OTTAWA — The federal government says its "best friends" are Europeans amid a drift with the United States, as Luxembourg opens an Ottawa embassy aimed at boosting a knowledge-based economy.
"This moment in time is witness to a changing and stressed geostrategic environment," Foreign Affairs Minister Anita Anand said Wednesday.
"Issues relating to defence and security — not to mention economic survival and affordability — are at the very top of mind for us all," she said at an event where her Luxembourg colleague Xavier Bettel officially opened a new embassy in Ottawa.
Anand's parliamentary secretary Rob Oliphant said her presence at the event showed "the absolute importance that we are placing on Europe" in the coming weeks and years.
"Canada is depending more and more on Europe as our best friends in the world. The European Union, and other European countries, are absolutely critically important to Canada's success and Canada's future," he said.
Luxembourg is a major financial hub and Statistics Canada ranks it as the eighth largest source of foreign direct investment in Canada, which does not include other countries' indirect funding through Luxembourg.
Bettel told reporters near Parliament Hill that the embassy that has been operating since last December was decided on before the return of Donald Trump to the White House.
"It's a win-win situation and it's not against (the) U.S.A.; it's not against someone," he said. "It's not America First and the others behind; it has to be a win-win situation for all the partners."
Bettel said he chose to place an embassy in Canada because it's a "trusted partner" with shared values who hosted the country's head of state, Grand Duchess Charlotte, in Montreal during the Second World War.
He said Canada is the only G7 country without an embassy in Luxembourg, and hopes Ottawa opens a diplomatic mission instead of following his country from neighbouring Belgium.
With just 680,000 people, Luxembourg is one of Europe's most sparsely populated nations, even with the 200,000 workers who commute from neighbouring countries.
But the country has outsized clout in financial markets, according to Robert Harmsen, an Edmonton native and a political scientist at the University of Luxembourg.
"It's a gateway to Europe that it is not only a major financial centre, it's also a logistics hub; it's also a very good place if you're looking for a European base, or to expand into Europe," he said.
Likewise, "Canada potentially is a North American gateway" for Luxembourg, he said.
For decades, Luxembourg was a major steel producer, and it was among six countries who formed a continental steel and aluminum agreement in 1951 that later morphed into the European Union.
Harmsen said the country became an innovator in financial services and found ways to package investments to lower tax bills, thus earning a reputation as a tax haven. It hosts the European court that deals with most commercial and regulatory cases.
More recently, he said, the country has tried to become a knowledge economy with a focus on cybersecurity, outer-space technology and systems biomedicine.
Harmsen was part of Luxembourg's trade mission to Canada in 2022, where he said there was a focus on partnering with aerospace and pharmaceutical companies, particularly in Quebec as most people in Luxembourg speak French.
The country launched another trade mission in 2024 and decided to open an embassy, ahead of Prime Minister Mark Carney being elected on a pledge to seek deeper trade ties with Europe.
Canada signed a trade agreement with the European Union that came into force in 2017, and Harmsen noted that Canadian exports to the continent have not gone up nearly as much as European exports to Canada.
"I've lost count of the number of times that Canada was going to turn to Europe, and that there was going to be a big initiative to actually strengthen relationships, economic, political, cultural, and otherwise," he said.
"If there is going to be the kind of diversification that Carney's been talking about and the Canadian government's been talking about, this is the sort of thing that needs seriously to be looked at," Harmsen said.
Bettel said both Luxembourg and Canada have learned the importance of having "a strong economy" that doesn't rely on one partner, whether it's Russian gas, Chinese microchips or American trade opportunities.
"As a European continent, we were always dependent on someone else," he said. "This is what we learned, from the lessons of the last 10 years."
This report by The Canadian Press was first published June 11, 2025.
Dylan Robertson, The Canadian Press
