Guns, Butter, and GDP
A 'Carney Doctrine' emerges?: Defence spending as economic statecraft
🎯 Three-Shot Burst
Debt, Drones and Deterrence: Why Defence Spending Is the New Industrial Policy
Canada’s parliamentary budget watchdog has raised questions about the federal government’s new defence spending, claiming it remains short on details. Meanwhile, a new poll reveals three quarters of Canadians support Canada joining the ReArm Europe plan.
Lemonade from lemons: NATO faces unprecedented risk as U.S. commitment wavers, demanding urgent increases in defence spending and unity among allies to deter Russian aggression and maintain credible collective security.
PM Carney has articulated a transformation of Canada’s forced-by-Trumpian-threat defence spending from a reluctant - and overdue - NATO obligation, into an engine for economic renewal, fusing military investment with a new brand of strategic, Keynesian statecraft.
Bottom line: There is no outside-of-wartime playbook for rewriting the rules of Canadian political economy in real time. By necessity, Canada is not just boosting defence investment, but also recasting defence as a tool for national resilience and industrial autonomy. Or, as Policy Options declares, casting defence as “a lever of economic security… a Carney Doctrine”.
Related:
Lockheed Martin COO on President Trump’s proposed ‘Golden Dome’ missile shield, and why we’re probably at the beginning of a 3-to-5 year surge in defence spending
(H/T to KJF)
📋 Procurement Updates
Rewiring British Defence Financing
As it turns out, many of Canada’s problems are not unique. UK MP’s Luke Charters and Alex Baker have published a succinct overview of the UK defence industry’s challenges related to accessing financial products and capital.
Key takeaways: Defence SMEs face more acute funding challenges than other SMEs, particularly in accessing the capital needed to grow and scale. Unique sector-specific risks, such as reliance on government contracts, create uncertainty for lenders and investors. Banks are often reluctant to lend to defence SMEs due to perceived credit risks, while slow procurement processes force these firms to seek additional loans.
Bottom Line: The UK’s defence funding challenges sound a lot like Canada’s. The Icebreaker is pleased to be co-hosting Kevin Reed, president of the new Defence, Security and Resilience Bank (DSRB), in Toronto next week. The panel will also feature investors from ONE9, Maverix PE, and Tofino Capital.
Related:
Detailed issue brief on how a global defence bank would function
🚀 Launch Window
To Infinity, and Beyond
Quebec-based Reaction Dynamics has closed CAD $14 million in Series A funding — in addition to last week’s grant of CAD $10 million from the Government of Quebec, bringing the company’s total funds secured to CAD $38 million to date.
Elsewhere in aviation and aerospace, NordSpace, led by CEO and Friend of the Newsletter Rahul Goel, has successfully completed a month-long campaign to qualify and test the limits of its Hadfield Mk III liquid rocket engine - metal 3D printed, regen cooled, and Earth-shakingly powerful.
Next up: its first flight, scheduled for this summer, which will make Canadian history as the nation’s first commercial launch from a commercial spaceport [click here for video]:
Bottom Line: Assured access to space will reshape Canada’s sovereignty, security, and economy. NordSpace is building an end-to-end space missions company backed by a launch and propulsion architecture designed to be competitive in the modern launch era.
Related:
Orbit is the New Frontier: Panache Ventures’ Sarah Willson on how most defence organizations are dangerously underestimating the threat of space weather to national security, operational readiness, and critical infrastructure
⚔️ Combat Readiness
North Vector Dynamics and survivability in the age of drone warfare
In Operation Spiderweb, Ukraine deployed 117 autonomous FPV drones from
inside Russia - destroying or severely damaging 41 strategic aircraft, effectively neutralizing 34% of Russia's strategic bomber fleet and inflicting an estimated $7 billion in damages.
Weeks later, Mossad-activated UAVs struck deep into Iran from pre-positioned caches, neutralizing air defense systems before they could launch.
Bottom Line: This isn’t just a military problem – it’s a multi-billion-dollar reset in what
national security demands. Calgary’s North Vector Dynamics was founded to meet that challenge, and has developed a modular counter-UAS and short-range air defence architecture for saturation-scale drone attacks that now define the modern battlespace.
Its SHIELD system combines autonomous interceptors, distributed fire-control, and multi-domain launch platforms – deployable by vehicle, drone, or ground team in GPS- and RF- denied conditions.
Related:
North Vector Dynamics founder Paul Ziade on how modern wars are fought
Drone Force One: Estonia is building a drone wall along its Russian border
🌏 International Developments
A tale of two approaches to AI
OpenAI, the company behind ChatGPT, just secured a $200 million contract with the U.S. Department of Defense to prototype frontier AI systems for critical national security use cases. According to the Pentagon, the deal covers both warfighting and enterprise domains, with most of the work centered in Washington and running through July 2026.
Meanwhile in Canada: Ottawa is trying to build in-house AI tools that are just as good as ChatGPT.
Bottom Line: Please, Ottawa, just use Cohere.
📈 Public Market Proxy
The S&P 500 Aerospace and Defense stock price index is soaring in record-high territory
Related:
Canada Eyes Buy-Canadian Policy For Steel, Aluminum
😬 Meme Warfare
If we ever sell arms to the Ayatollah, we will make sure to provision for dentures…
🔫 Hot Shots
Why can’t we be friends?: The defense industrial base is "not a simple false dichotomy between the industrial titans that have powered American defense for decades and the innovative trailblazers from Silicon Valley”
Steel and Silicon: Shipbuilding’s defence tech moment
Tried and tested: For European drone manufacturers, Ukraine is the place to be… Friend of the Newsletter Eliot Pence talks drone warfare on a podcast
Canada centres G7 supply chain deal: Just three producers, China, Indonesia and the Democratic Republic of the Congo, control 86% of the global critical mineral supply… Canada pledges $4.3B in support for Ukraine at G7
All quiet on the Western front: The real G7 story is the quiet reassertion of Canadian energy
Let them
eat cakegive speeches: European Commission VP Kaja Kallas with a must-watch for all NATO membersDomino theory: The Pentagon’s local pizza orders spike when war is breaking out
Trojan Horse: The wars in Ukraine and the Middle East offer Americans a glimpse into the battles of the future—and a warning
🤝 Meet the Defence Tech Community
The Icebreaker is co-hosting two events during Toronto Tech Week [note that both are oversubscribed and now waitlist-only]
Arctic Edge: Canadian Defence Innovation and Investment, June 24: Sign up here. The event will feature a cross-section of speakers from innovation, the public sector, and the investor community.
Defence Tech Patio Drop In, June 27: Sign up here to join VCs, founders, operators, defence primes, and the defence-curious, over a few cold beers on a sunny patio.
These events are officially part of Toronto Tech Week 2025, a weeklong citywide collection of events to connect and celebrate the builders.
If you’ve got battlefield intel, classified tips, or just want to call in an airstrike on our typos, hit “reply” and sound off. Whether it’s a new tech sighting, a rumour from the mess hall, or feedback on our comms, we want your SITREP.