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Isabelle Hudon, Chief Executive Officer of the Business Development Bank of Canada (BDC) / Courtesy of Reuters-Yonhap

Canada is accelerating the establishment of a global defense bank, leveraging the North Atlantic Treaty Organization (NATO) summit in Türkiye next week as a springboard. This development suggests that middle powers are moving to build independent security cooperation frameworks amidst signs of cracks in the traditional US-led global order.

In an interview with Reuters on July 2 (local time), Isabelle Hudon, CEO of the Business Development Bank of Canada (BDC) and Canada’s chief negotiator for the Defence, Security and Resilience Bank (DSRB)—a multilateral defense cooperation initiative—stated, "We have set the upcoming NATO summit as our deadline and aim to announce the list of founding member states." Canada plans to finalize a cohort of around 10 founding members during the summit.

The core objective of the DSRB is to leverage low-interest financing to raise up to 100 billion pounds (approximately 205.7 trillion won) to bolster the defense capabilities of allied nations. Hudon explained that except for Canada, most of the initial founding members are European nations.

Spearheaded by Canadian Prime Minister Mark Carney, the DSRB was conceived to respond to a rapidly shifting security landscape marked by the prolonged war in Ukraine, escalating tensions with Russia, and China’s military expansion.

However, significant hurdles remain before the bank can officially launch, including capital sharing and securing a credit rating. For the DSRB to obtain the top-tier credit rating (AAA) necessary for stable fundraising, the participation of major economies is vital; yet, aside from Canada, Luxembourg—the projected host country—is the only nation that has officially declared its intent to participate.

Other variables include differing views on capital contribution methods and competition with existing initiatives, such as the European Union's own defense program (SAFE).

South Korea's potential participation is also drawing attention. Hudon noted that Canada has held productive discussions with South Korean officials, placing the likelihood of their participation at 50-50.

                                                                                                          Lee Jeong-eun