The Evolving Tug-of-War on Sovereignty
Pulling closer to the U.S. on border security while scrambling for real sovereignty through overdue military reinvestment
[Eds. note: we’ve been writing this newsletter privately for a few weeks, and it has become popular by word of mouth in the defence community. By popular demand, we are making it public. This is the third public edition. We promise it will always be free for those who subscribe now.]
🎯 Three-Shot Burst
Canada’s Balancing Act: Integration vs. Independence
Prime Minister Mark Carney announced Canada will hit NATO’s 2% defence spending target this fiscal, five years ahead of his election campaign promissory date of 2030.
The $9 billion announcement is light on detail, but does call out intended investments in Arctic surveillance, and modernizing everything from drones to digital infrastructure, breaking down as $2.6 billion for personnel, and $2 billion towards overseas partnerships such as ReArm Europe, as well as $560 million for digital tech and cyberdefences. According to The Logic, $25.5 million will be allocated to an existing program to help startups develop military technogy.
It was also notable for a particular quote from the PM:
“But now the United States is beginning to monetize its hegemony, charging for access to its markets and reducing its relative contribution to our collective security.”
Just as Ottawa claims victory, NATO is already shifting expectations, floating a new 5% target for all member states.
PM Carney campaigned on defining a new economic and security relationship with the United States. This is proving tricky, as today’s landmark defence spending announcement crashes up against the introduction last week of new Canadian border security legislation.
Coast Guard Goes Paramilitary (Sort Of): The government’s new Border Security bill is pushing the Coast Guard to modernize, amending the Oceans Act to authorize Arctic security patrols and intelligence sharing with DND and CBSA. Turning the Coast Guard into a quasi-paramilitary force has a catch: it requires new hardware, including ships, surveillance, and a budget that matches the ambition, something addressed specifically in today’s defence spending announcement. The Arctic is becoming crowded, with Russian and Chinese activity increasing. This move is not about turning the Coast Guard into a combat unit, but about making sure Canada has presence in a region where absence can have real consequences.
CBSA’s Powers Go Supersized: Bill C-2 isn’t just about beefing up the Coast Guard - it’s a sweeping expansion of CBSA’s authority. Border agents now have warrantless access to export warehouses and can pry into private mail under “urgent circumstances.” The bigger play? Forcing tech companies to restructure data for instant law enforcement access. With new cash transaction limits and a digital dragnet, this is a major shift in how Canada polices its borders and financial flows. Sovereignty isn’t just about territory - it’s about who controls the data and the dollars, and keeping up with allies, and adversaries, who already use such tools.
Asylum Alignment: The bill retroactively denies refugee claims filed more than a year after arrival - even for those who arrived as far back as 2020. Add a 14-day filing deadline for irregular crossers, and Canada is effectively outsourcing its refugee screening to U.S. Border Patrol. This is an overdue, if blunt, fix to keep a system under strain both credible and sustainable, but also raises tough questions about our real relationship with the United States.
Bottom Line: PM Carney is trying to both lock arms with the U.S. on immediate border threats, and break free from reliance on American military tech and supply chains via overdue military reinvestment.
When it comes to border security, Canada is doubling down on interoperability and data-sharing with Washington. Sovereignty here means harmonizing with American priorities - even if it means ceding some control over privacy and refugee policy. Contrast that with Canada’s new defence plan: a $9 billion surge to rebuild the Armed Forces, ramping up domestic production of ammunition, AI, quantum, and cyber capabilities, and integrating the Coast Guard into NATO’s broader defence grid - all with the goal of “never being dependent on others again.”
Meanwhile, hitting the 2% target is already obsolete if NATO’s new benchmark is 5% - meaning Canada’s “ahead of schedule” victory lap may be short-lived. This isn’t just about budget box-checking; it’s about whether Canada can ever set its own security agenda, or if we’re doomed to chase a perpetually moving finish line.
💣 Arsenal Update
The New Global Arms Race
According to GZERO Media, in 2024, world military spending surged to a record $2.7 trillion, the steepest annual increase since the Cold War's end, driven largely by European, Asian and Middle Eastern nations.
Today’s arms race is not just about quantity, but technology. Nations are investing heavily in next-generation weapons, including drones, hypersonic missiles, artificial intelligence, cyber capabilities, and space-based systems.
In the US, President Donald Trump’s desire for a “Golden Dome” missile defence system akin to Israel’s “Iron Dome” would add $175 billion to Washington’s arms budget over the next three years. It would also require the cooperation of Canada, at a price of $61 billion.
Bottom Line: 2 in 3 Canadians believe that Canada should not be part of the American Golden Dome missile shield and instead spend on the capability of Canadian Armed Forces.
The arms race could deal a death blow to arms control agreements. The New START treaty between the US and Russia is set to expire in February 2026, with little hope for renewal. It could also see new theatres of war emerge: in the Asia Pacific around Taiwan, in Europe in countries bordering Ukraine, and in cyberspace, through the use of disinformation and propaganda campaigns.
⚔️ Combat Readiness
How Drones are Reshaping War
Last week, Ukraine launched Operation Spider’s Web, a surprise drone attack that went deep inside Russia, reaching as far as Siberia for the first time.
Ukraine says 117 drones were smuggled into Russia, hidden in the roofs of wooden sheds and later loaded onto the backs of trucks then launched remotely. The result was an enormous blow to Russia’s strategic bomber fleet.
Josh Schwartz, an assistant professor of international relations at Carnegie Mellon University, joins CBC’s Front Burner podcast to explain how they are transforming modern warfare.
🤖 Innovation Spotlight
The Northern Drone Landscape is Vast
Related:
How to stop an offensive drone, by ZeroMark, a NY-based developer of military rifle attachments for shooting down drones, which raised $7 million last June in a seed funding round co-led by Andreessen Horowitz.
📋 Procurement Updates
Canada vs. Italy: Guess which is better at military procurement?
Overhauling a military does not only mean securing the most lethal missiles, the stealthiest submarines or the fastest frigates; it means designing a procurement system that can deliver the biggest bang for your buck in the shortest period of time. Doing so means the equipment arrives before it is outdated, but it also frees up financial resources for everything from recruiting soldiers to training missions.
Comparing the Italian and Canadian militaries illustrates the woeful inadequacies of the latter. The two countries, both members of the G7 and NATO, have roughly equal GDPs, and their military outlays are not far apart.
Bottom Line: Italy’s procurement system puts Canada’s to shame. Rome tends not to agonize over purchases the way Canada does. Learn why here.
🌏 International Developments
Does Canada have the national will to own our future in the cosmos?
Canadian expat Alexander MacDonald is NASA’s former chief economist and the author of The Long Space Age: The Economic Origins of Space Exploration from Colonial America to the Cold War.
He recently returned to his hometown of Ottawa to speak at the first Canadian Space Launch Conference. He argues that leadership in space technologies, and the intellectual property and productivity improvements that arise from them, will be part of what defines the leading nations and economies of the future. If we want Canada to be amongst them, we need to prioritize investments in Canadian space capabilities and in Canadians with big space dreams.
Related:
Condolences to the family of Marc Garneau, who passed last week at the age of 76. He became the first Canadian in space on October 5, 1984, and flew on three Space Shuttle missions. He later served as President of the Canadian Space Agency, and Minister of Foreign Affairs.
😬 Friendly Fire
Special Guest POV: Eliot Pence, Canadian expat + former head of international at Anduril Industries
Back to Zero
Founders often talk about how building a startup is like “fixing the plane while you’re flying it.” PM Carney’s message today at The Munk School was very much a “fix the plane” then “fly the plane” message. It was a sequentialist approach and insufficient. There was never really any question that we needed to fix recruitment, housing, salaries and infrastructure for our soldiers. That’s the price of admission for being a sovereign democracy.
What most countries around the world are asking themselves is a set of questions that are very different to those answered by PM Carney today in Toronto. For example: How can we build enduring capabilities at scale? How do we spark innovation that stays in the country? What is the constellation of institutions required to make that future a reality? What are the list of agencies, risk capital providers, R&D houses that can get us closer to this future state? These are the hard questions on defence.
Another area where there was insufficient information is on innovation. The history of innovation is that it rarely emerges within a centralized government bureaucracy. Yet, BOREALIS is just that: a centralized bureaucracy that decides what the future looks like and then funds it with R&D money. The potential for BOREALIS is that it does the opposite: it funds entrepreneurs in a decentralized way and lets the private sector, ideally the venture community, lead.
Another glaring detail was how PM Carney handled NATO. Mocking it. The irony is that we may well be more out of sync in two weeks’ time than we are today. At least today, we’re 0.63% away from the goal. By the end of June we may well be 1.5% in arrears as NATO considers increasing the defence spend threshold.
The government would do well to revisit how it speaks about defence. I’d offer three considerations worth heeding:
Be transparent, open and industry-first: set clear milestones, funding scales, and program timelines for innovation.
Align ambitions: commit now to the new NATO goal, not just the halfway point.
Make domestic investment real: deploy meaningful contracts to Canadian firms, especially SMEs and defence-tech startups.
Build enduring capability: from munitions factories to quantum labs, from Arctic sensors to cyber operations.
🔫 Hot Shots
Ch-ch-changes: Along with an extra $9 billion and shifting the Coast Guard to the defence portfolio, Ottawa is floating a new Defence Industrial Strategy and a centralized Defence Procurement Agency.
Canada’s Military Can’t Defend Us: China and Russia have drawn closer, with Beijing bankrolling Russian energy projects in the Arctic and indirectly helping fund its military build-up. China has now declared itself a “near-Arctic state.” The region, once considered remote and secure, is now a strategic frontline. Meanwhile, multinational naval forces are converging off Nova Scotia to “enhance collective defence capabilities”- but also to show the flag as the Atlantic heats up. The US Coast Guard’s first polar icebreaker in over 25 years is now operational - a not-so-subtle reminder that North American Arctic gaps are being filled, with or without Canadian leadership.
Samarium Chokehold: Supply of this singular rare earth mineral, crucial for the manufacture of magnets for missiles, fighter jets, smart bombs, and other military gear, gives China leverage in trade talks.
D-Day: A new Saskatoon museum commemorates Canada’s Juno Beach heroics, 81 years later.
SHIELD: The D stands for… defence, obviously! The Canadian Shield Institute (‘Securing Homegrown Innovation, Economic Leadership and Defence’), an offshoot of the tech advocacy group Council for Canadian Innovators, was announced in January with a $10-million donation from Jim Balsillie. It has now tapped ex-Sonos CEO Patrick Spence to chair the board, and Vass Bednar as Managing Director.
Sans America: Canada isn’t the only country thinking about going it alone. A new paper from the The International Institute for Strategic Studies explores the costs and consequences of defending Europe, without the United States…
…But What About America?: Export Development Canada’s new CEO discusses how Canada must expand its trade horizons in the Trump era, while the Hudson Institute hosts an afternoon panel today about the future of the continent and how North American states can increase economic cooperation to strengthen the continent’s security.
Another Kinda Conflict: Canada’s public safety minister asks officials to ‘screen’ him from conflict of interest.
Pipeline Politics: Canada can no longer afford to leave its oil export sector exposed to erratic US policy.
DARPA Does: Canadian deep-tech firms are still all-in on DARPA
Frigate-about-it: Seaspan delivers the Canadian Navy’s HMCS Calgary frigate.
Doubled Deutsche: Germany’s new regional turboprop, “powered
by Canada,” is built for remote ops.
🤝 Meet the Defence Tech Community
The Icebreaker is co-hosting two events during Toronto Tech Week
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.