Canada has joined the European Union's Security Action for Europe initiative, Prime Minister Mark Carney's office announced Monday. The agreement makes Canada the first non-EU country to gain access to the 150-billion-euro rearmament fund.

"Canada's participation in SAFE will fill key capability gaps, expand markets for Canadian suppliers, and attract European defense investment into Canada," Carney said in a statement.

The move allows Canadian defense companies access to cheap, EU-backed loans to procure military equipment. It marks a significant shift in Ottawa's defense posture as the Carney government looks to diversify military spending away from the United States.

SAFE is part of a broader European effort to prepare the bloc to defend itself by 2030 amid concerns about a potential Russian attack and uncertainty over American security commitments. The fund was announced earlier this year as NATO allies across Europe began pumping billions into their domestic defense industries following Russia's invasion of Ukraine.

Talks on the United Kingdom joining the SAFE fund ended without agreement last week. Negotiations foundered over money, with Europe demanding more for Britain's participation than London was willing to pay, according to the Associated Press.

Carney's defense overhaul

The SAFE agreement is one piece of a larger Canadian defense buildup. Carney unveiled a new security investment plan in June that proposed an increase of more than C$9 billion in military-related funding for this fiscal year. The plan would enable Canada to meet NATO's 2% defense spending target five years ahead of schedule.

Senior Canadian government officials said total defense spending was projected to reach C$53.4 billion this fiscal year but would grow to C$62.7 billion with the new investments, according to DefenseScoop.

Carney's budget, which requires Parliament's approval, would include another C$81 billion for the Canadian military over the next five years, Politico reported. The funding would push Ottawa above NATO's 2% of GDP requirement for member defense spending.

The prime minister has been blunt about the rationale. "We should no longer send three-quarters of our defense capital spending to America," Carney said. "We will invest in new submarines, aircraft, ships, armed vehicles and artillery, as well as new radar drones and sensors to monitor the sea floor and the Arctic."

Carney has said that no more will over 70 cents of every dollar of Canadian military capital spending go to the United States.

Billions for domestic industry

The new Canadian investments fall into two main categories. Roughly C$6.6 billion would go toward developing Canadian manufacturing sources to ensure more military equipment is made domestically. Another C$6.2 billion would expand defense partnerships with allies, including assistance for Ukraine.

The government has proposed production of up to 15 new River-class guided missile destroyers based on a British design. It has also committed investments in the U.S.-led Golden Dome air defense system and efforts to replenish stocks of munitions and ground vehicles sent to Ukraine.

Additional spending includes C$560 million this year to grow the Canadian Armed Forces Cyber Command, modernize digital resources, and accelerate military AI deployments. Another C$1 billion would go toward systems designed to make Canada more self-sufficient in defending its territory, particularly the Arctic. That includes over-the-horizon radar, joint support ships, integrated underwater surveillance systems, logistics vehicles, and domestic ammunition production.

The Department of National Defence has set up a new Defence Investment Agency tasked with reducing bureaucratic delays and speeding up procurement that prioritizes Canadian defense firms.

"We need to make sure our defense investment benefits Canadians first and foremost," Canadian Finance Minister François-Philippe Champagne told reporters, noting that new spending would build roads, ports, and runways in the Arctic and benefit underserved communities in the High North.

F-35 purchase under review

Carney's government continues to review the purchase of U.S. F-35 fighter jets to explore other options. The prime minister has said the potential for domestic production is a factor in the decision.

Sweden's Saab has submitted a proposal promising that assembly and maintenance of its Gripen fighter jet would take place in Canada. No final decision has been announced.

The review reflects the broader shift in Canadian defense policy. Some Canadian defense officials have said the reforms are necessary to force change to an old, slow bureaucratic process designed for peacetime—an era now challenged by the wartime economies of Russia and China, according to Politico.

Carney, who leads Canada's Liberal party, was elected in April to serve as prime minister. He built his campaign around promises to push back on President Donald Trump's tariffs and calls for annexation of America's northern neighbor, and to strategically rearm the nation's military.

Trump's actions—including launching a trade war and suggesting Canada become the 51st U.S. state—created the political environment for Carney's election after he promised to confront what he characterized as American aggression.

Readiness gaps exposed

The defense buildup comes after years of criticism over the state of Canadian military equipment and readiness. Carney has acknowledged significant gaps.

"The brave women and men who are protecting our sovereignty do not have the resources they need for a riskier world," the prime minister said. "Our military infrastructure and equipment have aged, hindering our military preparedness."

He cited specific examples: only one of Canada's four submarines is seaworthy, and less than half the maritime fleet and land vehicles are operational.

Canada revealed the extent of these deficiencies when it deployed a brigade to Latvia after Russia's 2022 invasion of Ukraine. The 2,200 Canadian troops were beset by training and equipment issues and struggled to obtain spare parts for vehicles during the deployment.

The government has also committed C$4.6 billion over five years for projects in artificial intelligence, quantum computing, and cybersecurity, along with C$182 million to establish a domestic space launch capability. A Defence and Security Business Mobilization Program worth C$1 billion will finance smaller suppliers.

Canada has deepened ties with Europe through two deals signed in June covering trade, climate issues, and defense. The country has said it will meet NATO's military spending guideline by early next year.

Canada is set to host Trump and other world leaders at the G7 summit in Alberta next week.