Mark Carney says Canada will meet NATO’s new 5% defense target through mining, oil and gas

The new commitment adopted by all 32 NATO member states on Wednesday is split into 3.5 percent for core military capabilities and 1.5 percent for defense-related investments. He told CNN that these expendatures could reach $150 billion per annum.

Carney also told CNN that investments already underway in Canada’s resource sector will account for a huge chunk of that total. “A little less than a third of that overall number is spending on things that quite frankly we’re already doing to build the resilience of the economy,” he said.

Carney pointed to projects involving mineral mining, railways, and other transport infrastructure: “A lot of it will count towards that 5 percent because it’s infrastructure spending,” he said.

Carney’s warm shift in tone to natural resources comes at the same time that Alberta Premier Danielle Smith pushes for a new oil pipeline to the West Coast.

Smith said discussions with private sector partners were moving onward and could come soon. She also said the project would serve as a test case for Carney’s new two-year federal approval process for major infrastructure builds.

“We’re pretty close to having either one or a consortium come forward, and so I would hope that that would happen very soon,” Smith said, according to the Globe and Mail. Her government has also proposed a tradeoff in which energy companies would move forward with the Pathways Alliance carbon capture project in exchange for federal approval of a new pipeline.

The Pathways Alliance, made up of Canada’s major oil sands producers, has pledged to achieve net-zero emissions by 2050. Its plan focuses on a 400-kilometre carbon pipeline that would send captured emissions from oil sands sites to a storage hub near Cold Lake, Alberta.

The group says the system could eliminate up to 22 megatonnes of CO2 annually.

Carney has said he wants to make Canada an “energy superpower,” but Smith has argued that ambition won't work with current federal restrictions on the potentially lucritive sector.

She called on Ottawa to repeal measures such as the oil-and-gas emissions cap and the West Coast tanker ban, which she says stoke separatist sentiment in Alberta.

“They could solve this by having a mea culpa moment, like they did when they repealed the carbon tax,” Smith said. “He’s demonstrated that he can change course when he sees something that’s incorrect. And so I’m very hopeful that we’ll be able to persuade him of that over the next three months.”

Carney said that even if Canada hits its surprise pledge to reach NATO’s old 2 percent of GDP benchmark this fiscal year, the country would still need a massive increase in core defence spending to meet the 3.5 percent requirement—around a 75 percent jump.

“We don’t need an aircraft carrier any more,” Carney told CNN. “It’s drones integrated with cybersecurity, satellites, AI.”

He also confirmed ongoing talks with US President Donald Trump, saying the two are working toward a trade deal that could be finalized within weeks.

“He admires Canada, I think it’s better to say," when asked about Trump's previous talks of annexing Canada, "and they for a period of time coveted Canada.”

“We’re two sovereign nations who are discussing the future of our trade relationship, our defense partnership, which has been very strong in the past; how is that going to evolve?” he said.