Canada has formally joined a major European Union defence fund known as Security Action for Europe (SAFE), marking a significant shift to diversify its military procurement away from the United States. 

This new partnership grants Canadian defence companies access to a €150 billion (approximately $170 billion) EU loan programme that supports joint defence projects and procurement, enabling Canadian firms to obtain competitively priced loans backed by the EU.

Prime Minister Mark Carney declared that this move will help address key capability gaps, expand markets for Canadian suppliers, and attract European investments into Canada's defence industry. Canada is notably the first non-EU country to gain preferential access to the SAFE programme.

This development comes as Prime Minister Carney seeks to reduce Canada's overwhelming reliance on the US, which accounts for over 70% of Canadian military capital spending.

Carney’s government has voiced dissatisfaction with this imbalance and is actively exploring alternative procurement options, including renegotiating the purchase of the F-35 fighter jets and considering Sweden's SAAB Gripen fighter, which proposes local assembly and maintenance in Canada.

Joining the EU defence fund aligns with Canada’s strategy to diversify its defence supply chain and enhance transatlantic ties beyond the US. Canada has also confirmed it will meet NATO’s military spending guideline by early 2026.

The SAFE initiative is part of the EU’s broader ReArm Europe or Readiness 2030 plan, aimed at boosting European defence capabilities through an €800 billion investment plan including loans to EU members for joint procurement of military assets like missiles, drones, and artillery.

Although Canada’s participation opens significant opportunities, the country still must negotiate specific project participation and partner countries within the scheme. Talks on the UK joining SAFE recently collapsed over disagreements on financial commitments, highlighting the complexity of expanding this EU defence collaboration.

Carney’s pivot away from the US is also politically influenced by tensions with the US under President Donald Trump, whose trade conflicts and provocative remarks about Canada helped fuel Carney's platform for reducing reliance on the US.

Carney’s administration is thus seeking to build stronger defence economic ties with Europe while fostering growth in Canadian defence manufacturing, promising higher-paying jobs and domestic industrial development.

Canada's entry into the EU SAFE defence fund represents a landmark policy shift towards defence diversification, offering Canada expanded access to European defence markets and collaborative procurement frameworks, while creating new avenues for private and public sector growth in defence capabilities beyond traditional US dependence.​

Based On AP Report