Ottawa is having a tough time getting its defence bank out of the G7 group chat.
Driving the news: The Defence, Security and Resilience Bank (DSRB), a global defence bank championed by Prime Minister Mark Carney, is struggling to get other countries to sign up and meet its €100 billion capital goal, per Reuters.
So far, no other G7 country has agreed to join the Canada-based bank. Only smaller economies like Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine have pledged support.
The aim of the DSRB is to provide cheap, long-term funding for defence projects. The bank will dish out loans to military equipment suppliers (including startups in need of cash) as well as governments looking to buy new gear.
Catch-up: When the DSRB was announced back in April, it was reported that nearly 20 countries, including NATO members and their allies, were in talks to join. Since then, countries like Germany, Japan, and the U.K. have been non-committal, citing concerns about overlapping initiatives and the value for money that the bank would provide.
The viability of the DSRB rests on having major economies signed up. Without them, securing the triple-A credit rating needed to dole out low-interest loans would be difficult.
Why it matters: Ottawa has committed to the largest increase in military spending since WWII, and plans to give 70% of all defence contracts to Canadian companies in the next decade. To make that happen, those homegrown defence firms need a lot of cheap capital — from a friendly lender like the DSRB — to ramp up production.
Our take: Getting allies on board for the DSRB is a test of Carney’s ability to coordinate the so-called middle powers he believes can help reduce Canada’s reliance on the U.S.—LA
