Canada has finalized an agreement to join the European Union’s Security Action for Europe (SAFE) program worth €150 billion ($244 billion Cdn). Defence Minister David McGuinty mentioned that while the exact cost to the federal treasury is not yet determined, this marks the first time a non-European country will formally participate in the joint military procurement initiative.
Under the SAFE program, Canada will be able to contribute ammunition, missiles, drones, artillery systems, infantry weapons, and more. This agreement opens up significant opportunities for Canada, fostering substantial private investment in the country. Negotiations for Canada’s participation began following an overarching defence-security partnership signed by Prime Minister Mark Carney with the EU last June.
One of the key aspects of joining the SAFE program is the entry fee, which is calculated based on the projected business Canadian defence contractors are expected to engage in under the initiative. This fee grants access to a larger share of low-interest loans underwritten by the European Commission, enabling Canadian companies to bid on joint projects.
While the agreement is in place, finer details such as financial commitments are still being ironed out. McGuinty assured that more information on costs and other specifics will be revealed in due course. The fee to join the program is anticipated to be in the millions, not billions, of dollars, according to an official in McGuinty’s office.
The United Kingdom has also been in talks to enter the SAFE program but faced challenges over the fee, leading to a breakdown in negotiations. The deadline for initial bids for loans under the program was set for Nov. 30, with issuance expected next year. It remains uncertain how the missed deadline may impact Canadian companies seeking to participate or if they will have to wait until 2027.
The SAFE program, introduced by the EU in March, is part of a broader effort across Europe to bolster military capabilities amid the conflict between Russia and Ukraine. To date, 19 out of 27 EU countries have applied for loans under the program, with Poland, Romania, Hungary, and France being among the countries allocated significant portions of the funding.
The focus now turns to the upcoming multi-year fiscal framework negotiations with the European Union Parliament, presenting a substantial opportunity for collaboration in defence procurement over the next cycle. The SAFE program is seen as a vital component in enhancing both Canada’s military and industrial sectors, as emphasized by Carney prior to signing the overarching defence agreement last spring.