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CSIS VIEWPOINT: Canadian Membership in AUKUS – A Time for Action

On a sunny March day in San Diego, U.S. president Joe Biden, flanked by UK prime minister Rishi Sunak and Australian prime minister Anthony Albanese, announced next steps on AUKUS, the security partnership between the three countries. The tone among the three was celebratory, as they put the finishing touches on months of intensive planning and coordination and agreed upon a timeline for Australia’s acquisition and eventual construction of nuclear-powered submarines (SSNs). However, the conference was marked by a conspicuous absence. Canada—the country with the world’s longest coastline, bordering the Pacific, Arctic, and Atlantic Oceans, founding NATO ally, member of both the Five Eyes partnership and North American Aerospace Defense Command (NORAD)—has been nowhere to be found in AUKUS discussions.

In contrast to the grand atmosphere of the AUKUS summit, Biden’s visit to Ottawa the next week was a congenial, if hurried, attempt to check the right boxes with the United States’ northern neighbour. Security and defence announcements, including a timeline and budget for modernising NORAD sensors (in particular critical over-the-horizon radar), weapons, and command and control infrastructure, seemed cobbled together by a reluctant Canadian government barely in time for the two leaders’ press conference. The glacial pace at which Canada appears to be adapting to the realities of modern great power competition has left it far behind the curve, with consequences for both Ottawa’s reputation among its allies, and its ability to protect Canadian territory, sovereignty, and contribute to global peace and stability.

While Canada is a member of storied and long-standing security partnerships, it has been loath to step up as a member of these alliances. Even Canada’s new Indo-Pacific Strategy is decidedly light on substance. The document commits to greater participation in joint exercises and training and the deployment of just one extra vessel for patrols in the region, adding up to a modest investment of less than $500 million over five years.

Canada’s minister of national defence, Anita Anand, explained that Canada was not interested in AUKUS given its central purpose of acquiring nuclear submarines, “which is not the route Canada is taking in terms of its marine capabilities.” Canada is indeed in dire need of replacing its aging submarine fleet and, despite the minister’s assertion, conventionally armed SSNs have been recognised in the past as “the only vessel able to exercise surveillance and control in northern Canadian ice-covered waters.” As such, they should not be taken off the table. Regardless, AUKUS is about much more than SSNs; it is a bold strategy to align member states’ defence and technology sectors to develop the next generation of military capabilities. It sends a message to potential challengers that the United States, United Kingdom, and Australia are serious about protecting their interests in the region and beyond.

A Lack of Commitment

Why is Canada missing from AUKUS? The simple answer is that Ottawa was apparently not invited. But even if it had been, Canada’s answer may have been driven by cost. AUKUS comes with a hefty price tag for Australia of between 268 and 368 billion AUD (179 and 245 billion USD) over a 30-year period. This type of large-scale, sustained commitment to overhaul a single defence capability would be unprecedented for Canada, which has struggled since the end of the Cold War to match its allies in defence spending. With a 2.20 trillion USD economy in 2022, Canada spent approximately 1.3 percent of its GDP on defence, well short of the NATO goal of 2 percent, which it has not met in over 35 years. Further, Canada’s capital acquisition budget represents only 18.7 percent of overall defense expenditures. Both figures put Canada at or near the bottom of NATO countries. According to leaked U.S. intelligence documents revealed recently in the Washington Post, Prime Minister Trudeau has told allies in private that Canada will never reach the 2 percent spending target.

In contrast, Australia, with a GDP of 1.75 trillion USD, spent 2.11 percent on defence (32.45 billion USD). Many other countries have also dramatically increased their defence spending to respond to resurgent great power competition and other threats. Japan has committed to more than double its expenditure on the Japan Self-Defense Forces (JSDF) by 2027, and Germany has taken concrete steps to bring military spending up to the NATO threshold.

Given these developments, Canada’s defence posture appears increasingly exposed. Ottawa’s paucity of credible commitments to shore up defence will leave it increasingly on the sidelines when it comes to vital conversations around maritime security, integrated deterrence, and defence-industrial cooperation. The establishment of AUKUS has even led some analysts to speculate that the Five Eyes may evolve into a de facto “Three Eyes” partnership, as Australia, the United Kingdom, and United States become the indisputable Anglosphere leaders on security matters. Beyond reputational damage, Canada’s weak security stance in the face of growing challenges from revanchist and revisionist powers will compromise Canadian national interests, as can be seen with aggressive Russian moves in the Arctic and increasingly hostile Chinese activities in Canada, including electoral interference.

Despite this gloomy picture, recent announcements on AUKUS create an auspicious, if fleeting, opportunity for Canada to reengage with its Five Eyes partners, strengthen industrial bases, and signal a commitment to shoulder the responsibilities of responding to increased great power competition. While much attention has been paid to the submarine acquisition and development efforts which constitute Pillar 1 of the agreement, discussions are now underway with respect to Pillar 2, which deals with cooperation on other advanced technologies. This presents new opportunities for other countries to engage (fellow Five Eyes member New Zealand already making overtures). This potential for expansion is reflected in the April 2022 Leaders’ Statement in which the three countries commit to “seek opportunities to engage allies and close partners.”

To fully exploit this window of opportunity, Canada needs to make a forward-looking, resource-backed bid to join AUKUS now. Doing so will pay dividends not only for Canada’s security, but also for its technology and industrial sectors. It could also pave the way for renewed Canadian participation on the world stage before its absence from strategic partnerships ceases to be conspicuous and starts becoming routine.

More than Meets the Eye

The apparent indifference of Canada toward AUKUS seems to stem from a combination of sticker-shock and an inadequate understanding of the benefits to be derived from the agreement. These two concerns intersect most powerfully at the first pillar of the agreement focused on nuclear-powered submarines. That said, engaging with AUKUS on Pillar 1 represents one of the most effective ways for Canada to modernice a woefully out-of-date submarine fleet.

The four diesel-electric Victoria-class submarines that comprise Canada’s undersea capability are estimated to represent a quarter of the Royal Canadian Navy’s advanced warfighting abilities. However, these vessels, purchased from the United Kingdom in 1998, are deteriorating in part due to age, and even more so due to the wear and tear of extensive activity. The Victoria class have ranged far and wide, from Canada’s arctic waters monitoring Russian undersea activity to the coast of North Korea helping enforce international sanctions. The maintenance requirements for Canada’s SSNs have grown substantially to the detriment of fleet readiness. In 2019, for instance, the Department of National Defence reported that its submarine fleet “spent zero days at sea,” instead stuck in port undergoing repairs that are expected to surpass $3 billion in costs by 2025.

Canada only recently began a lengthy process of identifying replacements for its current submarine fleet. Estimated timelines for first delivery of new subs range between 15 and 25 years, at which point the Victoria-class boats will have become storied antiques. Joining Pillar 1 of AUKUS accordingly represents one method of jump starting this process and opens the door for Canada to potentially acquire conventionally armed nuclear-powered submarines of its own, taking advantage of economies of scale. This capability has been recogniced by previous defence ministers as especially important for operations in Arctic waters.

However, even setting aside the question of submarines entirely, AUKUS membership brings three major advantages for Canada’s security and prosperity.

First, AUKUS is a technological accelerator, facilitating exchanges of information and expertise which have immediate applicability to defence and other sectors far beyond. Pillar 2 of AUKUS is geared towards placing advanced capabilities in the hands of member countries’ armed forces, especially with respect to “cyber capabilities, artificial intelligence, quantum technologies, additional undersea capabilities, hypersonic and counter-hypersonic.” These technologies will have a profound impact on the future battlespace, and Canada needs them to operate seamlessly under NORAD and NATO commands and ensure force projection and protection.

Second, AUKUS encourages greater integration among member states’ industrial bases. As with cooperation on broader research and development, closer defence-industrial collaboration has benefits that extend far beyond Canada’s defence sector. In particular, increasing critical mineral cooperation through AUKUS would dovetail with existing North American initiatives, such as the Minerals Security Partnership and announcements made at the North American Leaders’ Summit and the Biden-Trudeau meeting. Not only will closer cooperation on mining and manufacturing help AUKUS develop the kinds of economies of scale necessary to defray the significant costs and time lag associated with high-tech military capabilities, it will strengthen commitments to North American integration set out under the United States-Mexico-Canada Agreement (USMCA). Additionally, while collaboration on technology and industrial policy will have important spillover effects, the framing of AUKUS as a defence partnership first and foremost may also prompt Canada to strengthen its supply chains and industrial security standards in response to malign foreign influence that puts Canada at risk of major economic disruption in times of crisis. Canada is already moving in this direction, as demonstrated by new measures aimed at strengthening the Investment Canada Act and the establishment of a Critical Minerals Strategy.

Finally, AUKUS helps promote strategic convergence on a deterrence-based response to rising Chinese aggression in the Indo-Pacific and Russian activity in the Arctic. Perhaps most importantly, AUKUS membership offers Canada a practical way to support emerging strategic priorities. Canada’s new Indo-Pacific strategy, for instance, finally identifies China as a “disruptive global power,” a long-overdue recognition of the realities of great power competition. However, the steps undertaken to this point to support a stronger stance against China do not match those set out in U.S. national security documents or those of key allies like Australia and Japan. While Canada is finally beginning to see eye to eye with allies on regional threats, it needs to move beyond half-measures on defence and accelerate modernisation and procurement efforts.

Given the important benefits Canada could derive from joining AUKUS, what can the country bring to the table?

Looking to Canada

Canada has played an important role for decades supporting global security. At the close of the Second World War, Canada had the world’s fourth-largest navy, and into the early 1970s, Canadian defence spending consistently surpassed 2 percent of GDP. Canada today boasts competent and professional armed forces, ample natural resources, an advanced industrial economy, and an enviable geostrategic position from which it can serve as a force multiplier to the AUKUS agreement.

As the longest standing member of the U.S. National Technology and Industrial Base (NTIB), Canada has had nearly three decades to harmonise its defence industry with that of its southern neighbour. Furthermore, Canada falls under an exemption in the International Traffic in Arms Regulations (ITAR) unique among all U.S. treaty allies which “allows license-free permanent and temporary exports, retransfers and reexports of unclassified defence articles and defence services to the Canadian government.” Combined with the unprecedented degree of trade integration between the two countries fostered under the USMCA, the United States and Canada are already further along on military procurement cooperation than other AUKUS members.

Another vital sector where Canadian membership in AUKUS could have a considerable impact is on critical minerals and mining. Canada is home to some of the world’s largest deposits of rare earth elements and other resources critical in the manufacture of advanced technologies, including military-grade sensors, lasers, communications equipment and batteries. Furthermore, the Canadian government has invested nearly $4 billion CAD to develop these resources. Canada has also climbed to the number two spot on BloombergNEF’s global battery supply chain ranking. High-performance batteries are another emerging technology with profound implications for defence technology, especially uncrewed or autonomous vehicles. Canada could take a leading role in associated research and development under Pillar 2 of AUKUS.

With respect to technological cooperation, Canada could also play a vital role in accelerating AUKUS’s work on artificial intelligence and cybersecurity. Canada has the most highly educated workforce in the G7, and is home to a vibrant tech ecosystem which includes 800 artificial intelligence (AI) companies and hundreds of emerging startups. The ability to tap into this network of expertise will prove a boon to AUKUS members aiming to develop and refine technologies at the cutting edge of research and design.

Canada’s strategic geography offers yet another advantage to AUKUS. It provides important surveillance and domain awareness capabilities in the Arctic and the northern Pacific. To this end, AUKUS and NORAD modernisation could feed into one another, with the latter’s focus on early warning offering a natural complement to the former’s Pillar 2 initiatives in countering Russian and Chinese hypersonic weapons.

Canada has much to offer AUKUS, and vice versa. But striking the right balance remains a challenge for both sides. For Australia, the United Kingdom, and the United States, opening the door to too many partners too soon risks making the agreement overly broad and unwieldy. From the Canadian perspective, joining AUKUS could lead to demands over the longer term for dramatic increases in defence spending which may not be easy for Ottawa and the public writ large to accept. It may therefore be necessary to adopt a gradual approach.

Now Is the Time to Act

The time is right for Canada to consider approaching its Five Eyes partners about AUKUS membership. Such a strategy should focus at least initially on Pillar 2 and on starting a conversation about aligning industrial and research policies to support the development of key defence capabilities. An emphasis on technological cooperation would provide a gentle glide path for Canada, eased in part by New Zealand’s statements of interest in joining Pillar 2 of the agreement, rather than plunging into the icy depths of SSN procurement.

Nevertheless, while Pillar 2 should be the initial focus of Canada’s membership in AUKUS, this should not slam the door on eventual cooperation on submarines. Joining Pillar 2 may allow Canada to consider Pillar 1 over the longer term, especially as the need for Canada to update its subsurface capabilities becomes increasingly pressing.

While accession to AUKUS would be a powerful symbol of a potential new security and defence posture, it would be only one step in helping Canada align with its allies in meeting the demands of a world dominated by renewed geostrategic rivalry. As the West navigates a period more dangerous and unpredictable than any since the Second World War, and as Canada completes a defence policy update in light of these changed global circumstances, it should make broader efforts to increase defence spending and modernise its forces. Recent announcements, such as the acquisition of F-35 aircraft and a NORAD modernisation, were welcome but long overdue and should not mask serious deficiencies in Canada’s submarine fleet as well as its military personnel levels. Joining AUKUS would be good start, and perhaps set Canada on a path toward an appearance at the next sunny and celebratory conference to inaugurate the next phase of cooperation for the Western alliance.

Christopher Hernandez-Roy is the deputy director and senior fellow at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Vincent Rigby is a non-resident senior adviser with the CSIS Americas Program. He is also a visiting professor with the Max Bell School of Public Policy at McGill University. Henry Ziemer is the program coordinator and research assistant with the CSIS Americas Program.

Source: asiapacificdefencereporter