Canada in talks with UK over defense bank and fighter jet program

LONDON — The U.K. government is in negotiations with Canada over joining its NATO-linked defense bank, and membership of a global fighter jet program, Canada’s top diplomat in Britain said.

In an interview with POLITICO, Bill Blair, the Canadian High Commissioner to the U.K., said that Gordon Brown has spoken directly to the country’s prime minister, Mark Carney, about the Defence, Security, and Resilience Bank (DSRB).

There are “conversations taking place” between DSRB officials and both the U.K. Ministry of Defence and Treasury, Blair said, adding: “I'm very encouraged by the progress that we've been able to make, but there's still a bit of work to do.”

Brown — a former U.K. prime minister and chancellor who was hired by Keir Starmer last month to assist on global finance initiatives — has spoken to Carney and provided “a number of questions, which were entirely appropriate,” the diplomat added.

Blair, who is also a former defense minister in the Canadian government, said: “We've been working hard to make sure that we provide both Mr. Brown and the people at Treasury with answers to the questions that they have, and it's just part of an ongoing dialog and negotiation between us.”

Two defense insiders told POLITICO Brown has also spoken to Isabelle Hudon, who leads Canada’s work on the bank. A representative for Hudon declined to comment.

Fresh hope for defense spending

Britain has so far resisted calls to sign up to the DSRB, which aims to provide AAA-rated financing to help fund the defense industries in allied nations.

Brown’s engagement on the topic will inject fresh hope among backers of the bank that the U.K. is warming to the initiative, after Chancellor Rachel Reeves previously appeared ambivalent about it.

A U.K. defense industry representative, granted anonymity to discuss a sensitive matter, said Brown’s involvement is “welcome” after what they described as “foot-dragging” by the Treasury, adding: “If you want a clearer example of how 'unwilling' Treasury have been to raise defense spending, as John Healey made clear this week, you won't find one."

Andrew Kinniburgh, director general of Make UK Defence, said: “The prime minister needs to urgently rethink and ensure the U.K. fully participates in the DSRB as a matter of national importance.”

Healey, who quit as defense secretary Thursday in protest at the level of spending allocated by Starmer to fund the military, said in his resignation letter that he had outlined “credible ways of meeting the mid-term funding challenges,” but suggested these had been ignored.

This has been interpreted by some in the sector as a reference to the DSRB and war bonds, neither of which have been advanced by the Treasury while it focuses on a separate “multilateral defense mechanism” with Finland and the Netherlands.

The Telegraph newspaper reported last week that Reeves was not prepared to sign off on the initial funding demand of £870 million to take part in the DSRB.

Global fighter jet program

Blair also told POLITICO that Canada is giving “very serious consideration and [is] engaged in discussions” with Britain, Japan and Italy about its “potential future participation” in the Global Combat Air Programme (GCAP) — a joint venture aimed at delivering sixth-generation fighter jets by 2035.

"We believe Canada can make a very significant contribution to that initiative,” he said, adding that his country has an aeronautics industry and wider sectors that have the technology, training and testing capability required for the program. In addition, he highlighted Canada’s national resources and secure supply chains for critical minerals as key assets for the scheme.

He noted that Canada has “a great deal of confidence” in Britain, Japan and Italy as “good partners,” and has already “initiated conversations with those countries to see where it might be appropriate for Canada to participate.”

Canada had already been linked to the program as an observer, but Blair's comments represent the first direct intervention by Ottawa, and raise the prospect of more direct involvement.

Earlier this month the Financial Times reported that the Treasury is aiming to seize control of GCAP’s financing amid concerns the cost of the scheme could spiral beyond what Britain can afford. The paper noted that £6 billion is expected to be added to the project by Britain as part of its delayed Defence Investment Plan.

GCAP’s interim deal runs out at the end of June. Starmer is due to meet Japanese Prime Minister Sanae Takaichi in London on Sunday with no long-term funding settlement announced for the country’s flagship joint program.

The chief executive of Leonardo — one of the schemes’ industrial partners — on Wednesday welcomed the possibility of Germany entering the program, but warned that a new member could push back the delivery date. It comes after the collapse of the French-German FCAS jet program earlier this week.

A U.K. government spokesperson said: “Together with our partners, we remain open to others joining GCAP, while keeping the programme on track and delivering our future military capabilities.”

Mike Blanchfield also contributed to this report from Ottawa.

This story has been updated with a comment from a U.K. government spokesperson.