The Implications of the Recent Canadian Federal Elections for Defense

It is probably a bit early to draw conclusions from the shift to a minority liberal government, but there is no harm in crystal ball gazing from the defence and security perspective.

On the foreign policy side, what matters most, as usual, is Canada-U.S. relations. It is very unlikely that much will change on the Canada-U.S.-Mexico Agreement (CUSMA) until such, unlikely, time when the United States ratifies the new Treaty. Were this to miraculously happen in a moment of weakness, or generosity, on the part of Nancy Pelosi in the House of Representatives, there could be attempts by the NDP to ask for more pro-labour measures, or by the Bloc for supply management concessions made to U.S. demands.

Although Mr. Scheer denounced the CUSMA’s results, there is a consensus, notably underscored by Rona Ambrose, that Prime Minister Trudeau and his team managed a multi-partisan operation, thus very unlikely to unravel. But Mr. Trudeau is lucky that, weakened as he undeniably is today, there will be little focus by the U.S. on Canada over the next 15 months as the presidential electoral maelstrom will consume all the energy within the United States political spectrum – and that is without assuming an impeachment process!

There will be renewed pressure on Canada to be more forceful with China, unfortunately to no avail until the Meng Wanzhou extradition case is resolved. Ambassador Barton might feel lonely in Beijing unless the China-U.S. trade war comes to an agreed end and the Huawei CFO is, also miraculously, part of the deal in some form or another.

If Brexit is consummated in one form or another, there will be an easy consensus on concluding a trade agreement with the UK, whose government could very well also be lurching towards minority status if the Brexit outcome has to be settled at the voting booth. It will be interesting to see what is actually possible in terms of Canada’s ability to par both CUSMA and the Canada-EU Comprehensive Economic and Trade Agreement (CETA). Of course, if yet another miracle was to happen, whereby the UK remains in the EU, then CETA will remain the paradigm.

Canada will continue to lack any policy towards Russia, although there will be serious review of any Russian interference in the recent elections. I expect there will equally be little noise on Canada’s views, let alone policy, towards the Middle East other than the perfunctory assertions of eternal love for Israel.

But more “unimportantly”, there will be little in the way of initiatives in traditional foreign policy terms, less ostentatious appearances at summitry / more maturity and discretion, while a stronger, determined approach on climate change which, Mr. Scheer’s views notwithstanding, remains a unifier with the other parties despite the Canadian divide between East and West.

Clearly, there is no shortage of paradoxes.

Specifically on defence, the key issue will be – once again – procurement. Indeed, since the July 23rd release of the formal Request for Proposals to acquire 88 advanced fighter jets, pursuant to the Strong, Secure, Engaged Defence Policy, the number of contenders has whittled down to Lockheed Martin’s F-35, Boeing’s Super Hornet and Sweden’s Saab Gripen.

There are still lingering hard feelings towards Boeing for its earlier rebuff of Canada and, while totally unrelated, the company’s recent problems with the 737 Max may have added some concerns in this ethereal quest for perfection.

Now that Canada has opted out of its Industrial and Technological Benefits (ITB) straightjacket policy, caving to legitimate demands from the U.S. to abide by our $30 million yearly commitment to contribute to the development of the F35 – which, by the way, generated over a billion dollars’ worth of quality business in Canada, it seems that Lockheed Martin has a “lock-in” (poor pun intended) on this bid. And in any event, when “two eyes” trump “five eyes” what does one do with a sixth eye?

As author and former Canadian Air Force fighter pilot, Alan Stephenson explains: “To provide latitude to all bidders, the final RFP was modified into a two-phased proposal to allow non-American companies to address 2/5-EYES challenges up front, while also applying rated criteria for economic offset potential of stated ITB requirements, to keep the F-35 within the bidding process. Additionally, five per cent was shifted from cost to economic criteria to compensate for changes in the original draft ITB policy. The proposals will now be assessed on 60 per cent technical merit, 20 per cent cost and 20 per cent economic benefits.”

Key here is the government’s decision to change the earlier policy that forces bidders on military contracts to invest as much in Canada as the value of the project they are bidding on. This change allows bidders to define their own industrial targets, and stems from U.S. pressure that Canadian companies are already making loads of money through Canada’s participation in the F35 development program, and asserting it should be considered as an alternative to the ITB.

More broadly, defence procurement is unlikely to be sabotaged by the small parties in the new Parliament, although butter vs. guns is always more appealing in the face of a weakened regime.

One would reasonably assume that the two-man parties would see eye to eye on military expenditures – unless Mr. Scheer decides that opposition to all and anything is the ultimate channel to keeping his job.

As to the National Shipbuilding Strategy, and the frigate program in particular, the usual suspects are solidly in the captain’s chair (another lousy pun intended) and Lockheed Martin and BAE Systems, of course within the Irving Empire, seem to have little to fear from Alion and others.

And if Donald Trump ever finds the time, between tweets and the impeachment saga, to look at Canada’s defence expenditures as a percentage of GDP, he will be pleased to note that on development assistance, Canada is as lame as the President of the United States.

But then, maybe my crystal ball is foggy and none of this – so little – might ever happen at all!

This was first published by our partner Front Line Defence on October 22, 2019.