As Canada embarks on one of its most significant military procurements, a fierce competition is unfolding between South Korea and Germany for a lucrative contract to supply 12 new submarines. With a potential value soaring between $60 billion and $120 billion, including acquisition costs of up to $30 billion, the decision is not merely about military capability; it reflects a broader shift in Canadian foreign policy as the government seeks to diversify its international partnerships.
The Bidders: Hanwha Ocean vs. TKMS
The competition has boiled down to South Korea’s Hanwha Ocean and Germany’s Thyssenkrupp Marine Systems (TKMS), both presenting advanced diesel-electric submarine designs. Hanwha is offering its KSS-III Batch-II submarine, while TKMS proposes the 212CD, developed in collaboration with Norway.
In an impressive display of commitment, the South Korean Navy’s Dosan Ahn Changho submarine set sail from Jinhae Naval Base on March 25 and is expected to dock at Canadian Forces Base Esquimalt by late May. This vessel will participate in a joint naval exercise with Canada in June, further solidifying the South Korean bid’s hands-on approach. Notably, during its transit, the submarine made a brief stop in Hawaii, where it picked up two Royal Canadian Navy submariners, signalling the importance of this exercise.
Political Context and Foreign Policy Implications
Prime Minister Mark Carney has indicated that a decision regarding the submarine contract is anticipated by the end of June 2026. This procurement is poised to forge a long-term partnership spanning nearly 70 years with the winning nation, a factor that extends far beyond mere military considerations.
The bidding process has been extended to allow both bidders to enhance their proposals, following concerns from Ottawa regarding the economic and industrial benefits initially offered. Hanwha has increased its pledged benefits from $60 billion to $70 billion, including commitments to manufacture military vehicles in Canada using local labour and materials. Meanwhile, TKMS is touting its partnerships with Canadian firms, including Bombardier Inc., to bolster its bid by highlighting its alignment with Canada’s strategic goals.
Recent Developments and Upcoming Visits
In a strategic move, German Defence Minister Boris Pistorius will visit Canada during the CANSEC defence trade show at the end of May, building on the momentum from earlier discussions led by Vice-Chancellor Lars Klingbeil. This visit underscores Germany’s commitment to securing the contract and enhancing economic ties with Canada.
Conversely, South Korea is planning to send a senior delegation to Ottawa shortly, which may include prominent officials like Kang Hoon-sik, chief of staff to President Lee Jae Myung. This visit aims to further promote economic relationships and underscore the importance of the submarine contract within a broader geopolitical context.
The Stakes: Transforming Canada’s Naval Capability
The significance of this submarine acquisition cannot be overstated. It marks a transformative moment for the Royal Canadian Navy, which has struggled with an aging fleet of second-hand submarines—currently, only one of its four operational submarines is active. This procurement would represent the first substantial addition to Canada’s underwater fleet since the Cold War, fundamentally enhancing the nation’s naval capabilities.
While Germany boasts an extensive history in submarine exports, having supplied vessels to numerous navies worldwide, South Korea’s record is less established. Hanwha Ocean’s experience is primarily with Indonesia, making Canada its first Western customer.
Why it Matters
This submarine procurement is not just a military upgrade; it’s a statement of intent from Canada as it seeks to redefine its global alliances and defence posture. Amidst increasing tensions and shifting trade dynamics, the decision to align with South Korea or Germany will have lasting implications for Canada’s economic and strategic landscape. Ultimately, this choice could reshape Canada’s defence industry, enhance its military capabilities, and signal a new era of international cooperation beyond traditional allies.
