Canada clears NATO's 2% bar — after years of lagging and a last-minute lift

Canada crossed the politically significant threshold of meeting NATO's defence spending benchmark of two per cent of gross domestic product, according to the Western alliance's annual secretary general's report and compilation of statistics released on Thursday.

It is the first time since the late 1980s — toward the end of the Cold War — that the country has met the target, which has in recent years taken on enormous political and symbolic significance. 

The Liberal government achieved the goal with an injection of an additional $9.3 billion into the Department of National Defence's budget last June — bringing the overall defence expenditures to just over $61 billion.

Despite the huge expenditure, the NATO report showed that Canada had crossed the line by the skin of its teeth, registering an estimated two per cent of GDP. It was still in the bottom one-third of the alliance in terms of defence spending, along with Belgium, Spain, Albania and Portugal.

The top spenders in terms of percentage of GDP included Poland (4.3), Lithuania (4.0), Latvia (3.74) Estonia (3.42) and Denmark (3.34). The United States ranked seventh overall (3.19).

Hitting the two per cent benchmark by the end of the fiscal year, on March 31, was a promise Prime Minister Mark Carney made in the face of long-standing pressure from allies, including the United States. 

The achievement represents a dramatic turnaround from not quite two years ago when former prime minister Justin Trudeau referred to the two per cent goal as a "crass mathematical calculation," one that he had reportedly told allies Canada would never meet.  

The country arrives at the threshold months after NATO leaders vowed to increase defence spending even higher over the next decade to five per cent of GDP (3.5 per cent on direct military spending and 1.5 on defence infrastructure).

Getting to the two per cent goal was never assured because, over many years, the Defence Department has not had the institutional capacity to spend all of its appropriation. It has often had to return unspent billions of dollars to the federal treasury.

The benchmark was partly achieved by an internal reorganization of the federal government, which has seen some agencies, such as the Canadian Coast Guard, moved under the auspices of the Defence Department and therefore counted toward the NATO target. It was also achieved through a substantial pay raise for members of the military and by pouring money into base infrastructure and overhaul.

While the prime minister deserves credit for making defence spending a priority, defence analyst Dave Perry says there's been an emerging agreement across the political spectrum that the investment were necessary.

"It hasn't been just Mr. Carney," said Perry, president of the Canadian Global Affairs Institute. "In the last federal election every party committed to spending two per cent of GDP on defence. It is a completely different political consensus on defence than the one that we had had for the previous decade where they were all in agreement that didn't need to hit."

Perry said that changed a year ago.

Carney is in Halifax Thursday and expected to have more to say about the achievement and face questions on the details of the spending.