Canada has reached a compromise with NATO allies in which member states will commit to trying to increase defence spending to 2 per cent of their annual economic output, rather than embracing a hard target for boosting military expenditures.

This debate takes place as the North Atlantic Treaty Organization (NATO) grapples with Russia's efforts to break up Ukraine and the need to be ready to defend a member state if Moscow's aggression spreads.

The Canadian government and other alliance members have been under pressure from Britain and the United States to sign on to a stronger statement at this week's NATO summit in Wales as a means of improving the alliance's capacity to respond to crises. Both London and Washington wanted NATO's 28 members to agree to boost defence spending to 2 per cent of their gross domestic product when they meet Sept. 4 and 5 near Cardiff.

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Canada, which spends about 1 per cent of GDP on military budgets, had balked at the proposal and fought the inclusion of this strict target in the NATO summit communiqué, saying Canadian taxpayers wouldn't support such a hike in defence spending and calling the goal arbitrary. Britain and the U.S. are among the few NATO members that already devote 2 per cent or more to military budgets.

Such an increase for Canada would cost at least $20-billion in additional expenditures each year. At present, Ottawa spends about $18-billion annually on defence.

The Harper government, which styles itself a hawk on military spending, found itself in the unusual position of resisting pressure from allies to boost defence spending.

On Tuesday evening, however, the Prime Minister's Office announced Canada had found middle ground in discussions with Washington and London and other NATO members.

"We have agreed to compromise language with our NATO allies and the commitment agreed to will be reflected in the NATO Summit statement to be issued later this week," said Jason MacDonald, spokesman for the Prime Minister.

The 2-per-cent pledge will be part of NATO's communiqué, but will be substantially softened. "Specifically, it is an aspirational target and will be acknowledged as such in the summit statement," Mr. MacDonald said.

Canadian officials said Ottawa has agreed to boost spending, but only on specific initiatives.

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"We agree with our NATO allies that it is important to continue increasing our defence spending, and we have committed to doing so," the Prime Minister's spokesman said. "Canada will continue to focus on increasing spending on measures that meet actual operational needs, in response to global issues et cetera, and not on meeting an arbitrary target."

The imperative to hike Canada's military spending would have upset the Harper government's re-election strategy. The Conservatives have cut spending for several years now to balance the budget by 2015, when the Tories are expected to head to the polls again. The government plans to use surplus budget revenue to fund tax cuts as a means of enticing voters in 2015.

Fen Hampson, director of the Global Security and Politics program at the Centre for International Governance Innovation in Waterloo, Ont., said Canada was hardly the only notable NATO member balking at a pledge that would significantly boost military spending. Germany was also cool to the idea, he noted.

Still, he said, fulfilling a hard NATO pledge to hike military spending would scramble the re-election plans for the Tories, who appear set to run on their record of fiscal management.

"Committing ourselves to doubling defence spending just wasn't going to happen," he said. "It's domestic politics."