Why should Canada ReArm Europe?
The case for a European defence pact
🎯 Three-Shot Burst
Canada is ready to sign on to Europe’s new defence industrial pact, ReArm Europe
At this week’s G7 in Kananaskis, all of the oxygen has been sucked up by the outbreak of war between Israel and Iran. But German and French leaders have arrived with a Canada-specific agenda: convince PM Carney to join a long-term commitment to arms production and supply chains that will rearm Europe. PM Carney is expected to formally sign the pact in Brussels later this month.
Canadian officials have sought to reduce their reliance on American gear - particularly since Trump mused in March about selling allies “toned-down” versions of fighter planes with fewer capabilities than U.S. aircraft.
In March, the European Commission unveiled ReArm Europe, a plan that would earmark up to the equivalent of C$1.25 trillion for defence over five years.
“Most prefer joining ReArm Europe over U.S. alliance despite knowing it could harm relations with U.S.” -- Angus Reid Institute survey, June 2025
Caught between a rock and a MAGA cap: PM Carney and President Trump have announced their intention to agree to a new economic and security arrangement within 30 days. Even still, NATO allies are pivoting away from America. But that is easier said than done for Canada due to our proximity. Richard Shimooka believes Canada has no good options when it comes to President Trump’s demand that Canada sign on to spend an additional $61B to join his Golden Dome missile defence pact. Other experts believe Canada’s spending boost can only go so far to lessen U.S. reliance. And some are sure we should hedge:
Canada’s ex military chief has mixed feelings. Asked whether Canada should pivot away from reliance and integration with the U.S., former Chief of the Defence Staff General Wayne Eyre said “alliances are predicated on certainty, and if there is uncertainty that raises the question as to how reliable an ally is. In my belief, we need to hedge. We need to have a diverse group of allies, partners, and friends – a mesh if you will because we just don’t know what the future’s going to bring.”
Out of the frying pan, into the fire?: All of Canada’s new defence spending must be in service of making Canada a net exporter of defence tech, rather than becoming a branch plant for other defence primes. Are we better off trading America for Europe?
According to Duncan Stewart, deep tech investor and Friend of the Newsletter, we are, and here is why…
Bottom Line: “ReArm Europe presents an economic opportunity that may fit Canada’s context. With a few notable exceptions, we have no homegrown tech multinationals. We do have a strong research base that is feeding a growing tech startup and scale up ecosystem. The 20th century story was to export IP and people and companies south, as Canadian SMEs were swallowed up by American multinational incumbents. Indeed, when I spent time at Hewlett-Packard in Palo Alto and an interesting SME approached us, we only considered whether to buy them, or crush them — the dominant North American model.
Europeans are culturally more tolerant of small business-based supply chains. The German economy ‘Mittelstand’ (backbone) of small businesses employs ~60% of the national workforce and generates ~70% of Germany’s exports. European multinationals like Thales and Rheinmetall are already utilizing Canadian SME suppliers.
Instead of fighting to integrate into mature US supply chains with additional risk of acquisition, Canadian tech startups and SMEs have a rare opportunity to integrate into these EU supply chains on the ground floor, with the added benefit of reduced downstream acquisition risk.”
Related:
PM Carney’s shopping list: U.S. guarantees on North-American supply-chain resilience, firm commitments on NATO burden-sharing, and new collaborative R&D money for defence tech - all while keeping Trump’s tariff trigger finger holstered
📋 Procurement Updates
How are we going to pay for all of this?
With a new multilateral development defence bank, of course. The Defence, Security and Resilience Bank (DSRB) would be similar to Export Development Canada, a Crown corporation that provides financial and risk management services to Canadian exporters and investors, “but way bigger,” according to Kevin Reed, the Canadian living in London serving as the organization’s president.
How it works: The bank would allow NATO allies to speed up procurement by tapping the bank for money, rather than waiting for annual budget cycles. The DSRB would provide credit guarantees to commercial banks to lend into the defence sector. It would offer large banks such as RBC and BMO credit guarantees “that would loosen up capital so they could offer lines of credit, trade finance, you name it, but we can grow the industrial base a lot faster,” Reed said.
Reed is pitching Canada take a co-lead role, and have Toronto co-host the bank’s HQ alongside London.
Bottom Line: The Icebreaker is thrilled to be co-hosting Reed in Toronto on June 24 (all credit to Canadian Space Mining Corporation’s Daniel Sax for pulling this event together).
Come hear his pitch for yourself on a defence panel about capital in the sector, which will also feature investors from ONE9, Maverix PE, and Tofino Capital (too many Friends of the Newsletter to name!)
Related:
Detailed issue brief on how a global defence bank would function
How bad is Canadian government procurement, really?
💣 Arsenal Update
Call sign, “Maverick”
Last week we told you about the soaring costs of Canada’s F-35 procurement. But not everyone believes the sticker price is without merit.
DND’s Digital Innovation Manager Mark D. Robbins has taken to social media to defend the cost of the program, arguing that the F-35 cost should be benchmarked by what it replaces.
Bottom Line: The shelf cost per unit comes in around the same as other comparable aircraft. He describes the aircraft as a flying stealth supercomputer that is “post-dogfighting”.
⚔️ Combat Readiness
Spooling up the blockchain battalion
Silicon Valley executives are joining a new innovation corps in the US Army Reserve. The US Army will direct commission four tech executives at the rank of Lt. Col., charging them with leading a new Army innovation corps inside the Reserve component called Detachment 201.
This initial cohort of executives includes the chief technology officer from Palantir, Shyam Sankar, whose “Defense Reformation” website has become a talking point among defence tech community; Andrew Bosworth, the chief technology officer from Meta; Kevin Weil, OpenAI’s chief product officer and Bob McGrew who, until November, was chief research officer at OpenAI.
The move comes as the Trump administration embraces venture capital and tech industries, including VC-backed startups like Anduril, Palantir and others who have begun to take root as major players in the defense industrial base. The Trump administration’s nominee to take the reins as the Army’s No. 2 two civilian, Michael Obadal, is an Anduril employee.
Requesting permission to deploy MVP (Minimum Viable Platoon)!
Bottom Line: Canada needs to develop our own defence industrial base. This means investing in home-grown defence tech that out-innovates foreign primes and secures our sovereignty. While the Anduril’s and Palantir’s of the world seem to be light years ahead, it was only six year ago that Anduril was on employee 20, and most engineers scoffed at taking a job in defence - certainly nobody in the Valley was putting up their hand to become a reservist!
Related:
OpenAI wins $200 million U.S. defence contract
🌏 International Developments
Procurement problems aren’t limited to Canada
As reported by Friend of the Newsletter Pete Modigliani, who runs the venerable Defense Tech and Acquisition, the US defence acquisition system is also in disrepair, and in desperate need of SPEED (Streamlining Procurement for Effective Execution and Delivery):
😬 Meme Warfare
We are rearming Europe, so…
🔫 Hot Shots
From the frontlines: Iranian officials claim they’ve uncovered new evidence of how Mossad operatives carried out attacks from inside the country, at least some of which helped suppress Iranian air defenses. Mossad has revealed that it built a secret explosive drone base in Iran to strike ballistic missile launchers at a base in Tehran. Since last year, Israel forces have repeatedly hit Iran’s defences. Prime Minister Benjamin Netanyahu said on Sunday that Israel had worked to “peel off the layers of protection” of Iranian defences. Yesterday, Israel hit Iranian state tv during a live broadcast
Zap!: China’s ‘Silent Hunter’ laser gun shooting down Ukrainian drones. The Spectator with a detailed story on the frightening advance of China’s military capabilities
Swarm: China places massive order for 1M kamikaze drones (H/T to Friend of the Newsletter Cameron Rowe)
Patent-pending?: Vancouver-based ZenaTech Inc. plans to file a patent for its counter-unmanned aircraft system (c-UAS) technology in response to US drone policy
Pssst: The Pentagon disinformation that fueled America’s UFO mythology to cover up real secret-weapons programs
Trading places: Professor Stephen Nagy, Friend of the Newsletter, in the Japan Times on Canada’s attempts to diversify to China and the risks associated
Necessity is the mother of innovation: The Atlantic with a longform piece on how Ukrainian drones have changed warfare forever. On this topic, shout out to Friend of the Newsletter Tim Mak, a Canadian, who runs a news organization based out of Kyiv covering Ukrainian defence innovation
🤝 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.