Politics

Is Canada ready for the risks of the new global economy?

Let’s add one more item to Canada’s long list of priorities in the new year: preserving economic security as the foundation of national security.

Several developments have put the spotlight on policy that involves national security, economic security, and prosperity.

The combination of COVID-caused disruptions to the supply chain, and “me first” economic nationalist actions, have further limited access to critical goods, from personal protective equipment to computer chips.

Meanwhile, the growing rivalry between the U.S. and China, which is economic as well as military, has heightened security risks due to the many technology, trade, and research links across this increasingly fractious divide.

Our increasing reliance on digital platforms exposes us to cyberattacks, including the ransomware that’s repeatedly shut down essential services, and the infamous Solar Winds data breach.

The opening up of Arctic waters to commercial maritime traffic has also added national-security concerns to the already pressing infrastructural and environmental needs of Northern communities.

Capping the list, it’s clear that disruptive technological change, from electric vehicles and artificial intelligence to a global economy based on intangibles, is about to kick into a new and accelerated phase.

China, the European Union, the U.S., and Japan have equated national security with economic security in different ways, leaving Canada with tradeoffs that could prove difficult.

Economic security must be integrated into Canada’s national-security considerations, but in a nuanced way. A clear distinction needs to be made between the economic dimensions of national security and the security dimensions of economic policy. Clearly, threats from hostile actors require diplomatic, intelligence, and even military responses. At the same time, as an entrepreneurial trading nation, Canada must court risk — while hedging against it — to ensure we have the economic capacity that guarantees our national security.

Specifically:

  • We need both to stress-test our economy for foreseeable risks and ensure there’s money in the budget to implement readiness plans. Canada has been better at the former than the latter.
  • In an age of innovation, Canada’s research ties will be both essential to our economic success and a source of national-security concerns. This is an area that needs to be managed rather than pre-emptively shuttered, and the management can’t be downloaded to our research community.
  • As new frontiers emerge — whether in the Arctic or in cyberspace — risk and economic opportunity will sometimes overlap. No-go zones must be identified and diplomatically cordoned off. Canada should navigate other frontiers quietly, and be aware of its limited military capacity.
  • Policy-driven re-shoring, or “ally-shoring” — bringing supply chains home or to geopolitical allies — will likely require public-policy support to be sustained. Initiatives that diversify supply sources and that mitigate or eliminate a national-security threat, while also capitalizing on a national advantage, should be vigorously pursued. Otherwise, Canada should take a polite pass and rely on global markets.

Ultimately, Canada’s national security will depend on its ability to sustain its prosperity, which in turn depends on trade and innovation.

It must therefore: engage with the World Trade Organization; minimize threats that might curtail access to the U.S. market; and further diversify export markets.

Perhaps more important, Canada must take deliberate steps to adjust its business model to the data-driven and knowledge-based economy, in which wealth is captured by nations that own intellectual property and data, not necessarily by those that simply generate these intangible assets. Canada excels at the latter, but not at the former. To be truly economically prosperous and secure, this must change.

Broadening our understanding of national security presents new challenges, but merely identifying a security risk can’t automatically preclude economic engagement. Instead, there must be a clear-eyed, case-by-case assessment of the tradeoffs, keeping the best interests of Canadians in mind. We won’t pull up the drawbridge. But how we partner internationally, and with whom, is among this country’s most pressing foreign-policy challenges.

Dan Ciuriak and Patricia Goff are both senior fellows at the Centre for International Governance Innovation (CIGI) and contributing authors to CIGIonline.org.  


The views, opinions and positions expressed by all iPolitics columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of iPolitics.

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