EVOLVING BALANCE OF POWER Trends in global economic development are shifting the relative power of states, from the West to the East, and – to a lesser extent – from the North to the South, creating a more diffuse environment in which an increasing number of state and non-state actors exercise influence. This shift supports positive global change, such as the alleviation of poverty, and the democratization and empowerment that often accompany economic development. However, this shift has also been accompanied by weak governance and increasing uncertainty. In this era of growing multipolarity, the United States is still unquestionably the only superpower. China is a rising economic power with an increasing ability to project influence globally. Russia has proven its willingness to test the international security environment. A degree of major power competition has returned to the international system. There are also a number of rising regional powers that are gaining greater influence in international affairs, particularly as economies in Latin America, Asia, and Africa continue to grow at a relatively rapid pace. Canada has a strong interest in supporting the international system it helped to build, including by fostering new partnerships, engaging with emerging powers and promoting peace around the globe. STATE COMPETITION As a trading nation and influential member of the G7, G20, NATO and United Nations, Canada benefits from global stability underpinned by a rules-based international order. Recent years have witnessed several challenges. Russia’s illegal annexation of Crimea is an example that has carried grave consequences. Activities in the South China Sea highlight the need for all states in the region to peacefully manage and resolve disputes in accordance with international law, and avoid coercion and other actions that could escalate tension. The re-emergence of major power competition has reminded Canada and its allies of the importance of deterrence. At its core, deterrence is about discouraging a potential adversary from doing something harmful before they do it. A credible military deterrent serves as a diplomatic tool to help prevent conflict and should be accompanied by dialogue. NATO Allies and other like-minded states have been re-examining how to deter a wide spectrum of challenges to the international order by maintaining advanced conventional military capabilities that could be used in the event of a conflict with a “near-peer.” Deterrence has traditionally focused on conventional and nuclear capabilities, but the concept is also increasingly relevant to the space and cyber domains. 50 THE RE-EMERGENCE OF DETERRENCE Changes in the international environment demand a new understanding of how and when to lawfully use or threaten to use military force in support of diplomatic engagement to manage and shape conflict and international relations. The return of major power rivalry, new threats from non-state actors, and challenges in the space and cyber domains have returned deterrence to the centre of defence thinking. Canada benefits from the deterrent effect provided by its alliances (e.g., NATO and NORAD), and takes seriously its responsibility to contribute to efforts to deter aggression by potential adversaries in all domains. A CHANGING ARCTIC The Arctic region represents an important international crossroads where issues of climate change, international trade, and global security meet. Eight states – Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States – have territory north of 60o, while five of these states border the Arctic Ocean. Arctic states have long cooperated on economic, environmental, and safety issues, particularly through the Arctic Council, the premier body for cooperation in the region. All Arctic states have an enduring interest in continuing this productive collaboration.