DAVID PERRY: President & CEO, Canadian Global Affairs Institute
CDR sent Senior Staff Writer, Joetey Attariwala, to speak with David Perry, the President and CEO of the Canadian Global Affairs Institute. Perry is the author of multiple publications related to defence budgeting, transformation and procurement, so we asked him to speak about the current state of defence issues related to Canada. Here are highlights of their discussion.
CDR: David, thank you for taking the time to speak with me. We are living in some very interesting times for geopolitics and global security. Prime Minister Carney has stated that Canada’s relationship with the US, as we have known it, is over. Do you agree that Canada should diversify its military capabilities to be less oriented to all things US?
David Perry: I think given everything that’s happened and how fundamentally disruptive, not just of the status quo generally, but of the status quo as he helped define it during his first administration, that President Trump’s behavior is massively disruptive and I think leading, understandably, to a huge loss of trust in how the United States is going to act moving forward. Former ambassador, David MacNaughton, appeared on political programs recently and basically said what’s the point of renegotiating a new trade agreement if Trump won’t honor the last one that he negotiated and called the best negotiated, the most successful agreement in the United States history!
I think it’s hard to look at what they’re doing economically and not see links, either explicitly or implicitly, with the defence relationship and in part, the different comments about the 51st State, but as well, the way that they’ve been acting towards Greenland and Denmark, who, for a small country, has been one of the United States most full throated and reliable allies of the last 20 or 30 years. It’s pretty remarkable to see the way the US has pivoted to treat allies with, I think, outright hostility in lots of cases, but scorn and derision in most of the other ones.
Mr. Carney being so definitive with that statement is a pretty clear cut message, and I’m not sure how many people have much of a sense of exactly what that would imply, because as you were suggesting in your question, the extent, breadth, depth and importance of our relationship with the United States for defence and security issues is really difficult to accurately quantify, but also to capture in terms of the importance to Canada.
Over the last 80 years or so, we have basically built all of our defence and security architecture around the premise that the United States was a friendly, or at least, at a minimum, a benevolent hegemon, and if that dynamic has changed, then we’re going to have to revisit a whole bunch of fundamental assumptions. If the United States is no longer interested in the value of allies the way that it had since the Second World War ended, then that’s got pretty massive implications for Canada because we are extremely reliant on the United States. So, I think broadening our portfolio of defence and security links would be a good thing, but I don’t have much of a sense how many people outside of more narrow defence circles really have much of an understanding of exactly how broad the US relationship goes. I think it will be an interesting set of discussions with whoever wins the next election to at least start trying to understand the breadth and depth of what links exist today, to then potentially have the conversation about how you broaden away from those and in what ways specifically.
LOOKING TO EUROPE
CDR: Do you feel that the long-standing Canadian preference for US military equipment is the kernel issue in why European companies often pull out of Canadian defence procurement competitions?
David Perry: I’m always leery of taking at face value corporate articulated reasons for why they were either unsuccessful or where they didn’t participate in a particular competition, because, irrespective of whoever is making those kinds of comments, I don’t ever assume that they’re totally objective and not motivated in terms of a preferencing or market shaping exercise in any particular direction. So, I think there could be lots of different reasons why companies haven’t been participating.
In terms of the preference perspective from the Armed Forces, I think you can wind that back a step to your previous question where having the United States as our intrinsic security and defence partner has been the core assumption of our defence planning and all the different things that flow out of that — like desire to have more and more interoperability with the United States. I think there’s an element that is military preference in the sense of which gear from what country would they most like to have based on their own professional experiences and career activity. A lot of that’s also driven from actual policy choices that the Government of Canada has made, and a lot of that has been significantly shaped and articulated by the Department of National Defence. That’s all led us to have, I think, an increasing trend to value the interoperability of any piece of military equipment, or for that matter, services that get provided in some respects too, that work as seamlessly as possible with the United States military because that interoperability and close working relationship has been a core underpinning of Canada’s defence.
To go back to whether we’re in a different world here — if the government is going to make different choices about who it wants to see the military work with, then we would have to have a reshaping or re-weighting of the different considerations that we look at in procurements.
2% TARGET
CDR: Both the Liberals and Conservatives have stated that Canada needs to meet the 2% of GDP target for defence spending. What do you make of the 2% target, and do you feel Canada will spend in a wise way, and by that, I mean spending money that will deliver military capability?
David Perry: It’s a fascinating thing to watch Canada have a political consensus emerge around an issue. In Canada, we finally decided that 2% is a real thing that we can get political buy-in, although not yet having translated it into the actual commitment of money to make it happen, at least politically. This is the first political campaign where we’re seeing all the major parties make a commitment to spend at that level, but there is all kinds of speculation about what’s going to happen at the upcoming NATO Summit this Spring and whether or not there will be a new investment pledge target set, and if so, how high it will actually be. My suspicion is that, certainly, based on the tenor of the prior Summit in Washington, that there’s going to be a new investment pledge target set at some point, it’s just a question of when and how high the target will be.
So, thinking about that from a Canadian perspective, there are three components required in us getting to 2%. One is actually getting a real political decision that that should happen, and maybe we are there. I’ll be waiting to see mandate letters or some other kind direction or signal about the government’s intent, like in the throne speech, to be confident that that’s not just campaign rhetoric, but an actual priority of the government. The second thing is you actually need to see the money committed. Obviously we haven’t seen that happen yet. Then the third piece would be, what kind of mechanisms are going to be introduced by the government to actually allow it to spend at a higher level, and so on that front, I think there’s going to be at least two broad thrusts — what are the ways under our current construct that you can spend money in a five year timeframe, so basically focus on getting to 2% by like 2030 or so, versus what you would ideally want to make capability investments in which I think is more of what you are getting at.
In our current procurement system, the average time cycle to buy stuff is between 14 to 16 years, depending on which data you look at, so it’s hard to have a lot happen five years from now when it takes triple that time on average to get major weapon systems bought. I think we’re more likely to see a focus on easier ways to actually move the money and get it out the door by putting more money into maintenance and infrastructure, because it’s possible to spend that faster under our current system than it is to have a clean sheet of paper of where would we like to see more capability and in various areas because of the way the world’s changing. The last defence policy took two years to get publicly released, and it was essentially just a modification of the previous policy direction going back to 2017 with additional cash and some added focus on the Canadian north.
I think there’s two potential things to think about — one is what we spend our money on to get to the point where we at least start spending 2% of GDP on defence; and then there’s a potentially entirely separate set of conversations to be had about if we’re going to not just get there, but stay at that spending level over the long term. That provides a little bit more lead time to think about where we’d invest in the capability. I think it’s important to get to spending 2% as it would put a lot more money on the table, but staying at that level, I think, opens up the possibility of fundamentally rethinking how the Canadian Armed Forces is actually structured, and what kind of capabilities it has.
CANADA’S DEFENCE INDUSTRY
CDR: What should the next government do to help foster the defence industry in Canada?
David Perry: I’d say two things: One is to decide whether or not it is actually a priority of the Government of Canada to better defend this country, and to me, that would entail actually placing defence in a top five priority issue set. So that would be one — does defence actually matter, or is it just going to continue to be a much lower order priority for the Government of Canada? Depending on the answer to the first question, the second thing that I think it could do would be to try and get more coherence on a bunch of different parts of government policy and programming. We currently have a certain set of preferences and ways that our military’s force development process works that aren’t necessarily harmonized with the economic offset ITB policy. Also, there’s not much coherence between that and how we fund research and development and innovation in this country.
There also isn’t a whole lot of coherence between what we support in terms of exports and either what the government supports directly or what the government permits by literally issuing export permits. So, I think prioritization of defence would be part of it, and then coherence amongst the different activities of government to collectively support the industry if they actually want it to thrive. Getting to 2% and staying there would potentially put enough money on the table that you may actually have to go back and revisit whether or not the Canadian markets, as typically discussed, is always going to be too small to really support viable Canadian industry, because if you’re putting several hundred additional billion dollars on the table over the long term then maybe that changes.
F-35 ACQUISITION
CDR: There’s been a lot of discussion about the potential of canceling the F-35 but the bigger issue around that topic is US control over the platforms and products they manufacture and sell, and the potential for them to weaponize that control, should they choose to. The same could be said for the Aegis Weapons System, the P-8 Poseidon and other platforms. What is your assessment of this issue?
David Perry: So, the US President himself spent time in the oval office talking about the United States toning down aircraft to sell, I think he said by 10%, because to paraphrase, he said that you’re selling to allies today, but maybe they’re not going to be allies in the future. So that sure isn’t doing much to instill confidence in making purchases from the United States that fundamentally require the involvement and support of the United States government. It sends a terrible signal about reliable, long-term access to the very expensive technology that you’re looking to buy. So that’s a big point of concern.
The other sense is that beyond just those big systems, again, going back to how broadly and how extensively we rely on the United States to support the Canadian military, that if we’re really concerned about how reliable the United States is, then it’s not just the combat systems of our key combat platforms that we’d have to be concerned about.
SHIPBUILDING
CDR: I believe the government announced $22 billion for the first batch of three River-class destroyers, yet the total budget for 15 ships is reported as $56-60 billion before taxes. Now, I appreciate ships are more expensive at the beginning of a build project, but do these numbers make sense to you?
David Perry: They might, but I do think that the country is owed more fulsome explanation than we’ve had on this. It wasn’t even a real government announcement of the project. I think what they’ve done is kind of innovative, like announcing a contract for sort of an initial value, an initial level of effort, with the idea that they’re going to refine that when they have a better idea of what the actual costs are going to be, which, given that they don’t have a finalized design at this point, I really want to see the government come back in and explain this better, because this is the largest project we’ve got going.
CDR: Should the government seek to procure the MV Asterix Combat Support Ship?
David Perry: I think that we should get more than two refueling ships, so whatever either a 2% of GDP CAF is, or more than 2% of GDP looks like, I think the Navy has articulated for good reason all along to have more than two refueling ships. So, if there’s an option still to acquire the Asterix then we should seriously look at that. I don’t know what the option would be to extend JSS production, but that would also be worth exploring too. I think we should look at a third ship and figure out what the most effective mix or options for doing that would look like.
CDR: What are your thoughts on defence procurement today in relation to the defence policy update — Our North, Strong and Free?
David Perry: I think the expectation now is that the work that went into that defence procurement review is going to feed into transition advice. I hope the government takes and acts on as many recommendations as they want to start implementing right away. I don’t think there’s any need for any more review or any more study. We need for people to go and actually start acting to implement the results of the most recent round of extensive defence procurement review options. They need to stop analyzing and start doing.
CDR: Thank you.
Joetey Attariwala is CDR’s Senior Staff Writer
