Turkey joins Canada’s global defense bank initiative

Canada has a new solution for ramping up defense investment in the West, and Turkey seems to be buying in: Turkey will join the Canada-led initiative to launch a multilateral defense-focused bank as a founding member, an official told Reuters on Monday. The move would give the forthcoming Defense, Security and Resilience Bank (DSRB) its largest defense-industrial player and gives one of the world’s fastest-growing arms exporters access to subsidized capital built to help Nato and allies ramp up armament.

What we know: The plan aims to raise up to USD 134 bn, targeting a triple-A credit rating that would let the bank lend cheaply to member states and to firms that struggle to access affordable finance. The bank will be headquartered in Canada and is meant to be operational in 2027. Nine countries have signed on so far: Canada, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey, and Ukraine, a roster that holds no G7 heavyweight other than Canada, Reuters notes.

No founding member comes close to Turkey on defense-industrial weight. Ankara’s defense and aerospace exports rose almost 50% y-o-y to hit a record USD 10.6 bn in 2025 (goods and services), up from USD 7.1 bn in 2024. The sector now has more than 3.5k active companies employing some 100k people and boasting a self-proclaimed localization rate of more than 82%, according to Turkish Exporters Assembly data. Five Turkish firms — Aselsan, Baykar, Turkish Aerospace Industries, Roketsan, and MKE — are among the top 100 arms producers, with combined 2024 revenue of USD 10.1 bn.

BACKGROUND- The idea of a multilateral defense bank was first floated in 2019 as a Nato bank by policymakers and officials of the defense alliance to address chronic under-investments in European defense. The idea gained steam later after former Nato chief innovation officer Rob Murray laid out the DSRB proposal in a policy brief for US-based thinktank the Atlantic Council in late 2024, just months before the beginning of the second Trump administration.

Canada’s Mark Carney later adopted the idea as his signature alliance initiative, which comes as a response to rising pressure from Washington over lackluster defense spending among Nato and European allies. The US pressure, alongside shifting global geopolitics in Europe and abroad, ultimately culminated in Nato’s 2025 pledge to lift spending toward 5% of GDP by 2035 — a target that would cost European members roughly USD 600 bn a year in extra outlays.

Setting up the DSRB would be the clearest application yet of Carney’s “middle powers” doctrine. In his January Davos speech, the Canadian PM called the collapse of the US-led order “a rupture, not a transition,” casting Trump’s tariffs, territorial threats to allies, and the erosion of international law as the end of a system middle powers could no longer count on. The pitch was for those middle power countries to act collectively — “if we're not at the table, we're on the menu,” Carney said.

What's next: Domestic politics could be a blocker, as founding countries are now required to run the plan through their domestic treaty processes. Another open question is the ability to scale the bank without Germany, the UK, or other strong founders with strong balance sheets.