The NATO alliance measures members’ contributions not merely by budgets, but also by deliverable capabilities. The question that confronts Canada and the alliance is: will Canada’s increased spending translate into deployable military power that meets NATO’s output-based requirements?
In the current fiscal year, Canada has met NATO’s 2% defence spending target. It aims 3.5% for core military capabilities by 2035 and 1.5% ancillary spending, to make up Canada’s 5% NATO commitment. This significant and accelerated increase reflects Canada’s strategic recognition that it must invest not only in immediate readiness but also in the long-term infrastructure and industrial capacity for a credible deterrent posture alongside allies. While Canada is committed to these ambitious and long-term targets, persistent structural barriers in procurement, personnel recruitment, and industrial policy and serviceability may limit its deployable military capabilities, for Canada and NATO both. Despite historic spending increases, this practical gulf between fiscal inputs and operational deliverables challenges Canada’s operational capability. Canada’s role in NATO would be strengthened by sharpening its focus on timely, combat-ready men and material.
Meeting the spending target removes a political liability, but it simultaneously raises expectations. Canada’s defence budget for 2025-2026 will reach approximately $62.7 billion. Meeting the 2% target addresses a longstanding irritant in Canada’s alliance relationships. Allies expect Canada to demonstrate that its increased investment produces tangible military effect. Yet as the Parliamentary Budget Officer’s February 2025 analysis warns, reaching the 3.5 per cent target could add $63 billion annually to the federal deficit by 2035. This fiscal reality constrains every subsequent decision about procurement, personnel, and capability development.
The most significant structural barrier to Canada’s defence promises turning into reality is procurement blurriness. The February 2026 Defence Industrial Strategy establishes an ambitious benchmark: 70% of federal defence contracts to be awarded to Canadian firms within a decade. Nevertheless, the strategy rolls out when Canada is already pursuing several major procurements that will shape its military posture for decades. The F-35 fighter acquisition, River-class destroyer program, and new submarine project each face compressed timelines that challenge both industrial capacity and NATO expectations. The River-class destroyers have delivery timelines extending into the 2030s, with the final ship expected in 2050. The Patrol Submarine Project, contemplating up to 12 new vessels, remains in early stages with bidders from Germany and South Korea offering competing partnership models. Interestingly, both the fighter and submarine competitions are exempt from the new industrial strategy. Canada’s most significant capability decisions of the decade will be made under the old rules, delaying the strategy’s impact on major platforms. These decisions will set precedents for how “Build-Partner-Buy” applies to future acquisitions. For NATO, this means Canadian contributions to air power, maritime security, and undersea warfare will continue to depend on foreign (even non-NATO) suppliers for the foreseeable future.
The F-35 fighter replacement additionally illustrates the timeline and strategic problem. In February 2026, the RCAF participated in a ceremony at Lockheed Martin to mark the start of final assembly on Canada’s first F-35A. This represents only 16 of the 88 aircraft originally planned, with the government reviewing whether to purchase the remaining 72 amid trade tensions. More critically, the F-35’s Block 4 upgrades are running five years behind schedule and $6 billion over budget, according to the U.S. Government Accountability Office. These delays threaten Canada’s ability to conduct sustained Arctic air sovereignty patrols, a core NATO expectation given Canada’s geographic position. After 2025, the aging CF-18 Hornet fleet will see a steep decline in survivability. Yet Canada’s first F-35s are not expected to arrive until 2028, and the specialized infrastructure needed to support them is already years behind schedule. The Department of National Defence’s 2026-27 Departmental Plan emphasizes year-round Arctic operations to “detect, deter, and defend against threats” alongside NATO allies. Without full F-35 operational capability until the 2030s, Canada risks relying on a fleet that lacks survivability against modern threats, undermining its contribution to collective Arctic defence.
The River-class destroyer program faces similar constraints. Full-rate production began in April 2025, and Irving Shipbuilding achieved a milestone in January 2026 by lifting and flipping the first structural unit for the future HMCS Fraser. However, final design review for the complex combat systems is not expected until 2026-2028, and the first ship delivery is projected in the early 2030s. These destroyers are essential for North Atlantic anti-submarine warfare, a priority NATO capability target assigned to Canada through the Defence Planning Process. Even if the newly created Defence Investment Agency (DIA) accelerates procurements, the timelines extend into the next decade. Whether Canada can spend fast enough to generate capability within NATO’s force planning cycles remains a significant question. This leads to our second barrier: the personnel.
Procurements merit combat-ready personnel. The Canadian Armed Forces (CAF) Regular Force currently stands at approximately 65,700 personnel against an authorized target of 71,500. The gap will affect every capability Canada plans to acquire and promises to deliver for NATO plans. Encouragingly, applicants surged 12.9% recently, supported by a 20% pay increase and the largest military housing program since World War II. Unfortunately, these improvements mask systemic dysfunction. The Auditor General’s October 2025 report found that between April 2022 and March 2025, the CAF received roughly 192,000 applications but recruited only about 15,000, a ratio of approximately 1 in 13. The report identified “ineffective decision making,” disjointed governance, and unlinked IT systems as root causes. For Canada itself, and for NATO’s defence planning, the implication is clear: even if procurement is on schedule, Canada needs trained members to operate it. The AG’s findings compound this concern. This personnel gap leads directly to the third structural barrier: whether the equipment Canada does field is actually ready for operations, for serviceability and strategic integration.
The 2026 NATO Defence Ministers’ Meeting saw Canada commit to several initiatives that enhance its operational contribution: the Initial Alliance Future Surveillance Control Support Partnership Committee; new defence understandings with the Netherlands and France; and a signed Defence Cooperation Agreement with Denmark focused on Arctic and North Atlantic security. Most significantly, Canada formally acceded to the European Union’s Security Action for Europe (SAFE) initiative, allowing Canadian industry to participate in SAFE contracts with up to 80 per cent Canadian content. This opens European markets to Canadian defence companies while enabling deeper integration of Canadian components into allied supply chains. This diversification strengthens Canada’s position within NATO by making it a more versatile ally.
Canada’s participation in European initiatives provides it with a strategic hedge. By integrating with European supply chains, Canada will reduce its dependence on the US. This diversification strengthens Canada’s position within NATO as a versatile ally. Yet the serviceability targets reveal the gap between aspiration and reality. Internal assessments reveal that only 58% of Canadian forces could respond to a NATO crisis, with roughly half of navy and air force assets currently unserviceable. The RCAF’s modernization progress offers a template, but replicating this across all services demands years. Three of the barriers – the procurement delays, personnel shortfall, and serviceability gaps – share an underlying cause: the structural inertia. Given Canada’s proactive plans, NATO will expect a Canada that is ready to field forces at the scale and readiness the alliance operations can count on.
Canada stands at an inflection point about whether its increased spending will be able to translate into deployable military power. These procurement and personnel challenges converge on a fundamental tension in Canada’s NATO alignment. The alliance has shifted from measuring budget inputs to demanding specific operational outputs: capability generation timelines, interoperability certification, and strategic enabler availability. Canada needs to accelerate and harmonize its plans for its own defence needs and for NATO’s capability expectations. The shift from “whether” to “how” represents genuine progress, and the implementation of this will demonstrate the nation’s capability.
The gulf between promise and practice is substantial, yet Canada’s trajectory is committed to closing it. Integrating procurement, personnel, plans, and partnership is the key.
Photo Credits: https://www.wsj.com/world/americas/canadas-carney-wants-51st-state-talk-to-stop-before-talks-with-u-s-on-economy-security-ties-e7e65296
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
