THE DISPATCH

Part 8 of a 10 part series on the global reshaping.

The rise of the Medium Countries.

In a month when Trump is threatening to “decertify” Canadian aircraft and Europe is buying shells as fast as factories can stamp them out, Canada just did something that sounds technocratic but is anything but: we bought our way into Europe’s rearmament bank.

The instrument is called SAFE – Security Action for Europe – a €150‑billion (≈CAD $244‑billion) loans‑for‑weapons program that sits at the heart of the EU’s Readiness 2030 defence plan. As of this month, Canada isn’t just applauding from the sidelines. The Carney government has formally secured Canada’s participation in SAFE, making us the first non‑European country inside the tent.

For a series about how medium countries are building their own bridges, this is a big one.

What SAFE Actually Is

SAFE is Europe’s answer to a pair of uncomfortable truths:

• Russia has turned ammunition stockpiles and artillery production into a test of Western staying power in Ukraine.

• The United States, now led by a president who openly questions alliances, may not be a reliable backstop forever.

Under SAFE, the EU raises up to €150 billion and offers long‑maturity, low‑interest loans to member states so they can:

• Refill depleted stocks of shells, missiles, drones, and air defence systems.

• Co‑finance new production lines and joint procurement programs.

• Standardise equipment and build a more integrated European defence‑industrial base.

There’s a catch: to tap SAFE money, states are supposed to buy European (or from trusted integrated partners). That’s the carrot for industry. And thanks to Carney’s November 30, 2025 deal, Canada is now one of those partners.

What Canada Just Signed Up For

The official readouts from Ottawa and Brussels all hit the same notes. SAFE gives Canada:

• Preferred status in EU defence procurement tied to SAFE.

• A seat at the table as Europe spends hundreds of billions modernising its forces.

• A new channel to attract European defence investment into Canadian plants, R&D and dual‑use industries.

The Prime Minister’s office calls it “a historic step that deepens Canada’s partnership with Europe” and promises “massive private investment and new, higher‑paying careers in Canada’s defence and advanced manufacturing sectors.”

Defence Minister David McGuinty and his team have since inked follow‑up understandings in Munich, outlining how Canadian companies can:

• Act as eligible suppliers in SAFE‑financed projects.

• Count significant Canadian content in joint bids with European primes.

• Use Ottawa’s new Defence Investment Agency to navigate EU opportunities and co‑fund capacity at home.

In plain language: when EU states borrow SAFE money to buy systems, Canadian firms are now in the preferred‑partner bucket instead of the generic “third country” bin. That’s a structural shift.

Why a Medium Country Wants In

From a medium‑country perspective, SAFE hits three of the big themes we’ve been exploring all series.

1. A second industrial anchor besides Washington

Canada has lived through decades of U.S. defence dependence: ITAR bottlenecks, Buy American rules, and now a U.S. president threatening tariffs and “decertification” of Canadian aircraft over a business‑jet spat. SAFE doesn’t replace the U.S., but it gives Ottawa:

• A parallel ecosystem where Canadian companies can scale without relying solely on U.S. demand.

• A way to hedge against U.S. political swings by plugging into EU‑led joint procurement and long‑term production runs.

In medium‑country terms, that’s classic variable geometry: don’t exit the old alliance, but make sure you have options when the hegemon wakes up in a bad mood.

2. An industrial policy tool hiding inside a defence program

SAFE is framed as helping Europe arm itself, but it doubles as an industrial policy engine. Ottawa’s communications around the deal are explicit: participation is meant to drive investment into:

• Advanced manufacturing and machining.

• Complex electronics, sensors, and software.

• Dual‑use tech that straddles defence, mining, energy, and digital infrastructure.

In other words, the same ecosystem that builds guidance systems, radars, or unmanned platforms can also build monitoring tech for pipelines, smelters, and mines; the same secure‑supply logic that Europe applies to missiles applies to critical minerals, steel, fuels and battery inputs.

3. A seat in Europe’s new security architecture

Joining SAFE signals that Canada intends to be more than a polite NATO passenger. It cements the idea from earlier editions — the European Defence Bridge — that Canada is now structurally tied into Europe’s hard‑power buildup, not just its climate and trade agendas.

The Trade‑Offs and the Fine Print

None of this is free. SAFE participation comes bundled with expectations.

• More defence spending, faster. SAFE doesn’t directly fund Canadian purchases, but Brussels will expect Canada to keep stepping up – from air defence contributions in Europe to maritime presence in the North Atlantic and Arctic.

• EU rules will matter more. Export controls, ESG standards, tech‑security screens and content rules coming out of Brussels will increasingly shape what Canadian firms can build and where they can sell it.

• Europe gains leverage, too. By tying more of our industrial base to EU demand, we gain resilience versus the U.S. but also become more sensitive to European politics, from procurement squabbles to climate‑policy fights.

For a medium country, that’s the constant balancing act: trade one big dependency for a portfolio of dependencies, and hope the diversification buys you room to manoeuvre.

Why SAFE Belongs in a Mining & Energy Newsletter

On the surface, SAFE is a defence‑sector acronym. Underneath, it’s very much about rocks, molecules, and electrons.

• SAFE‑financed systems will need steel, aluminium, explosives, fuels, rare earths, and electronics — all of which tie directly back to mining, energy, and critical‑minerals supply chains.

• Europe’s rearmament is unfolding alongside its Green Deal Industrial Plan and Critical Raw Materials Act, which explicitly call for diversified, “trusted” sources of lithium, nickel, cobalt, copper and uranium.

• Canada’s pitch into SAFE leans heavily on our role as a secure supplier of critical minerals and energy, not just a builder of finished kit.

For operators and investors in this audience, that means SAFE is another piece of the same story we’ve been telling from Korea to Qatar to India:

• If you’re sitting on a deposit or project that can feed into European defence, grid, or battery supply, your offtake conversations just got more interesting.

• If you’re building tech that sits at the edge between defence and industrial applications — sensors, AI, control systems — the SAFE bridge is one more lane you can drive down.

In a world where certification can be politicised in a tweet, where fuel shortages can ground tourism in Cuba, and where blackouts can idle mines and data centres, SAFE is Europe and Canada trying to hard‑wire some stability back into the system — with medium countries positioning themselves not as spectators, but as co‑architects.

That’s why we’re in. The question now is what we do with the seat.

// THE DIRT

A Closing Thought

NOTES FROM THE NORTH

It’s been a week.

I lost my grandmother last week and my father’s sister (unrelated to my grandmother) is now not doing well. It’s hard to be on the other side of the country when things fall apart for those you love.

With all our technology making it easier to connect more regularly there’s still no digital substitute for a hug.

I’m reminded on a morning like this that the easiest way to forget about the hard things in life is to do harder things.

Head down, press on, stay the course.
Go forward as you intend to go on.

Try.

I know that’s not a Nike level slogan like Just Do It, but “Try” might just be the slogan I need on a T-Shirt most days.

Have a great week all, to quote Red Green:
“I’m Pullin’ for ya, we’re all in this together. “

-Lee

Nostalgia - The feeling you get when your youth says hello.