Banking on War

What happens when a country that talks about human rights starts wiring its economy into the business of war?

Canada is on a defence-spending spree. Ottawa has committed tens of billions over the coming decade to new ships, jets, drones, missile systems, and a loosely defined suite of “modernization” and “resilience” initiatives. Now add a new layer: a Defence, Security and Resilience Bank, being developed with 18 other countries to finance defence production and harden supply chains.

Individually, these moves may seem pragmatic, even necessary. Taken together, they point to something larger: the steady wiring of Canada’s economy into the business of war. The question isn’t just whether that’s strategically smart, but whether it aligns with the kind of country Canada has long claimed to be.

The first flaw is the mandate. “Defence, security and resilience” sounds flexible; it is also an invitation to mission creep. A permanent, capitalized institution with a brief that loose can justify almost anything. Border surveillance, offensive cyber tools, intrusive data systems - all can be recast as “resilience.” The real shift is institutional: decisions about what Canada finances move from Parliament to loan committees and risk departments. MPs won’t vote on new categories of militarized technology. They’ll be told this is what security now requires.

The second problem is more concrete. Canada maintains a longstanding loophole in its arms-export regime: military goods bound for the U.S. cross under a general permit, bypassing the human-rights assessments required elsewhere. Once inside integrated North American supply chains, Canadian components are folded into U.S. systems and shipped far beyond Canadian scrutiny. Efforts to close this gap have failed; earlier this year,Jenny Kwan’s private member’s bill to apply equal scrutiny to U.S.-bound exports was defeated by Liberal Members, with some noble exceptions and the Tories .

The proposed bank would scale up production along precisely these integrated supply chains. Layering a powerful financing institution on top of an export regime with a gaping blind spot doesn’t just preserve the risk of indirect complicity, it amplifies it. Rather than loosening our dependence on U.S. systems, we deepen it.

The third problem is structural. Multilateral banks are technocratic by design. Their authority rests on financial models and portfolio logic, appropriate for railways or clean energy, far more fraught when the assets are weapons systems and militarized infrastructure. In practice, power will sit with the bank’s board and management: deciding which sectors expand, which partners benefit, and how to balance strategic risk against financial return. Democratic oversight,the occasional parliamentary statement, the annual report, won’t keep pace.

Underlying all three is a deeper dynamic.

Economic lock-in is real. Once factories are retooled, workers retrained, and capital aligned with long-term defence demand, the pressure to sustain it intensifies. At that point, asking hard questions about end-use, human-rights risk, or Canada’s broader foreign policy becomes harder, not easier.

None of this denies a more dangerous world. Russia’s invasion of Ukraine, rising authoritarianism, and new domains of conflict make the case for credible capabilities among democracies. But they do not answer the harder questions: what Canada should finance, for whom, and under what safeguards to honour human rights commitments.

A Defence, Security and Resilience Bank layered onto a rapidly expanding and still loosely defined defence agenda is a consequential choice. Without clear limits on what it can fund, without closing the export-control loophole, and without meaningful democratic oversight, Canada risks a quiet but lasting shift: from a country that champions human rights and international law to one whose prosperity depends on the expansion of the systems that strain them.

👉 Note:My thanks to Jill Glessing for bringing the DRSB meeting to my attention .