Canada is pushing to establish a multilateral financial institution that supports defense industry investment ahead of the North Atlantic Treaty Organization (NATO) summit. With Western demand for weapons surging after the Russia-Ukraine war and Korea emerging as a defense exporter, attention is on whether Korea will join the new international defense finance framework as it is mentioned as a country considering participation.
According to Reuters on the 2nd (local time), Canada is seeking to jointly announce the launch of the Defence, Security and Resilience Bank (DSRB) with about 10 countries at the NATO summit to be held in Ankara, Türkiye, on the 7th-8th. Isabelle Hudon, Canada's chief negotiator and Business Development Bank of Canada (BDC) chief executive officer (CEO), said, "We have set the NATO summit as the deadline and intend to announce the list of founding members."
The DSRB is a multilateral financial institution designed to support allied countries' defense industry investment and expansion of weapons production capacity. It is a consultative body advanced as Prime Minister Mark Carney of Canada emphasized the need to respond through a "coalition of middle powers," saying the existing U.S.-led world order is wobbling. It aims to raise up to £100 billion (about 205 trillion won) to strengthen allied defense.
So far, Luxembourg is the only country that has publicly expressed its intention to participate. It is expected to serve as the DSRB's European base. The United Kingdom, which is pursuing its own defense finance project (MDM) with the Netherlands and Finland, is exploring ways to link it with the DSRB, and Germany, which initially kept its distance, recently joined as an observer and is reviewing the outcome. Italy, Spain, Turkey, Belgium and Ukraine are also said to be analyzing Canada's proposal.
CEO Hudon said she held productive talks with Korea and assessed Korea's likelihood of joining as "fifty-fifty." She added there is a possibility Korea could join later. Korea's Ministry of Economy and Finance earlier told Reuters it is reviewing a proposal to participate in the DSRB.
Korea is being mentioned because its presence in Europe's defense market has grown recently. Although not a NATO member, Korea has expanded defense exports—centered on Poland—to include tanks, self-propelled howitzers and aircraft. If Korea joins the DSRB, some say it could also positively affect Korean defense companies' overseas production expansion and local supply chain investment.
The DSRB concept emerged to build allied defense production capacity in response to the protracted Ukraine war and the military expansions of Russia and China. As uncertainty around U.S. security commitments grows, NATO members are increasing defense spending, but small and midsize defense firms are struggling to secure funding needed to expand production facilities and procure raw materials. The DSRB is seen as a mechanism to fill this financial gap in the defense supply chain.
However, challenges remain before it actually launches. For the DSRB to raise funds at low interest rates in international financial markets, it needs to secure a AAA credit rating, which requires sufficient capital and participation by key countries. Reuters reported that, depending on the outcome of final talks, the joint announcement of founding members at the NATO summit could fall through.