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NATO dues and don’ts: Can Canada get off Trump’s naughty list?
Members of the Western bloc are on edge after Donald Trump said last weekend that he’d encourage Russia to “do whatever the hell they want” to allied states that don’t pay their dues. Canada pays well below the 2%-of-GDP NATO guideline and would be high on Trump’s “delinquent” list, but that doesn’t mean Ottawa is ready to pay up.
Trump’s comments drew the ire of … just about everyone. President Joe Biden, the chairman of the Joint Chiefs, NATO chief Jens Stoltenberg, German Chancellor Olaf Scholz, and even fellow Republicans blasted Trump for his comments. The most common refrain was that the former US president was undermining the collective security alliance and emboldening Russia.
But Canadian leaders, who are preparing for a possible Trump 2.0, were more cautious with their response. Foreign Affairs Minister Mélanie Joly admitted Canada must “do more” and steered clear of criticizing Trump. Defense Minister Bill Blairalso declined to take a run at the former president.
As Europe spends more on defense, the US has complained for years about Canada’s military spending, which is heading for 1.43% of GDP in 2025 – the highest it’s been in over 12 years. Ottawa’s defense spending is unlikely to rise further anytime soon as the governing Liberals keep an eye on the deficit and debt-to-GDP ratio while struggling to manage the budget ahead of a planned 2025 election.
Munich Security Conference 2024: What to expect
Ian Bremmer's Quick Take: Hi, everybody. Ian Bremmer here. It is the Munich Security Conference. It's that time of year, yet again, the 60th Munich Security Conference this year. And you would think that that would be like a big anniversary. It's like platinum or diamonds or something very valuable and exciting. And yet the value of the conference is becoming undermined. And it's becoming undermined not because it doesn't matter, but rather because leaders are less committed to it.
And that is a very deep concern. There's no annual theme to this year's conference, but every year they do put out an annual report. Came out a couple of days ago, and the theme this year was “lose-lose” dynamics. In other words, less focus on multilateralism, less focus on collective security, less focus on global cooperation and instead a prioritization of individual gain of countries and even of leaders. And that's not a great backdrop against a incredibly contentious US election, a war between Russia-Ukraine that isn't going very well, certainly not from the perspective of those that are attending the security conference and also a Middle East war that is expanding and threatens to get the Europeans and the Americans more and more involved. A couple of things that are worth paying attention to that may not be getting as much attention outside Germany.
One is that Christoph Heusgen, the chair of the conference and a good friend of mine for many years now, has come out saying that Trump has a point in terms of his strong criticism of NATO nations not meeting their 2% defense goal. And that, of course, especially means Germany, which is the largest economy in Europe. And they've made lots of commitments, but they've got an economic crisis right now, and there are lots of competing demands inside that country that don't focus on security and defense after all. Germany, not a frontline country dealing with Ukraine or Russia a little bit farther back. And you can really see defense spending fall off the farther you get from Russia, unless, of course, you're talking about the United States.
Another thing that's worth paying attention to and it's going to make it a little harder. Germany last year perceived Russia as their number one security threat.This year, Russia's fallen to number seven. Top issues for the Germans, mass migration and radical Islamic terrorism. That is the Munich Security index that they, you know, sort of take surveys of attendees and of participants. And it's very interesting to see that. That's similar to the view that I got at Davos a few weeks ago. And just talking to people around the world outside of these conferences, Ukraine is nowhere close to the level of prioritization these days, even for countries that are pretty close to it, that it was getting 6 months ago, 12 months ago, 24 months ago, and that, of course, is also a very big problem for the Ukrainians, a very big problem for the frontline states like the Estonians and the Poles and the Nordics, who consider this their top priority but having a harder time telling others that that's what really matters. So those are some of the issues we're looking forward to discussing and you'll be hearing from us again real soon.
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NATO has a Trump problem
Ian Bremmer's Quick Take: Hi, everybody. Ian Bremmer here. And a Quick Take to kick off your week. Could be so much to talk about. I say kick off. So you think it's Super Bowl, but no, no, I'm not going there. Don't. I mean, I care, but not after the game's over. Then I'm kind of done. It's exciting that way. I love sports. I get very excited and then over immediately.
Let's move on to NATO and lots of hair on fire because former President Trump, about to become the Republican nominee, could easily be president again, says that recounting a conversation he had with a leading European leader. (I suspect he's talking about Angela Merkel and Germany.) And that if they refused to pay, that he wouldn't be interested in defending them Indeed, he would tell the Russians they could do whatever the hell they wanted to countries that refused to pay for their own self-defense. And predictably, this got Europeans very agitated. The NATO' secretary-general, the European Council president, both saying this is only good for Putin. It weakens the alliance with Trump saying that and especially saying that publicly and the Europeans are indeed, almost all the Europeans are panicked about what might happen if Trump were to become president in 2025.
And I think these are all real points and deserve to be responded to. I do think it's important to look at the other side of the equation. At the same time, which is, should there be consequences for American allies that are unwilling to prioritize their own self-defense? And by the way, when I say consequences, I don't mean that the Russians should be able to invade them.
But should there be any consequences or should they just continue to be perfect NATO allies in good standing because the de facto policy of the United States appears to be, “well, otherwise, yeah, tell them they need to pay more, but we're not going to do anything if they don't. ” And that also doesn't seem reasonable. That seems like a policy that is guaranteed to alienate the Americans and lead to a much weaker NATO. In fact, if you are a country that is not spending on your own self-defense for years and years, that also is a strong signal to Vladimir Putin. That also is a very weak signal to the future of the NATO alliance. But unfortunately, that message is never sent by the president of the European Council or by the leaders of the countries that don't care about spending on their own defense.
I mean, the Canadians, for example, spend less than 1.3% of GDP on defense. That's roughly exactly what they were spending in the nineties. Why? Because they don't think they need to they don't think it really matters. The Germans, the Italians, the Spaniards. I mean, most of the large economies other than the United States significantly underspend on defense. They don't have adequate troop readiness, they don't have adequate military capabilities, never mind to provide support for Ukraine or other countries that might need it that aren't NATO members, but even to adequately defend themselves.
And that's a serious problem. It's been going on for decades, in part because of a belief that there was a peace dividend, that there weren't going to be wars anymore in Europe, so they didn't really care about NATO and “let the Americans spend if they want to, but we don't have to.” And that's unacceptable as well, especially when the Russians invade Ukraine. Now, after the Russian invasion of Ukraine, a lot of countries took it more seriously. That's why Finland has joined NATO, that's why Sweden is about to join NATO. Certainly the front line countries are much more worried and they spend a lot more. But those countries that are free riding in the back, they don't care as much. And clearly the right answer is somewhere in between.
It is that for years and years the Americans need to say that if you don't spend or else, and that all else needs to be consequential, needs to have you know, we won't have as many military exercises with you or we're not going to share the same level of intelligence or we're not going to provide as advanced military equipment. And if you do that and make it matter, then those countries are much more likely to do something like actually take you more seriously than if they know you have no fist in your glove. Now, there is a broader question, which is whether a President Trump actually wants the Europeans to spend 2% and then he'll be happy and committed, or whether he believes that NATO is just a drag on the United States. It’s a multilateral group.
It's a commitment with countries that the Americans would rather not be committed to, that Trump thinks it's a fool's game and would rather leave. There are those that have worked with Trump that feel that way. Former National Security Adviser John Bolton certainly thinks that has articulated that that is Trump's actual private view. Hard to know, hard to know. Will say that Trump feels much more comfortable with allies like the Saudis, for example. And you'll remember that he traveled there before we traveled to European countries or to Canada, in part because the Saudis not just short term transactionally, but longer term are committed to US defense. But also recognize that they need to spend and that there is a very ongoing mutual back scratching between the two countries. And the fact that the Saudis don't share American values is a very little interest to Trump, in part because the United States frequently doesn't live up to those values. And certainly Trump doesn't care very much about them. And that the Europeans, in being committed to multilateralism and rule of law, which Trump isn't as interested in, but also more willing to use that to help, you know, sort of strengthen an alliance system that has values as a component of it, is something that Trump thinks the Americans get taken advantage of with.
Now, again, where you land on that spectrum, I think differs radically on, you know, how old you are, your historic world view of the Cold War, for example, where your country is geographically. You know what your immediate threat environment is like, also how you feel about the United States. I mean, as an American, do you think the US has been good for you or do you feel like you've been screwed by the United States? I mean, if you've got kids that went to war in Afghanistan or even the second war in Iraq and didn't come back, came back with PTSD, and the Veterans Administration didn't take adequate care of you, and you don't think the war was fought justly or for principles that you believe in, you probably feel very differently about what the US should and shouldn't be doing in terms of other military alliances than you do say, my dad, who fought in Korea or others that were World War II veterans, certainly, or those in the United States that didn't fight for anything, but nonetheless feel like the American system did pretty well for them.
And it's that latter problem. It's the fact that so many Americans today don't feel like their political system is legitimate, don't feel like the American dream applies to them, don't feel the class mobility, don't trust their leaders or their institutions across the board. That I think is creating so much space for populists in the United States to say, why are we doing for other countries? Trump's other statement that we saw over the last few days, we shouldn't give any foreign aid. It should all be loans. And if you don't behave in ways that we like going forward, that we should take those loans away and we should make you pay it back. And he didn't say that only applies to the Europeans. From his perspective, that would apply to Israel, that would apply to the Japanese. That would apply to Mexico, Canada, he doesn't care. It's America first. And more Americans will feel that way if they think that their country hasn't taken care of, doesn't take care of them or their kids. I don't feel that way. I'd like to live in a United States, it’s the richest country in the world, and we have much more ability to do more for others. And long term, I think that plays to our advantage.
But I absolutely understand why many Americans no longer feel that way. And I think it's a shame. And I think we need to take responsibility to do something about that if we want a different outcome.
So that's it for me for today. I hope everyone's doing well and I'll talk to you all real soon.
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Graphic Truth: Military might, Canada vs. US
It will come as no surprise that there's a massive gap between the military assets and capabilities of the US and Canada. After all, no country in the world spends more on defense than the US. But Canada has been getting flak from NATO for falling short of the alliance’s 2% of GDP defense spending guideline. The most recent numbers show Canada’s military expenditures at 1.38% of its GDP. And amid myriad global crises and conflicts, Canada’s Defense Department has been targeted with budget cuts. Is the Canadian government doing enough to strengthen its military?
Off to war again?
No matter how cold it is in your community, it is even colder in the deep winter of discontent that has hit the 2024 political world … aka Mordor.
The year ahead presents two kinds of challenges to the US and Canada: external ones from growing conflicts and internal ones, from US isolationism and what I call “Canadian insulationism.” At the moment, it’s a toss-up which ones are more dangerous.
Let’s look at the external challenges, including the raging conflicts in Israel-Gaza, the Red Sea, and Ukraine – all of which look to worsen in 2024.
Here at Eurasia Group, one of our Top Risks of 2024 is a Partitioned Ukraine — with Russia essentially ending up with about 18% of Ukraine, something once unimaginable. But is that the end? After two years and hundreds of thousands of casualties, will 18% of Ukraine satisfy Putin’s expansionist appetite, or simply whet it for more? The second option is more likely.
Putin has converted his country into a war economy, with over 6% of his GDP going to military spending, and, despite sanctions, there is enough growth there to fuel concern about inflation.
As he sees critical US military support for Ukraine fade and a potential Trump administration on the horizon, Putin is ready to ramp up his aggression. I was at a meeting with a group of ambassadors to the UN yesterday, and many expressed a strong view that Ukraine is still just the start of Russian aggression, not the end. So it is no surprise that next week NATO will start its largest military exercise in over 20 years, with more than 90,000 troops taking part in Steadfast Defender.
This means they are getting ready for a widening war, and that is sobering.
Meanwhile, in the Middle East and North Africa, the Israel-Hamas war churns on, and efforts to contain it are looking increasingly futile. Hamas has not been sufficiently degraded to give up fighting, it still holds hostages, and it has gained wide support around the world, something the once-isolated terrorist group never enjoyed. One of the group’s greatest victories has been the “Hamasification” of the entire Palestinian cause, meaning their radical, annihilationist cause, once a marginal part of the diplomatic conversation, is now THE cause, overtaking the voice of the Palestinian Authority. And because they remain a terror group whose goal is to eradicate Israel, it makes any two-state solution or prospects of a new governance partner in Gaza extremely thorny.
Meanwhile, Israel under the extremist and embattled leader Benjamin “Bibi” Netanyahu, is gearing up for a much longer battle in Gaza — and the West Bank. He also does not want a two-state solution and never really has. Just today, in shocking remarks, Netanyahu said he does not want a Palestinian state and then said, “in the future the state of Israel has to control the from the river to the sea.” That was a provocative appropriation of a Palestinian rally cry that many Israelis regard as a call for genocide. The radical cycle is now in full spin.
Meantime, after 100 days of brutal bombings that have stunned even Israel’s closest allies, there is no real end in sight. The sophisticated tunnel systems that are discovered daily reveal the resilience of the Hamas military operation, and it is yet another aspect of the situation Bibi badly underestimated and miscalculated.
With the current Israeli and Hamas leadership, there is very little hope for anything but more war.
While most post-Oct. 7 efforts of containment centered on Iranian-backed Hezbollah in Southern Lebanon and the Palestinian Authority in the West Bank, a surprise player emerged: the Houthis. The Shiite militant group in Yemen, which fought a decade-long war against Sunni Saudi-backed forces, is launching ballistic missiles into the Red Sea near the critical Bab el-Mandeb Strait, aka Gate of Tears, which is living up to its name.
The Strait and the Suez Canal account for about 12% of total global trade, so naturally the US and a coalition of 20 countries steamed into the area to protect this critical supply line. This has a long precedent. In 1801, Thomas Jefferson sent the US Navy to fight the so-called Barbary Pirates in North Africa to protect US shipping. Today, the corsairs are Iranian-supplied ballistic missiles, but not much else has changed.
In any case, it has done no good. The Houthis flipped the Ballistic Bird at the US and launched over 30 missile attacks, driving much of the shipping business out of the Red Sea and having an immediate impact on the global economy.
The US and the UK, with the support of countries like Canada, counterattacked with a series of intensive bombing missions targeting Houthi military installations, and once again … nothing changed. This is the Houthi Trap. Red Sea shipping is a Red Line for the global economy, so as long as the Houthi attacks continue and shipping insurance rates go up, the US and its allies will have to respond. Maritime choke points like the Bab el-Mandep, the Strait of Hormuz, the Straits of Malacca, or the Panama Canal (which is too dry right now for some ships to use) – are the Achilles heels of the global economy. When any one of them is under threat, it means one thing: expanded conflict.
The internal threats in the US and Canada, however, make dealing with the external ones significantly harder. The US Republican Party is in the grip of a deep isolationism. Speaker of the House Mike Johnson told President Joe Biden yesterday that there will be no deal for tens of billions of dollars in aid to Ukraine unless he cracks down on the US border. Johnson’s job is on the line, and he knows that if he approves aid to Ukraine, far-right members of his party will make a motion to vacate and dump him, just as they did with the last speaker. And with Donald Trump in full ascension as the likely Republican nominee, US aid to Ukraine is likely coming to an end. America First means America Gone in many parts of the world, and that’s not a good sign when there are expanding wars everywhere.
Canada doesn’t have an isolationist problem. It has a long history of global involvement and is committed to multilateral originations. The problem it suffers from is an insulationist strain. It simply won’t put its money where its multilaterals are.
For example, Canada spends about 1.3% of its GDP on defense – a far cry from the 2% NATO guideline – and there has been deep concern about another CA$1 billion cut from the force this year.
Proximity to the US and being protected by three oceans have given Canadians a sense of insulation from a dangerous world, so there is no political urgency to keep up national defense. You might not buy home insurance if you don’t think your home will ever collapse, but it doesn’t work that way.
As the 2024 world tips toward widening wars, the isolationism of the US and the insulationism of Canada will make things much worse.
As my Dad used to say, the cheap man pays twice. Trying to save now by shirking responsibility in places like Ukraine and getting off easy on defense spending will only make the inevitable bill twice as expensive when it comes. And the security bill is coming.
U.S. President Joe Biden and Canadian PM Justin Trudeau during a bilateral meeting at the North American Leaders' Summit in Mexico City, Mexico, January 10, 2023.
Biden-Trudeau talks focus on immigration and defense
Amid the pomp and pageantry accompanying President Joe Biden’s first official visit to Canada, he and Canadian PM Justin Trudeau are looking to make some deals.
Even before Biden’s arrival late Thursday, news broke that the two countries had reached an agreement on irregular migration flows across the US-Canada border, a sticking point for both governments. An influx of asylum-seekers across the Roxham Road crossing into Quebec has dogged relations, with nearly 40,000 migrants crossing in 2022 alone.
Trudeau has been asking the US to renegotiate the Safe Third Country Agreement, which requires asylum-seekers who cross select border points to be sent back to the country where they first entered. Why? Because it encourages migrants to enter at irregular crossings like Roxham Road, and once they’re in Canada they can legally make asylum claims.
The precise details of the new migration deal are still under wraps, but Canada has reportedly agreed to take in 15,000 migrants from the Western Hemisphere through official channels. The agreement also would reportedly allow both countries to turn away asylum-seekers who cross the border without authorization.
The Biden-Trudeau talks on Friday are also expected to turn to defense. Last month’s Chinese spy balloon fiasco has led to increased pressure on both leaders to ramp up security. North Korean missile tests and Russian advances in missile technology have added more urgency to North American defense.
A new Maru Public/GZERO poll finds that the vast majority of Americans and Canadians (93% and 91%, respectively) want the two countries to boost security efforts, and most Canadians favor either a joint missile-defense system or having US missiles on Canadian soil.
With both Canada and the US being behind on the modernization of the North American Aerospace Defense Command – much of its radar systems are from the 1980s – Friday’s discussions are likely to touch on NORAD investment.
Biden is expected to push Trudeau on military spending – like many NATO members, Canada lags behind its defense spending target of 2% GDP. Canadian NORAD officials complain that current military capabilities are sluggish. Last year, Trudeau’s government pledged $4.9 billion to upgrade NORAD, but Americans are skeptical about the speed at which Canada can deliver.
The war in Ukraine is also putting Arctic defense back on the map. The Maru/GZERO poll showed that majorities in both the US and Canada support a joint military presence in the Arctic. Receding ice in the region has freed up shipping lanes, portending new access to lucrative resources like oil and rare-earth minerals. The region’s security would take on even more geopolitical importance should Finland and Sweden join NATO, possibly making it a new frontline pitting Russia against the West.
There's no shortage of thorny issues for Biden and Trudeau to tackle, from defense and immigration to trade and Ukraine. For more on the presidential visit, be sure to join us on Twitter Friday at 12pm ET. We’ll be talking with Forbes' Diane Brady, Eurasia Group's Gerald Butts, and GZERO's Evan Solomon, breaking down what Biden and Trudeau need to accomplish during their meeting. Set a reminder here.
To stay up to date on crucial US-Canada relations, be sure to subscribe to our new newsletter, GZERO North.
NATO flag
What We’re Watching: NATO members’ defense budgets, Social Security as a political weapon, China’s support for Sri Lanka
NATO chief wants more defense spending
As Russian aggression in Ukraine enters year two, NATO members need to boost their defense spending. That was the message from NATO chief Jens Stoltenberg Wednesday after a summit with member states’ defense ministers. Back in 2014, around the time of Russia’s invasion of Crimea, NATO states committed to raising their respective defense spending to 2% of gross domestic product. (NATO’s direct budget is separate from national defense budgets.) Still, while many have increased their spending on military equipment and training, most NATO states – including Germany, France, Italy, and Canada – still fall short of the 2% threshold. The US, for its part, leads the pack, spending 3.47% of GDP on defense. (You’ll likely remember that former President Donald Trump made a habit of slamming NATO members, particularly Germany, for not paying their fair share. As war ravages Europe again and tensions with China soar, Stoltenberg says that the 2% target, which expires next year, should be the floor – not the ceiling. Finland and Sweden, both vying to join the bloc, respectively spend 2% and 1.3% of GDP on defense.
The politics of entitlements
President Joe Biden has made crystal clear that he believes the protection of Social Security and Medicare benefits – federally protected pension and healthcare entitlements for seniors – is a powerful political weapon that Democrats can wield against Republicans. Some in the GOP have inadvertently helped him. A number of Republicans have signaled support for plans to reduce spending on these programs by raising retirement ages and finding other ways to reduce future benefits, and Florida Sen. Rick Scott has proposed a plan that would require Congress to reauthorize all federal programs every five years. The GOP’s House and Senate leaders, Kevin McCarthy and Mitch McConnell, respectively, have said publicly they have no such intentions. But politics aside, the funding problems that Republicans point to are real. On Wednesday, the nonpartisan Congressional Budget Office released a report warning that Social Security and Medicare spending will grow much faster than federal tax revenues over the next decade as the fast-rising number of retirees puts measurable strain on the solvency of both programs. Biden says the gap can be filled without cutting benefits by asking wealthier workers to pay more in payroll taxes. Republicans counter that tax increases on the needed scale would weigh heavily on future economic growth. The two parties remain miles apart on solutions.
Will China offer Sri Lanka debt salvation?
Sri Lanka is grasping for debt relief as it heads into a key international meeting with foreign lenders organized by the International Monetary Fund on Friday. Colombo hopes to pump the brakes on the country’s downward economic spiral that saw the country run out of foreign currency and experience its first-ever default last year, triggering food shortages, power cuts, and the wrath of protesters, which forced the resignations of the president and prime minister. The island nation pines for cuts in its debt from international backers, especially China, as the Middle Kingdom is one of Sri Lanka’s biggest creditors, holding about 10% of its $51 billion debt. Beijing has so far been opaque about debt reduction. It expressed ‘support’ for Sri Lanka this week heading into the meeting but stopped short of committing to lowering the debt. Doing so would be a dodgy proposition, not just for Chinese creditors who want to be paid, but for fear that other heavily indebted poor countries will want reductions in their debt burden as well. This puts the 22 million-strong nation, often cited as a cautionary example of China’s debt trap, in yet another tough bind: It needs an emergency IMF loan, but the Fund wants creditors to reduce Sri Lanka's debt beforehand. We’ll be watching to see how far China goes for Sri Lanka.The Graphic Truth: FIFA War Cup
The quarter-finals of the 2022 men's soccer World Cup begin Friday in Qatar, with five teams from Europe, two from South America, and one from Africa. It's going to be war on the pitch in each of the four games, but what would happen if each side actually went to war with each other? We look at who would win each round — and the World Cup — if what counted was not soccer skills but rather military muscle, measured by percentage of GDP spending on defense.