight other countries — Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine — have committed to supporting the Defense, Security and Resilience Bank. The DSRB playbook is inspired by financial institutions such as the World Bank that helped rebuild Europe after World War II.
“Canada is leading to build the foundations of our collective security,” the Canadian leader said. “The Defense, Security and Resilience Bank will unlock investment, strengthen our defense industrial base, and ensure that Canada and our allies have the capacity to meet the challenges of a more dangerous and divided world together.”
The initial goal is to raise $134 billion for NATO partners. Analysts say the DSRB will deliver long-term, low-cost financing for military hardware without adding pressure to national balance sheets.
“The Defense Resiliency Security Bank could help smaller NATO countries and Ukraine fund defense purchases by providing low-cost financing,” said Ryan Brobst, deputy director of the Center on Military and Political Power at the Foundation for Defense of Democracies think tank. “However, unless some of NATO’s larger economies like the United States and Germany join, the bank will have difficulty capitalizing the project.”
In 2014, NATO set a baseline for allies to spend at least 2% of their gross domestic product on military defense. But escalating security concerns — Russia’s invasion of Europe and Chinese military expansion — prompted the alliance to adopt the Hague Investment Plan. NATO countries would commit up to 5% of their GDP toward national security by 2035, with a review process scheduled for 2029.
Eastern flank countries in Russia’s looming shadow embraced the higher spending requirements and are approaching the 5% goal years ahead of schedule. But other NATO allies, such as Canada, struggled to meet the initial 2% target, much less the optimistic 5%.
“At a time when allies are increasing defense investment, expanding industrial capacity, and accelerating production of critical capabilities, we recognize the need to mobilize public and private capital at scale to support our defense, security, and resilience priorities,” Canada and the eight other countries said Tuesday in a statement. “By leveraging a strong credit foundation, the DSRB is designed to expand access to capital, reduce financing costs, and support expansion of industrial capacity across member countries.”
Organizers said the DSRB is intended to complement, not duplicate, other programs seeking to increase defense production. It’s expected to commence operations by 2027.
Governments across Europe are scrutinizing their balance sheets as increased defense spending competes with other priorities like healthcare costs and rising house prices. Meanwhile, they face growing dissent from populations frustrated by government stagnation and corruption.
“Compounding this is Europe’s fragmented procurement system, which drives up costs and limits efficiency by playing national interests over collective European solutions,” British lawmakers Calvin Bailey and Graeme Downie wrote in a recent essay for the Royal United Services Institute think tank. “It is in these circumstances that the [DSRB] could revolutionize how Europe funds its defense.”
The DSRB plan has the support of major financial institutions like JPMorgan Chase, which in April announced an expansion of its $1.5 trillion, 10-year Security and Resiliency Initiative. It seeks to finance industries vital to economic security across Europe.
“The national and economic security of countries depends on strong, resilient, and reliable supply chains, and robust critical industries,” said Jamie Dimon, CEO of JPMorgan Chase, in a statement. “For too long, the U.S. and Europe have relied on unpredictable sources for things like critical minerals that are essential to collective security and prosperity. Now, it is in our best interest to address these challenges together — because our security, freedom, and economic growth depend on it.”
Canadian Foreign Minister Anita Anand said the DSRB reflects a shared commitment to strengthen collective security among NATO allies and domestic economic resilience.
“By mobilizing public and private investment, Canada and its allies are building the industrial capacity needed to respond to today’s challenges and support a stronger alliance for the future,” Ms. Anand said.
Correction: An earlier version of this story incorrectly reported Ryan Brobst’s first name.
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