Sometimes the Obvious Choice is Not the Best Choice
The July 6 2026 Globe and Mail newspaper announced that "Ottawa picks Germany's TKMS to build Canada's submarines, sources say".
The decision to choose the European (Germany and Norway) submarine building supplier, instead of the Global South (South Korean) one is welcomed by most commentators.
Is it possible that the obvious choice ('They will speak English better', 'Germany is closer geographically', 'Canada needs to get inside the European system for military production', 'Canada wants to strengthen the EU and NATO') is not the best choice? Is it possible that rejecting South Korea's apparently superior bid is a big mistake?
The Carney government has already said that both bids meet the technical quality standards for a well-built submarine. The difference, they have said, will come down to how much each bidder offered in addition, on two counts. What would the bidder's offer do to enable Canadian shipyard companies and workers to develop their own capacity to build submarines and related technology in future? What would the bidding countries offer as investment in Canadian companies and workers in other parts of the Canadian economy?
It seems from the outside that South Korea's offer is superior on both counts. The European bidder would build the submarines in Germany and Norway for the foreseeable future. The South Koreans would have the Canadian shipyards involved in some aspects of the production from the beginning.
The Europeans, according to the Globe, have not bothered to make even vague offers to invest in other parts of the Canadian economy. South Korea has made several relatively specific offers to do so.
Prime Minister Carney made a well-received speech at Davos that called upon "middle power" countries to make alliances for trade and other purposes that do not rely too much on achieving alignment with, and mutual benefit seeking arrangements with, either the US or China.
But there are two versions of this idea and the submarine contract decision indicates that the Carney government, when forced to choose, will support one of them instead of the other.
Version #1 is supported here. "Middle power" turns out to mean allying with other countries that are part of the US-led (Europe and the US and European settler colonies) Western imperial alliance, as a tactic to gain more leverage and autonomy within that alliance.
Version #2 is to define Canada as an independent country that is part of the overwhelming Majority of countries that are "middle powers" simply because they are neither China nor the US. In this version, we position ourselves as seeking the good of everyone, including the people of China and the US. Version#2 does not require that Canada remove itself from the Western alliance in general or on any specific issue. People will have different views on that, and yet still prefer to make alliances that strengthen our own economic producers, as the South Korean offer clearly seems to do.
Leaving aside the bigger issue of whether Canada should be bowing to US pressure to increase its military budget by a factor of 3 or 4 (from 1.5% to 5% of GDP), the submarine contract seems to be an example of a case where our best interests align with the Global South bidder, yet we reject it. It may prove to be a mistake.
P.S. The submarine contract decision does not augur well for the upcoming decision that the Carney government has to make about what concessions to make to win a renewal of the Canada-Mexico-US free trade pact. The Trump administration is offering another Version#1 deal. Canada gets a new pact as long as it agrees to 'come inside the tent'. Canada gets a new pact as long as it agrees to aligning all of its trade and other policies to be part of Fortress America, to 'friend-shoring' that accepts bans on doing business with China, or with any other country, whenever they produce a product that is superior to a US one. Stay tuned.