Canada Bets on Home-Built Defense as Fighters Wait

As Canada’s recently formed Defence Investment Agency—formally established in 2025—continues to ramp up domestic military capacity and opportunities, the organization has reiterated its commitment to strengthening Canadian capabilities. This, according to CEO Doug Guzman, is also crucial if Canada is to meet NATO’s target of 3.5% core GDP spending by 2035. Citing an initial 2% figure reached in March, he said during a July 20 panel, “It’s not about the willingness or the allocation of the funds. It was the ability of the system to absorb it, by which we mean people, training, infrastructure and supply chain.”

The Canadian government’s industrial strategy, published earlier this year, is backed by CA$81.8 billion allocated over five years in the 2025 budget for defense investments. However, with the makeup of its potentially mixed future fighter fleet still undetermined, Sweden’s Saab could still be a significant part of the Canadian “build, partner, buy” framework.

In a memorandum of understanding signed July 17, Montreal-based CAE and Saab stated that, following a potential Gripen acquisition, CAE would be “responsible for operating and sustaining advanced Gripen training systems in Canada.” The agreement would, Saab said, “create high-value work opportunities [and] strengthen Canada’s defense industrial base.” Saab added that the partnership would also give Canada “the capability to independently support future mission systems enhancements and upgrades,” with Canadian specialists able to perform classified mission systems work.

Speaking on July 20, Saab president and CEO Micael Johansson said that while it is important not to underestimate transatlantic relations among Europe, the U.S., and Canada, “we have to get our act together in terms of collaborating and aligning the view on the capabilities needed in the fragmented European perspective.” He acknowledged that tensions exist among international partners, pointing to the Future Combat Air System—a French-, German-, and Spanish-backed effort that the partners effectively terminated last month after failing to agree on issues such as intellectual property rights and the aircraft’s core functions, which ultimately “became difficult.” A balanced “logic” among industry, end users, and political security policy, he said, is the foundation of a more certain framework.

According to Johansson, Sweden’s accession to NATO (formalized in 2024) has helped make the case for Saab’s approach to data sovereignty and open-architecture software design. “It’s easier for us, being in the alliance, to convince people we’ve done it,” he said. Even so, he believes interoperability is “not only as easy as having the same links or the same connectivity.” It is about “making sure Canada, for example, can manage all the data they generate within their operations without having input from Sweden or Saab.”

And while Ottawa has yet to finalize a potential revision to its U.S.-built F-35 fleet, “There is no way all the countries in the European perspective can do everything; neither can Canada, neither can Sweden,” Johansson concluded. “There is no way back. If we don’t want to have [the] full dependency on the U.S. we have, we are in the right direction now.”