Canada urges U.K. under new PM to reconsider joining global bank aimed at boosting defence financing

Canada urges U.K. to join new global bank for defence projects

Defence, Security and Resilience Bank has support from 8 other countries

Canada's High Commissioner to the U.K. Bill Blair says the government is engaged in talks to urge the U.K. to join its multinational defence bank now that Andy Burnham is the country's new prime minister.

The Defence, Security and Resilience Bank, also known as the DSRB, is a Canada-led financial institution in the works that's aimed at giving low-cost loans to countries to help them rearm against Russia and growing international threats.

So far, eight other countries have pledged their support, but no other G7 nations, which could limit how much the bank can lend.

"The discussions between the government of Canada and the government of the United Kingdom have been ongoing," Blair told CBC News.

"We think that the United Kingdom's participation in the DSRB will benefit all of its members."

Prime Minister Mark Carney advocated for the defence bank on a call with then-prime minister Keir Starmer in February, but the U.K. had its own plan and the two leaders agreed to align efforts.

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Now that Burnham is in power, there's a push underway to try to get the U.K. to re-examine becoming a founding member of the defence bank.

Pressure to increase defence spending

NATO allies are trying to boost their defence spending after pressure from U.S. President Donald Trump, who says allies have been relying too much on the U.S. The military alliance's members have promised to increase core military spending to 3.5 per cent of GDP by 2035 — a pledge that Burnham, on Day 1 in office, said the U.K. will honour.

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Carney has been personally trying to get countries to join the defence bank that's expected to pool countries' resources together to finance defence companies so they can scale up production. Carney has said the bank will make sure allies "have the capacity to meet the challenges of a more dangerous and divided world together."

Blair said he expects Carney and Burnham will talk about the DSRB, adding they already know each other and "there's great respect between the two men."

Isabelle Hudon, Canada's chief negotiator for establishing the bank, is currently in London along with four members of Carney's cabinet trying to make deals.

Media in the U.K. reported Hudon made her case to the U.K. publicly at the Farnborough International Airshow at a finance summit on Monday.

"The U.K. should not only be a member of the DSRB, but a founding member," Hudon told the summit, according to media reports.

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Blair confirmed there are a "number of discussions that have already taken place between 10 Downing Street and Her Majesty's Treasury and the chancellor on this issue."

Support from new finance minister

The U.K.'s new finance minister, John Healey, who is expected to push for the country to join the DSRB after his predecessor refused to join, U.K. newspaper The I Paper reported Wednesday.

Healey was an advocate for the Canada-led defence bank when he was defence secretary. He quit that role in June over what was described as a battle over the U.K. delaying its military spending plan.

The U.K. under Starmer had its own plan to develop a Multinational Defence Mechanism, which it described as an "innovative new financing model" to speed up defence investment and boost joint procurement to meet allies' needs.

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In July, the two countries released a joint statement promising not to compete and ensure their efforts were complementary.

Defence Minister David McGuinty said there are discussions with the new prime minister about the defence bank. He spoke to two of his counterparts about the matter while in the U.K. this week, he said.

"We're hopeful these two initiatives can be at least mutually reinforcing if not integrated, but that remains to be seen," McGuinty said.

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Industry Minister Mélanie Joly, who is also in London, said she has been pitching the defence bank to G7 allies, including in Norway, Sweden and Finland. She said there's value in having them at the table because of their strong defence budgets and industrial bases that include aerospace, artificial intelligence and marine industries.

"That's why having the U.K. or having G7 countries as founding member of the bank is also important because of course it will bring a breadth of possibility and capital to the table," Joly said.

She described the DSRB as a new way for middle powers to come together and have access to a different pool of capital to help small and medium-size companies build up capacity.

Ashley Burke is a senior reporter with the CBC's Parliamentary Bureau in Ottawa. She was recognized with the Charles Lynch Award and was a finalist for the Michener Award for her exclusive reporting on the toxic workplace at Rideau Hall. She has also uncovered allegations of sexual misconduct in the Canadian military. You can reach her confidentially by email: ashley.burke@cbc.ca