It’s remarkable how much our international reputation has faded over the past 10 years, both diplomatically and economically.
It is remarkable how much attitudes about Canada have shifted, both here and abroad, over the past 10 years. A decade ago, riding the wave of a booming economy, Canada was widely admired for a banking system that had got through the 2008-2009 global financial crisis without government bailouts. Today the country’s global stature is much diminished and Canadians are rapidly losing confidence in their economic prospects.
In the years leading up to 2016 Canadians grew accustomed to global accolades. In a 2003 cover story, The Economist touted the prospects for “cool Canada,” following up in 2006 that Canada’s relative economic performance made it a “superstar” as the “only country running both current-account and budget surpluses.” Steve Poloz, then chief economist at EDC, said in 2005 the stars were aligned for Canadian firms to achieve the “productivity miracle” already realized in the U.S. In 2012, the OECD secretariat forecast Canada’s economic growth would lead the G7 nations over the next 50 years. Our AAA credit rating, stable economy and resource riches prompted the IMF in 2012 to recommend central banks hold more currency reserves in Canadian dollars, leading to headlines about “loonie set to join global currency elite” as a safe haven in turbulent times.
A Maclean’s article reporting 2011 poll results proclaimed Canada was “on top of the world” and “Canadians have never felt so upbeat about the future.” A year later, Joe O’Connor could claim in this newspaper that “Canada’s got swagger.” This confidence was reinforced when Britain hired Mark Carney in 2012 as the first foreign-born governor of the Bank of England, calling him the “best central banker of his generation.” On the global stage, in 2016 U.S. President Barack Obama told Parliament: “the world needs more Canada.”
A stable banking system was not Canada’s only perceived financial advantage. Some analysts predicted Toronto would become a major trading centre for the North American cap-and-trade carbon market. Moody’s Analytics projected Toronto’s financial services industry would employ more people than London’s by 2017. Tiff Macklem, then dean of the Rotman School, wrote an op-ed in 2016 touting Toronto’s “potential to become the leading global fintech hub.”
That was then. Today Canada’s reality is much different than people were expecting before 2015. Its finance sector is known for being “an ATM and safe deposit box for money laundering,” according to Jonathan Manthorpe in his 2019 book, Claws of the Panda. In 2018, The Economist noted that Canada “has long had a reputation as a place to snow-wash money.” Regulation is split between federal and provincial governments and there are almost no restrictions on lawyers involved in laundering.
Instead of buoyant economic growth, the OECD last year downgraded Canada’s prospects to 2060 to dead last out of 38 nations. In a 2019 feature, The Economist noted that the top Canadian firm on Fortune’s list of the world’s largest companies ranked 241st, concluding that our “economy and business culture will have to become more American.”
Nothing has damaged Canada’s economy and global stature more than the obstacles governments have deployed to hamper our energy industry. In 2011, the late Jim Prentice, then vice-chairman of CIBC, reviewed the slew of Canadian energy projects then underway, from hydro in Labrador to Alberta’s oil sands, and concluded “no one else is bringing on energy projects on the pace and scale of Canada.” Today, by contrast, British Columbia and Quebec are struggling to meet electricity demand, while the oil sands have slashed investment.
The harm from discouraging oil and gas development was fully revealed after Russia’s 2022 invasion of Ukraine. Canada was unable to answer Europe’s desperate need for oil and gas. When German Chancellor Scholz visited Canada to plead for more natural gas, our prime minister claimed there was “no business case” to support LNG exports to Europe. Meanwhile, since March 2022, American firms have signed now fewer than 57 supply agreements with Europe for 73 million metric tons of LNG annually, according to a recent report in the Wall Street Journal.
A recent Nanos poll found even fewer Canadians (just 13 per cent) thought our global reputation had improved than were satisfied with the state of our economy (23 per cent). The Wall Street Journal said last year that Canada’s paltry defence spending should disqualify us from G7 membership, while Spain is openly lobbying to take our place. We have become irrelevant to the geopolitics of our natural allies, whether the problem at hand is the growing rivalry between the U.S. on the one hand and Russia and China on the other or the EU’s fixation on rectifying its energy and defence deficits.
More broadly, Canada has failed in its traditional role of explaining the U.S. to the rest of the world. Though it’s strange to recall, immediately after Donald Trump’s election in 2016, the hope was Trudeau would be the “Trump Whisperer,” establishing Canada as an “indispensable nation,” to quote Maclean’s Scott Gilmore. Instead, we have reverted to our traditional sense of moral superiority over Americans and now parrot the global chorus condemning the direction of U.S. politics. We have a plan for dealing with Trump, the prime minister assures us. Good luck to us with that.
Philip Cross is a senior fellow at the Macdonald-Laurier Institute.
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How to explain Mark Carney’s obsession with Europe and his lack of attention to Canada’s economy and an actual budget?
Carney’s pirouette through NATO meetings, always in his custom-tailored navy blue power suits, carries the desperate whiff of an insecure, small-town outsider who has made it big but will always yearn for old-money credibility. Canada is too young a country, too dynamic and at times a bit too vulgar to claim equal status with Europe’s formerly magnificent and ancient cultures — now failed under the yoke of globalism.
Hysterical foreign policy, unchecked immigration, burgeoning censorship and massive income disparity have conquered much of the continent that many of us used to admire and were even somewhat intimidated by. But we’ve moved on. And yet Carney seems stuck, seeking approval and direction from modern Europe — a place where, for most countries, the glory days are long gone.
Carney’s irresponsible financial commitment to NATO is a reckless and unnecessary expenditure, given that many Canadians are hurting. But it allowed Carney to pick up another photo of himself glad-handing global elites to whom he just sold out his struggling citizens.
From the Globe and Mail
“Prime Minister Mark Carney has committed Canada to the biggest increase in military spending since the Second World War, part of a NATO pledge designed to address the threat of Russian expansionism and to keep Donald Trump from quitting the Western alliance.
Mr. Carney and the leaders of the 31 other member countries issued a joint statement Wednesday at The Hague saying they would raise defence-related spending to the equivalent of 5 per cent of their gross domestic product by 2035.
NATO Secretary-General Mark Rutte said the commitment means “European allies and Canada will do more of the heavy lifting” and take “greater responsibility for our shared security.”
For Canada, this will require spending an additional $50-billion to $90-billion a year – more than doubling the existing defence budget to between $110-billion and $150-billion by 2035, depending on how much the economy grows. This year Ottawa’s defence-related spending is due to top $62-billion.”
You’ll note that spending money we don’t have in order to keep President Trump happy is hardly an elbows up moment, especially given that the pledge followed Carney’s embarrassing interactions with Trump at the G7. I’m all for diplomacy but sick to my teeth of Carney’s two-faced approach to everything. There is no objective truth to anything our prime minister touches. Watch the first few minutes of the video below.
Part of the NATO top-up we can’t afford is more billions for Ukraine which is pretty much considered a lost cause. NATO must keep that conflict going in order to justify its existence and we will all pay dearly for it.
The portents are bad. This from the Globe:
We are poorer than we think. Canadians running their retirement numbers are shining light in the dark corners of household finances in this country. The sums leave many “anxious, fearful and sad about their finances,” according to a Healthcare of Ontario Pension Plan survey recently reported in these pages.
Fifty-two per cent of us worry a lot about our personal finances. Fifty per cent feel frustrated, 47 per cent feel emotionally drained and 43 per cent feel depressed. There is not one survey indicator to suggest Canadians have made financial progress in 2025 compared with 2024.
The video below is a basic “F”- you to Canadians from a Prime Minister who smirks and roles his eyes when questioned about his inept money management.
He did spill the beans to CNN with this unsettling revelation about the staggering numbers we are talking about:
Signing on to NATO’s new defence spending target could cost the federal treasury up to $150 billion a year, Prime Minister Mark Carney said Tuesday in advance of the Western military alliance’s annual summit.
The prime minister made the comments in an interview with CNN International.
“It is a lot of money,” Carney said.
This guy was a banker?
We are witnessing the political equivalent of a vain woman who blows her entire paycheque to look good for an aspirational event even though she can’t afford food or rent. Yes, she sparkled for a moment, but in reality her domaine is crumbling. All she has left are the photographs of her glittery night. Our Prime Minister is collecting his own album of power-proximity photos he can use to wallpaper over his failures as our economy collapses.
The glass slipper doesn’t fit.
Trish Wood is Critical is a reader-supported publication.
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To reach 2 per cent of GDP this year, the federal government is committing an additional $9.3 billion towards the military budget. Moreover, to reach 3.5 per cent of GDP by 2035, it’s estimated the government will need to raise yearly spending by an additional $50 billion—effectively doubling the annual defence budget from $62.7 billion to approximately $110 billion.
As part of this year’s NATO summit, Canada and its allies committed to increase annual military spending to reach 5 per cent of gross domestic product (GDP) by 2035. While this commitment—and the government’s recent push to meet the previous spending target of 2 per cent of GDP—are important steps in fulfilling Canada’s obligations to the alliance, there are major challenges the federal government will need to overcome to execute these plans.
Since 2014, members of the North Atlantic Treaty Organization (NATO) have committed to spend at least 2 per cent of GDP (a measure of overall economic output) on national defence. Canada had long-failed to fulfill this commitment, to the ire of our allies, until the Carney government recently announced a $9.3 billion boost to defence spending (up to a total of $62.7 billion) that will get us to 2 per cent of GDP during the 2025/26 fiscal year.
However, just as Canada reached the old target, the goal posts have now moved. As part of the 2025 NATO summit, alliance members (including Canada) committed to reach an increased spending target of 5 per cent of GDP in 10 years. The new target is made up of two components: core military spending equivalent to 3.5 per cent of GDP, and another 1.5 per cent of GDP for other defence-related spending.
National defence is a core function of the federal government and the Carney government deserves credit for prioritizing its NATO commitments given that past governments of different political stripes have failed to do so. Moreover, the government is ensuring that Canada remains in step with its allies in an increasingly dangerous world.
However, there are major challenges that arise once you consider how the government will execute these commitments.
First, both the announcement that Canada will reach 2 per cent of GDP in military spending this fiscal year, and the future commitment to spend up to 3.5 per cent of GDP on defence by 2035, represent major fiscal commitments that Canada’s budget cannot simply absorb in its current state.
To reach 2 per cent of GDP this year, the federal government is committing an additional $9.3 billion towards the military budget. Moreover, to reach 3.5 per cent of GDP by 2035, it’s estimated the government will need to raise yearly spending by an additional $50 billion—effectively doubling the annual defence budget from $62.7 billion to approximately $110 billion. However, based on the last official federal fiscal update, the federal government already plans to run an annual deficit this year—meaning it spends more than it collects in revenue—numbering in the tens of billions, and will continue running large deficits for the foreseeable future.
Given this poor state of finances, the government is left with three main options to fund increased military spending: raise taxes, borrow the money, or cut spending in other areas.
The first two options are non-starters. Canadian families already struggle under a tax burden that sees them spend more on taxes than on food, shelter, and clothing combined. Moreover, raising taxes inhibits economic growth and the prosperity of Canadians by reducing the incentives to work, save, invest, or start a business.
Borrowing the money to fund this new defence spending will put future generations of Canadians in a precarious situation. When governments borrow money and accumulate debt (total federal debt is expected to reach $2.3 trillion in 2025-26), the burden of this debt falls squarely on the backs of Canadians—likely in the form of higher taxes in the future. Put differently, each dollar we borrow today must be paid back by more than a dollar in higher taxes tomorrow.
This leaves cutting spending elsewhere as the best option, but one that requires the government to substantially readjusts its priorities. The federal government devotes considerable spending towards areas that are not within its core responsibilities and which shouldn’t have federal involvement in the first place. For instance, the previous government launched three major initiatives to provide national dental care, national pharmacare and national daycare, despite the fact that all three areas fall squarely under provincial jurisdiction. Instead of continuing to fund federal overreach, the Carney government should divert spending back to the core function of national defence. Further savings can be found by reducing the number of bureaucrats, eliminating corporate welfare, dropping electric vehicle subsidies, and many other mechanisms.
There is a fourth option by which the government could fund increased defence spending, which is to increase the economic growth rate within Canada and enjoy higher overall revenues. The problem is Canada has long-suffered a weak economy that will remain stagnant unless the government fundamentally changes its approach to tax and regulatory policy.
Even if the Carney government is able to successfully adjust spending priorities to account for new military funding, there are further issues that may inhibit money from being spent effectively.
It is a well-documented problem that military spending in Canada is often poorly executed. A series of reports from the auditor general in recent years have highlighted issues with the readiness of Canada’s fighter force, delays in supplying the military with necessary materials (e.g. spare parts, uniforms, or rations), as well as delays in delivering combat and non-combat ships needed to fulfill domestic and international obligations. All three of these cases represent instances in which poor planning and issues with procurement and supply chains) are preventing government funding from translating into timely and effective military outcomes.
The Carney government has recently made major commitments to increase military funding to fulfill Canada’s NATO obligations. While this is a step in the right direction, it’s not enough to simply make the commitments, the government must execute them as well.
