Juno News - What Carney’s $24B submarine deal means for Canada

00:00:00.000 a german shipbuilder to build a fleet of 12 submarines for this country this headline ottawa

00:00:12.560 picks germany's tkms to build canada's new submarines sources say tkms is a leading

00:00:19.120 manufacturer of non-nuclear subs and frigates the company beat out a south korean firm for the

00:00:26.220 contract worth as much as 30 billion dollars for the subs plus billions of dollars more for

00:00:33.060 maintenance and upgrades in the years ahead. Prime Minister Mark Carney made the announcement in

00:00:38.480 Halifax. We will now enter into negotiations to procure up to 12 submarines and that process

00:00:46.440 is commercially sensitive and as always we will not negotiate in public so as to maintain the

00:00:53.700 strongest possible position for Canada. The German government says the project will add

00:00:58.160 $85 billion in GDP to Canada's economy over the life of the contract.

00:01:04.220 Another oil pipeline proposal, this time a line that would stretch from Alberta to Ontario.

00:01:11.000 Alberta Premier Daniel Smith and Ontario's Doug Ford say the 500,000 barrel a day project would

00:01:17.920 connect crude oil production in the prairies with domestic refineries in Ontario.

00:01:23.280 In the space of about a year, look at how Canada's public opinion has changed.

00:01:27.600 It's done a 180 on energy.

00:01:29.640 In a poll this week, almost 70% of Ontario residents support new or expanded pipelines,

00:01:35.120 and Alberta is here to support the needs of Ontario and all of Canada,

00:01:38.940 with energy in support of a stronger economy, job growth, and prosperity for decades to come.

00:01:44.820 Pipelines have gone from impossible to a national imperative.

00:01:48.780 The Alberta's oil sands have gone from a target to a national treasure.

00:01:52.420 and we're launching the greatest expansion of oil and gas infrastructure and production in decades.

00:01:57.440 For his part, Premier Ford says he's disgusted by the way the previous federal government

00:02:02.520 under Justin Trudeau treated Alberta.

00:02:05.200 You said back in May that Premier Smith was putting an independence question on the ballot

00:02:09.260 to protect her 30% base. Have you two spoken about the referendum?

00:02:13.220 Let me talk about that. I think the world of Premier Smith, first of all.

00:02:17.620 and we're focused on a pipeline.

00:02:22.000 I know, but let me cut to the chase here.

00:02:25.700 The previous federal government, not this one, 0.99

00:02:27.700 the previous federal government treated Alberta like garbage, like terrible. 0.98

00:02:33.300 I've never seen anything as bad as that. 0.95

00:02:35.980 So I know that Premier Smith wants a proud, sovereign Alberta, part of Canada.

00:02:42.900 And again, we're there to support her.

00:02:44.980 It's Team Canada, I'll do anything we can.

00:02:48.860 But thank you for that question.

00:02:50.620 Our guest today is Joe Varner,

00:02:52.460 senior fellow at the McDonnell Laurier Institute.

00:02:55.540 Welcome once again, Joe.

00:02:57.280 Great to be with you, Mark.

00:02:59.080 Okay, so we now know that the Kearney government

00:03:02.200 intends to spend billions of dollars

00:03:05.240 on these subs built in Germany by TKMS.

00:03:10.240 What do you know about this company

00:03:12.380 and what can we expect in the way of product

00:03:14.980 for our billions of dollars in tax money.

00:03:18.700 Well, I guess the program is supposed to cost somewhere between 20 and 30

00:03:22.660 billion for acquisition of 12 submarines.

00:03:25.700 And then another 50 to 60 billion in terms of in-service support and, and

00:03:30.580 other, other items over, over a period of time, uh, TKMS is the leading

00:03:37.120 builder of non-nuclear submarines in the world.

00:03:40.360 it's uh exported uh its submarines to 20 countries

00:03:44.760 so they're they're a very capable firm very capable builder right and now when they sold

00:03:54.480 the idea to canada they said that our economy would grow that it would add somewhere around

00:03:59.500 86 billion dollars in gdp over the life of the contract how will that materialize exactly how

00:04:05.800 we make all that money uh from basically having a german company build these subs well the german

00:04:13.560 company would be the prime if if if indeed that's what happens at the end of the day the government

00:04:19.800 will certainly have them as the preferred uh prime but sometimes over the contracting period that

00:04:26.840 that could change but as the prime they would they would uh build some of the submarines i suspect

00:04:34.200 offshore and then some i suspect would be built in canada or components of them would be built in

00:04:40.360 canada so you know the the iron would come or the metal would come from from a canadian company

00:04:48.840 different components might come from a canadian company i know that they've signed i believe a

00:04:53.640 contract with c-span in in vancouver and i think that that other contracts have been signed in

00:05:00.200 in terms of teaming partnerships with, uh, with the German bidder.

00:05:04.880 So, you know, we'd make money that way and certainly maintenance and other things

00:05:10.920 over a long period of time, Canada would make cash on that.

00:05:14.600 I think they're talking about 650,000 jobs too, um, or job person years with

00:05:22.200 regard to the German bidder.

00:05:23.580 So it's, it's a, it's a substantial bid.

00:05:26.060 The German submarine is probably the most expensive, but it seems that the industrial benefits and the benefits to the Canadian economy, the government seems to have suggested, are better.

00:05:42.340 Now, it's a non-nuclear sub, right? DKMS doesn't make nukes?

00:05:47.300 No, no. Only a few countries make nuclear submarines.

00:05:51.700 I mean, do you think we should have gone in that direction? Does that make sense?

00:05:56.060 I think that for some people that makes a lot of sense to go with a nuclear boat, but in terms of the infrastructure and the training and cost, it would be a very expensive program.

00:06:08.460 And you're seeing that play out with Australia in the AUKUS agreement with the United States and the UK, where the Australians are going to go with nuclear boats.

00:06:18.820 but but it's going to be a very time-consuming process to get an actual hole in the water

00:06:26.160 an american company was not in the running it was just a south korean firm i mean what happened

00:06:35.680 there should we have maybe kicked the tires a little more on a u.s option just to help our

00:06:43.240 relationship our trade relationship with that country so the americans don't build conventional

00:06:48.340 powered submarines yeah um you know the the french do um but the the other submarine in the competition

00:06:56.980 was uh was sob submarine so so there were kind of three boats that were in the competition

00:07:03.940 um and and you know all by all means all all very capable uh submarines um the the south

00:07:13.140 korean submarine compared to the german is probably a little bit cheaper they probably can get them

00:07:18.580 faster and but right now they've only exported i think to indonesia only indonesia and south

00:07:25.140 korea are operating these submarines we're not buying technology though are we no i wouldn't

00:07:31.940 say we're buying old technology my understanding the german boat has has some new technology in

00:07:37.060 terms of air independent propulsion and and probably will have some some new technology

00:07:42.420 in terms of some of its armaments and its combat system uh but the and and the design of the

00:07:47.940 submarine is is uh fairly uh fairly robust and fairly fairly uh new um so i wouldn't say that

00:07:56.500 we're getting old technology it's not like when we purchased the upholders uh that you know the

00:08:02.820 the brits had laid up and they sat you know locked up for so many years and then turned out to have

00:08:08.420 all kinds of problems these will be brand new submarines so i guess we're a player now i mean

00:08:14.260 globally there was a lot of talk when prime minister carney said we're going to increase our

00:08:20.580 defense spending to five percent of gdp i think a lot of people said yeah sure i'll believe it

00:08:25.300 when i see it is this a sign that canada means business now as far as military procurement goes

00:08:32.820 well i think that the government's trying to show that it means business

00:08:36.660 we'll see in the contract how many hulls we're going to get at the end of the day how many

00:08:40.500 submarines do we get and what comes with them and and how quick will we get them that'll those

00:08:47.140 will be the big questions certainly a fleet of 12 uh conventional uh uh diesel-powered

00:08:53.940 submarines is is is going to be very good for the navy and very good for protecting our coastline

00:08:59.940 and the approaches to our arctic uh it's certainly going to be a much welcomed capability our current

00:09:06.680 submarine fleets at the end of its service life and and needs to be replaced expeditiously

00:09:12.080 that's going to take a while before we get these boats and i realize that but you sort of answered

00:09:19.160 a bit of my question here about the arctic you know to what degree is this really about solidifying

00:09:25.000 our claim to the north which of course subject to opposition by rivals like Russia for instance

00:09:35.080 can you answer that question yeah i guess what i would say mark is that that the submarines be very

00:09:41.560 useful in protecting the approaches to the northwest passage and and waters uh you know

00:09:48.600 adjacent to the ice pack i don't think that they would spend very much time if any under the ice

00:09:53.720 pack uh the submarines typically for a submarine to break through ice up there you need something

00:10:01.000 in the neighborhood of i think 5 500 tons and these are not not anywhere close to that so

00:10:08.440 so in terms of going under that's that's not in the game but of the approaches to

00:10:14.760 to Canada's North and Arctic, they would be very effective patrol craft and very effective

00:10:23.700 weapon systems.

00:10:24.700 Now, we're going to have to get people who are trained in the use of these.

00:10:30.260 And so that, I imagine, will sort of create a whole new cottage industry around these

00:10:36.700 subs because we've got to have specialized personnel that can work inside these these uh

00:10:44.940 submarines but four boats now four subs now so you're going to be training a lot of people

00:10:52.380 what that means to the the shape and the the future a number of uh destroyer frigates in

00:10:59.020 the surface fleet is probably uh another question i mean at the end of the day all

00:11:04.540 all this defense spending is is great and it's much needed and the canadian forces needs equipment

00:11:10.060 and they need it yesterday the problem is that you know the bill will keep adding up

00:11:16.540 and at what point does the government say okay well we've we've we've rearmed enough

00:11:22.060 and you know the estimates right now on russia uh going at it with a european country

00:11:29.180 other than Ukraine or 2029, we weren't going to see any submarines before 2030 or maybe even 2035.

00:11:38.540 So, you know, it's long overdue. It's way late. And, you know, we're going to have to get on

00:11:46.740 with things. I'm wondering if not going nuclear puts us at a disadvantage against countries like

00:11:56.220 Russia, China, who obviously have nuclear subs.

00:12:02.360 Is that an issue?

00:12:03.860 Will that be an issue, do you think?

00:12:06.040 Yeah, well, they have nuclear-powered subs,

00:12:08.980 and then they have subs that carry nuclear weapons.

00:12:12.520 Canada has kind of gone the opposite route

00:12:15.540 on nuclear weapons a long time ago.

00:12:19.140 That's something that Canadians find distasteful.

00:12:22.700 But in terms of nuclear power,

00:12:24.760 those submarines also generate a fair amount of noise and diesel electric submarines are very

00:12:32.120 quiet they're very efficient killers and you know people will make arguments on both sides

00:12:39.160 as to what's what's better a nuclear boat or a conventional boat i think great now the boat

00:12:45.240 that suits the canadian navy is the one that's been chosen what message do you think it sends

00:12:51.320 globally to our rivals uh will they be paying attention by this uh about you know will they say

00:12:58.220 oh oh canada seems to be stepping up its game what do you think the reaction will be internationally

00:13:03.860 i think the reaction internationally it will be good for nato in the sense that you know the the

00:13:11.600 monies that we've spent so far to get to two percent of gdp you know a lot of people question

00:13:17.240 the math whether it's voodoo math and whether it's real spending at the end of the day what we

00:13:23.600 what we have done is we've made you know two percent according to the government but that

00:13:31.640 hasn't translated into a tangible combat capability in terms of the Canadian forces

00:13:39.520 this would be a tangible combat capability that we would be purchasing and it would be a significant

00:13:46.360 good combat capability that we would be purchasing. I think after the Second World War, you would know

00:13:51.260 this better than I. I think Canada had the number three Navy in the world. I'm not mistaken. We were

00:13:57.260 a major player. And then through the course of decades, we just did keep up. And look at us now,

00:14:07.020 you know we're kind of sad sacks in terms of having played our role the proper role in nato

00:14:16.700 and so i guess we have the prime minister going to nato summit uh what later um so i guess he'll

00:14:23.180 have something to brag about when he gets there when he meets with his counterparts correct yeah

00:14:28.940 well i think there are going to be a number of uh nato uh spending announcements in in terms of

00:14:35.900 defense procurement projects that are going to be probably announced around the summit

00:14:42.540 and so this will be one of them and it'll be a significant one if you're a chinese or a russian

00:14:47.420 naval planner when canada has 12 type 212 cd submarines in the water you're going to pay

00:14:56.780 attention to that capability and you're going to be concerned about it so that that's very good i

00:15:02.700 I think, for NATO, and it's very good for Canada.

00:15:07.460 Now, I can't help but think that the Germans could be buying our LNG right now.

00:15:11.780 You know, if Prime Minister Trudeau had agreed, you know, it would have been sort of a great

00:15:17.980 way to offset the construction of these subs is to be selling them energy.

00:15:23.500 Sadly, we're not there yet.

00:15:25.800 To what degree does this move, in terms of having the Europeans involved, line up with Carney's personal view that, you know, we're the most European, non-European country, you know, his sense that we should be cozying up to Europe. Is this part of that agenda or that mindset?

00:15:46.680 that? Yeah, well, I think it is part of the cozy up to Europe agenda. I don't think there's any

00:15:53.420 doubt. I mean, if we'd purchased the South Korean submarine, it would have been a way to operationalize

00:15:59.880 the Indo-Pacific strategy. And a lot of people thought that that was a good way to go and to

00:16:05.360 show that we're a Pacific nation. But I think, you know, the acquisition of the German-Norwegian

00:16:12.180 submarine is very much uh in the nato interest and very much in the european union interest

00:16:18.340 and and very much in canada's interest if we want to do business with them it would be really hard

00:16:23.940 to say you know we're throwing all of our our support behind nato and we're going to go for

00:16:29.060 two percent and not to purchase some european equipment so i think you know there there are

00:16:36.020 challenges uh no doubt um but you know at the end of the day it's it's probably a very good decision

00:16:43.620 that the real issue is going to come down to cost it's going to come down to the benefits

00:16:49.940 and it's going to come down to the time it takes to get the submarines delivered

00:16:54.420 how will the americans take this well i think that the americans will look at it as a good

00:17:00.580 announcement uh because they've been looking at and studying uh what we've been doing and i think

00:17:06.580 to date they haven't been too impressed uh which is you know what what we've seen in in some of the

00:17:12.740 commentary uh but uh you know the american the trump administration is not impressed with too

00:17:17.940 many of their nato allies at the moment uh so uh you know we've got a shortened summit uh because

00:17:23.700 of it um a one one one and a half day sort of summit where they're going to discuss uh nato

00:17:31.220 spending and from what i understand article five and reaffirm article five and and otherwise it's

00:17:38.020 it's an in and out so that there's no chance of having a fight with donald trump uh which which

00:17:43.620 is you know interesting if that's the case uh but i think you know from the american perspective and

00:17:50.100 And I think from our NATO allies perspective, you know, the Trudeau years, the 10 years was a lost decade in terms of our defense, our foreign policy, our intelligence community, and our public safety.

00:18:03.940 And the prime minister has got a big hole to dig himself out of that was handed to him by the previous prime minister.

00:18:14.780 And it's not going to be an easy road to haul.

00:18:17.640 Yeah, it was a lost decade in terms of our resource.

00:18:20.100 wealth you know uh and as we look at our own current financial state you know you can't help

00:18:28.660 but think things could have been a lot better a lot better if we had built out uh pipelines

00:18:35.900 that were planned to go you know 10 years ago if that had happened you know i think

00:18:40.820 we'd be in a position to buy these subs and not even sweat it you know anyway last last word to

00:18:47.940 you. It's time to re-equip the Canadian forces. The time was actually yesterday or two weeks ago

00:18:56.140 or three weeks ago because we are running into troubled waters with the Chinese and the Russians. 1.00

00:19:04.160 We've already seen the Iranians act out and the North Koreans are probably warming up to do 0.86

00:19:09.160 something to get some attention and some love. So I think we have to re-arm the Canadian forces 0.89

00:19:16.840 and move forward in a deliberate and decisive manner.

00:19:20.920 Joe Varner, thank you so much for coming on the show.

00:19:23.160 We appreciate it.

00:19:23.740 How do people find you online?

00:19:27.260 Online?

00:19:28.340 You can find me on Substack.

00:19:30.140 Okay.

00:19:31.340 Yeah, you can find me on Substack

00:19:33.380 and you can find me, my articles and interviews

00:19:38.280 on the McDonnell-Laurier Institute website.

00:19:41.640 Perfect.

00:19:42.220 Thank you, sir.

00:19:42.920 Appreciate it.

00:19:43.900 Thank you, sir.

00:19:44.660 If you enjoyed this show,

00:19:45.540 consider supporting great independent journalism by becoming our, well, latest member of the Juno

00:19:54.000 News family. Wouldn't that be great? A premier member of Juno News? Go to junonews.com backslash

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00:20:04.300 Thank you so much. We'll see you next time.

Juno News - July 07, 2026

What Carney’s $24B submarine deal means for Canada

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