Cascade Institute

By Christopher Collins and Mike O’Sullivan

The version of record of this op-ed appeared in Barron's.

Europe has effectively been at war since 2022. Russia’s drones are still flying over European airports, their ships continue to sabotage critical undersea cables, and their cyberattacks across the continent are surging.

Europe still isn’t ready to fight back.

There have been fits and starts of ambitious defense measures: last year, the European Commission sought to mobilize €800 billion under its Readiness 2030 plan, the European Union earmarked €150 billion for the Security Action for Europe, or SAFE, program, and the European Investment Bank (EIB) quadrupled its defense spending to €4 billion. But if Europe is to take full responsibility for its own security—and President Donald Trump is making clear it needs to—what currently exists isn’t enough.

The SAFE program is a demand-side instrument. It helps EU governments borrow to procure defense materials by issuing low-interest, long-maturity loans. It does nothing to promote more supply; SAFE offers no mechanism for guaranteeing commercial bank lending to defense firms, for instance. And the fact that the program is so heavily oversubscribed clearly signals both the demand and the urgency for more help. Meanwhile, the EIB is limited in what it can do by structural constraints: its own policies prevent it from financing weapons and ammunition. As the EIB’s president has rightly said, the bank “is not a defense ministry.”

This is where the proposed Defence, Security and Resilience Bank (DSRB) could come in—not as a rival to the existing European mechanisms, but as a complement that covers the ground they cannot.

The concept of the DSRB was developed by Rob Murray, formerly the head of innovation at NATO, who began working on the idea in 2018. The bank was officially launched last year and is now well beyond the drawing board: major global banks have signed on to help structure the institution, and its backers aim to have it operational by the end of 2026.

It is a straightforward idea: a multilateral bank, owned and overseen by democratic states. The DSRB would raise funds by issuing AAA-rated bonds on global capital markets and would then lend to member governments and guarantee loans made to defense firms by commercial banks. By pooling allied credit strength, these loans would be made at rates most NATO members cannot access on their own and over the long time frames that defense investment demands. Importantly, with the DSRB, there is no joint debt and no shared liability. Each country answers only for its own equity stake, which preserves national control.

The gap the DSRB is best placed to fill is on the supply side, helping companies that develop and build defense equipment access capital. This is especially true for the growth-stage firms across Europe, that are too mature for early-stage venture capital but too small and too risky for conventional bank lending.

Europe has relatively few investment funds that do the type of investing required to scale these companies. And European commercial banks, after years of ESG-driven retreat from the defense sector, lack both the appetite and the internal expertise to lend to these firms without guarantees. A DSRB-backed guarantee structure would address both these issues.

The European capital markets argument also deserves more attention. The EU’s Savings and Investment Union project aims to keep European capital in Europe, channeling it into productive, long-term capital market investments. The DSRB’s AAA-rated bonds would be precisely the kind of high-quality, euro-denominated instrument that a deeper European capital market could absorb, investing European savings into European security. Far from competing with the Savings and Investment Union, the DSRB could become a compelling use-case for the program.

Canada has emerged as a champion of the DSRB. Under Prime Minister Mark Carney — who has made strengthening Canada's strategic autonomy a national priority — Canada has taken a leading role in establishing the bank and hosting meetings with partner countries to begin negotiations on the bank’s charter. Canada has already lined up all of its major banks as partners and the country’s biggest cities are all vying to host the bank’s headquarters.

European defense and finance ministers are more lukewarm.

Germany says it prefers the existing SAFE program. But the DSRB would complement SAFE, not compete with it. Berlin knows this, or at least Deutsche Bank does, given that the German bank is one of the DSRB’s partner institutions. The German government’s current position amounts to telling its country’s flagship lender that it is wrong about how defense should be financed. That is an unusual stance for an export economy that prides itself on listening to industry.

The United Kingdom’s Treasury has said the DSRB would not deliver sufficient value. More than 800 British defense companies have publicly disagreed. The UK says it wants to spend 2.5% of GDP on defense, yet the country faces serious fiscal constraints. A multilateral guarantee structure is precisely the kind of tool that could help square that circle.

With major firms such as Naval Group, Dassault, Thales, and MBDA, France has the strongest defense industrial base in Europe; last year the country became the world's second-largest arms exporter. Yet Paris has barely commented on the DSRB. In diplomacy, that signals internal disagreement or caution.

Perhaps France fears that its strategic autonomy would be weakened by joining a bank that it would only partly own. But joining the DSRB would actually strengthen France’s strategic position by facilitating capital inflows. If Paris doesn’t become involved now, it risks spending the next decade complaining about rules it chose not to shape.

As the joke goes, Europe likes being concerned. The DSRB is a way to translate that concern into action. The countries that join the DSRB now will write the charter, while latecomers will accept terms drafted by others.

Europe’s three largest economies have every reason to be leading voices around this table. After all, the threats driving the DSRB, such as Russian aggression, supply chain fragility, and defense industrial underinvestment, are European problems. Letting Canada solve them isn’t a viable strategy.

Christopher Collins is a fellow with the Polycrisis Program at the Cascade Institute. Mike O’Sullivan is author of ‘The Levelling – what’s next after globalization?’(PublicAffairs), and former CIO at CS Wealth. 

Read the article in Barron's The post Europe Needs to Get Serious About Its Defense. A New Bank Is the Answer. appeared first on Cascade Institute.

By Christopher Collins, Polycrisis Fellow, Cascade Institute

The version of record of this op-ed appeared in The Globe and Mail

Earlier this month, during a panel discussion on the Canadian economy at the Liberal Party convention in Montreal, former Google CFO Patrick Pichette suggested that the government should restrict the ability of young Canadians to work in the United States, because Canadian taxes had funded their education. A clip of these remarks went viral, and for good reason: as Shopify founder Tobi Lütke said in response, “making Canada a cage” is not the right strategy to build a strong economy.

But Mr. Pichette’s remarks highlighted a real anxiety: many of Canada’s most talented young people do leave to work outside the country. I was one of these people: from age 24 to 31, I lived and worked abroad – both in the U.S. and overseas. Many of my friends also fall into this category. Eventually, I came back to Canada, as did some of my friends; others put down roots and stayed in San Francisco, New York, Boston or London. But we all benefited from professional opportunities that did not exist in our home country.

The data show record numbers of people are leaving the country. Many of these are skilled young professionals, and the majority head to the U.S., drawn by greater professional opportunities, deeper networks and higher wages. This has major implications for Canadian businesses and the broader economy; as a trade publication for Canada’s human resources professionals put it last week: “the people leaving are disproportionately the ones your workforce plans were built around.”

One dimension to this story that older Canadians of Mr. Pichette’s vintage often miss is the generational divide in how the U.S. is perceived. While polls show that Canadians overall disapprove of President Donald Trump’s America, that sentiment is strongest among those over 55. This is a global phenomenon; in many countries around the world, adults under 35 hold a more favourable view of the U.S. than those over 50. We should not assume that anti-Trump sentiment is sufficient to keep young talent at home.

Younger Canadians appear to be more willing to hold their nose and move to a country whose politics they dislike if it puts them in a better economic position. This makes sense; people building their careers don’t have as much flexibility as those who’ve already made it. We see a similar dynamic in Canada when it comes to attracting specialized talent to new governmental organizations such as the Major Projects Office – it has been harder to attract the younger professionals still building their careers.

So, what do we do about the brain drain? The instinct behind Mr. Pichette’s idea – wielding the stick – is wrong. In Canada, we don’t restrict interprovincial migration, and no one demands that an engineer trained in Ontario reimburse the province before moving to Alberta. And Canada also benefits from talent trained abroad. For example, the Philippines sends hundreds of thousands of health care workers abroad, including many to Canada; imagine the outcry if Manila tried to prevent them from leaving. The free movement of people is a foundational principle of liberal democracies; restricting it is an admission of policy failure and a concession to complacency.

The answer, then, is to look for carrots. For example, Canada could develop a scholarship model that generously funds graduate education but attaches this funding to a service obligation requiring recipients to work in the country for a defined period. This program could target fields where the brain drain is most acute, from AI research to health care to clean energy.

Finally, it is worth noting that not all emigration is a loss. True, some Canadians who leave will settle permanently abroad. But others will return with skills, networks and capital that benefit Canada enormously. We should want some of our future leaders to have spent their formative years operating in global nerve centres – not punish them for doing so. Perhaps the best example of this is Prime Minister Mark Carney, whose global experience and network from years working in the U.S., Britain and Japan undoubtedly help him navigate our country through an increasingly complex world.

People are rational economic actors, and they go where the opportunities are. This is not just a Canadian story: across the West, record numbers of young professionals are moving abroad. The question Canada should be asking is not how to stop people from leaving, but whether we are building the kind of economy that compels talented people to stay – or return home. Think of it as the Field of Dreams problem: if you build it, they will come.

So let’s focus on building, not caging.

Read article in the Globe and Mail The post Punishing young Canadians for leaving doesn’t solve the problem appeared first on Cascade Institute.

By Thomas Homer-Dixon and Christopher Collins

The version of record of this op-ed appeared in The New Republic

The world is in crisis right now, but the summer is shaping up to be much worse—for reasons beyond every country’s control, including America’s.

President Trump’s war on Iran is the cause of the current crisis. Iran’s retaliatory closure of the Strait of Hormuz to most trade has caused oil and natural gas prices to skyrocket, forcing countries to find creative ways to cut energy demand, and caused a fertilizer shortage that is certain to reduce crop yields around the world while also increasing the costs of agricultural goods. All of this comes as economic growth has slowed globally and governments have amassed record levels of debt.

And then, in a couple of months, we’ll likely have El Niño to contend with too. Welcome to the polycrisis.

That term, which was coined back in the 1970s, has gained popularity in recent years—thanks in part to Columbia professor Adam Tooze. Popularly, it’s sometimes seen as shorthand for “a lot of bad things happening all at once,” but that misses its real meaning. A true polycrisis is not a pile-up of unrelated calamities. Rather, it occurs when separate crises in different systems become entangled, feeding off each other and producing damage greater than the sum of their parts.

Consider fertilizer. The Persian Gulf region is a major producer of it, and roughly one-third of the world’s seaborne fertilizer trade passes through the Strait of Hormuz. Moreover, both natural gas and sulfur are critical inputs for fertilizer production, and Persian Gulf supplies of these commodities have also been cut off. This has caused fertilizer plants in South Asia to shut down, while China, one of the world’s largest fertilizer suppliers, has restricted exports to protect its domestic market.

So global fertilizer prices are surging, just as the spring planting season begins across the northern hemisphere. Around the world, governments are scrambling to secure fertilizer supplies and concerns are growing about food security in developing countries and rising grocery prices in wealthier ones. Farmers have been advised to expect tighter supply and margin pressures. In the U.S, this has already resulted in the lowest planting of spring wheat since 1970.

Now add weather. Forecasts predict that 2026 will be one of the hottest years on record, as the concentration of human-made greenhouse gases in the atmosphere continues to rise. Extreme heat accelerates moisture evaporation from soil, aggravates droughts, and reduces crop yields. Worse, there’s an 80 percent chance that an El Niño will develop this year, altering global rainfall patterns and triggering droughts in some regions and floods in others. NASA estimates that El Niño harms crop yields on at least a quarter of the world’s farmland. And there is a 25 percent chance this will be a “super” El Niño, intense enough to cause globally catastrophic extreme weather.

Research shows a strong El Niño can have an impact on global food supplies that causes six million children to go hungry. But these calculations do not include a global fertilizer shortage. Climate stress with adequate fertilizer is challenging. Climate stress without it is an entirely different order of crisis.

Unfortunately, these two crises are largely locked in, and there is little we can do in the short term to prevent their collision during the 2026 growing season. Even if the Strait of Hormuz reopened tomorrow, it would take time to restore global supply chains. The seeds of the polycrisis have already been planted, both literally and figuratively.

Yet food is only one system facing a shock. The Iran war is upending global energy markets, driving inflation, and lowering economic growth around the world. And this is all occurring at a time when many countries are still burdened by record levels of public debt left over from the pandemic, something the International Monetary Fund has termed “the fiscal version of long COVID.”

Research shows that food price shocks can act as a “threat multiplier,” transforming existing political dissatisfaction into widespread violent uprisings. As evidence, a global food price crisis in 2007–08 and a similar spike in food prices in 2010–11 caused riots and political instability in many countries.

The pressures building this summer are broader than what we’ve seen in the past, and the political and humanitarian consequences will be severe. Our institutions were not built to manage interrelated crises. Defense ministries watch the Strait of Hormuz, agriculture departments track fertilizer prices, climate agencies issue El Niño bulletins, and Treasury officials supervise debt levels. Each institution monitors and tries to manage crises in a single system, but nobody is tasked with modeling and mitigating the consequences when apparently distinct crises converge.

An effective response demands an integrated playbook. Contingency plans for this summer’s harvests need to simultaneously account for fertilizer shortages and extreme weather. International coordination should extend to fertilizer allocation, not just oil reserves. A planned United Nations fertilizer coordination initiative is a strong start, but developing countries also need urgent help diversifying their fertilizer import supply chains. Humanitarian organizations must prepare for dramatically elevated demand for food aid, and donors need to mobilize now—not after the harvests fail.

In the longer term, the world’s multilateral system needs standing capacity to monitor how crises in different domains interact, so that we stop being repeatedly blindsided by cascading crises that careful analysis could have anticipated. This is what polycrisis analysis seeks to address. The goal is not to replace specialists but to develop the tools and foster the conversations that track risk interactions across silos before containable shocks compound into systemic breakdowns.

None of this is happening at the required pace. Around the world, farmers are preparing to plant while facing both drought forecasts and disrupted supplies of fuel and fertilizer. They’re on the front lines of this polycrisis right now, but soon we all may be embroiled in it.

Read the article in The New Republic The post Cascade researchers warn of “bad-to-worse” crises in The New Republic appeared first on Cascade Institute.