Wheels up for Washington

A daily look inside Canadian politics and power.

Jul 08, 2024 View in browser   By Kyle Duggan and Zi-Ann Lum Thanks for reading Ottawa Playbook. Let's get into it. In today's edition: → JUSTIN TRUDEAU, MÉLANIE JOLY and BILL BLAIR head to the NATO confab. → Three things we’re watching. → Playbook speaks with defense researcher ANESSA KIMBALL about why Canada’s still struggling with the 2 percent target. DRIVING THE DAY Senior Trudeau government officials said Friday that they do not expect Canada to be called out by the U.S. government during this week's NATO meetings. | Geert Vanden Wijngaert/AP WAVE OF WARNINGS — JUSTIN TRUDEAU is wheels up for Washington this morning for a week of meetings in and around the 75th anniversary NATO summit — some of which could get really awkward. Canada’s former Ambassador to NATO, KERRY BUCK, said the government would be smart to announce a plan to hit its 2-percent spending commitment to the alliance now because “the longer they hang out there, the more they make themselves a target.” Otherwise, Trudeau, MELANIÉ JOLY and BILL BLAIR are heading into private meetings with allies with a damaged reputation, diminished influence and face pressure that will only ramp up. “We will be criticized at the North Atlantic Council in the meeting among leaders and criticized in bilaterals,” she tells Playbook. “Your political leverage at the table is decreased. More importantly, it damages and will continue to damage even more our bilateral relationship with the U.S.” — Team Canada side quest: As the gang heads south for the summit, Trudeau is also seeking to woo U.S. lawmakers on trade with upcoming USMCA renewal looming in the background and an ongoing presidential election. He has meetings set up with senior congressional leaders including HAKEEM JEFFRIES, CHUCK SCHUMER and MITCH MCCONNELL, senior Canadian officials noted in a media briefing Friday. — Trade spillover: A major business group that represents top CEOs in Canada is warning that the Trudeau admin should brace for some potential embarrassment. “We need to be prepared for being called out, and to be called out in a way that we've never been called out before — much more directly, much more overtly,” said GOLDY HYDER, head of the Business Council of Canada. “There's a risk that you get isolated, and at a time in which others are not only meeting their commitments, but in some cases exceeding their commitments. We look more than a laggard: We look like the student who deserves detention.” Hyder penned a letter to Trudeau in June urging the federal government to signal to allied countries its plans to revise its spending plans. Blair responded to Hyder’s appeal and held a private meeting with several CEOs, and indicated he’s pushing for increased defense spending internally in government and within the Cabinet. A response letter by Blair obtained by POLITICO shows he pledged Canada will be exploring “options for new capabilities such as new submarines, long-range precision strike missiles for air and maritime forces, and ground-based air defense,” which “will contribute towards Canada's path to 2 percent.” — Allies fed up: As POLITICO’s PAUL MCLEARY reports, half a dozen diplomats from NATO countries say allies are frustrated and Canada’s holdout status is damaging group efforts. It’s giving ammunition to members of the American foreign and security community who opt for either a “China first” strategy or belong to the isolationists camp. “I do think what Canada is doing is making it easier for European countries to go slow on getting to the mark,” one European diplomat said. — Not worried: Senior Trudeau government officials are downplaying concerns about facing down angry allies and they do not expect Canada to be called out by the U.S. government. “The [latest] defense policy reinforces Canada's commitment to 2 percent and the conversations we have with allies very much focus on the future of the alliance and the contributions that Canada is making, including robust contributions that we are particularly making in Latvia,” one senior official said in a background briefing for media on Friday. “We've been clear about our commitment to NATO on the path forward, so I don't think we're expecting any surprises at the summit or blowback” from the Biden admin. — Lost in a sea of issues: In an ironic twist, the Americans have done the best pre-positioning for Canada. U.S. Ambassador DAVID COHEN told CBC’s CATHERINE CULLEN on “The House” that major topics, from Russia to China to the Indo-Pacific, will most certainly dominate the summit and eclipse the 2-percent issue. “If the number one priority out of that summit is going to be Ukraine,” he said, then “Canada has an awfully good story to tell in that room.” “The issue of whether Canada is spending 1.76 percent or 2 percent of its GDP on defense, I'm sure will be a topic of conversation, but the major topics of conversation at the summit are going to relate to those larger issues where Canada has a lot to say about its support and its commitment.” — Related read: DAVID PUGLIESE writes “Trudeau should expect criticism at NATO summit over defense spending.” — Conversation starter: Prime Minister VIKTOR ORBAN of Hungary effectively endorsed Trump for president in an interview and, on the eve of the NATO summit, blasted the United States for having a “war policy” in Ukraine rather than a strategy for achieving peace. MATT BERG and PAUL RONZHEIMER have the details. Orbán’s comments came in an interview Sunday with Axel Springer media outlets. POLITICO is owned by Axel Springer. For your radar U.K. Foreign Secretary David Lammy in London. | AP CANADA SCORES A FIRST — Foreign Affairs Minister MÉLANIE JOLY had an early breakfast meeting today with the U.K.’s new Foreign Secretary DAVID LAMMY in London. — Progressives, unite: Joly arrived in London on Sunday for the bilat planned in advance of election night in the U.K. She’s Lammy’s first meeting with a foreign counterpart since he was appointed by new Labour British Prime Minister KEIR STARMER on Friday. Joly made inroads with Starmer back in September when the Labour leader was in Montreal, rubbing shoulders with progressive leaders during an exclusive summit. — Fast forward to today’s agenda: Talk about a “reset” in relations is a theme, according to a senior government official not authorized to talk publicly about closed-door details. The Canada-U.K. free-trade agreement was expected to be raised, the one put on ice in January, though the topic isn’t a main priority. — Spoiler alert: The U.K.’s new Business and Trade Secretary JONATHAN REYNOLDS has signalled he would be keen to prioritize free-trade talks with Canada. — Main priorities: Trading notes about Ukraine and NATO will take up more space, given the timing of their breakfast — plus frank discussion related to Five Eyes work, according to the official. Both Joly and Lammy will head to the NATO summit after their bilat. — All in a day: Joly also has a meeting planned with Commonwealth Secretary-General PATRICIA SCOTLAND. She’ll also host a roundtable with a mix of private sector experts and academics about the Indo Pacific and China — pre-NATO homework not on her public schedule. — In related reading: 6 things Keir Starmer wants to fix in his first month.   Understand 2024’s big impacts with Pro’s extensive Campaign Races Dashboard, exclusive insights, and key coverage of federal- and state-level debates. Focus on policy. Learn more.     THREE THINGS WE'RE WATCHING MORE AT THE SUMMIT — NATO members will be looking to send clearer signals to Ukraine about the path to membership. KERRY BUCK says she’s watching the summit for details on individual military assistance to Ukraine, on security arrangements and on support for using frozen Russian assets. “You'll probably see tighter or more forceful language on China's role — still a recognition that all allies need to work with China on shared challenges, but also that they need to do more particularly to stay ahead of China in areas where it’s already directly interfering with allied nations, for instance, with cyberspace and disinformation,” she said. “There's a deepening of strategic partnerships among China, Russia, Iran and North Korea. So, watch for a tightening of language and a tightening and expression of concern about all those countries.” — POLITICO reads: PAUL MCLEARY, CHRISTOPH SCHILTZ, STEFANIE BOLZEN, JACOPO BARIGAZZI and PHILIPP FRITZ have this team reporting on allies prepping for the prospect of dealing with DONALD TRUMP in the White House again. POLITICO’s DAVID COHEN has “NATO needs to look toward Pacific because of current realities, Jens Stoltenberg says” STRIKE AVERTED — The BC Maritime Employers Association withdrew an industry-wide lockout notice Sunday evening that would have shuttered cargo operations by members across the province. That follows a labor board ruling against a ship and dock workers union that was poised to strike today. The International Longshore & Warehouse Union Local 514 had issued an advanced notice over the weekend that workers would begin to strike this evening following two years of negotiations. But the BCMEA wrote to the Canada Industrial Relations Board seeking urgent intervention against the union to block the strike. The board met yesterday and ruled the strike contravened labor law, noting the union had held a strike vote with employees of only one of the employers. Rail lines are meanwhile bracing for labor disruptions. CHARLOTTE GOLDSTONE writes for The Loadstar that despite some of the CIRB timeline on this remaining TBD, one large shipper told her it was planning for supply chain disruptions starting around mid-July. CARBON DEBT COLLECTOR A KNOCKIN’ — Saskatchewan is in federal court over the carbon tax fighting to block Revenue Minister MARIE-CLAUDE BIBEAU from collecting tens of millions in back taxes related to the federal carbon tax. At dispute are the province’s fuel charge returns dating to the start of the year, since it’s been paying out federal fuel charges except those for home heating natural gas. CBC’s ALEXANDER QUON wrote about the plea for an injunction late last week. — New deets: According to the province’s July 4 notice filed in federal court obtained by Playbook, Canada Revenue Agency sent a letter to the province on May 29 alleging the debts owed under the greenhouse gas pricing law exceed C$42 million. On June 25, Bibeau issued a “requirement to pay” to RBC to collect C$28 million from the province’s general revenue fund for outstanding fuel charge debts. Saskatchewan claims the move to collect the debt is unconstitutional and objects to paying the home heating part by citing the home-heating oil carveout that benefits Atlantic Canada provinces. Where the leaders are — Prime Minister JUSTIN TRUDEAU is off to Washington this morning, with meetings scheduled today with Business Roundtable CEO JOSHUA BOLTON and Maryland Governor WES MOORE. Later Trudeau attends a reception hosted by Ambassador KIRSTEN HILLMAN. — Deputy PM CHRYSTIA FREELAND is in Toronto with no public events scheduled. — Conservative Leader PIERRE POILIEVRE and Bloc Leader YVES-FRANÇOIS BLANCHET have not released public itineraries. — NDP Leader JAGMEET SINGH is in Coquitlam with NDP MP BONITA ZARRILLO and local candidate LAURA DUPONT to talk about lowering grocery prices. — Green Leader ELIZABETH MAY is headed back to Ottawa for a Tuesday press conference. DULY NOTED 2 p.m. Environment Canada holds a media briefing on the severe hot weather conditions in western Canada. 12:30 p.m. ET (2 p.m. NT) Environment Minister STEVEN GUILBEAULT will be on The Rock to announce the creation of a national urban park in St. John’s HALLWAY CONVERSATION Canada's Foreign Minister Melanie Joly at NATO headquarters in April. | Virginia Mayo/AP SUMMIT PREP NOTES — For a crash course on why Canada’s still behind on 2 percent after aiming to hit it for a decade, Playbook reached out to Université Laval international relations professor Anessa Kimball, who researches NATO burden sharing and defense economics. The interview was edited for length and clarity. What are you watching for? “Two percent” is going to come back. Canada is expected to bring a plan to the table. It's expected to demonstrate to allies [how it will go about meeting its commitments] even in the short to mid-term. Most other allies at this point, even those like Italy and Spain that were on the naughty list, they've been able to do this. One of the challenges is that the Canadian public hasn’t really demonstrated a willingness to invest that much. It’s a political issue. BILL BLAIR and ANITA ANAND and other [past] defense ministers have noted it's uphill to convince parliamentarians of this need for 2 percent. Why is that so hard? We can point to a level of naiveté with respect to the relationship with the United States — there is a belief that if there ever really was a crisis, the U.S. would be there. We had four years of Donald Trump, and it would seem as though Canada should have learned from this, in similar ways we've seen our European allies learned. They are worried about potential Trump disengagement from NATO and from Europe in ways we don't necessarily see Canada being worried. Canada appears to be more worried about possible trade disturbances from a second Trump administration than a breakdown in the security and defense relationship. I think this is because we do take it for granted. Canadians are also not convinced … the threat is here. For example, it's easier to sell to Canadians that we should spend on defense when it comes to combating climate change or those types of disasters because that's in Canada. It's a real challenge to explain that we have to do this because of NATO. The reality is, this is how Canada manages to get a lot of its defense policy done, basically, by tying its hands internationally and then saying, ‘Look, we made this promise, so we have to do it.’ What are we talking about when we talk about the 2 percent metric? NATO defense expenditures — 2 percent of a country's annual GDP on military spending, which is what we call it, even though NATO defense expenditures can include a little bit more stuff. The definition that NATO agreed upon dates to the 1950s. So, there may be room to kind of maneuver or expand what might be included. Other countries are better at doing this functionally and legally. In Belgium, they have legislated so that their rail system is part of defense and national security. Something like 90 percent of everything that's going through Ukraine has gone through the rails of Belgium, but it also means that all the spending it does to maintain that is national defense spending. So there could be an argument made that, for example, the spending Canada will be doing on infrastructure in the Arctic will be used for defense, ergo this could be national defense spending. Canadians don't think like this because we don't want to mix those things together. But the reality is, these are ways in which Canada can help itself reach 2 percent. And I don't think that it would be difficult, particularly because now we have more Arctic partners in NATO, to get these things to become acceptable to other allies to get the allies to consent to these things. Where does the conversation go from here? We'll have to do some defense economics numbers crunching. One of the challenges is that recruitment is broken in Canada, so even if we were able to allocate the money, we know that we can't spend all the money we even get now. I explain in my book that with 2 percent, one of the challenges for Canada is that we are the smallest of the large economies, or the largest of the smaller economies. Either way you slice it, we would have to spend in real dollars the most of any other partner in the alliance. People don't appreciate what that would mean domestically, politically to an electorate. To give you an idea, based on the 2023 budget, Canada would have to identify as much money as currently funds the entire Ministry of Science, Technology and Innovation and give that to defense. MEDIA ROOM National Rally Leader Marine Le Pen answers a question after the second round of the legislative election on Sunday. | Louise Delmotte/AP — France is headed for a hung parliament as the left made surprising gains and dealt a blow to MARINE LE PEN, POLITICO’s CLEA CAULCUTT reports. Also from Caulcutt: 5 things to know about France’s messy election. — Here's POLITICO's JONATHAN MARTIN with the latest on JOE BIDEN's survival plan: Decry ‘elite’ critics, appeal to his base. — CTV’s JUDY TRINH reports on the reasons Trudeau and Singh are avoiding the Calgary Stampede; political analyst LORI TURNBULL was on the network weighing in on the significance. — SCOTT STRASSER has dispatches from the frontlines of pancake flipping. — The Globe’s IAN BAILEY reports on a Nanos Research survey that suggests most Canadians want the names of MPs accused of foreign interference made public. — CBC’s DAVID COCHRANE reports seasoned Grits might exit, stage left if the PM doesn’t signal changes that could right the ship. PROZONE For POLITICO Pro subscribers, our latest policy newsletter by ZI-ANN LUM and KYLE DUGGAN: Next steps on the DST. In other news for Pro readers:  — ‘Stuck’: Housing market malaise may last for years. — Trump victory could crush WTO chief’s chances for a second term. — Biden is convinced he can win. Democrats say prove it. — Big Telecom guns for a major Biden policy. — Why the anti-abortion movement is adopting the left’s post-Roe playbook. PLAYBOOKERS Birthdays: Sen. PERCY DOWNE (70!). Spotted: At the Calgary Stampede … PIERRE POILIEVRE flipping pancakes and later working the crowd at a lectern emblazoned with his “Common Sense” slogan dressed up in a Western font. NDP MP HEATHER MCPHERSON and Conservative MP BLAKE RICHARDS at the Ismaili pancake breakfast. Israel’s Ambassador to Canada IDDO MOED rocking a brand-new Schumacher hat. CHRYSTIA FREELAND and RANDY BOISSONNAULT donned up in Western attire; Trudeau skipping the Stampede; meet instead with the Hindu Canadian community in Mississauga. Movers and shakers: Carleton University instructor and public opinion researcher SIMON VODREY has joined Earnscliffe. TRIVIA Friday's answer: The inaugural full investiture for the first members of the Order of Canada took place Nov. 24, 1967. Props to  MARCEL MARCOTTE, ROBERT MCDOUGALL, MALCOLM MCKAY,  Today’s question: Only one member of NATO doesn’t have a standing army. Which is it? Send your answer to ottawaplaybook@politico.com Writing tomorrow's Playbook: NICK TAYLOR-VAISEY Playbook wouldn’t happen without: POLITICO Canada editor Sue Allan, editor Willa Plank and Luiza Ch. Savage.   Follow us on Twitter Nick Taylor-Vaisey @TaylorVaisey Sue Allan @susan_allan Kyle Duggan @Kyle_Duggan Zi-Ann Lum @ziannlum POLITICO Canada @politicoottawa   Subscribe to the POLITICO Playbook family Playbook  |  Playbook PM  |  California Playbook  |  Florida Playbook  |  Illinois Playbook  |  Massachusetts Playbook  |  New Jersey Playbook  |  New York Playbook  |  Ottawa Playbook  |  Brussels Playbook  |  London Playbook View all our political and policy newsletters Follow us

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