Canada joins EU defense fund as the country pivots away from the US

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TORONTO (AP) — Canada has joined a major European Union defense fund, Prime Minister Mark Carney's office said Monday, as the country looks to diversify its military spending away from the United States.

The plan allows Canadian defense companies access to a 150 billion euro ($170 billion) EU loan program, known as Security Action for Europe, or SAFE. That would allow Canadians firms to secure cheap, EU-backed loans to procure military equipment.

“Canada’s participation in SAFE will fill key capability gaps, expand markets for Canadian suppliers, and attract European defense investment into Canada,” Carney said in a statement.

Canada is the first non-EU country to gain access.

Carney has said he intends to diversify Canada’s procurement and enhance the country’s relationship with the EU. He has previously said that no more will over 70 cents of every dollar of Canadian military capital spending go to the U.S.

U.S. President Donald Trump's actions — including launching a trade war and suggesting Canada become the 51st U.S. state — infuriated Canadians and created the political environment for Carney to win the job of prime minister after promising to confront Trump's increased aggression.

Carney's government continues to review the purchase of U.S. F-35 fighter jets to explore other options. Carney has said the potential for having more production in Canada is a factor. A proposal by Sweden’s Saab promised that assembly and maintenance of the Saab Gripen fighter jet would take place in Canada.

Canada has said it will meet NATO’s military spending guideline by early next year.

Talks on the U.K. joining the SAFE fund ended without agreement last week. Negotiations foundered over money, with Europe demanding more for Britain’s participation than the U.K. was willing to pay.