Britain to stay outside Canada-led defence bank as countries plan cooperation

London, United Kingdom. Britain will remain outside the Canada-led Defence, Security and Resilience Bank (DSRB), a person familiar with the matter said, setting back plans for a global defence bank that would be the first of its kind. The two governments announced on Sunday that they would instead draw up arrangements for cooperation between their separate defence-financing initiatives.

Separate institutions with complementary roles

In their statement, Britain and Canada said they had worked closely to assess how the Multilateral Defence Mechanism (MDM) and the DSRB could advance common goals. They agreed to develop a cooperation framework serving both institutions, with the two bodies remaining distinct but complementary.

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The governments said the institutions would be designed as close partners, providing mutual support on emerging industrial priorities, opportunities for investment and strategic challenges in financing.

A second person said the governments had failed to resolve several central questions about a joint institution. These included where its headquarters would be located, how much procurement would be conducted jointly, lending arrangements for members and rules governing future membership.

According to that person, the MDM would seek to speed up defence investment, finance joint purchasing and pool demand among NATO allies to lower procurement costs. The DSRB would have a complementary role in financing defence industries and supply chains, with greater emphasis on lending to individual sovereign governments.

British decision follows renewed discussions

The DSRB has struggled to win backing from major European countries. Reuters first reported Britain’s decision not to participate in September last year, while Germany also declined to join.

There had been hopes that new Prime Minister Andy Burnham and his team would revisit Britain’s position. Britain and Canada recently held discussions on the issue.

Funding ambitions and supporters

The DSRB has sought approximately €100 billion ($112 billion) to provide inexpensive loans for defence projects undertaken by governments and contractors. Its plans also include guarantees for lenders funding smaller businesses considered higher-risk borrowers.

Canada will host the bank. Alongside Canada, the countries that have pledged backing so far are Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Turkey and Ukraine.