Carney Takes a Stand

Political careers can be made (or unmade) by a single speech. Think Barack Obama’s 2004 Democratic party convention address, Ronald Reagan’s at the Republican gathering forty years earlier, or Winston Churchill’s World War Two exhortations. At their best, such moments of oration can transcend the mundane, the ordinary, the workmanlike and sweep audiences following across all media to emotional places they never thought possible. Then, there are the singular speeches that span time which last because they make people think, and by so doing ultimately make them care enough to take up a cause and, if history is kind, change the world.

As epochal speeches go, Canadian Prime Minister Mark Carney’s fifteen-minute observations delivered at the World Economic Forum in Davos on January 20^th was delivered in his trademark laconic style. But the content more than made up for it. In its sweeping eloquent bluntness, he, however intentionally or not, positioned himself as the singular, unflinchingly pragmatic realist among Western leaders willing to tell blunt truths about the transformed world wrought by Donald Trump and the resurgent populist movement.

It's an unlikely role. For much of his career as an economist and central banker, he existed at the nexus of global thinkers and multilateral institutions, in fact at the very center of the establishment ‘rules-based order’ that is now besieged. Deemed the “rockstar banker” for his tenures heading up the Bank of Canada and the Bank of England, Carney was a fixture at global summits, where he opined beside business leaders and the political elite, espousing the values of international cooperation and the need for open economies and shared rules.

Now after less than a year as prime minister, Carney offered a stark, wholly realistic assessment of the New World Order: “the strong do what they can, and the weak suffer what they must.” In a wide-ranging speech that was at times elegiac for the predictable globalist order that has held sway for generations, and surprisingly eloquent for dry a delivery (how many world leaders quote Vaclav Havel’s writings as metaphor?) Carney laid out a new doctrine for a world of fractured international norms, warning “compliance will not buy safety”.

“The old order is not coming back. We should not mourn it,” he said. “Nostalgia is not a strategy,” remarks, which were received with a rare standing ovation from an audience of movers and shakers who doubtlessly have heard it all, every bromide, and cliché. While they did not explicitly mention U.S. President Donald Trump, Carney nonetheless alluded to growing frustration and concern that certain forces are more than eager to dismantle and weaken the “the architecture of collective problem solving” that has defined much of the past eight decades and kept the financial peace.

Up until this very moment many global leaders from nations large and small have sought to tiptoe around the challenges and disruption that Trump’s ‘move fast and break things’ policy have caused, choosing either the language of condescending appeasement such as allusions to  ‘dangerous departures’ he has taken from established norms, but they always return to the comforting delusion that he can be accommodated through excessive flattery. Carney has exposed that as simply inaccurate. He has recognized that, for good or ill, Donald Trump is a revolutionary, dedicated to changing the world because he sees it as woefully inefficient and insufficiently meritorious, calculating that a rude shock to the system is what’s needed.

Only now do these selfsame leaders increasingly realize they will not be able to “manage” Trump for the remainder of his term and are at last reckoning with the fact that the systems of international order that the US helped craft are crumbling. Carney is the first major western leader to basically acknowledge this reality, and he has sent out an admonition for them to grow up and deal with the world according to new rules which in turn necessitate new ways of thinking. At a time when leaders appear as lilliputian in their courage and values, and the world is looking for somebody to set a clear direction, Carney is doing exactly that. There are inherent risks in his being the first to do so, but he cannot be faulted for the attempt.

Carney marks the end of the rules-based order by acknowledging it never really existed. Because in some way, it was a collective illusion. And that now is over. The world order of the 20th century is giving way to a new era of unconstrained great-power politics and economic coercion. At the same time he is also very frank about the good and bad realities of the old order, and emphasized that it is no longer coming back, so we need vision for the future. He urged middle powers like Canada and states in Europe to unite, build strategic autonomy and diversify partnerships rather than accept subordination. Carney also stressed that leaders must be honest about the world and accept it as it is, a dig against those in Europe who are still paralyzed. He said we need to strengthen both domestic resilience, form coalitions and build new institutions.

Carney warned that the “great powers”, a thinly veiled reference to the US, have started using economic integration as “weapons”, with “tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited.” In recent days, Trump has threatened to place levies on European nations that oppose his bid to seize control of Greenland. But Carney also warned against diplomatic and economic retreats, telling attendees that a world of “fortresses” will be poorer and less sustainable.

He then proceeded to frame the stark choice facing many countries as, “The question for middle powers, like Canada, is not whether to adapt to this new reality. We must. The question is whether we adapt by simply building higher walls – or whether we can do something more ambitious.”

Justin Trudeau would never have put things that way (though we could envisage Pierre Trudeau and Lee Kuan Yew doing something similar) perhaps even deigned to give the industrialized nations such a collective kick in the pants.

Much of Carney’s rapid rise from economist to world leader advocating a Third Way is predicated on his thesis that geographic proximity, tight economic integration and longstanding political alliances with the US no longer guarantee prosperity and security. But the speech, has an element of a calculated gamble attached to it, for it comes as the two nations prepare for a protracted trade negotiations (CUSMA renewal) and the widely-held belief that Trump’s repeated threats to annex Greenland is prelude to turning his attention to Canada next.

Carney understands that while it is important to not poke the bear by antagonizing Trump through overblown rhetoric, there’s also no need to levy excessively flattery on the president. Thus, it was no accident that the prime minister touted his government’s recent trade mission to China, where he courted Chinese investment in Canada’s oil sector and dramatically scaled back tariffs on Chinese electric vehicles, the latter of which signaled a break with US policy. Neither did he shy away from his well-publicized trip to Qatar which netted a potential $290 billion in future investment from that strategically important country and its regional neighbors. He is speaking the language that the businessman dealmaker president understands and sending the signal that Trump has a savvy negotiating partner that won’t back down from a fight if it comes to that.

Nevertheless, as Canada shifts to become more “principled and pragmatic” in its dealings with other nations, Carney laid out his vision for how his government and other middle-power countries could navigate the tumultuous and unpredictable nature of global politics. He acknowledged the reality that Canada, while a G-7 member, is still a middle power which lacks the market size, military wherewithal and therefore the sheer bullish hard and soft power to impose its will on others.

Instead, Carney said he would pursue a policy of what he termed “variable geometry”, which involves forming different coalitions for different issues, based on shared values and mutual interests: in essence approaching global alliances with the same pragmatism as business deals, bilateralism or multilateralism as necessary. Simultaneously, his Liberal government was spending billions to bulk up its oft-neglected military, spending to support Ukraine’s defense while standing “firmly” with Greenland and Denmark all the while seeking to link trade more closely with Asian and European nations.

This flexible, seemingly ad-hoc way of developing alliances comes in stark contrast to the concrete certainties of the post-war international order that Carney has long championed and been part of.

While the world’s first ranked powers such as China, Russia (at least militarily, if not economically) and the U.S – have essentially decided that they’re going to take the law into their own hands,  Carney wants the rest of the world to neither abandon those institutions nor give up on them, for they have to a large extent ensured political and financial stability up to recently, but they do need overhauling. And it starts with the clear-eyed recognition that they must respond to new challenges by evolving to meet the times.

He said, “We should not allow the rise of hard power to blind us to the fact that the power of legitimacy, integrity, and rules will remain strong – if we choose to wield it together.”

In his own quiet, quintessentially Canadian way Mark Carney is sounding a clarion call for the west to wake up, to confront the need for the Old Order to change or risk irrelevancy. The real test is whether or not other countries will listen and whether or not he can help forge a new path from the shattered remains of the glass house Trump has broken. This speech has been his moment. Time will tell if Carney is a Churchill for our times whose warnings were heeded or if he will be a lone voice of reason crying in the wilderness. Either way, the path ahead for him and his audience will not be easy.