OTTAWA, JUNE 5 -- The Canadian government today unveiled its first comprehensive review of defense policy in 16 years, including commitments to modest annual spending increases and controversial plans to build a fleet of nuclear-powered attack submarines and alter its wartime role within NATO.

Although the plan is meant to rebuild Canada's neglected military, officials acknowledged that the commitment to an annual increase of at least 2 percent in real growth of the military budget over the next 15 years is not likely to change Canada's ranking of fourth from the bottom among the 16 NATO nations in per capita spending.

The plan puts heavy emphasis on rebuilding Canada's Navy, raises the priority on defense of Arctic regions near Canada and narrows somewhat the focus on reinforcement of Western Europe in wartime.

Defense Minister Perrin Beatty said the government is committed to building a controversial fleet of up to a dozen attack submarines capable of operating under the Arctic ice.

The government, resisting pressure from Washington, backed away from a longstanding commitment to send troops and fighter aircraft to defend Norway in the event of a Soviet attack and agreed only to a token increase in the size of its standing NATO forces in Europe.

Beatty said Ottawa will concentrate instead on rebuilding and upgrading its roughly 7,500-member NATO force in West Germany, which he said is now incapable of fulfilling its obligations. Canada will also beef up reserve forces at home so that they are capable of relieving Canada's Europe-based force in a crisis, and will transfer to West Germany the active-duty brigade previously committed to Norway. Since Norway forbids foreign troops on its soil during peacetime, Beatty said, deployment there from Canada would take "some weeks" and the force would not be able to "make an opposed landing."

Beatty told reporters, "What we will be doing is ensuring that in our commitments to NATO, to Europe, that the commitments we have are honest." He acknowledged that the net result of the reorganization would be to place only about 200 additional Canadian troops permanently in Europe.

As part of the defense plan, the Cabinet of Prime Minister Brian Mulroney made the commitment to increase military spending only by a rate of 2 percent above inflation during the next 15 years, a rate of growth less than in previous years.

Joseph Jockel, a former defense consultant to the State Department, described the policy as a "rejiggling of commitments; above all there is no commitment to increase defense spending." He observed that, unlike in Europe where the threat can be made to remove U.S. troops if allies there do not increase spending, the United States has far less leverage over Canada. Defense strategists say Canada has an "involuntary guarantee" of its security by virtue of its location between the United States and the Soviet Union, especially since the development of new Soviet cruise missiles capable of striking targets in the United States from thousands of miles away.

Beatty said the Cabinet also had agreed to plans to rebuild the Canadian Navy, which he said was in a "deplorable state," and to build a fleet of 10 to 12 nuclear-powered attack submarines, which he estimated would cost about $400 million each. The Cabinet, however, made no binding promise to finance the projects and will consider them in coming years as future budgets are drafted. Defense sources have said French or British-built submarines would be considered.

A claim by the United States that Canada's Arctic straits are international waters has helped propel plans to buy the submarines. Beatty argued they could also be deployed to protect Atlantic and Pacific sea lanes in time of war, and he released comments by U.S. Gen. Bernard W. Rogers, retiring supreme allied commander of Europe, endorsing the idea.

Beatty also said, however, that the submarines would be used to assert Canada's sovereignty over the Canadian Arctic. When asked what action a Canadian attack submarine might take if it encountered a friendly intruder in the waters, he said, "Obviously it's not our intention to torpedo it . . . . We don't do that sort of thing." He said the Canadian submarines would track the foreign craft, and the government would use their findings to take legal action.

Recent public opinion polls indicate a majority does not favor the new submarine program. The United States has tried quietly to discourage the submarine purchases, saying U.S. submarines can handle Arctic operations.